Third‐Party Logistics: A Meta‐Analytic Review and Investigation of its Impact on Performance

• Author: Craig R. Carter,Rudolf Leuschner,Zachary S. Rogers,Thomas J. Goldsby
• Date: 01 January 2014
• DOI: http://doi.org/10.1111/jscm.12046
• Published date: 01 January 2014

THIRD-PARTY LOGISTICS: A META-ANALYTIC REVIEW

AND INVESTIGATION OF ITS IMPACT ON

PERFORMANCE

RUDOLF LEUSCHNER

Rutgers University

CRAIG R. CARTER

Arizona State University

THOMAS J. GOLDSBY

The Ohio State University

ZACHARY S. ROGERS

Arizona State University

Interest in third-party logistics has been steadily increasing over the last

two decades. Recently, increased focus by researchers has produced a solid

literature base of academic research. In this article, a meta-analytic

approach is employed to provide a quantitative review of the empirical lit-

erature and examine relevant constructs. Fifty-four samples across 69 peer-

reviewed journal articles, yielding a total of 9,386 observations, were

obtained and analyzed. We used transaction cost economics and the

resource-based view as lenses to hypothesize a structural model of the

relationships between relational governance structure, logistics customer

service, and firm performance. Additional relationships were also found

and analyzed, helping to clarify the mixed existing findings in the litera-

ture. The study concludes by mapping out future directions for 3PL

research, based on the study’s findings.

Keywords: third-party logistics; transaction cost economics; resource-based view;

meta-analysis; customer service; firm performance

INTRODUCTION

Since its inception in the 1980s, the concept of

third-party logistics (3PL)—defined as the outsourc-

ing of multiple logistics activities (Sink, Langley &

Gibson, 1996)—has become a dominant reality for

the movement and storage of goods and informa-

tion in today’s supply chains. An earlier synthesis of

the vast, descriptive data from the “Lieb and Langley”

annual studies, conducted by Ashenbaum, Maltz

and Rabinovich (2005), suggests annual growth

rates of between five and ten percent for the 3PL

industry. And the most recent of these annual

studies, comprised of survey responses from more

than 2,000 industry executives, found that over 54%

of shippers’ transportation spend and 39% of their

warehouse operations spend were outsourced

(Langley, 2012).

As noted by Maloni and Carter (2006), the three pri-

mary reasons for outsourcing logistics services are (1)

service improvements, (2) cost reduction, and (3) a

desire by the organizations that purchase these logistics

services to focus on their own, nonlogistics core compe-

tencies. Thus, an important research question to be able

to answer is whether 3PLs can improve customer ser-

vice and firm performance. In addition, an understand-

ing of the type of customer–3PL relationship that is

needed to improve customer service and, ultimately,

firm performance is also desirable to provide a more

granular answer to this research question. Maloni and

Carter (2006) identified 45 survey-based papers in the

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3PL domain as of 2004,

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and their results suggest a

trend of increasing research interest surrounding 3PLs.

Given the 10 years that have passed since Maloni and

Carter’s data collection efforts, it is likely that a “critical

mass” of empirical research exists, which would allow a

more formal, meta-analytic examination of key con-

structs surrounding 3PLs, including the buyer–3PL rela-

tional orientation, customer service, and firm

performance relationships.

Our meta-analytic research method allowed us to

aggregate and summarize the existing research in the

domain of 3PLs. The major benefit of this approach is

that we were able to obtain results that are valid

beyond the limited scope of primary studies and

move toward making empirical generalizations. Indi-

vidual studies, because of their relatively small sample

sizes, usually lack the statistical power needed to

explain the magnitude of a statistical relationship in

the population (Hunter, 2001; Lipsey & Wilson,

2001). Another methodological advantage of a meta-

analytic study is that sampling or measurement errors

can be corrected (Hunter & Schmidt, 1990).

This paper has two major research objectives. The

first research objective is to delve more deeply into the

extant 3PL literature, by investigating the impact of

3PL customer service on firm performance, with an

examination of the 3PL–customer relational gover-

nance structure as a potential antecedent to customer

service. We apply both transaction cost economics

and the resource-based view to develop hypotheses

that propose this set of relationships. The second

research objective is to identify other key constructs

surrounding the 3PL–customer relationship that have

been studied in the extant literature and to investigate

the patterns of potential relationships between these

constructs. The value of doing so will be a better

understanding among the research community

concerning relationships that have not yet been

examined, as well as relationships that have been

sufficiently studied that might not warrant future

investigation, at least in a linear, direct fashion.

The remainder of our article is organized as follows.

In the next section, we provide a review of the 3PL

literature, and we describe the evolution of the 3PL

industry across three eras since its appearance in the

scholarly literature in the late 1980s. We then

introduce the study’s hypotheses. Afterward, we

describe the study’s methodology and present the

results of our analyses. Finally, we discuss our results

and provide suggested avenues for future, meaningful

3PL research.

LITERATURE REVIEW

Logistics Outsourcing and the 3PL Literature

A review of the literature reveals that third-party

logistics and logistics outsourcing have meant

different things to different people since the subjects

first appeared in the academic literature in the late

1980s. Definitions are critical in the conduct of

meta-analyses for they help to ensure consistency in

conceptual domain and enhance our understanding

of focal constructs (Hunter & Schmidt, 2004). Early

conceptualizations of third-party logistics characterize

logistics outsourcing quite broadly, as employing an

outside company to perform all or part of another

company’s materials management and product

distribution functions (Simchi-Levi, Simchi-Levi &

Kaminsky, 1999). As an example, Ellram and Cooper

(1990, p. 1) define third-party logistics providers as

“outside parties who provide [shippers with] functions

not performed by the firm. These can include trans-

portation carriers, warehousers, bankers, brokers, and

suppliers to these functions, such as stevedores.”

Over time, however, the concept of third-party

logistics evolved toward service offerings of greater

complexity, usually encompassing a combination of

services (Ojala, Andersson & Naula, 2006). Further,

the arrangements between customers and providers

of outsourced logistics service reflect the growing

complexity in relationship with emphasis placed on

high levels of formality and longer-term commit-

ments, as opposed to arm’s-length transactional

arrangements. This orientation is captured in the

definition of “modern third-party logistics” offered

by Leahy, Murphy and Poist (1995, p. 5) as: “a

relationship between a shipper and third-party

which, compared with basic services, has more cus-

tomized offerings, encompasses a broader number

of service functions, and is characterized by a longer

term, more mutually beneficial relationship.” Several

successive works (e.g., Knemeyer, Corsi & Murphy,

2003; Mello, Stank & Esper, 2008; Murphy & Poist,

1998) embrace this more comprehensive form of

logistics outsourcing to a point where, today, many

regard third-party logistics providers as asset- or

non-asset-based external parties that may be con-

sulted for any and all matters related to logistics ser-

vice (Yeung, Selen, Sum & Huo, 2006) and that are

often engaged in the strategic coordination of their

customers’ supply chain activities (Zacharia, Sanders

& Nix, 2011).

“Third-party logistics” began to appear in the titles

of conference papers and journal articles in the late

1980s. A comprehensive review of the 3PL literature

conducted by Marasco (2008) chronicles the

development of the topic, finding that 11 academic

articles focused on 3PLs during the 6-year period

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However, a large percentage of these papers reported only

descriptive statistics, rank orderings, and/or means tests using

single-scale items and could not be included in a meta-analysis

of common constructs surrounding third-party logistics.

Volume 50, Number 1

Journal of Supply Chain Management

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