The role of outsourcing management process in improving the effectiveness of logistics outsourcing

Logistics outsourcing has been widely adopted by firms as a means to reduce costs and increase flexibility. To ensure these expected outcomes, logistics outsourcing processes must be managed with appropriate governance mechanisms, but their effects on firm performance have hitherto been inconclusive in the literature due to overlooking of operational mechanisms. This study aims to shed light on the effects of the outsourcing management process (OMP), which is an operational mechanism, on the following two types of logistics service outsourcing: basic outsourcing and advanced outsourcing. By drawing upon resource-based views, we validated a proposed model based on survey data collected from 250 subsidies of publicly listed manufacturers in China. The results revealed that OMP affects the effectiveness of the two types of logistics outsourcing differently. While basic logistics outsourcing affects cost and delivery directly, advanced logistics outsourcing influences the performances via interaction with OMP. This study is the first to report this relationship. This study further makes a contribution by showing the conditional utility of OMP and its service-dependent nature, which has usually been ignored in the literature.