Examining the links between logistics outsourcing, company competitiveness and selected performances: the evidence from an emerging country

• DOI: https://doi.org/10.1108/IJLM-05-2020-0205
• Published date: 14 May 2021
• Date: 14 May 2021
• Pages: 1068-1090
• Subject Matter: Management science & operations,Logistics
• Author: Ebenezer Afum,Yaw Agyabeng-Mensah,Innocent Senyo Kwasi Acquah,Charles Baah,Essel Dacosta,Clifford Sekyere Owusu,Joseph Amponsah Owusu

Examining the links between

logistics outsourcing, company

competitiveness and selected

performances: the evidence from

an emerging country

Ebenezer Afum and Yaw Agyabeng-Mensah

Transportation Engineering College, Dalian Maritime University,

Dalian, China

Innocent Senyo Kwasi Acquah

Department of Marketing and Supply Chain Management, University of Cape Coast,

Cape Coast, Ghana

Charles Baah and Essel Dacosta

Dalian Maritime University, Dalian, China

Clifford Sekyere Owusu

School of Business, University of Derby, Derby, UK, and

Joseph Amponsah Owusu

Department of Marketing and Management, Kautz Gyula Faculty of Economics,

Szechenyi Istvan Egyetem, Gyor, Hungary

Abstract

Purpose –This study exami nes the mediation effec ts of time-based compet itiveness, cost-base d

competitiveness and customer performance between logistics outsourcing and financial performance.

Design/methodology/approach –The study relied on a questionnaire as the primary data collection

instrument and further employed partial least squares structural equation modelling technique to test all

formulated hypotheses.

Findings –The results demonstrate that logistics outsourcing has a significant positive impact on time-

based competitiveness, cost-based competitiveness, customer performance and financial performance.

Time-based competitiveness and cost-basedcompetitiveness were both found to have a significant positiv e

impact on financial performance; however, customer performance had no significant impact on financial

performance. The mediation analysis further indicates that while both time-based competitiveness and

cost-based competitiveness play mediation effects between logistics outsourcing and financial

performance, customer performance plays no mediation effect between logistics outsourcing and

financial performance.

Research limitations/implications –The sampled firms for this study came from a single emerging

country; hence, the results cannot be generalized or imported to reflect the results that may be obtained from

other emerging geographical settings.

Practical implications –The results provide sufficient evidence for managers to turn their attention to

logistics outsourcing, as a transformative business initiative, to gain time-based and cost-based

competitiveness so as to improve financial performance.

Originality/value –The study provides significant insight and makes an additional contrib ution to

literature in the area of logistics outsourcing, especially by colle cting data from an emerging country.

Modelling time-based competitiveness, cost-based competitiveness and customer performance as mediat ing

IJLM

32,3

1068

The authors are grateful to the Editor and two anonymous reviewers for their helpful comments and

suggestions.

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0957-4093.htm

Received 19 May 2020

Revised 31 August 2020

23 December 2020

15 February 2021

Accepted 16 March 2021

The International Journal of

Logistics Management

Vol. 32 No. 3, 2021

pp. 1068-1090

© Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-05-2020-0205

variables between logistics outsourcing and financial performance mak e this work relatively different from

other studies.

Keywords Logistics outsourcing, Time-based competitiveness, Cost-based competitiveness, Customer

performance, Financial performance

Paper type Research paper

1. Introduction

In the last couple of decades, the business landscape of various industries continues to change

rapidly, thereby breeding intense competition between firms and their respective complex

supply chains. Consequently, firms are under enormous pressure to unearth novel ways to

sustain their operations and remain competitive (Zhu et al., 2017). In response, firms are

turning their attention to logistics outsourcing (LO). LO has therefore emerged as an

industrial norm, playing a dominant role in the operational activities of firms (Christopher,

2016). As firms focus on LO, the academic community has also become interested in the

concept (Akbari, 2018), leading to an exponential increase in LO literature in recent times.

Hitherto, most firms were undertaking all activities in-house; however, this trend is

gradually changing as LO has become a critical component of the strategic initiative ofmost

firms within themanufacturing and service industries(Solakivi et al.,2013;K€

onig and Spinl er,

2016). Fundamentally, the premiseof LO is to allow external companiesto undertake non-core

activitieswhile firms focus on theircore business activities.Thus, LO-based firms acknowledge

the fact that it is important to focus on the “rightthings”rather than do “everything”(Zailani

et al., 2017). A significant objective of most firms is to maximize their logistics value via

achievingcost advantages and providingfast and reliable services to meet customerdemands.

Engaging in LO seems to be a strategic choice for firms to maximize their logistics value

(Bulgurcuand Nakiboglu, 2018). Logisticsfunctions that are frequently outsourcedto external

companies include transportation, warehousing, information technology, inventory

management, freight forwarding and material handling (Huo et al.,2016;Shi et al., 2016).

Firms may enjoy numerous benefits viaLO. The key advantages of LO may includeeffective

risk mitigation, access to complementary resources from external companies, achieving both

time-based andcost-based competitivenessand enhancing the financial performance of firms.

ThedebateastowhetherLOleadstoimprovedperformancehasbeeninconclusiveamong

many scholars. While some researchers (Lee et al.,2013;Awe et al., 2018) suggest a positive link

between LO and performance, others (Cho Joong-Kun et al., 2008;Wong and Karia, 2010)

disclosedthat therelationshipbetween the twoconstructs is negative,thus anindication thatLO

may not necessarily lead to improved performance. Moreover, in a study among Finnish SMEs,

Solakivi et al. (2011) disclosed that the link between LO and performance is non-existence. The

work of Hsiaoet al. (2010) further suggests that LO has no imp acton fi rmp erformance. Thus, as

far as empirical studies regarding LO and firm performance are concerned, scholars have

provided mixed results,suggesting a positive,negative or non-existent relationship.

Also, there are very scanty sources of literature and studies on LO in developing countries

compared to advanced countries and relatively strong economies. Perhaps, the results from

such developed countries may be quite difficult to import directly to reflect what could be

obtainable in emerging economies like Ghana. In conducting a systematic literature review,

Akbari (2018) identified Ghana as one of the emerging economies where the number of

studies on LO is very low, hence called for more empirical studies. This provides a leeway to

investigate and expand the literature on LO from the Ghanaian context.

This study is motivated by the rapid increase in logistics outsourcing activities in Ghana.

Specifically, outsourcing logistics is in a nascent stage among Ghanaian firms due to

competition frommultinational companies and the inadequate or lack of necessary resources

(Kuada and Hinson, 2015). Moreover, the continued expansion of Ghanaian firms (due to the

country’sindustrialization drive)coupled with their incessantmotivation to respondrapidly to

Company

competitiveness

and selected

performances

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