Drivers of Relationship Quality in Logistics Outsourcing in China

Given that an increasing number of companies outsource their logistics activities to third-party logistics providers (3PLs), managing logistics outsourcing relationships has become a critical capability. Although the fundamental importance of relationship quality in supply chain relationship management has begun to be understood, it has not been investigated in the context of logistics outsourcing, especially in China. This study addresses the gap in the literature by examining the drivers of relationship quality and investigating its effect on performance in logistics outsourcing in China. We use transaction cost economics and resource dependence theory as bases of this study. Dependence on 3PL (i.e., 3PL importance and unavailability of alternatives), logistics performance and relationship characteristics (i.e., the level of information sharing, relationship length and legal contract) are hypothesized as the relationship drivers based on transaction cost economics and resource dependence theory. Findings reveal that 3PL importance, logistics performance and information sharing are positively related to relationship quality, and that relationship length and the presence of a legal contract are marginally and positively related to relationship quality. The positive influence of relationship quality on financial performance is also observed. The managerial implications of the findings are considered, and the limitations along with future research directions are discussed. © 2012 Institute for Supply Management, Inc.