Academic journal article Business: Theory and Practice

An Examination of Trust as a Strategical Factor of Success in Logistical Firms

Academic journal article Business: Theory and Practice

An Examination of Trust as a Strategical Factor of Success in Logistical Firms

Article excerpt

Introduction

The logistics services industry has demonstrated tremendous growth over several decades, and there has been an increasing academic interest in logistics service providers (LSPs), especially since the 1990s (Maloni and Carter 2006). According to Lukassen and Wallenburg (2010), the work of LSPs has been increasingly recognised over the last few years, as has the significance of functioning supply relationships (Huemer 2012). Third-party logistics (3PL) plays a main role in supply chain management and, as a result, has experienced remarkable growth. The demand for 3PL providers has become a main approach (Govindan et al. 2016). Companies generally outsource their logistics to external service providers in order to improve the efficiency of their core functions. In order to achieve these aims, it is necessary to identify the management success factors supporting the fundamental competitiveness of logistics enterprises, as this is an essential development step for the companies involved (Wu 2012). The outsourcer does not have perfect information about either the service provider's capacity cost (i.e., cost for providing fast service), or her quality cost (i.e., cost of achieving a high quality level) (Ren et al. 2016). Logistics outsourcing has become an important strategy for companies seeking to gain a competitive advantage (Huo et al. 2015). The way out to stay competitive is by outsourcing the non-core business functions (Sople 2016). By enhancing operational performance, integration improves outsourcing performance in terms of both financial performance and overall satisfaction. Lastly, operational performance also contributes to financial performance (Yang and Zhao 2016).

Building relationships of trust seems to be a continuously attractive feature for business partners in contemporary society. However, achieving the close level of trust in relationships which business partners hope for is not easy during the business cooperation period. Basically, in reallife business environments the building of trust relationships appears to be impacted by the implementation of every detailed element of business cooperation decision-making during the business development processes (Wang 2012). The fundamental meaning of building trust can be understood in the sense that in-depth business collaboration with business partners is affected by the speed of trust-building, i.e. the time taken to create trust during the processes of developing the business. Therefore, trust is an important element in building long-term relationships (Ganesan 1994) and is considered a critical factor in the success of logistics outsourcing relationships (Tian et al. 2008, Schoenherr et al. 2015). Trust is an essential factor for successful resource sharing in logistics. Trust building is long-term multi-disciplinary agenda in collaborative networked organizations including those in supply chain and logistics (Daudi et al. 2017). They continue that trust is important for the information sharing and collaboration between supply chain partners and it enables development of log-term collaborative strategy (Stonkute and Vveinhardt 2016). For supply chains, collective optimization, with sharing and cooperation is key to success. Therefore, trust between Inter-organizational Information System partners is essential. However, firms are wary of sharing information across organizational boundaries (Sing and Teng 2016). For supply chains, collective optimization, with sharing and cooperation is key to success. Therefore, trust between inter-organizational information system partners is essential (Singh and Teng 2016). Our research aim was to examine the role of trust and the effect of the level of trust in the competitiveness of logistics services providers and within this, to examine the in-sector level of trust (involving clients, sub-contractors and other logistics service providers), as well as the essential factors in the development of trust within the firm. …

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