Public–Private Partnerships and Supply Chain Security: C‐TPAT as an Indicator of Relational Security

PublicPrivate Partnerships and Supply Chain Security: C-TPAT
as an Indicator of Relational Security
M. Douglas Voss
and Zachary Williams
University of Central Arkansas
Central Michigan University
Following the attacks of September 11th, public and private entities recognized a need to protect the global supply chain from terrorist dis-
ruption. In response to this need, the U.S. Government partnered with industry to create the Customs-Trade Partnership Against Terrorism
(C-TPAT) program. This research investigates the publicprivate partnership (PPP) relational aspects of C-TPAT. C-TPAT encourages rms to
voluntarily improve their security competence and that of their supply chain partners. We introduce the concept of relational security in the
context of PPPs. We dene relational security as all activities that establish, cultivate, and maintain successful security exchanges between par-
ties. We establish C-TPAT as one indicator of relational security by demonstrating its ability to establish, cultivate, and maintain successful
security exchanges between parties. Results indicate certied rms outperform noncertied rms in security performance, rm performance, and
Keywords: publicprivate partnerships; supply chain; security; C-TPAT; performance; relational security
Following the attacks of September 11th, public and private enti-
ties recognized a need to protect the global supply chain from
terrorist intrusion. Beyond the loss of human life, supply chain
disruptions can have other negative impacts. These include
decreased revenue and customer satisfaction resulting from
delayed deliveries as well as decreased brand equity if customer
perceptions of the rm are altered. Hendricks and Singhal (2005)
demonstrate these impacts can signicantly devalue the affected
rmsstock price.
Efforts to control supply chain security are hampered by the
complexity, size, and interdependency of the network (Speier
et al. 2011). The complexity and increased length inherent to
global supply chains, coupled with the need to maintain an ef-
cient and effective ow of goods, necessitated an innovative
response. Transaction cost analysis (TCA) (Williamson 1985;
Rindeisch and Heide 1997) would argue that the U.S. Govern-
ment (USG) could have structured the security response in sev-
eral ways. First, the USG could insource security by placing
security personnel at every rm, similar to the Transportation
Security Administration in airports. However, such an action
would have been prohibitively expensive and difcult to enforce
outside the United States. Second, the USG could rely on market
forces by asking rms to employ proper security measures and
providing incentives based on measurable security performance
outcomes. However, security performance outcomes are notori-
ously hard to measure in the absence of a security incident. The
determination was made that a hybrid governance mechanism
based upon publicprivate partnership (PPP) between the USG
and private rms was necessary. The formalization of this PPP
strategy was embodied in the Customs-Trade Partnership Against
Terrorism (C-TPAT) (Kleindorfer and Saad 2005).
C-TPAT is administered through U.S. Customs and Border
Protection (CBP), a division of the U.S. Department of Home-
land Security (DHS). CBP describes C-TPAT as a, voluntary
government/private sector partnership programfor securing glo-
bal supply chains and facilitating legitimate cargo and convey-
ances(U.S. Customs and Border Protection 2004, 1112). C-
TPAT seeks to create a critical mass of supply chain security.
This is accomplished by ensuring certied rms employ proper
security measures and requiring their supply chain partners to
increase security as well. In this way, C-TPAT is able to reach
beyond certied rms to more widely implement security best
practices in nonparticipating companies on a global basis.
PPPs have been applied in many contexts outside of security
including transportation, education, construction, and nancial
management (Wettenhall 2003; Stewart et al. 2009). Their con-
tinued application is a function of past PPP success. One
measure of C-TPATs success is the growth of certied rms.
C-TPAT was proposed in November 2001 and implemented in
April 2002 (Sheu et al. 2006). By November 2004, its member-
ship had grown to 7,400 partners (U.S. Customs and Border Pro-
tection 2004). This number increased to 10,572 by July 2013,
41% of whom were domestic importers, 29% carriers (motor,
rail, sea, and air), 12% foreign manufacturers, 9% third-party
logistics, 8% customs brokers, and 0.6% marine port authorities
and terminal operators (U.S. Customs and Border Protection
Stewart et al. (2009) have called for research dening the
effects of PPPs on rm performance. Conicting evidence exists
regarding the private sector benets of C-TPAT (Furia et al.
2011). C-TPAT implementation can be expensive and its benets
may be hard to quantify because it is difcult to assess the num-
ber of prevented security events or their effects. Few works have
investigated the impact of security measures on performance.
Even fewer have specically examined the impact of C-TPAT
certication on performance.
Corresponding author:
M. Douglas Voss, Department of Marketing and Management, Uni-
versity of Central Arkansas, 312 Business Administration Building,
Conway, AR 72035, USA; E-mail:
Journal of Business Logistics, 2013, 34(4): 320334
© Council of Supply Chain Management Professionals

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