Exploring an adaptability approach: how creative return processors impact firm performance

• DOI: https://doi.org/10.1108/IJLM-10-2019-0293
• Published date: 04 March 2021
• Date: 04 March 2021
• Pages: 790-820
• Subject Matter: Management science & operations,Logistics
• Author: Jennifer A. Espinosa,James Stock,David J. Ortinau,Lisa Monahan

Exploring an adaptability

approach: how creative return

processors impact

firm performance

Jennifer A. Espinosa

Marketing and Business Information Systems, Rowan University,

Glassboro, New Jersey, USA

James Stock and David J. Ortinau

Marketing, University of South Florida, Tampa, Florida, USA, and

Lisa Monahan

Marketing, Meredith College, Raleigh, North Carolina, USA

Abstract

Purpose –The authors explore complex adaptive systems (CAS) theory as an updated theoretical perspective

for managing product returns that better matches the chaotic nature of recent consumer behaviors. CAS theory

highlights the importance of agents who create and self-organize to help systems adapt in unpredictable

environments.

Design/methodology/approach –This research utilizes data collected from return managers in an online

survey and applies regression analyses to estimate the influence of the focal variables.

Findings –Empirical evidence of the firm flexibility–firm adaptability link is established, and return

processor creativity positively relates to this link. The firm flexibility–firm adaptability link fully mediates the

relationship between return processor creativity and returns management performanceand partially mediates

the relationship between return processor creativity and relationship quality. Nonmediated effects were

observed for turnover and revenue size.

Practical implications –Managers of returns who embrace an adaptability approach become facilitators of

returns by supporting processor creativity. Enhancing the autonomy of processors in their day-to-day work

increases the knowledge-creation capabilities of the firm, which helps the firm move forward and adapt in an

uncertain environment.

Originality/value –This research presents empirical evidence of the underlying mechanisms of CAS theory

in the product returns context by studying processor agents and argues that CAS theory better fits the current

dynamics of the product returns environment. Further, this paper extends work by Espinosa et al. (2019) and

Nilsson (2019) by studying how a specific human characteristic –creativity –impacts product returns

management.

Keywords Product returns, Complex adaptive systems, Creativity, Performance, Relationship quality

Paper type Research paper

1. Introduction

Research on product returns has been prevention-focused for nearly two decades, with key

processes designed to limit the number of products accepted for return (e.g. gatekeeping;

Rogers et al., 2002) and to create a sustainable competitive advantage (e.g. forecasting return

volume; Groeger et al., 2019;Nilsson, 2019). However, consumers’online shopping and return

habits have been adding unpredictable fluctuations and complexity to return volume

IJLM

32,3

790

The authors gratefully acknowledge and thank the anonymous reviewers and editor Gammelgaard for

their helpful comments during the review process. The authors gratefully thank the University of South

Florida’s L. Rene Gaiennie Endowment for funding to collect the data necessary to complete this

research.

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 28 October 2019

Revised 8 April 2020

7 July 2020

6 October 2020

Accepted 8 February 2021

The International Journal of

Logistics Management

Vol. 32 No. 3, 2021

pp. 790-820

© Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-10-2019-0293

(Cromwell, 2018;Navar, 2018). Due to their inability to see and handle products prior to

purchasing, consumers often purchase multiple sizes and styles of a product, with the

intention of returning the sizes and styles they do not like (Navar, 2018;Schaverien, 2018). In

2019, in-store return rates ranged from 5 to 10% of purchases, but online return rates ranged

from 15 to 40% of purchases, with clothing and shoes displaying the highest return rates of

30–40% of purchases (Orendorff, 2019;Reagan, 2019) as consumers become increasingly

accustomed to treating their homes like dressing rooms (Gray, 2019).

Unfortunately, the hierarchical infrastructure of most processing departments is not

designed to handle chaotic return volume due to systems of rules that constrain the autonomy

of return processors (defined as the employees who analyze and process product returns;

Gray, 2019;Groeger et al., 2019). Return processors often have limited access to information

about products and/or customers and frequently are not trusted to make key decisions about

returned items –instead decisions are passed to the next level in the hierarchy of decision-

making (Espinosa et al., 2019). While a hierarchical decision-making structure may allow

managers to track who made decisions on a returned item more easily, the actual work of

processing product returns cannot be reduced to purely mechanical tasks (i.e. steps in the

return process; Groeger et al., 2019;Nilsson and Gammelgaard, 2012;Nilsson, 2019). Looking

only at the mechanical tasks return processors go through ignores the rich, diverse mental

schema processors rely upon to guide their decision-making, as well as positive and negative

complexities that arise from motivational and emotional conflicts during human interactions

(e.g. collaboration supports creativity, but will sharing information threaten job security?;

Nilsson and Gammelgaard, 2012;Nilsson, 2019;Teal, 1996). Constrained decision-making

prevents return processors from making “strategically effective decisions”and adapting in

their day-to-day work (Groeger et al., 2019, p. 113), and leaves the product return system with

nonexistent or underdeveloped knowledge-creation processes (Nilsson, 2019). Knowledge-

creation processes are vital in an unpredictable environment since they give a system the

ability to respond to changes in the short term, which ultimately enables the system to sense

and embrace chaotic events more adeptly when they arise (Groeger et al., 2019). Research on

innovations in reverse logistics processes, including product returns management processes,

echoes this point, finding th at managers who cultivate a co llaborative, innovative

environment can enhance their environmental and economic performance more than

managers who do not (Huang and Yang, 2014).

The tenets of complex adaptive systems (CAS) theory provide an updated theoretical

perspective on returns management, that better match a less predictable, consumer-driven

returns environment and address how returns management systems can create knowledge

through return processors. In general, CAS theory studies how empowered decision-makers

distributed throughout a system’s structure spontaneously interact and create in response to

an unpredictable surrounding environment (Groeger et al., 2019;Holland, 2014). When

applying CAS theory to returns management, return processors become the empowered

decision-makers, who interact and self-organize with other processors in their day-to-day job

responsibilities to ultimately create value for a firm through the identification of new

knowledge (Espinosa et al., 2019). Thus, the key difference between a prevention focus and an

adaptability focus to managing returns is in the role of return processors. A prevention focus

constrains return processors to certain steps and tasks (called the prevention approach going

forward), whereas an adaptability focus empowers return processors to use their experience

and intuition more creatively (called the adaptability approach going forward). Collectively,

the creative abilities of return processors add flexibility to the product returns system

(Holland, 2014). From a managerial perspective, a logical question that arises from adopting

an adaptability approach is what impact do creative return processors have on the firm?

To answer this question, we survey managers of product returns at US companies about

the creativity of return processors and apply CAS theory to identify potential impacts of their

Creative return

processor and

firm

performance

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