The Future of Logistics in Emerging Markets—Fuzzy Clustering Scenarios Grounded in Institutional and Factor‐Market Rivalry Theory

• Author: Inga‐Lena Darkow,Micha Hirschinger,Alexander Spickermann,Heiko Gracht,Evi Hartmann
• DOI: http://doi.org/10.1111/jscm.12074
• Date: 01 October 2015
• Published date: 01 October 2015

THE FUTURE OF LOGISTICS IN EMERGING MARKETS—

FUZZY CLUSTERING SCENARIOS GROUNDED IN

INSTITUTIONAL AND FACTOR-MARKET RIVALRY

THEORY

MICHA HIRSCHINGER, ALEXANDER SPICKERMANN, AND EVI HARTMANN

Friedrich-Alexander-University

HEIKO VON DER GRACHT

EBS Business School

INGA-LENA DARKOW

University of Bremen

Transportation and logistics are increasingly relevant to the rapid eco-

nomic growth of emerging economies. Decision makers in the transporta-

tion and logistics industry require a comprehensive understanding of the

institutional business environment and factor markets in emerging econ-

omy countries to formulate accurate supply chain strategies for the future.

Although extensive studies on prospective scenarios in emerging econo-

mies are available, research has largely neglected the future evolution of

transportation and logistics. This study addresses this gap by applying a

multiple method research approach and relying on institutional theory

and factor-market rivalry theory to create scenarios of the development of

transportation and logistics in emerging economy countries by 2030. We

do so by collecting qualitative and quantitative data through a Delphi sur-

vey and applying fuzzy clustering to group the results into meaningful

and interpretable scenarios. Our results suggest that emerging economies

will take advantage of free trade zones to consolidate their position in the

international market and encourage investment. Consequently, logistics

will experience rapid growth and value-added services will expand, propel-

ling new players from developing economies onto the international stage.

Our findings also suggest that the logistics service industry in emerging

economy countries will undergo a significant consolidation process, lead-

ing to the possibility of factor-market rivalry among shippers. This sug-

gests that shippers’social networks and personal contacts will increase in

importance in the future.

Keywords: transportation, distribution and logistics; emerging economies; institu-

tional theory; factor-market rivalry theory; panel study; fuzzy logic; cluster analysis

INTRODUCTION

Numerous research and popular science articles pro-

pose that emerging economy countries, such as Brazil,

Russia, India, and China, represent the new arena for

future economic growth (Gnatzy & Moser, 2011; Wu

& Pangarkar, 2006). Their gross domestic product

(GDP) has experienced double-digit growth rates and

is expected to prevail in the future. Not surprisingly,

large multinational corporations (MNCs) are already

venturing into these promising markets (Magnusson,

Like all invited manuscripts, the original version of this note

underwent a double-blind review process.

October 2015 73

Westjohn & Boggs, 2009; Trunick, 2008), offering

their products and services to improve sales and

consolidate sourcing markets (Kusaba, Moser & Rodri-

gues, 2011). However, to operate successfully in these

fast-growth markets, efficient transportation and logis-

tics systems have to be in place (Czinkota & Ronkai-

nen, 2005). This also means that emerging economy

countries need to improve their logistics capabilities

and connectivity to benefit from globalization and

increasing international trade volumes (Memedovic,

Ojala, Rodrigue & Naula, 2008; Lin & Ou, 2011). Effi-

cient logistics systems and new free trade zones fur-

ther stimulate trade across national boundaries and

attract foreign investors. Increased demand, however,

could constrain logistics capacities and infrastructure

(Hausman, Lee, Napier, Thompson & Zheng, 2010;

Lorentz, Wong & Hilmola, 2007; World Trade Organi-

zation [WTO], 2013).

It is important to be familiar with the business envi-

ronment and its intrinsic attributes in these rapidly

evolving industries (Pang, 2010). Foresight allows

firms to assess potential impacts from many perspec-

tives and to determine the most suitable strategies and

implementation procedures (Haegeman, Marinelli,

Scapolo, Ricci & Sokolov, 2013). As institutions and

factor markets strongly contribute to countries’ eco-

nomic development and firms’ market success (Hitt,

Dacin, Levitas, Arregle & Borza, 2000; Hoskisson,

Eden, Lau & Wright, 2000), we grounded our research

in institutional theory (DiMaggio & Powell, 1983;

Scott, 1995) and factor-market rivalry (FMR) theory

(Ellram, Tate & Feitzinger, 2013; Markman, Gianiodis

& Buchholtz, 2009).

Researchers have suggested various participatory

methods to evaluate impending environmental issues

in rapidly evolving industries (Rohrbeck & Schwarz,

2013), including Delphi studies. We conducted a glo-

bal Delphi survey and obtained the input of transpor-

tation and logistics experts in evaluating 16 future

projections. In performing fuzzy clustering, we were

able to draw future scenarios concerning how the

logistics industry in emerging markets may evolve. We

selected the year 2030, since it is far enough in the

future to allow thinking outside the box on radical

new approaches, especially in the context of the devel-

opment of emerging markets. Our chosen horizon is

also in line with numerous other foresight studies in

the logistics context (Banister et al., 2000; Piecyk &

McKinnon, 2010; Schuckmann, Gnatzy, Darkow &

von der Gracht, 2012; Shiftan, Kaplan & Hakkert,

2003; Stead & Banister, 2003). Such a long-term out-

look provides thought-provoking input for strategic

planners, governmental organizations, and other rele-

vant stakeholders interested in how the future may

look for this specific industry in emerging economy

countries and offers support for their decision making.

Consequently, our study aims to close three existing

gaps in the literature. First, our research allows us to

integrate institutional theory and FMR theory to

develop rich insights that complement our qualitative

investigation. Second, we examine how transportation

and logistics in emerging economy countries might

evolve by 2030, via a Delphi study. And third, we add

the fuzzy clustering approach to well-established

methods for scenario development, to provide more

granular insights to our Delphi study results.

The remainder of the study is organized as follows.

We start by discussing the relevant literature on insti-

tutional theory, FMR and foresight in emerging mar-

kets and on the transportation and logistics industry

in particular. We then describe our multimethod

approach including the Delphi study design, the

development of future projections, the participation

analysis, and the scenario development through fuzzy

clustering. Next, we present and discuss the Delphi

findings and the results from fuzzy clustering and link

our results to the underlying theories. We conclude

with implications for research and practice and out-

line potential limitations as well as future research

directions.

LITERATURE REVIEW AND CONCEPTUAL

FRAMEWORK

The Importance of Logistics for Emerging

Markets

Wu and Pangarkar (2006) emphasize the role of

logistics networks within the large emerging markets.

Providing companies with efficient access to product

and factor markets is critical for emerging economy

countries to take part in international business (Haus-

man et al., 2010; Schwab, 2013; Wu & Pangarkar,

2006). Devlin and Yee (2005) argue that the provi-

sion of a functioning logistics infrastructure in emerg-

ing economy countries requires the common efforts

of firms, institutions, and governments to efficiently

reach regional and global product and factor mar-

kets. This means that an efficient logistics system

should not only increase trade volumes but also

attract export-oriented foreign direct investment

(FDI), which may further facilitate export capacities

and international business (Cavusgil, Kiyak & Ye-

niyurt, 2004; Hoskisson, Wright, Filatotchev & Peng,

2013). In contrast, limitations in logistics capacities

and corresponding inefficiencies can significantly

impact lead times and the cost of logistics services.

Furthermore, the lack of adequate required transpor-

tation infrastructure (e.g., ports) and other logistical

barriers such as insufficient customs procedures

intensify firms’ vulnerability to logistics-related uncer-

tainties (Hausman, Lee & Subramanian, 2006) and

capacity shortcomings. The resulting factor-market

Volume 51, Number 4

Journal of Supply Chain Management

74