Title: Trust, control and confidence in logistics outsourcing decisions

Authors: Jari Juga, Jouni Juntunen

Addresses: Faculty of Economics and Business Administration, University of Oulu, Box 4600, 90014 Oulu, Finland. ' Faculty of Economics and Business Administration, University of Oulu, Box 4600, 90014 Oulu, Finland

Abstract: A number of theoretical constructs and models exist for framing logistics outsourcing decisions. In transaction cost economics, it is argued that the dimensions of transactions, notably asset specificity, are the main criteria to consider in outsourcing situations. Resource-based approaches focus on the company|s assets and capabilities that should be protected and developed while non-core activities should be outsourced. Behaviourally oriented theories explore the human and social factors facilitating outsourcing decisions. In this paper, the model of Das and Teng (1998) is used to examine the role of trust and control as facilitators creating confidence in outsourcing when relationship specific investments are present in the outsourcing relationship. A conceptual model is developed and tested with structural equation modelling using survey data from Finnish industrial companies. The results show that confidence is positively associated with the propensity to outsource logistics when the outsourcing relationship is disposed to specific investments.

Keywords: logistics outsourcing; confidence; trust; control; asset specificity; third party logistics; 3PL providers; structural equation modelling; Finland; outsourcing relationship; specific investments.

DOI: 10.1504/IJSTM.2011.040375

International Journal of Services Technology and Management, 2011 Vol.15 No.3/4, pp.178 - 191

Available online: 25 May 2011 *

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