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Transportation Research Part E 43 (2007) 129–142

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Horizontal cooperation in logistics: Opportunities


and impediments
a,b,* c,1 d,2
Frans Cruijssen , Martine Cools , Wout Dullaert
a
Tilburg University, Faculty of Economics and Business Administration, P.O. Box 90153, 5000 LE Tilburg, The Netherlands
b
TNO Mobility and Logistics, P.O. Box 49, 2600 AA Delft, The Netherlands
c
Rotterdam School of Management, Department of Financial Management, Erasmus University,
P.O. Box 1738, 3000 DR Rotterdam, The Netherlands
d
University of Antwerp, Institute of Transport and Maritime Management Antwerp, Keizerstraat 64 B-2000 Antwerp, Belgium

Received 4 January 2005; received in revised form 15 July 2005; accepted 21 September 2005

Abstract

This paper presents the results of a large-scale survey on the potential benefits of and impediments for horizontal coop-
eration in Flanders. The main findings are that in general Logistics Service Providers strongly believe in the potential
benefits of horizontal cooperation to increase their profitability or to improve the quality of their services. The impedi-
ments for cooperation that are perceived or expected by the non-cooperating Logistics Service Providers prove to be expe-
rienced by the cooperating Logistics Service Providers. Finding a reliable party to lead the cooperation and constructing a
fair allocation mechanism for the benefits are the impediments that respondents agree with most.
Ó 2005 Elsevier Ltd. All rights reserved.

Keywords: Horizontal cooperation; Logistics networks; Empirical research; Factor analysis

1. Introduction

Fierce competition in global markets, the introduction of products with shorter life cycles, and the height-
ened expectations of customers have forced shippers and Logistics Service Providers (LSPs) to invest in devel-
oping stronger and mutually beneficial relationships with each other. Such vertical cooperation, involving
suppliers, manufacturers, distribution centers, customers and LSPs, is supported by extensive academic
research. As indicated by Gibson et al. (2002), research has mainly focused on identifying potential benefits

*
Corresponding author. Address: Tilburg University, Faculty of Economics and Business Administration, P.O. Box 90153, 5000 LE
Tilburg, The Netherlands. Tel.: +31 13 4663244; fax: +31 13 4668780.
E-mail addresses: frans.cruijssen@uvt.nl (F. Cruijssen), mcools@rsm.nl (M. Cools), wout.dullaert@ua.ac.be (W. Dullaert).
1
Tel.: +31 10 4082791.
2
Tel.: +32 32 755141.

1366-5545/$ - see front matter Ó 2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tre.2005.09.007
130 F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142

(e.g. Gentry, 1993), the critical success factors (e.g. Tate, 1996) and partner selection criteria. The most
common and best-studied type of vertical cooperation involves shippers hiring third-party LSPs (3PLs) to per-
form all or part of their materials management and product distribution function (Simchi-Levi et al., 1999).
Tyan et al. (2003) describe the supply chain advantages of consolidation of logistics flows by 3PLs. The
increased economies of scale make it for example possible to acquire large equipment that would have been
too expensive for the individual shipper. Leahy et al. (1995) assess the determinants for a successful vertical
cooperation between shippers and a 3PL.
Horizontal cooperation is defined by the European Union (2001) as concerted practices between companies
operating at the same level(s) in the market. Horizontal cooperation in logistics is mainly gaining momentum
in Western Europe. In Belgium and the Netherlands, the European logistics centers of gravity, the authors are
aware of over 30 formal logistics partnerships. Through close collaboration, the partnering LSPs aim at
increasing productivity, e.g. by optimizing vehicle capacity utilization, reducing empty mileage and cutting
costs of non-core/supporting activities to increase the competitiveness of their logistics networks.
The literature on horizontal cooperation in logistics is, however, still in its infancy. While for maritime ship-
ping (see e.g. Shepperd and Seidman, 2001) and the airline industry (Fan et al., 2001; Oum et al., 2002)
horizontal cooperation is quite common and well studied, the literature on horizontal logistics cooperation
is scarce. This matter has only been studied by Bahrami (2003), Cruijssen and Salomon (2004), Erdmann
(1999), and Vos et al. (2003), where the emphasis is on (1) quantifying the potential cost savings through coop-
eration by means of simulation studies and on (2) reporting a limited number of successful cases.
This paper describes the first large-scale study on empirical evidence on the potential benefits of horizontal
cooperation in logistics, as well as on the major impediments for starting and maintaining logistics partner-
ships in practice. The remainder of the paper is structured as follows. In Section 2 research questions are for-
mulated for surveying a large sample of LSPs in Flanders, the main logistics region in Belgium. The survey is
discussed in Section 3. Section 4 reports on the results of a factor analytical study based on the gathered data.
Section 5 concludes with the main results of the paper and identifies avenues for further research.

2. Research propositions

Although the literature on horizontal cooperation in logistics is scarce, cooperation between autonomous
firms, such as strategic alliances and joint ventures, has received extensive attention in the management liter-
ature. This literature forms the basis of a set of propositions regarding opportunities and impediments for
horizontal cooperation in logistics. The development of these propositions is also based on a series of five pilot
interviews with LSPs. For the survey a large number of managing directors of LSPs were asked about their
opinion on these propositions.

2.1. Opportunities

The driving force behind the formation of alliances is each participantÕs expectation of a net positive value
to the expected alliance outcomes (Parkhe, 1993). By cooperating, partners can generate so-called relational
rents. Dyer and Singh (1998) define relational rent as ‘‘a supernormal profit jointly generated in an exchange
relationship that cannot be generated by either firm in isolation and can only be created through the joint idi-
osyncratic contributions of the specific alliance partners’’. They argue that collaborating firms can generate
relational rents through relation-specific assets, knowledge-sharing routines, complementary resource endow-
ments and Ôeffective governanceÕ.
In a logistics context, relational rents can be ÔhardÕ (e.g. economies of scale) and ÔsoftÕ (e.g. learning).
Bartlett and Ghoshal (2000) mention three ways in which strategic alliances and networks allow participating
firms to reap the benefits of scale economies or learning: by (i) pooling their resources and concentrating on
(core) activities, by (ii) sharing and leveraging the specific strengths and capabilities of the other participating
firms, and by (iii) trading different or complementary resources to achieve mutual gains and eliminate the high
cost of duplication. Kogut (1988) summarizes the advantages of cooperative alliances in terms of reducing the
transaction costs resulting from small number bargaining, enhancing the competitive position or market
F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142 131

power of the partners, and fulfilling the partnerÕs quest for organizational knowledge and learning. The poten-
tial advantages of cooperation have also been mentioned and studied by many other authors, e.g. Hagedoorn
(1993), Hamel et al. (1989), Hennart (1988), Ohmae (1989) and Zineldin and Bredenlow (2003).
These high-level opportunities of cooperation support the identification of a number of specific opportuni-
ties that cooperating LSPs can benefit from. Based on a discussion of these benefits, a number of propositions
are formulated below. These propositions relate to Costs and Productivity, Service and Market position.

2.1.1. Costs and Productivity


As mentioned above, cooperation provides a platform for organizational learning, giving firms access to the
skills and capabilities of their partners (Hamel, 1991; Kogut, 1988; Westney, 1988). In this way, they can
improve their own operational processes. It implies that cooperating LSPs can increase their ability to control
costs and to reduce the costs of the supply chain (Gibson et al., 2002). Moreover, collaboration on non-core
activities offers the potential of joint purchases (e.g. of vehicles, onboard computers and fuel) in order to
reduce the purchasing costs (Dyer and Singh, 1998). The opportunities for cost reduction in terms of core
and non-core activities and purchases are captured in the following three propositions:

O1 Horizontal cooperation increases the companyÕs productivity for core activities, e.g. decrease in empty haul-
ing, better usage of storage facilities etc.
O2 Horizontal cooperation reduces the costs of non-core activities, e.g. organizing safety trainings, joint fuel
facilities, etc.
O3 Horizontal cooperation reduces purchasing costs, e.g. vehicles, onboard computers, fuel etc.

2.1.2. Service
The impact of cooperative specialization on productivity is well known. Best practice value chains are char-
acterized by interfirm specialization allowing individual firms to focus on a narrow range of activities and
engage in complex interactions with other firms (Alchian and Demsetz, 1972; Dyer, 1997).
In doing so, cooperation not only offers benefits and synergy effects such as economies of scale, skilled labor
force, high R&D level and access to superior technology, but also generates greater customer value added at
lower cost (Zineldin and Bredenlow, 2003). Moreover, alliances enable companies to learn from each othersÕ
skills and capabilities (Hamel, 1991; Kogut, 1988; Westney, 1988), which is another potential source of quality
improvement at lower costs. We integrated the opportunities of horizontal cooperation regarding customer
service into the following two propositions:

O4 LSPs can specialize while at the same time broadening their services.
O5 LSPs can offer better quality of service at lower costs, e.g. in terms of speed, frequency of deliveries, geo-
graphical coverage, reliability of delivery times etc.

2.1.3. Market position


The sheer size of the volumes involved in serving large industrial shippers (e.g. in the (petro) chemical
industry) sometimes prohibits individual LSPs from entering the tendering process on an individual basis. Alli-
ances are a useful tool to expand the available fleet, service range and geographic coverage, and, as a result, to
increase their customer reach (Bleeke and Ernst, 1995). This opportunity is captured in proposition O6.
Proposition O7 reflects the potential for horizontal cooperation to serve as a means to protect companies
under uncertain market conditions and to enhance the competitive position or market power (Kogut, 1988).

O6 Horizontal cooperation enables individual LSPs to tender with large shippers on larger contracts.
O7 Horizontal cooperation helps to protect the companyÕs market share.

The seven propositions regarding opportunities of horizontal cooperation are summarized in Table 1.
132 F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142

Table 1
Propositions about opportunities of horizontal cooperation
Code Proposition
O1 Horizontal cooperation increases the companyÕs productivity for core activities, e.g. decrease in empty hauling,
better usage of storage facilities etc.
O2 Horizontal cooperation reduces the costs of non-core activities, e.g. organizing safety trainings, joint fuel facilities, etc.
O3 Horizontal cooperation reduces purchasing costs, e.g. vehicles, onboard computers, fuel etc.
O4 LSPs can specialize while at the same time broadening their services
O5 LSPs can offer better quality of service at lower costs, e.g. in terms of speed, frequency of deliveries, geographical coverage,
reliability of delivery times etc.
O6 Horizontal cooperation enables individual LSPs to tender with large shippers on larger contracts
O7 Horizontal cooperation helps to protect the companyÕs market share

2.2. Impediments

The literature pays little attention to the burdens and dark sides of close relationships (Zineldin and
Bredenlow, 2003). Horizontal cooperation often is an uncertain undertaking in which it is difficult to plan
the required activities or measure the realized output. Therefore, having a trustworthy relationship is vital
(van der Meer-Kooistra and Vosselman, 2000; Tomkins, 2001), but the risk of opportunism remains real. A
typical source of relational risk is opportunistic behavior of the partners, i.e. actions of the partner that do
not comply with the spirit of the cooperation (Williamson, 1985; Das and Teng, 1998). We develop propositions
relating to impediments to horizontal cooperation in four areas: partner selection, determining and dividing the
gains, unequal negotiation positions of partners, and Information and Communication Technology.

2.2.1. Partner selection


Analyzing a potential partnerÕs strategic and organizational capabilities requires data on its physical assets,
as well as on less-tangible assets and organizational capabilities (Bartlett and Ghoshal, 2000). The search costs
incurred to find potential trading partners and to evaluate their aptness and reliability can be a very big hurdle
for small and medium sized LSPs (Bleeke and Ernst, 1995; Williamson, 1985; Hennart, 1993; North, 1990).
Furthermore, recent empirical evidence (Chalos and OÕConnor, 2004) confirms that partner unreliability is
a major source of the managerial complexity of cooperation. Two partner selection impediments for LSPs
are formulated below:

I1 It is hard to find commensurable LSPs with whom it is possible to cooperate for (non-)core activities.
I2 It is hard to find a reliable party that can coordinate the cooperation in such a way that all participants are
satisfied.

2.2.2. Determining and dividing the gains


The narrow scope of most alliances prevents full understanding of the nature, extent, and distribution of
risks or rewards that might accrue in the course of the partnershipÕs evolution, or even a clear definition of
each partnerÕs roles and tasks (Bartlett and Ghoshal, 2000). The importance of a fair distribution of expected
and unexpected costs is also stressed in Gibson et al. (2002). The propositions I3, I4, and I5 contain the imped-
iments concerning the determination and division of gains from horizontal cooperation.

I3 It is hard for the partners to determine the benefits or operational savings due to horizontal cooperation
beforehand.
I4 Partners find it hard to ensure a fair allocation of the shared workload in advance.
I5 A fair allocation of benefits to all the partners is essential for a successful cooperation.

2.2.3. Unequal negotiation positions of partners


Bleeke and Ernst (1995) explain how the evolvement of the relative bargaining power of the partners is the
key to understanding whether an alliance is likely to lead to a takeover. Relative bargaining power depends on
F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142 133

Table 2
Propositions about impediments to horizontal cooperation
Code Proposition
I1 It is hard to find commensurable LSPs with whom it is possible to cooperate for (non-)core activities
I2 It is hard to find a reliable party that can coordinate the cooperation in such a way that all participants are satisfied
I3 It is hard for the partners to determine the benefits or operational savings due to horizontal cooperation beforehand
I4 Partners find it hard to ensure a fair allocation of the shared workload in advance
I5 A fair allocation of benefits to all the partners is essential for a successful cooperation
I6 When an LSP cooperates with commensurable companies, it becomes harder to distinguish itself
I7 Over time smaller companies in the partnership may lose clients or get pushed out of the market completely
I8 When benefits cannot be shared in a perceived fair way, the larger players will always benefit most
I9 Cooperation is greatly hampered by the required indispensable ICT-investments

three factors: the initial strengths and weaknesses of the partners, how those strengths and weaknesses change
over time, and the potential for competitive conflict. Inspired by the pilot interviews, the next three proposi-
tions explore areas of potential conflict due to unequal negotiation positions of the partners.

I6 When an LSP cooperates with commensurable companies, it becomes harder to distinguish itself.
I7 Over time smaller companies in the partnership may lose clients or get pushed out of the market completely.
I8 When benefits cannot be shared in a perceived fair way, the larger players will always benefit most.

2.2.4. Information and Communication Technology (ICT)


The vast majority of the companies active in logistics are small and medium sized companies (SMEs). As
SMEs tend to lag behind in implementation of information and communication technology (ICT) systems
(Gunasekaran and Ngai, 2004), this can hamper those forms of cooperation that require intensive (order) data
exchange. Our pilot interviews indicate that ICT is mainly an issue for horizontal cooperation agreements of a
medium intensity. Low intensity initiatives often do not require specific ICT investments and high intensity
initiatives generate sufficient revenue to pay back the required ICT investments. Proposition I9 covers the
ICT impediment.

I9 Cooperation is greatly hampered by the required indispensable ICT-investments.

Table 2 recapitulates the nine propositions about impediments for cooperation developed in this section.
This paper aims at linking characteristics of logistics companies to their attitudes towards the proposed oppor-
tunities and impediments for horizontal cooperation. Since this is the first time propositions on this subject are
submitted to a large set of LSPs, exploratory factor analysis is used to identify not directly observable factors
within the sets of propositions on opportunities or impediments. Based on the resulting factors, a number of
hypotheses are developed. The results of the factor analysis and the hypotheses are presented in detail in Sec-
tion 4.

3. The survey

A questionnaire with the 16 propositions on horizontal cooperation was submitted to a sample of LSPs.
Respondents were asked to evaluate each proposition by choosing one of the following options: (1) strongly
disagree, (2) disagree, (3) neutral, (4) agree, (5) strongly agree. This Section provides detailed information on
the composition of the sample, the questionnaire, the respondents, and the in-depth interviews that were con-
ducted to complement the survey.

3.1. Questionnaire and interviews

After fine-tuning the questionnaire by means of five pilot interviews, a personalized questionnaire was sent
to 1537 Flemish LSPs. The survey was sent out on March 12th, 2004, and to increase the response rate a
134 F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142

reminder was sent out on March 19th 2004. Completed questionnaires came in between March 15th and April
14th 2004. In total, 162 useful answers were returned.
Eleven in-depth interviews were conducted to cross-check and fine-tune the findings from the survey. We
selected respondents of the survey who had outspoken/clear views on horizontal cooperation in logistics.

3.2. Sample and response

The BelFirst database (BelFirst, 2004), containing the annual reports of 250,000 companies in Belgium, was
used to construct a representative sample of around 1500 LSPs. The sample included LSPs with the following
Nace-Bel main activity codes: freight transportation by road, inland water transportation, cargo handling and
storage, freight forwarding and courier activities other than national post activities. In the remainder of this
paper, we will refer to the latter category as Ôexpress carriersÕ.
Kumar et al. (1993) provide suggestions on selecting key informants. To limit the workload for the often
small sized logistics companies in the sample, we decided to select a single key informant. Because of the con-
siderable sample size it was impossible to assess the competence of each informant. To ensure that each
respondent was sufficiently knowledgeable and that responses were not tainted by informant bias, we person-
alized the questionnaire by addressing the managing director by name for each selected company.
Table 3 summarizes both the structure of the sample and the response rate. For each cell in the table, the
first number refers to the number of companies contained in the sample, the second to the number of LSPs in
the BelFirst database. The sample size was pre-set to approximately 1500. 25% of the questionnaires were sent
to large companies and 75% to small and medium sized companies. This ensures a sufficient representation of
the larger companies in view of their economic importance and at the same time offers the possibility to thor-
oughly survey medium sized LSPs. To limit the risk of a zero response rate in the smallest categories, ques-
tionnaires were sent to all companies in a category with no more than ten companies, resulting in a total
of 1537 LSPs.
Cases in which questionnaires were returned because the address was unknown, or returned blank because
the company stopped its activities, are reported in column 8 (ÔinvalidÕ). These respondents were removed from
the sample to calculate the net response rates presented in column 9 of Table 3. Unfortunately, low response
rates of about 10% have become exemplary for large-scale mail surveys (see e.g. Wisner, 2003). We note, how-
ever, that the true response rates may be somewhat higher because not all companies that ceased to exist can
be expected to return the questionnaire.
The net response rate is highest for companies that are mainly active in road haulage, inland navigation and
courier services. The small number of respondents for the activities inland water transportation (6 respondents)
and express carriers (9 respondents) limits the representativeness of the results for these categories. The low
response for the freight forwarders could be due to a low interest in horizontal cooperation. In-depth inter-
views revealed that these LSPs prefer vertical cooperation in logistics. Horizontal cooperation, e.g. consisting
of exchanging loads, is sometimes perceived as a threat to existing professional forwarding activities. The
response rate for the LSPs in the category Cargo handling and storage is higher than the response rate for
the freight forwarders, but is still quite low (8%).

Table 3
Response rate and sample composition according to Nace-Bel main activity codes and the number of employees in full time equivalents
Nace-Bel main activity Number of employees in full time equivalents Invalid Response rate
0–4 5–19 20–49 50–99 100+
Freight transportation by road 607 (2258) 261 (888) 132 (374) 40 (79) 21 (37) 1061 (3636) 21 0.12
Inland water transportation 40 (126) 9 (10) 3 (3) 0 (0) 0 (0) 52 (139) 1 0.12
Cargo handling and storage 92 (286) 55 (142) 29 (51) 15 (25) 12 (19) 203 (523) 3 0.08
Freight forwarding 58 (187) 33 (92) 27 (44) 14 (15) 10 (12) 142 (350) 7 0.05
Express carriers 61 (232) 10 (18) 6 (6) 0 (0) 2 (2) 79 (258) 2 0.11
Total 1537 (4906)
F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142 135

We checked whether there are significant differences between the characteristics of the LSPs that responded
to the survey and those who did not, because a systematic difference would compromise the generalizability of
the results (Flynn et al., 1990). The reliability of the data is therefore tested in two ways. First, the respondents
are compared to non-respondents based on two characteristics: number of employees in full time equivalents
and type of annual report (contracted or complete). T-tests do not show any significant difference between the
two groups of LSPs. Second, because a reminder was sent out, the potential non-response bias is assessed by
comparing early versus late respondents. Respondents are considered late if their form was received later than
March 23rd 2004. T-tests do not show any statistically significant difference between the early and late respon-
dents, both with respect to their evaluation of the propositions and their company characteristics. Based on
the above we conclude that non-response bias is not a serious concern for the analysis in Section 4.

4. Analysis and findings

Table 4 provides an overview of the respondentsÕ evaluations of the propositions on opportunities and
impediments for horizontal cooperation. The numbers suggest that the propositions on the potential benefits
of horizontal cooperation are well supported by the respondents. For each proposition, the percentage of
respondents that agrees is considerably higher than the percentage that disagrees. This observation also holds
for the propositions on impediments for cooperation.
The numbers in Table 4 indicate that the most supported opportunity of cooperation is the possible
increase in a companyÕs productivity on its core activities (O1). More than 75% of the respondents of the sur-
vey agree with proposition O1, while less than 5% disagree. The in-depth interviews revealed that decreases in
empty milage, better usage of storage facilities and increased load factors are the most common examples.
A large share of the respondents is neutral about the proposition that horizontal cooperation helps to pro-
tect market share (O7). Both the in-depth interviews and the literature (Becker et al., 2005) affirmed that ship-
pers do not expect LSPs to cooperate to provide them with a full service concept. Cooperation between LSPs
is only encouraged when it brings the shippers significant cost reductions and as long as it does not jeopardize
their negotiating position. This, together with the neutral evaluation of proposition O7, suggests that horizon-
tal cooperation in logistics should be regarded as a means for LSPs to increase their productivity, rather than
as a reaction to requests from the demand side.
According to the respondents the most severe impediments for cooperation are the problems of finding a
reliable party that can coordinate the cooperation in such a way that all participants are satisfied (I2) and the
construction of fair allocation mechanisms for the attained savings (I5). The in-depth interviews revealed that

Table 4
Evaluations of propositions on opportunities and impediments
Code Mean Standard No. of obs. Missing Strongly Neutral Strongly
deviation (1–5) (%) disagree/disagree (%) (%) agree/agree (%)
O1 4.17 0.99 152 6.2 4.9 13 75.9
O2 3.65 1.00 152 6.2 8 33.3 52.5
O3 3.42 1.13 152 6.2 16.7 35.2 42
O4 3.74 1.08 152 6.2 9.9 25.3 58.6
O5 3.56 1.10 151 6.8 10.5 34 48.8
O6 3.60 1.12 152 6.2 13.6 29 51.2
O7 3.24 1.08 152 6.2 19.1 41.4 33.3
I1 3.84 0.96 155 4.3 8 21.6 66
I2 4.00 0.87 154 4.9 5.6 17.3 72.2
I3 3.54 0.89 153 5.6 13 27.8 53.7
I4 3.73 0.89 154 4.9 8.6 21.6 64.8
I5 4.11 0.84 154 4.9 3.7 15.4 75.9
I6 3.52 0.90 153 5.6 13.6 27.2 53.7
I7 3.95 1.01 154 4.9 8.6 21 65.4
I8 3.60 1.19 155 4.3 19.1 20.4 56.2
I9 3.43 0.97 154 4.9 14.2 38.9 42
136 F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142

LSPs can reduce or circumvent the latter problem in a pragmatic way. In the case of an (informal) freight
exchange between road transportation companies for example, the company that submits a transportation
order to the exchange could charge a commission to compensate for its efforts in acquiring the order. If none
of the other partners in the cooperation decide to accept the order, the company that submitted the order in
the pool has to fulfill the order itself. In this way, difficult issues on the determination and distribution of the
savings generated within the cooperation can be avoided.
The impediment that received the least support concerns the required ICT-investments (I9). The in-depth
interviews affirmed that ICT costs are only an issue for cooperations of a medium size and medium intensity.
The administrative burden of handling the transactions of the cooperation may be too large to handle by
phone or fax, but cannot justify investments in an Electronic Data Interchange (EDI) system or a sophisti-
cated Web-based exchange system because the cooperation lacks the critical mass.

4.1. Factor analysis

This section describes the exploratory factor analysis used to investigate whether the reactions to the sets of
propositions on opportunities and impediments can be summarized in a few not directly observable factors.
The principal components method is used to extract factors, and the varimax method is applied to rotate the
component matrix in order to facilitate its interpretation. We decided to employ the Kaiser–Meyer–Olkin
(Kaiser and Cerny, 1977) measure to evaluate the fit of the model. The resulting measure of sampling ade-
quacy is 0.804, which indicates that the use of factor analysis on this dataset is appropriate.
Three principal components with eigenvalues larger than one can be extracted, which in total account for
57.2% of the variance in the data. The first factor comprises all seven proposed opportunities of horizontal
cooperation and is therefore called Opportunities. The second factor is classified as Partner Selection Imped-
iments and consists of the propositions I1 and I2. The third factor, Other Impediments, contains the seven
remaining propositions on impediments for horizontal cooperation. The results of the analysis are reported
in Table 5. Unidimensionality of the three factors has been cross-checked and affirmed by subjecting each fac-
tor to a separate exploratory factor analysis.

4.2. Hypothesis testing

We are interested in the issues that determine the LSPsÕ attitudes towards the three factors that emerged
from the factor analysis above. Empirical investigations of the drivers of cooperative alliances and on the
choice of a suitable partner have been undertaken in a broader context (e.g. Geringer, 1991; Nielsen, 2003;
Beckman et al., 2004). These studies have identified a number of company criteria that may influence an LSPÕs
attitude towards cooperation. While most of these studies address vertical cooperation in an international con-
text, a number of criteria that are applicable to both the national and the international context seem to recur.
Financial status of the potential partner and its size appeared as two of the most important criteria for partner
selection (Nielsen, 2003). Studies focusing on the search for economies of scale and access to technology or
markets (Inkpen and Crossan, 1995), the comparison of the firmÕs market power compared with industry lead-
ers (Hamel et al., 1989) and the initial strengths and weaknesses of the partners (Bleeke and Ernst, 1995) con-
firm that financial status and size of the partners is relevant. The NaceBel database contains information on
both characteristics, enabling us to use these data to assess their relation with the evaluations of the three fac-
tors by the respondents.
In addition, whether firms already cooperate and how long they have been working with each other is also
stressed as an influential factor in the literature (e.g. Heide and John, 1990). Consequently, we are interested in
the effect of existing cooperation on the respondentsÕ assessment of opportunities, partner selection impedi-
ments and other impediments.
For the value added and gross return on assets, the most recent year for which all respondents deposited
their annual reports was used (2002). In order to find significant relations between the developed factors and
the company characteristics, we estimate three regression equations where the three factors have been
regressed on the explanatory variables cooperation, size and profitability:
Table 5
Results of factor analysis

F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142


Factor % of Propositions Factor Loadings
Variance
Factor 1 Factor 2 Factor 3
Opportunities 24.4% O1 Horizontal cooperation increases the companyÕs productivity for core activities, 0.735 0.259 0.159
e.g. decrease in empty hauling, better usage of storage facilities etc.
O2 Horizontal cooperation reduces the costs of non-core activities, e.g. organizing safety trainings, 0.769 0.086 0.061
joint fuel facilities etc.
O3 Horizontal cooperation reduces purchasing costs, e.g. vehicles, onboard computers, fuel etc. 0.722 0.089 0.015
O4 LSPs can specialize while at the same time broadening their services 0.787 0.170 0.063
O6 Horizontal cooperation enables individual LSPs to tender with large shippers on larger contracts 0.727 0.102 0.037
O5 LSPs can offer better quality of service at lower costs, e.g. in terms of speed, frequency of deliveries, 0.766 0.057 0.002
geographical coverage, reliability of delivery times etc.
O7 Horizontal cooperation helps to protect the companyÕs market share 0.531 0.391 0.047
Partner 11.7% I1 It is hard to find commensurable LSPs with whom it is possible to cooperate for (non-)core activities 0.056 0.818 0.225
Selection I2 It is hard to find a reliable party that can coordinate the cooperation in such a way that all participants 0.072 0.775 0.350
Impediments are satisfied
Other 21.2% I6 When an LSP cooperates with commensurable companies, it becomes harder to distinguish itself 0.248 0.275 0.569
Impediments I3 It is hard for the partners to determine the benefits or operational savings due to horizontal 0.157 0.227 0.718
cooperation beforehand
I4 Partners find it hard to ensure a fair allocation of the shared workload in advance 0.061 0.039 0.705
I5 A fair allocation of benefits to all the partners is essential for a successful cooperation 0.247 0.361 0.507
I7 Over time smaller companies in the partnership may lose clients or get pushed out of the market completely 0.042 0.097 0.816
I9 Cooperation is greatly hampered by the required indispensable ICT-investments 0.263 0.010 0.650
I8 When benefits cannot be shared in a perceived fair way, the larger players will always benefit most 0.036 0.230 0.706
Kaiser–Meyer–Olkin-Olkin measure of sampling adequacy: 0.804. Bartlett test of sphericity: 922.280, significance: 0.000.

137
138 F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142

EQ1: Opportunities ¼ b11 Cooperation þ b12 Size þ b13 Profitability


EQ2: Partner Selection Impediments ¼ b21 Cooperation þ b22 Size þ b23 Profitability
EQ3: Other Impediments ¼ b31 Cooperation þ b32 Size þ b33 Profitability

In the remainder of this section we discuss hypotheses for each coefficients in the above regression equa-
tions. Table 6 summarizes the formulation of these hypotheses and provides the corresponding results. All
hypotheses are tested at the 5% significance level.

4.2.1. Opportunities hypotheses


Hypothesis (H1) states that cooperation does not influence the attitude of the respondents towards oppor-
tunities, or in other words: cooperators and non-cooperators value the opportunities offered by horizontal
cooperation equally. This hypothesis is supported by the data (b11: 0.108, significance: 0.193), which indicates
that the opportunities expected by the non-cooperators seem to be experienced in practice by the cooperators.
This, together with the high average scores of the propositions about opportunities, illustrates the strong
potential of horizontal cooperation for LSPs.
The hypothesis stating that size does not influence opportunities (H2) was supported (b12: 0.084, signifi-
cance: 0.308). Prior to the analysis, we expected size to affect opportunities in two ways. Since smaller com-
panies have smaller economies of scale and can thus operate less efficiently individually, they could benefit
from forming a coalition in order to compete more effectively with larger companies. Therefore size would
have a negative relation with opportunities. On the other hand, small companies are likely to operate on mar-
ket niches where cooperation with other LSPs is not possible or desirable. In contrast to these smaller com-
panies, larger LSPs generally offer a broader service range and have a larger customer base so that they can
more easily select suitable activities on which cooperation might be profitable. This argument would in turn
predict a positive relation between size and opportunities. Testing the hypothesis shows that these opposite
effects cancel out to result in an insignificant coefficient.
H3 states that profitability does not influence the attitude of firms towards opportunities. This hypothesis is
rejected by the survey data (b13: 0.237, significance: 0.004). A possible explanation of the observed negative
relation is that the more profitable an individual company is, the less inclined he is to cooperate with compet-

Table 6
Overview of hypotheses and results
Standardized Significance Result
coefficient
Opportunities hypotheses
H1 EQ1 Cooperation does not influence the attitude b11 0.108 0.193 Supported
of respondents towards opportunities
H2 Size does not influence the attitude of respondents b12 0.084 0.308 Supported
towards opportunities
H3 Profitability does not influence the attitude of b13 0.237 0.004 Rejected
respondents towards opportunities
Partner selection impediments hypotheses
H4 EQ2 Cooperation does not influence the attitude of respondents b21 0.138 0.103 Supported
towards partner selection impediments
H5 Size does not influence the attitude of respondents b22 0.052 0.532 Supported
towards partner selection impediments
H6 Profitability does not influence the attitude of respondents b23 0.216 0.010 Rejected
towards partner selection impediments
Other impediments hypotheses
H7 EQ3 Cooperation does not influence the attitude of respondents b31 0.067 0.437 Supported
towards other impediments
H8 Size does not influence the attitude of respondents towards b32 0.115 0.182 Supported
other impediments
H9 Profitability does not influence the attitude of respondents b33 0.011 0.898 Supported
towards other impediments
F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142 139

Table 7
Do you think it to be preferable that a third independent party coordinates the partnership?
‘‘YES’’ ‘‘NO’’
Frequency 17 50
Additional Provided that the coordinator carries responsibility It is preferable to remain in complete control
remarks A third party can be useful in bringing parties together The third party introduces extra costs.
and exploring the possibilities of a partnership One of the participants should coordinate the partnership

itors. At the other end of the spectrum, for low-profit or unprofitable LSPs, cooperation can be a surviving
strategy to increase efficiency and improve financial results.

4.2.2. Partner selection impediments hypotheses


H4 states that cooperation does not influence partner selection impediments. This hypothesis was sup-
ported (b21: 0.138, significance: 0.103). In other words, there is no evidence that cooperators perceive the
problems in finding partners differently than non-cooperators do. A priori the expectation was that coopera-
tors encounter fewer problems in finding partners than non-cooperators do. This assumption is however, not
supported by the data. In the survey, respondents were also asked whether it would be better to have an inde-
pendent third party coordinating the partnership. Table 7 shows that the majority of the respondents do not
consider independent parties the most adequate candidates to lead and coordinate a partnership. This suggests
that there is little demand for non-asset based Fourth Party Logistics parties or consultants to start up or
coordinate horizontal cooperation.
H5 states that size does not influence the way LSPs think of impediments related to partner selection. This
hypothesis was supported (b22: 0.052, significance: 0.532). In advance, we expected that large LSPs would
not be favored partners for smaller LSPs, because larger firms could misuse their greater economic strength.
H6 states that profitability does not influence partner selection impediments. This hypothesis is rejected at
the 5% level (b23: 0.216, significance: 0.010). The interpretation of the observed negative relation is that very
profitable companies experience fewer difficulties in finding partners than less profitable LSPs. An explanation
might be that profitable LSPs have more to offer in terms of learning effects and stability of the relationship.
Moreover, they generally have a financial buffer to overcome the required initial investment of time and
money to start an intensive cooperation. This increases the probability that the cooperation will last and
investments are not in vain.

4.2.3. Other impediments hypotheses


H7 states that cooperation does not influence the view of LSPs on other impediments. This hypothesis was
supported by the data (b31: 0.067, significance: 0.437), suggesting that cooperators and non-cooperators
evaluate the (non-partner selection) impediments alike. Stated differently, this seems to suggest that the

Table 8
Additional impediments to cooperation
Explanation Frequency
Our company is too small 14
Incidental cooperation is OK, but structural cooperation is not desirable because of 6
competition considerations
Agreements are not complied with in a cooperation 5
Competition prohibits cooperation 4
We are interested in joining a partnership, but the Flemish logistics sector lacks 4
the broad vision that is necessary to start such initiatives
Our company offers services that are too specialized 4
We do not yet cooperate horizontally, but we are looking for partners 2
Cooperation is impossible in the Flemish logistics sector 2
We have not thought about it yet 2
Other (lack of top-level and government support, strict customer requirements) 51
140 F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142

impediments expected by the non-cooperators are in fact experienced by the cooperators. In the questionnaire,
respondents were asked to report on additional impediments encountered in practice for structural, long-term
cooperation. The answers—as well as the number of respondents providing this answer—are summarized in
Table 8. The fact that 14 respondents consider the small size of their company to be an impediment for coop-
eration puts our conclusions under hypothesis 5 into perspective. These small-sized LSPs (one or two full time
equivalent employees) indicate that they either lack the business connections to set up a cooperation or have a
small number of customers that fill their capacity entirely.
H8 states that company size does not impact other impediments. This hypothesis was supported (b32:
0.115, significance: 0.182), indicating that there are no significant differences in the way cooperators and
non-cooperators evaluate the proposed impediments.
H9 states that profitability does not influence other impediments. This hypothesis was supported (b33:
0.011, significance: 0.898), which suggests that profitability of an LSP does not help to avoid or overcome
the impediments for cooperation.

5. Conclusions

To assess potential benefits of horizontal cooperation between LSPs and the main impediments to its imple-
mentation, 1537 LSPs were contacted in Flanders, Belgium. Together with the Netherlands, Flanders is the
center of gravity of logistics services in Europe, hosting the vast majority of European Distribution Centers.
Although this study is exploratory in nature, the survey results provide the logistics sector with some impor-
tant insights in horizontal cooperation.
The opportunities of horizontal cooperation, introduced in Section 2, are widely supported across the
Flemish logistics sector. The evaluations show a positive agree/disagree balance for all seven proposed oppor-
tunities. O1 (‘‘Horizontal cooperation increases the companyÕs productivity for core activities’’) receives the
strongest support. In particular, it receives more approval than O2 (‘‘Horizontal cooperation reduces the costs
of non-core activities’’). We conclude that cooperation on core activities, although involving the exchange of
customer information, is considered to be more desirable than cooperation on non-core activities because of
the higher potential of cost savings. Apart from cost and productivity opportunities, the strong support for O4
(‘‘LSPs can specialize while at the same time broadening their services’’) leads us to conclude that the respon-
dents consider horizontal cooperation to be an interesting possibility for increasing their customer service. The
broad support by all respondents for the propositions on opportunities is, however, negatively related to the
profitability of the respondents (see hypothesis 3).
The factor analysis in Section 4 subdivided the proposed impediments for horizontal cooperations into two
sets: Partner Selection Impediments and Other Impediments. The first set (Partner Selection Impediments)
consists of two propositions that are strongly supported by the respondents. Partner choice is vital for the suc-
cess or failure of cooperations and is well-studied in the organizational science literature, (e.g. Geringer, 1991;
Nielsen, 2003; Beckman et al., 2004). The problems with finding suitable partners are less severe for the more
profitable respondents (see hypothesis 6). Concerning the non-partner selection impediments, respondents
expect most difficulties from issues relating to bargaining power: I4 (‘‘Partners find it hard to ensure a fair
allocation of the shared workload in advance’’), I5 (‘‘A fair allocation of benefits to all the partners is essential
for a successful cooperation’’), I7 (‘‘Over time smaller companies in the partnership may lose clients or get
pushed out of the market completely’’), and I8 (‘‘When benefits cannot be shared in a perceived fair way,
the larger players will always benefit most’’). Potential partners must therefore explicitly take these impedi-
ments into account and take actions to overcome them before cooperation starts.
Unfortunately, the literature on the distribution of both costs and savings arising from horizontal cooper-
ation is scarce. To fill this gap, cooperative game theory provides a promising direction of thought. This dis-
tribution problem shows many similarities with well-known game-theoretic problems, such as the traveling
salesman game (e.g. Engevall et al., 1998), the (extended) tree game (e.g. Granot et al., 2002), transportation
games (e.g. Sanchez-Soriano et al., 2001), cost allocation in the Chinese postman problem (e.g. Hamers et al.,
1999), and cost allocation in the vehicle routing problem (e.g. Engevall et al., 2004). Cooperating companies in
e.g. the automotive industry (Cachon and Lariviere, 1999), retail (Sayman et al., 2002), telecommunication
(van den Nouweland et al., 1996), aviation (Adler, 2001), and healthcare (Ford et al., 2004) have already
F. Cruijssen et al. / Transportation Research Part E 43 (2007) 129–142 141

benefited from game theoretical methods that objectively take into account each playerÕs impact within a
cooperating group and produce compromise allocations that distribute the benefits of cooperation based
on clear cut fairness properties. Similar approaches could be developed for the logistics sector to help LSPs
understand how distribution of both costs and savings can be undertaken.

Acknowledgement

This research was partially funded by the Flemish Institute for Logistics, www.vil.be. This support is grate-
fully acknowledged. Furthermore, the authors would like to thank the two anonymous referees for their useful
comments that helped to improve the presentation of this paper.

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