Reconciling Alternative Theories for the Safety of Owner–Operators

• Author: Susan L. Golicic,Brian S. Fugate,Jason W. Miller
• Date: 01 June 2018
• DOI: http://doi.org/10.1111/jbl.12180
• Published date: 01 June 2018

Reconciling Alternative Theories for the Safety of

Owner–Operators

Jason W. Miller

1

, Susan L. Golicic

2

, and Brian S. Fugate

3

1

Michigan State University

2

Colorado State University

3

University of Arkansas

Motor carrier safety is an important concern of shippers, carriers, policy makers, consignees, insurance providers, and the motoring public.

One aspect of carrier safety that has garnered substantial attention is whether carriers making greater use of owner–operators are more or

less safe vis-

a-vis carriers making greater use of employee drivers. Currently, conflicting theoretical predictions exist regarding the direction of

this relationship. In this article, we offer a reconciliation of the alternative theoretical predictions by developing a coherent theory that merges

sociological rational choice theory and theory regarding motor carrier safety. We subject our theory to empirical testing by fitting a series of

seemingly unrelated regression models to a vector of safety measures tracked as part of the Federal Motor Carrier Safety Administration’s Com-

pliance, Safety, and Accountability program. Our results are consistent with our proposed theory of owner—operator safety and provide mean-

ingful theoretical and managerial implications and directions for future research.

Keywords: motor carrier; safety; owner—operator; seemingly unrelated regression

INTRODUCTION

Understanding how the structure of organizations, and conse-

quently the structuring of work, affects the safety and well-being

of workers and the general public is of central concern to scholars

studying organizations in general (Kalleberg 2000) and logistics

and supply chain management (L&SCM) in particular (Brown

1996; Cantor 2008). Workers have a vested interest in the safety

of their firms’operations given industrial accidents can result in

serious, if not fatal, injuries (Levine et al. 2012). Similarly, the

public has a stake in firms’operational safety given industrial

accidents can impose externalities on society (Rosseau and Libu-

ser 1997; Savage 2011). Lucidly illustrating this point, large com-

mercial truck crashes killed 3,903 people in 2014 (Federal Motor

Carrier Safety Administration 2016). Moreover, while the ratio of

fatalities over 100 million miles driven declined from 5.51 in

1975 to 1.29 in 2010, this fatality rate has risen from its nadir in

2010 to 1.40 in 2014 (Federal Motor Carrier Safety Administra-

tion 2016). Thus, motor carrier safety remains a highly relevant

topic for all supply chain members and policy makers.

One characteristic of the structuring of work that has been

particularly contentious in the L&SCM literature pertains to

the safety of owner–operators in the motor carrier industry

(Corsi et al. 1988; Adams 1989; Bruning 1989; Dammen

2005; Monaco and Redmon 2012; Cantor et al. 2013). On the

one hand, scholars have argued that asset ownership gives

owner–operators greater incentive to operate safely so they

preserve the value of their equipment (Hubbard 2000; Nicker-

son and Silverman 2003; Dammen 2005). On the other hand,

different scholars argue that the financial strain many owner–

operators experience incentivizes them to defer maintenance

and exceed hours-of-service (HOS) rules (Adams 1989; Chow

1989; Belzer and Swan 2011; Cantor et al. 2013). Empirical

tests have been inconclusive, with studies finding owner–oper-

ators are more likely (Corsi et al. 1988; Hunter and Mangum

1995), no more likely (Bruning 1989), and less likely (Britto

et al. 2010; Monaco and Redmon 2012; Cantor et al. 2013) to

be involved in accidents. Adding to the confusion, scholars

have found owner–operators are more likely to have log book

violations (Monaco and Williams 2000) and vehicle-related

violations (Britto et al. 2010; Cantor et al. 2013) but no more

likely to have unsafe driving violations (Monaco and Williams

2000; Britto et al. 2010). These contradictory theoretical argu-

ments and inconsistent empirical findings are problematic both

theoretically and practically, as it hinders our development of

cumulative knowledge (Goldsby and Autry 2011) and hampers

our ability to inform both managerial practice and public pol-

icy (Waller et al. 2012).

In this article, we seek to reconcile these alternative theoreti-

cal predictions into a coherent theory of owner—operator safety.

We do so by drawing on principles from sociological rational

choice theory (SRCT; Friedman and Hechter 1988; Hechter and

Kanazawa 1997) and theory regarding motor carrier safety

(Miller and Saldanha 2016). We begin using principles from

SRCT to provide a theoretical foundation for framing why

owner—operator status alters truck drivers’benefits and con-

straints for committing unsafe acts. Specifically, we explain why

owner—operators have more to gain by operating unsafely and

concomitantly face fewer constraints in doing so, resulting in

the general prediction that carriers making greater use of

owner–operators will have worse performance across various

safety categories tracked by the Federal Motor Carrier Safety

Administration (FMCSA) as part of the Compliance, Safety, and

Accountability (CSA) program. We then extend this logic to

explain why we expect a change in carriers’use of owner–oper-

ators relative to employee drivers to have a statistically more

pronounced relationship with some of the safety measures

tracked as part of the CSA program.

Corresponding author:

Jason W. Miller, Department of Supply Chain Management, Eli

Broad College of Business, Michigan State University, 632 Bogue

Street N370, East Lansing, MI 48824, USA; E-mail:

mill2831@msu.edu

Journal of Business Logistics, 2018, 39(2): 101–122 doi: 10.1111/jbl.12180

© Council of Supply Chain Management Professionals

We test our theory by fitting seemingly unrelated regression

(SUR) models to carriers’percentile scores of three core safety

metrics—Unsafe Driving, HOS Compliance, and Vehicle Mainte-

nance—tracked by the FMCSA as part of the CSA program for

a random sample of 484 large, for-hire motor carriers. We

selected these metrics because (1) carriers’percentile scores on

these safety behaviors have been linked to accident rates by two

independent investigations (Lueck 2012; The Volpe Center

2014) and (2) these safety behaviors vary along the dimensions

specified by our theory. Consistent with expectations, we find

carriers making greater use of owner–operators have more safety

violations, with this relationship being statistically significantly

more pronounced for HOS Compliance and Vehicle Maintenance

vis-

a-vis Unsafe Driving. We evaluate the robustness of our find-

ings by performing a series of two-stage least squares (TSLS)

analyses and fitting SUR models to carriers’absolute safety per-

formance in these three categories.

This article contributes to the L&SCM literature in several

ways. First, it utilizes SRCT to provide an integrative framework

for examining owner—operator safety that incorporates why

owner–operators experience different benefits and constraints

than employee drivers for committing unsafe acts. In contrast,

existing treatments of owner—operator safety focus separately on

benefits (Nickerson and Silverman 2003) or constraints (Swartz

and Douglas 2009) differences. Second, the theory we develop

offers more precise predictions than extant theories by suggesting

which metrics will have the strongest relations with carriers’

owner—operator use, which represents a theoretical contribution

per Meehl (1990) and Edwards and Berry (2010). Third, we pro-

vide the first explanation for extant findings that owner–operators

and employee drivers display more pronounced safety differences

for classes of safety behaviors whose violation can alleviate

short-term financial strain, such as exceeding HOS rules and

driving poorly maintained equipment (Britto et al. 2010; Cantor

et al. 2013). Given a goal of science is to offer answers to a

wider array of empirical questions without incurring conceptual

problems (Laudan 1984), the fact our theory offers more precise

predictions while also accounting for existing empirical anoma-

lies means it provides a stronger contribution (Laudan 1977).

Fourth, our findings call into question earlier arguments that

asset ownership incentivizes owner–operators to operate safely

and maintain their equipment (Nickerson and Silverman 2003;

Baker and Hubbard 2004; Dammen 2005) given our results dia-

metrically oppose this prediction. Last, we provide corroborating

evidence to Miller and Saldanha’s (2016) theorizing that system-

atic differences across the classes of safety behaviors tracked by

the CSA program are likely to manifest in different empirical

outcomes. Furthermore, we offer a few refinements to their theo-

retical arguments based on our empirical results.

The remainder of this article is structured in four sections. The

first section reviews the literature on the safety of owner–opera-

tors in the motor carrier industry both within the United States

and overseas. The second section highlights the core tenets of

SRCT, explains how it can be applied to this study’s context,

and utilizes SRCT along with theory regarding motor carrier

safety to formulate the hypotheses of interest. The third section

discusses the sampling design, describes the measures, explains

the statistical modeling approach, and contains the results. The

fourth section describes theoretical contributions, summarizes

managerial and policy implications, highlights limitations, and

suggests directions for future research.

BACKGROUND LITERATURE

Given the large number of owner—operator truck drivers in the

United States—estimated at 350,000 (OOIDA Foundation 2016)

—and around the world (Mayhew and Quinlan 2006), coupled

with the public policy implications of motor carrier safety (Chen

et al. 2015), quite a few scholars have examined whether owner–

operators are more or less safe than employee drivers. To

preserve space and improve the reader’s ability to compare and

contrast the extant literature, we have summarized these studies

in Table 1, making particular note of the sample characteristics,

assumptions regarding owner—operator safety, and empirical

results.

We wish to call attention to three features of Table 1. First, schol-

ars have put forward opposite arguments regarding owner—opera-

tor safety. Some scholars have argued that owner–operators will be

less safe because they experience more economic pressure that, in

turn, results in them being more likely to “cut corners”(Adams

1989; Chow 1989). For example, Viscelli (2016) notes that many

owner–operators earn less than employee drivers do. Low pay

results in financial strains that owner–operators try to overcome by

working more hours than legally permitted (Belzer 2012) and oper-

ating poorly maintained trucks (Chow 1989). In stark contrast, other

scholars have argued that asset ownership should result in owner–

operators driving more safely and better maintaining equipment

(Baker and Hubbard 2004; Dammen 2005). Illustrating this per-

spective, Nickerson and Silverman (2003) state, “Asset ownership

provides an incentive to an owner—operator to expend more effort

and resources in vehicle maintenance and careful driving than

would a company driver”" (pp. 92–93). We note these divergent

perspectives because we address this debate in the Theory and

Hypothesis Development section.

The second feature of Table 1 to note is that studies have pre-

dominantly examined owner—operator safety by investigating

differences in accident rates between owner–operators and

employee drivers. These inquiries have returned conflicting

results. For example, Corsi et al. (1988), Hunter and Mangum

(1995), and Mayhew and Quinlan (2006) find that owner–opera-

tors and/or carriers making greater use of owner–operators have

higher accident rates; Bruning (1989), Monaco and Williams

(2000), and Williamson et al. (2009) find no difference between

owner—operator and employee driver accident rates; and Dam-

men (2005), Britto et al. (2010), Monaco and Redmon (2012),

and Cantor et al. (2013) find owner–operators and/or carriers

making greater use of owner—operator have lower accident rates.

While prior research has been constrained by available data,

Beard (1992) and Savage (1999) question the use of accident

rates to measure motor carrier safety. First, because accidents are

rare events, it is difficult to ascertain if differences in accident

rates stem from true underlying safety differences versus arising

from stochastic factors. Second, accidents often arise from factors

beyond drivers’control (Cantor et al. 2010), which increases

accident rates’measurement error (Beard 1992). Third, theoretical

arguments regarding owner—operator safety concern differences

in the frequency of unsafe behaviors, such as speeding or using

102 J. W. Miller et al.