Industrial Marketing Management xxx (xxxx) xxx–xxx

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Industrial Marketing Management

journal homepage: www.elsevier.com/locate/indmarman

Research paper

Service innovation of cold chain logistics service providers: A multiple-case

study in China
⁎
Jing Daia, Wen Cheb, Jia Jia Lima, Yongyi Shoub,
a
Nottingham University Business School, University of Nottingham China, Ningbo, China
b
School of Management, Zhejiang University, Hangzhou, China

A R T I C LE I N FO A B S T R A C T

Keywords: This exploratory study investigates how cold chain logistics service providers (LSPs) in emerging markets gain
Cold chain logistics competitive advantage through service innovation, and how state ownership and regulatory pressure influence
Service innovation their innovation practices. By applying a multiple-case study research design, this study examines service in-
State ownership novation in four leading cold chain LSPs in China. For each case, specific service innovation practices are
Regulatory pressure
documented and coded according to the service innovation framework adapted from previous research. The
Business model
results show that service innovation is indeed important impetus for cold chain LSPs' superior competitiveness,
even though previous research suggested that firms in this industry are not as innovative as others. Cold chain
LSPs in emerging markets tend to innovate in providing new value-added and differential service offerings to
specific customers, industries or regions. Cross-case analysis also reveals that high state-owned share and reg-
ulatory pressure may limit LSPs' capability for investing service innovation and developing novel business
models.

1. Introduction perishable products range from food, beverages to pharmaceutical

Globalization, with the ongoing redeployment of global value
chains and increasing cross-border trades, have been creating tre-
mendous demands for professional logistics service across the world.
Logistics service business thrives prominently in emerging markets,
since these markets are not only taking advantage of the status as fac-
tories of world commodities, but also benefiting from burgeoning do-
mestic needs. For instance, China's logistics revenue reached 10.1 tril-
lion yuan ($ 1.4 trillion) in 2018, a 14.5% increase compared to the
year before (China Federation of Logistics & Purchasing, 2019). Pre-
vious research suggests that logistics service industry in developed
countries are not as innovative as other service industries on average
(Busse, 2010; Wagner, 2008). LSPs' innovation seems to be more costly
than other service providers and yields lower returns (Busse, 2010).
However, little is known about the role of logistics service innovation
plays in the context of emerging markets, where the business oppor-
tunities are ample and clients are eager for quality logistics services.
In this exploratory research, we investigate service innovation of
cold chain logistics service providers (LSPs) in China. A cold chain is a
supply chain with perishable products, which must be stored and
transported in a particular range of temperature and humidity condi-
tions (Bishara, 2006; Bogataj, Bogataj, & Vodopivec, 2005). These
products and medical devices. On the one hand, the accelerated process
of urbanization in China continuously increases the demands of agri-
fresh products transportation, and its economic development raises
customers' expectation on the quality of perishable goods. According to
a report from China Cold-chain Logistics Association (2016), cold chain
logistics service market in China increases 15% per year since 2013,
and the market size is forecasted to reach 550 billion yuan ($ 80 billion)
in 2024. On the other hand, cold chain logistics service involves more
investments on specific equipment, employees training, IT facilities and
management systems than average logistics services. In an emerging
market featured as inadequate infrastructure and chronic shortage of
resources (Sheth, 2011), cold chain LSPs' innovation in China may be
more costly and risky. Moreover, since the gross revenue of top 100
Chinese cold chain LSPs only accounts for around 10% of the industry
(China Cold-chain Logistics Association, 2016), this decentralized and
heterogenous market structure may also impair the benefits of in-
novation. In this occasion, both favouring and suppressing factors of
service innovation are enhanced.
However, the extant literature of cold chain innovation mainly fo-
cuses on the technical aspects, such as employing new techniques or
facilities for reducing waste and improving efficiency (e.g. Abad et al.,
2009; Goyal & Giri, 2001; Lutjen, Dittmer, & Veigt, 2013), and provides

⁎
Corresponding author.
E-mail addresses: jing.dai@nottingham.edu.cn (J. Dai), chewen@zju.edu.cn (W. Che), jiajia.lim@nottingham.edu.cn (J.J. Lim), yshou@zju.edu.cn (Y. Shou).

https://doi.org/10.1016/j.indmarman.2019.08.002
Received 31 December 2018; Received in revised form 12 July 2019; Accepted 10 August 2019
0019-8501/ © 2019 Elsevier Inc. All rights reserved.

Please cite this article as: Jing Dai, et al., Industrial Marketing Management, https://doi.org/10.1016/j.indmarman.2019.08.002
J. Dai, et al.
little knowledge on the effectiveness of innovation in this context. For
filling this gap, we attempt to offer details of cold chain LSPs' innova-
tion practices in China through a multiple-case study and contribute to
further understanding of whether or how cold chain LSPs in China
benefit from innovation.
The other reason we chose China as the empirical setting is that the
economic activities in this country are experiencing a transitional
period from state control to market governance. This period offers an
ideal context to examine how competing institutional logics (i.e. state-
based and market-based logics) influence LSPs' innovation practices
(Friedland & Alford, 1991). Even though the market-based logic would
be dominant in the future according to China's central government, the
socio-political governance feature still makes significant difference
(Sheth, 2011). This perspective, however, is largely neglected by ex-
isting cold chain and LSP innovation literature. Thus, in this research,
we identify two institutional factors—state ownership and regulatory
pressure—which capture socio-political influence through internal
governance structure and external political pressure, respectively. We
demonstrate how these two factors affect cold chain LSPs' innovation
practices.
This research makes several novel contributions. First, we provide
an exploratory investigation on service innovation of cold chain LSPs in
China. Our results show that in a typical emerging market context,
which is featured as rapidly growing but heterogenous market de-
mands, inadequate infrastructure and chronic shortage of resources,
service innovation is still an important source for firms to gain market
competitive advantage. Service providers prefer innovatively adding
new values and providing differential services to improve efficiency in
the market competition. Second, we investigate the effects of state
ownership and regulatory pressure on service innovation. Through the
lens of Resource-Advantage Theory, we offer explanations for why
these socio-political governance factors limit firms' capacity for in-
vesting service innovation and developing novel business models.
Third, taking advantage of the multiple-case design, we also provide
rich details about the service innovation practices in cold chain industry
of China, which offers an in-depth understanding of the real business
world.
The structure of this article is organized as follows. In Section 2, we
review relevant literature on innovation in general, logistics service
innovation in emerging markets, state ownership and regulatory pres-
sure. In Section 3, we provide details of the selection of case firms and
the coding procedure. The results of the analysis are presented in
Section 4 (within-case description) and Section 5 (cross-case analysis).
Section 6 refines these results in form of propositions. Lastly, theoretical
and managerial implications are presented in Section 7.
2. Literature review
2.1. Innovation
In Schumpeter's theory, innovation is the strategic stimulus to eco-
nomic development, and can be defined as “the commercial or in-
dustrial application of something new - a new product, process, or
method of production; a new market or source of supply; a new form of
commercial, business, or financial organization” (Schumpeter, 1982,
p.19). According to the Resource-Advantage Theory, innovation en-
ables firms to provide value-added offerings highly regarded by cus-
tomers, which in turn helps firms gain superior performance and
competitive advantages (Eggert, Thiesbrummel, & Deutscher, 2015). To
be more innovative than competitors is a well-accepted basis for firms
to gain first mover advantages and competitiveness (Biemans and
Griffin, 2018; Lengnick-Hall, 1992; Lieberman & Montgomery, 1988).
Innovation can be classified in several ways (Vargo, Wieland, &
Akaka, 2015). Even though focusing on service innovation in this re-
search, we can still benefit from referring to typologies developed for
general innovation. To the best of our knowledge, only a few studies on
2
Industrial Marketing Management xxx (xxxx) xxx–xxx
service innovation discuss the typology issue (den Hertog, van der Aa, &
de Jong, 2010; Paswan, D'Souza, & Zolfagharian, 2009; Vence & Trigo,
2009). Yet most of them are either too complex or inappropriate as
coding frameworks in this research. Classically, innovation can be
classified into product and process innovation, which represent new
offers to external demands and new improvement of existing internal
processes, respectively (Utterback & Abernathy, 1975). This dichotomy
is also validated by Wang, Voss, Zhao, and Wang (2015), in which both
service product and process innovation were empirically justified by the
analysis on archived service innovation projects. In this research, we
employ this product/process dichotomy as one aspect of the LSPs' in-
novation framework.
Besides the product/process dichotomy, there is “a new subject of
innovation, which complements the traditional subjects of process,
product, and organizational innovation and involves new form of co-
operation and collaboration” (Zott, Amit, & Massa, 2011, p.1032). It is
the business model innovation (BMI). A business model is defined as
“design or architecture of the value creation, delivery, and capture
mechanisms” of a firm (Teece, 2010, p.172). It provides firms with a
more customer-centric and holistic view of competition. Since the in-
vestments on product or process innovation may sometimes be ex-
pensive, time-consuming and uncertain, more firms turn to new busi-
ness models as a form of innovation (Amit & Zott, 2012). BMI is
considered as “designed, novel, nontrivial changes to the key elements
of a firm's business model and/or the architecture linking these ele-
ments” (Foss & Saebi, 2016, p.201). According to a report from IfM and
IBM (2008), service innovation is regarded as a combination of BMI and
other types of innovation for improving existing services, creating new
value proposition and new service system. Wang et al. (2015)’s research
also identified BMIs from service innovation projects. These studies
suggest that BMI may be a valuable perspective in investigating service
innovation.
Foss and Saebi (2016) further classified BMI into modular and ar-
chitectural BMI. Modular BMI refers to the innovation of a business
model in which the value creation, delivery and capture mechanisms
are loosely coupled. It involves changes in one or more constituent
components. For example, a firm with modular BMI may target a new
market segment and create new values with its value proposition, de-
livery and capture mechanisms intact. Conversely, architectural BMI
refers to a tightly interdependent structure of its business model, and an
architectural change of the overall business model. For instance, a top
Chinese LSPs - Bada Logistic Service, has established an integrative
supply chain platform for minerals industry. The platform enhances the
architectural BMI by coordinating and balancing the material flow of
minerals throughout the whole supply chain, including ports, railways
and inland transportation. In this research, we adapt this classification
(i.e. modular and architectural BMI) as another aspect of LSPs' in-
novation framework.
2.2. LSPs' innovation in emerging markets
LSPs are defined as “companies which perform logistics activities on
behalf of others” (Delfmann, Albers, & Gehring, 2002, p.204; Ellinger
et al., 2008; Panayides, 2006). By performing a boundary-spanning role
and contacting with different parties across supply chains, LSPs gain a
crucial position and have great impact on supply chain effectiveness
(Busse & Wallenburg, 2011; Panayides, 2006). The services they pro-
vide are identified as relational (rather than transactional) B2B services
in nature, which are marked by high complexity, high task uncertainty,
high task variability, high interdependence between parties and high
equivocality (Vickery, Droge, Stank, Goldsby, & Markland, 2004). In a
survey conducted on LSPs in China, Hong and Liu (2007) identified
underdeveloped market mechanism, institutional problems, inadequate
logistics infrastructure and lack of capitals as some of the main barriers
to logistics development. In a more recent research, Rahman, Ahsan,
Yang, and Odgers (2017) summarized 14 challenges for multinational
J. Dai, et al.
LSPs operating in China, including financial stability, inadequate edu-
cation and training for employees, government regulations and under-
developed logistics infrastructure. These empirical findings are largely
consistent with Sheth (2011)’s seminal framework on emerging market
characteristics, which consists of five dimensions (i.e. market hetero-
geneity, socio-political governance, unbranded competition, chronic
shortage of resources and inadequate infrastructure). Since cold chain
industry is a specific component of logistics service industry, these
unique contextual features may still hold true in the cold chain research
in China, even though there is lack of direct support from the literature.
Moreover, as we mentioned above, since cold chain logistics service
business involves more investment on equipment, human resources and
IT facilities, bears higher operations costs and are more vulnerable to
institutional environment, the effects of these features may be even
amplified. Thus, the effectiveness of the whole cold chain depends
highly on LSPs' ability to integrate fragmental market demands, ela-
borate new value-added offerings, and deliver products under parti-
cular temperature conditions and institutional instructions at reason-
able costs. These additional requirements yield a more complex
logistics system, which calls for more efforts on coordinating relevant
parties, adopting advanced techniques, and improving internal man-
agement. Therefore, we believed that cold chain LSP in emerging
market is an appropriate context for generating new insights on the
service innovation research.
To date, service innovation is still a promising topic in the LSP re-
search (Busse & Wallenburg, 2011; Chu, Feng, & Lai, 2018; Darkow,
Weidmann, & Lorentz, 2015). LSP innovation research is open to more
in-depth examinations in various contexts. In this research, since we
attempt to investigate the influencing factors and effectiveness of cold
chain LSP innovation, and given the scant literature on similar issues,
we turn to review the antecedents and outcomes of service innovation
in the logistics innovation literature. Relevant research is summarized
in Table 1.
As Table 1 presents, the influencing factors and outcomes of logis-
tics innovation concerned by scholars are quite diverse, for they are
designed to answer various research questions. However, except for a
few studies (Carli Lorenzini, Mostaghel, & Hellström, 2018; Chu et al.,
2018; Lin, 2007), the effects of institutional factors on logistics in-
novation are not empirically tested. Given the importance of institu-
tional factors in shaping the behaviours of cold chain practitioners, it is
also surprising that few studies have examined their influence on cold
chain practices. There may be two reasons. One is that a large pro-
portion of studies in cold chain logistics focus on agri-fresh products
(Govindan, 2018; Revoredo-Giha & Leat, 2013; Shukla & Jharkharia,
2013), hence the different levels of institutional factors, such as reg-
ulatory pressure, in different business segments are easily neglected.
The other is the lack of specific studies in emerging markets, as men-
tioned above. Considering the critical role played by institutional fac-
tors in both cold chain services and emerging markets, we are parti-
cularly interested in two institutional factors (i.e. state ownership and
regulatory pressure) in this research. Moreover, since it is widely ac-
cepted that superior performance arises from competitiveness (Porter,
1985; Powell, 2001), we are not distracted by various kinds of firm
performance and focus on the effects of service innovation on firms'
competitive advantage. By selecting leading LSPs in different business
segments, we attempt to take advantage of case study methodology and
present a vivid picture on how leading cold chain LSPs gain competi-
tiveness through innovation practices.
2.3. State ownership and regulatory pressure
Government plays an important role in promoting economic growth
and technological development in emerging markets (Kim, 1997; Wade,
1990), through their influence on national economic structure and in-
stitutional configuration (Lundvall, 1992). Therefore, government is a
crucial source of potential institutional factors that exert socio-political
3
Industrial Marketing Management xxx (xxxx) xxx–xxx
influence on firms. State-owned companies generally enjoy more re-
sources from the government, but carry more social responsibility
guided by government as well. This characteristic might differentiate
private firms from state-owned firms when they are facing with com-
petition for innovation development. From the LSPs' perspective,
ownership structure is an internal institutional factor which may affect
their innovation practices via decision-making processes or the ability
of acquiring external resources (Choi, Lee, & Williams, 2011). On the
other hand, LSPs focusing on different business segments operate under
different regulatory pressure, which is an external institutional factor
and may influence their innovation practices through the mechanism of
maintaining legitimacy or the penalties of violating regulations (Jaffe &
Palmer, 1997).
Empirical research on the relationship of state ownership and in-
novation is quite rare and inconsistent. For example, by investigating
Chinese public firms in eight different industries, Choi et al. (2011) find
that the impact of state ownership on innovation performance is posi-
tive but lagged. However, in a follow-up study with data from 301
Korean public firms, Choi, Park, and Hong (2012) fail to discover a
significant effect. Employing the World Bank Enterprise Surveys data-
base, which consists of 19,000 firms across 47 developing economies,
Ayyagari, Demirgüç-Kunt, and Maksimovic (2011) identify a negative
relationship between state ownership and overall firm innovation.
Conversely, the majority of research on regulatory pressure suggests a
positive relationship with innovation, and most of them focus on en-
vironmental regulations. For example, an industry level study finds that
lagged environmental compliance expenditures have a positive effect
on R&D expenditures (Jaffe & Palmer, 1997). Beerepoot and Beerepoot
(2007) and Kammerer (2009) empirically support that regulation is an
impetus for energy-saving innovation diffusion and environmental
product innovation in specific industries. Lin and Ho (2011) identify
regulatory pressure as one of environmental factors that have sig-
nificantly positive influence on green practice adoption for logistics
firms in China.
Although previous studies have provided some important under-
standing on the roles of state ownership and regulation pressure on
innovation development, few studies examine their effects on service
innovation. Hence, for filling this gap, we investigate how different
degrees of state ownership and different levels of regulatory pressure
influence cold chain LSPs' innovation practices in China through a
multiple-case design.
3. Methodology
In this research, we employed a multiple-case study design for three
reasons. First, case study is a valid methodology for generating new
insights and building new theories (Barratt, Choi, & Li, 2011). It is an
ideal method to offer a more holistic and in-depth view than some
quantitative methods (Feagin, Orum, & Sjoberg, 1991). This is con-
sistent with our purpose of offering detailed insights about how leading
cold chain LSPs gain competitiveness through innovation, and how
these endeavours are affected by contingent factors (i.e. state owner-
ship and regulatory pressure) in the emerging markets. For testing
theories, other alternative methods may be less controversial
(Eisenhardt & Graebner, 2007). Second, case study is also an effective
methodology for exploratory purposes (Yin, 2013). Since the literature
review shows that research in cold chain and LSP innovation is under-
researched, it is suitable to employ a less structural methodology, such
as case study, to enhance our knowledge in this topic. Third, Eisenhardt
(1991) emphasizes the superiority of following a multiple-case trail.
The comparative multiple-case logic provides a more robust base of
theory-building and better external validity (Eisenhardt & Graebner,
2007).

Table 1
Literature review.
Reference
Chapman, Soosay, and
Kandampully (2003)
Panayides and So (2005)
Panayides (2006)
Glenn Richey, Genchev, and
Daugherty (2005)
Lin (2007)
Grawe, Chen, and Daugherty
(2009)
Yang, Marlow, and Lu (2009)
4
Wallenburg (2009)
Wagner and Sutter (2012)
Cui et al. (2012)
Wagner (2013)
Bellingkrodt and Wallenburg
(2013)
da Mota Pedrosa et al. (2015)
Shi, Zhang, Arthanari, Liu, and
Cheng (2016)
Rahman et al. (2017)
Anning-Dorson (2018)
Chu et al. (2018)
Carli Lorenzini et al. (2018)
Methodology
Conceptual paper
Survey; LSPs in Hong Kong
Survey; LSPs in Hong Kong
Survey; Automotive Aftermarket Industry
Association
Survey; LSPs in Mainland China
Survey; Chinese electronics industry
Survey; Container shipping service firms in
Taiwan
Survey; LSPs and their clients in Germany
Multi-case studies LSPs and their clients
Multi-case studies; LSPs in Taiwan, Hong Kong
and Mainland China
Large scale survey from the German Innovation
Survey; Germany transportation and logistics
service industry
Survey; LSPs in Germany
Multiple semi structured interview; Six LSPs
Survey; Chinese 3PL providers
Conceptual paper
Survey; Service firms in United Kingdom and
Ghana
Survey; 3PL providers in China
Case study (2 cases); A global pharmaceutical
manufacturer and a packaging manufacturer
Innovation
Logistics service innovation
LSP innovation
LSP innovativeness
Innovative reverse logistics
capabilities
The innovation in logistics
technologies
Service innovation
Innovation capability
Proactive innovation
Joint LSP-client innovation projects
3PL logistic innovation
Logistics service innovation and the
level of innovation among LSPs
LSP innovativeness
Logistic innovation
Third party purchase (3PP)
innovation
Multinational third-party logistics
(MN3PL) service providers in China
Service firm performance
Logistics service innovation
Packaging innovation
J. Dai, et al.
Influencing factors Outcomes
Networking and R&D, Investment in ICTs, Human capital,
Organizational change, Intellectual property rights, Changing
competition and regulatory frameworks
Relationship orientation; Organizational learning Supply chain effectiveness; Supply chain
performance
Relationship orientation Logistics service quality; LSP performance
Resource commitment Strategic performance; Operational
responsiveness; Service quality
Internal factors: Organizational encouragement, Quality of human
resources
External factors: Environmental uncertainty, Governmental
support
Customer orientation; Competitor orientation; Cost orientation Market performance
Recourse: Network resource; Information equipment; Corporate Customer service performance; Financial
image performance
Customer loyalty
High integration with customer; Establishing links to customers Upgrading LSPs' strategic positioning;
insisting on new services; Complementary relationship-specific Intensify customer relationships; Higher
investments; Agreement of benefit sharing performance
Efficiency; Effectiveness; Service portfolios Logistic innovation
Geomarket; Export intensity; Competitive Strategy; External Serviced improvement; New services
partners (all partners, suppliers, customers, competitors,
consultants, universities)
Relationship quality (Customer, External service provider, Other Innovativeness; Firm performance
LSPs); Innovation focus
Activities and behaviours of employees with customer contact Logistics innovation development
Asset specificity; Uncertainty; Order frequency; Transaction size Value to client; Benefit to provider
Guanxi; Government regulations; Price pressure; Transportation
cost
Customer involvement capability; Product innovation; Process Firm performance
Innovation
Political in guanxi; Business guanxi; Organizational structure Logistics service innovation
Customer-Supplier relationship; Technology; Legislation; Packaging innovation (pharmaceutical
Marketing; Logistics; Sustainability manufacturer and packaging manufacturer)
Industrial Marketing Management xxx (xxxx) xxx–xxx
J. Dai, et al.
3.1. Theoretical sampling
Since the purpose of this study is to develop theory, not to test it,
theoretical sampling is appropriate (Eisenhardt, 1989; Eisenhardt &
Graebner, 2007), in which “cases are selected because they are parti-
cularly suitable for illuminating and extending relationships and logic
among constructs” (Eisenhardt & Graebner, 2007, p.27). Representa-
tiveness is not an issue in this research context. Specifically, we use two
criteria to identify potential cases. The first is competitiveness, and the
other is variances in the contingent factors' matrix. Corresponding to
the first criterion, we define leading cold chain LSPs as the one that are
credited as more competitive than the majority of the peers in their
specific business segment by industrial experts. Thus, this credited
competitiveness is the key guideline for identifying the initial pool of
leading cold chain LSPs in this research. Furthermore, to examine the
effects of state ownership and regulative pressure on cold chain LSPs'
innovation practices, the selected cases should cover all four categories
derived from the 2 × 2 contingent factors matrix, with high and low
levels of each factor. In other words, at least one case should be selected
to fill in each conceptual category.
We consulted a provincial Association of Logistics & Purchasing
(ALP) for this theoretical sampling. As the largest and most author-
itative logistics' guild in a coastal province, the ALP serves almost all
the influential local LSPs as its members. The ALP also has a cold chain
branch, and we communicated with its director and other senior
members for suggestion. They are not only experts on local cold chain
community, but also possessing sufficient knowledge on the domestic
cold chain LSP market. After the consultation, we further assessed the
companies on the list of recommendation. Through searching and
analysing archival information, such as news reports and industry
analysis reports, we identified seven cold chain LSPs that meet our
research criteria.
We then contacted these firms and informed them the general ideas
of this research. Four of these firms asked for the initial interview
questions before they made any decision. After several rounds of
communication, we excluded three firms because either they were not
interested in this research, or we were unable to guarantee the level of
anonymity they required. As Miles, Huberman, and Saldaña (2014)
suggested, local stakeholders can always tell which firm is being de-
picted. Some firms were worried about possible negative consequences
(e.g. disclosing their innovative practices to competitors or how they
react to certain contingent factors) when they were identified and did
not want to run the risk. In the end, four leading cold chain LSPs were
selected, and their relative positions in the contingent factor matrix
were shown in Fig. 1.
High
Company Y Company H
Regulatory
Pressure
Company L Company N
Low
Low High
State-owned share
Fig. 1. Selection of case firms.
5
Industrial Marketing Management xxx (xxxx) xxx–xxx
3.2. Data collection
An interview protocol was initially developed from reviewing the
relevant literature. It was then revised after consulting the director and
senior members of the ALP cold chain branch, and several pilot inter-
views with key informants in each case firm (see Appendix 1). The
protocol had been also sent to case firms before conducting formal in-
terviews. We did this for several reasons. First, as mentioned above, in
the sampling stage, four of the seven sample candidates asked for the
protocol to decide on whether participating in this research. Three of
them were included in the final sample. It is the candidates' ethical right
to know details about the research as they wish, and only by doing so
could they fully understood the potential harms and risks involved
(Miles et al., 2014). Second, given the explorative nature of this re-
search, neither interviewees nor researchers may fully comprehend the
topic and know what kind of information should provide or collect. By
sending the protocol prior to interviews and communicating on am-
biguous issues, the understandings from both sides were advanced. This
would not only ensure that the final version protocol would be tightly
related to our research interest and contribute to a better face validity
and content validity, but also smooth the formal interview processes.
Third, the interview protocol was only served as a general template.
Customized and multiple open-ended questions were asked in each
interview according to unique features of the firm, the context and the
role of the interviewees. Thus, the protocol sent to interviewees prior to
the interviews was less likely to influence the cognitive frame of in-
terviewees' perception about this research and yield biased information.
The interviews were conducted in a semi-structured manner. Semi-
structured interview plays important roles in qualitative research, and
“offers great potential to attend to complexity of a story in need of
contextualization” (Galletta, 2013, p.9). Therefore, it is suitable for this
research. The interviews were conducted on site, with the time frame of
interview between 60 and 90 min. Interviewees in each firm included
senior managers, functional managers and operational supervisors at
both corporate and business unit level (see Table 2). Since the protocol
was sent prior to interviews, the case firms provided us the initial lists
of interviewees and communicated with us the competences of each
interviewee in answering our questions. Through the interviews, our
understanding on the firms was advanced. We also asked for arranging
interviews with specific interviewees. For example, the interview with
quality control supervisor of company H was asked by us for learning
how exactly their integrated IT system works. In addition, we visited
the operation sites of all four firms.
All the interviews were digitally recorded and subsequently tran-
scribed into texts. After each site visit, filed notes were also edited and
organized. We also collected archival data from company websites,
news, internal company reports and documents for enriching data
Table 2
List of interviewees of cold chain LSPs.
Company Title
H Vice General Manager
Assistant General Manager
Assistant General Manager
Operations Supervisor
Quality Control Supervisor
Refrigerated Warehouse Supervisor
Y Corporate Vice President
General Manager
N General Manager
Assistant General Manager
Director, General Manager Office
Manager, Business Department
L Corporate President
Vice General Manager
Vice General Manager
Assistant General Manager
J. Dai, et al.
sources. We used all these materials for the coding and analysis.
3.3. Data analysis
All empirical data mentioned above were analysed through quali-
tative coding processes (Ellram, 1996; Krippendorff, 2019; Miles et al.,
2014). The unit of coding is innovation practices of case firms. Only
innovation practices, which are new to the industry or new to the
majority, were taken into account. The coding process was conducted
as follows. First, we employed a coding framework adapted from an
industrial report, which summarized critical success factors in the
transportation and logistics (T&L) industry (Riedl, Farag, &
Korenkiewicz, 2016). Since our research focuses on cold chain LSPs, we
adapted seven relevant success factors in this report as initial frame-
work to code innovation practices. An innovation practice was coded
into one of the seven categories for its relevance or contribution to the
success factor.
These seven coding categories could be further classified into two
dimensions corresponding to competitive advantage sources – rigorous
efficiency and differentiating offerings (Porter, 1985). Rigorous effi-
ciency related innovation includes a lean organization and governance,
advanced IT and digital capabilities, and standardization and in-
dustrialization; while differentiating offerings related innovation in-
cludes human resources excellence, dynamic value pricing, specializa-
tion and focus, and long-term customer partnerships. In other words, all
the innovation practices were coded into these seven categories in first-
level coding, and these seven categories along with the innovation
practices coded into them were then coded as either rigorous efficiency
and differentiating offerings.
Second, we coded innovation practices within the classical product/
process innovation dichotomy. In addition, we also coded each LSP case
into different business model innovation categories (Foss & Saebi,
2016). By using the coding data generated above, we then analysed
how different levels of state ownership and regulatory pressure influ-
ence product/process innovation and the patterns of business model
innovation. The coding details are provided in Appendixes B and C.
For achieving better reliability and validity, three coders were en-
gaged in the coding processes. One of them is a professor in the op-
erations management department and interested in the topics relevant
to logistics innovation. The second coder is a PhD candidate, whose
research interest is logistics management. The last one is an MBA stu-
dent who has 5 years working experience in cold chain LSP industry.
We believe that they are all capable of handling this coding job. After a
short-time training, they first coded the materials independently. As
Krippendorff (2019) suggested, coding results from these three in-
dependent coders could be used to calculate Krippendorff's α, which
may be “the most general and flexible agreement measure with ap-
propriate reliability interpretations in content analysis” (p.401). The
Krippendorff's α of coding results were 0.832, 0.810 and 0.879, corre-
sponding to each aspect in our conceptual framework. Bootstrap results
showed that the possibilities of Krippendorff's α value lower than 0.7
were 2.12%, 8.42% and 0.05%, respectively. These metrics demon-
strate strong evidence of replicability (Hayes & Krippendorff, 2007;
Krippendorff, 2019).
After the assessment of intra-coder reliability, the disagreements
among coders were reconciled through a “discursive alignment of in-
terpretation” (Seuring & Gold, 2012). That is, for any different inter-
pretation of the material in the coding results, the coders assessed and
resolved it by “gradually revealing and consensually redrawing the
min-maps having led to the discrepancy in the first place” (Seuring &
Gold, 2012, p.547). In this stage, they discussed the disagreements to-
gether. On some occasions, they approached the authors, interviewees
and archival materials for resolving the disagreements.
We employed the NVivo 11 for assisting the coding processes. NVivo
is widely used in qualitative data analysis. It helps scholars in orga-
nizing, storing and retrieving data, and uncovering connections in ways
6
Industrial Marketing Management xxx (xxxx) xxx–xxx
that are not easily achieved manually. In this research, we used NVivo
for managing various types and sources of data, retrieved and compared
the coding results of the three coders, and saved efforts for calculating
Krippendorff's α.
4. Within-case descriptions
4.1. Company H: cold chain LSP on pharmaceutical products
Company H is a professional LSP on pharmaceutical products in
Eastern China, and serves more than one third of sales in the provincial
market. Even though it is wholly-owned by a giant state-owned en-
terprise (SOE), company H operates independently. Company H pro-
vides stable and high-quality logistics services with its own refrigerated
warehouse and trucks.
More than 300 other cold chain LSPs compete in this business
segment, while most of them are small firms that does not possess
threats to company H's leader position. But the most critical dyadic
relationship in the pharmaceutical cold chain industry is between LSPs
and buyers. The buyers, especially the mega public hospitals that
control downstream demands, therefore have gained substantial market
power. Obtaining their trust and approval is the key to be competitive
in this business. Moreover, cold chain logistics service in the pharma-
ceutical industry is guided by detailed government regulations. For
example, in 2013, the Good Supply Practice (GSP) for Pharmaceutical
Products was published by China's Ministry of Health. This GSP clarifies
nearly every detail of logistics service for pharmaceutical products,
including quality management, procurement, delivery, storage, facil-
ities and equipment. It also offers particular instructions on cold chain
logistics.
4.1.1. Rigorous efficiency
Company H leverages their advanced IT and digital capabilities to
improve efficiency. They have developed a tailored and unified in-
formation system, which is compatible with the official pharmaceutical
product supervision code, and integrates the warehouse management
system (WMS), transportation management system (TMS) and radio
frequency identification (RFID) handset devices seamlessly. This in-
formation system monitors every single phase during its logistics ser-
vices, and provides functions such as instant GPS location, temperature
recording and tracing, automatic temperature alarm, data visualization
and transport path generation. These services can also be accessed by
their clients. Although many other cold chain LSPs also have their own
information systems, very few of them can integrate these subsystems
and data from various sources.
4.1.2. Differentiating offerings
As mentioned above, since the major market power is enjoyed by
buyers in this business, company H conducts a special customer cap-
ability building project to maintain long-term customer partnership.
Company H not only provides free facilities and software, trains em-
ployees for critical buyers, but also reengineers their internal tem-
perature control processes to prevent cold chain disruption. Hence,
company H successfully develops their cooperation with critical buyers,
gains their trust, and wins future orders from customers.
4.2. Company Y: cold chain LSP on medical devices
Company Y is a professional cold chain LSP on in vitro diagnostic
(IVD) medical devices, especially on point-of-care testing (POCT) de-
vices and reagents. It is wholly-owned by a private medical devices
manufacturer and seller, which is one of the leading companies in the
industry. Company Y is also the first company who received the busi-
ness license to provide third party logistics service on medical devices
from the local government in 2015.
Similar to LSPs on pharmaceutical products, LSPs on medical
J. Dai, et al.
devices are also influenced greatly and governed rigorously by a system
of regulations. Since the former version of Regulations for the
Supervision and Management of Medical Devices (RSMMD) released by
the central government do not contain restrictions on logistics opera-
tions, most of the sellers in this industry outsource transportation to
parcel delivery companies. Medical devices are transported by a foam
box filled with ice or refrigerant, but no specific temperature control or
tracing procedures are offered. Even when the new version RSMMD
came out with logistics operations instructions in 2014, only a few
professional cold chain LSPs are in the market.
4.2.1. Rigorous efficiency
Company Y develops an online medical device order platform,
which connects the buyers and sellers. This order platform is customer-
oriented and can be accessed from a PC client or mobile app. When
buyers place an order on this platform, if the order is taken by a seller,
all the logistics information, especially temperature tracing records,
will be presented as soon as possible. The buyers and sellers can also
retrieve or manage historical logistics data. As a professional LSP on
IVD devices, company Y develops a set of standard operating proce-
dures (SOPs) for daily operations, which is adapted from the GSP for
Medical Devices and based on their own calibration. In addition,
company Y also invents a new set of standardized coolers to reduce long
distance transportation costs.
4.2.2. Differentiating offerings
Although the prevailing parcel delivery services are cost effective, it
is hard for parcel delivery companies to fulfil the required temperature
range for different medical devices in a stable manner. Since more and
more regulations are released by local governments to supervise third
party logistics on medical devices, the demands for high quality LSPs
are increasing. Company Y seizes this opportunity by providing pro-
fessional and high-quality cold chain logistics services with specialized
IVD warehouses and refrigerated trucks. This is particularly attractive
to small and medium sized enterprises (SMEs) who cannot afford a self-
built logistics system. In addition, company Y establishes an online-to-
offline business model in this segment. They aim to extend the online
order platform to other LSPs and their clients. By providing an online
one-stop order service and certificating an offline logistics service net-
work around several metropolises, company Y attempts to transform
itself to a fourth party logistics integrator and advisor, and an industrial
data analyst.
4.3. Company N: cold chain LSP on import and export products
Company N is a professional cold chain LSP on import and export
products in a port district. The port is one of the busiest ports in the
world in terms of cargo tonnage. Company N is invested by a giant SOE
and a private logistics company with one-half share for each. The SOE is
obligated to preserve and appreciate state asset value in this port. The
private company is professional in port logistics services since they
have been in this business for over 15 years. Supported by both share-
holders, company N provides professional refrigerated warehousing
service, customs declaration and inspection service, and multimodal
transportation service for import and export products such as fruits,
vegetables, meat, seafood and wines.
4.3.1. Rigorous efficiency
Company N has its own refrigerated warehouses, and contracts
transportation services to its partners. By standardizing service pro-
cesses and facilities, such as temperature sensors and truck size, com-
pany N improves the utilization rate of its warehouses and reduces
waiting time. Company N also leases its warehouse rooftop to a power
plant for solar energy generation, and hence enjoys a discount price of
electricity.
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Industrial Marketing Management xxx (xxxx) xxx–xxx
4.3.2. Differentiating offerings
The innovation initiated by company N to provide value-added of-
ferings can be summarized as follows. First, company N reengineers
customs declaration and inspection service processes by establishing an
inspection centre and quality testing laboratories within its own logis-
tics park. Now, officials from the Administration of Customs (AC) and
the Administration of Quality Supervision, Inspection and Quarantine
(AQSIQ) work there. In the normal circumstances, arrival cargoes have
to wait on the port for customs declaration and quarantine inspection.
That often means days of waiting, and refrigerated containers have to
be opened twice on the scorching wharf, which may bring great risks of
cold chain disruption. Now in the newly designed process, cargoes are
stored in the refrigerated warehouse of company N, and the containers
were just opened once in a temperature buffer zone. This reengineered
process yields a lower product loss rate and a shorter waiting time for
clients. Second, company N also establishes a port transaction market
for the refrigerated products stored in its warehouse, and a new e-
commercial department to facilitate online sale. By negotiating with the
local government for preferential tax measures and providing reliable
cold chain logistics services, company N assembles a large volume of
different imported products in its market, and creates new selling
channels for clients. Third, company N is participating in a tracing
system project initiated by the government for imported food and
beverages. Once it is successfully launched, clients who pay for this
service can trace real-time information during the whole process of
customs clearance and inspection. Besides, it also provides a security
code tag with detailed quality information, which is endorsed by the
government and can be retrieved by consumers.
4.4. Company L: cold chain LSP on aquatic foods
Located in one of the largest fisheries in China, company L is a
private company and the largest cold chain LSP in the local market.
They not only offer refrigerated warehousing and transportation ser-
vices to fishing enterprises, processing plants and wholesalers, but also
extend their business to financial and e-commercial services based on
their knowledge and accumulated network in aquatic food cold chains.
4.4.1. Rigorous efficiency
One of the bottlenecks in aquatic food logistics is standardization,
especially in the process of production. There are thousands of kinds of
aquatic foods and a large number of fishing enterprises producing on
their own in the local market, which leads to a tremendous number of
stock keeping units (SKUs) for LSPs. As the demand variation increases,
it is hard for LSPs to fulfil various inventory requirements in an efficient
manner. Nevertheless, as the largest cold chain LSP in the region,
company L maintains a high level of trust and commitment with many
fishing enterprises. Leveraging their relational capital, company L co-
operates with these fishing enterprises and providing an on-board
sorting system to improve upstream production standardization.
Similar to company N, company L holds refrigerated warehouses,
and outsources transportation service to its partners. These partners
work together and form a distribution network that covers the whole
domestic market of China. Based on their strengths in different regions
and businesses, company L classifies these partners and distributes or-
ders accordingly. Company L also provides business information for
partners and helps them reduce the rate of empty backhaul.
In addition, company L develops new tools to improve their services
by their own or through cooperation with other professional organi-
zations. For instance, they have designed a patented metal tray to re-
place the traditional wooden one. This metal tray is a more durable and
contamination proof for aquatic foods for longer term storage. It is also
designed for a better cold air circulation in warehouses. Cooperating
with a software company, company L has developed a tailored WMS
and a mobile TMS. These information systems standardize its internal
processes and offer required information to partners in time.
J. Dai, et al.
4.4.2. Differentiating offerings
Logistics services on aquatic foods are always plagued by the tur-
bulence of yearly yield. For buffering this uncertainty and achieving a
more stable revenue flow, company L has reorganized its own organi-
zational structure and designed a more balanced business portfolio as
follows.
First, company L has founded two subsidiaries to deal with cold
chain logistics services. Subsidiary LU is an asset-based company, who
is in charge of refrigerated warehouses and their operations. Subsidiary
ZK, aiming to become a logistics advisor, services as a platform to
provide cold chain solutions for material flows, which contains re-
frigerated warehousing, bonded warehousing, transportation service,
customs clearance service and so on.
Second, to mitigate the seasonal financial pressure confronted by
fishing enterprises and aquatic food trade companies, subsidiary ZK
collaborates with banks and offers loans as long as there are collaterals
stored in LU's warehouse. Since most of the fishing enterprises and
trade companies are SMEs, it is quite difficult for them to get loans from
traditional banks. On the contrary, based on expertise in this industry
and a distribution network across the domestic market, company L
reduces default risk substantially and offers supply chain finance ser-
vice more flexibly. They served over 50 clients with 80 million RMB in
the first year. To extend this business, company L negotiates with some
famous supply chain companies and endeavours to qualify their bills of
lading as collaterals.
Third, company L has founded subsidiary WL to operate its e-com-
mercial business. WL has built two online platforms dealing with
business clients and individual consumers, separately. The B2B plat-
form focuses on several selected best-sellers, and aims to serve all the
stakeholders involved in this business. By gathering these sellers and
employing its own logistics services, company L attempts to establish a
tracing system and a logistics database to fulfil the increasing demands
of high-quality aquatic foods. The B2C platform focuses on processed
aquatic foods and aims to develop its own brand. By investing on value-
added activities, such as processing, designing and packaging, and co-
operating with other sellers, company L expands itself into a new
market segment. Company L also supplies high quality products to
other famous B2C platforms in China. Meanwhile, WL extends its offline
network through acquiring the largest local convenience store chain
and opening new stores. There are over 60 stores in the local market
until late 2016, which helps to tackle the last mile transportation pro-
blem. WL also cooperates with other food chain brands and preserves
showcases for them in stores to offer high end products for local cus-
tomers. On the other hand, company L operates an e-commerce in-
dustrial park and provides logistics, finance and other services for e-
commercial start-ups. There are 52 start-ups in the park in the first year.
To provide differentiated offerings mentioned above, company L
strategically maintains long term partnership with its clients and seizes
potential business opportunities. Its marketing managers are required
to spend most of their time with clients. By frequent informal and ca-
sual communications, these marketing managers attempt to discover
customer needs, which are even not aware by their clients, and preach
the services that company L can offer.
5. Cross-case analysis
5.1. Cold chain LSPs' innovation and competitiveness
Coding results based on the seven success factors are presented in
Table 3. Since the identified innovation practices from case firms were
coded into the success factor categories according to their relevancy or
contribution, the results in Table 3 shows how these innovation prac-
tices facilitating cold chain LSPs' competitiveness through these success
factors. Specifically, it is observed that all these four case firms are
engaged in at least two innovation practices which are new to the in-
dustry. From the interviews, we realized that innovation is considered
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Industrial Marketing Management xxx (xxxx) xxx–xxx
Table 3
Innovation activities to gain competitiveness.
Factors H Y N L
Focus on rigorous efficiency A lean organization and
governance
Advanced IT and digital 1 1 1
capabilities
Standardization and 2 1 3
industrialization
Focus on differentiating Human resources excellence
offering Dynamic value pricing
Specialization and focus 2 3 5
Long-term customer 1 1
partnerships
Note: The number indicates the amount of innovation practices.
among the most important factors for these firms maintaining their
leading positions. As the corporate vice president of company Y said,
“The market is flourishing from a backward status, and for seizing this
opportunity, we are trying to invest in new tools and facilities and
searching for new ways of doing business. Only by doing so can we
advance with the market and not be replaced by the competitors.”
Even though both innovation strategies (i.e. rigorous efficiency and
differential offering) are critical to competitiveness, the coding results
and within-case descriptions suggest that leading cold chain LSPs in
China may be more enthusiastic in differentiating offerings. For ex-
ample, 10 innovation practices from companies Y, N and L were related
to the category of specialization and focus, which covers near half of the
total innovation practices. These firms attempt to identify specific de-
mands from customers, industrial partners and local communities, and
fulfil them through new value-added offerings. Examples can be found
from the financial services provided by company L for its small and
medium suppliers, and the customs declaration and quarantine in-
spection process reengineering initiated by company N.
In the four case firms, no innovation practices were found in cate-
gories of a lean organization and governance, human resources ex-
cellence, and dynamic value pricing. However, it does not mean that
they are not important. It is possible that in a rapid growing and de-
centralized cold chain logistics service market (China Cold-chain
Logistics Association, 2016), the management of LSPs prioritizes the
needs of resources from innovation practices which contribute directly
to providing quality services, reducing costs, and enhancing customer
lock-in. In addition, the case firms may also have practices related to
these categories, but the practices are not as innovative as the ones
identified in this research.
5.2. Types of LSP innovation and contingent factors
Innovation practices were also coded into different innovation
types. These results are presented in Tables 4 and 5. Table 4 shows that
there is no substantive difference of innovation practice numbers be-
tween product and process innovation within any case company.
However, they do vary across companies. We argue that these differ-
ences across companies are consequences of the effects from two con-
tingent factors, i.e. state ownership and regulatory pressure. We will
discuss this in the next section. As the coding results show, given similar
Table 4
LSP innovation practices in product and process innovation.
Product innovation Process innovation
Company H 1 1
Company Y 2 3
Company N 2 2
Company L 5 5
Note: The number indicates the amount of innovation practices.
J. Dai, et al.
Table 5
LSP business model innovation.
Modular Architectural
Low High Low High
Company H X
Company Y X
Company N X
Company L X
Note: X indicates that the company belongs to the corresponding category.
levels of regulatory pressure, companies characterized with high state-
owned share exhibit less innovation practices than their counterparts
(i.e., H versus Y, and N versus L). Given similar levels of state owner-
ship, companies embedded in high regulatory pressure seem less active
in initiating innovation (i.e., H versus N, and Y versus L).
In Table 5, both companies H and N were categorized as modular
BMI, since their new value-added services did not change their value
proposition, delivery and capture mechanisms (Foss & Saebi, 2016).
However, they were also different in the level of modular BMI im-
plementation. For example, company H provides customer capability
building services for critical buyers only based on its traditional com-
petences (e.g. temperature control for transporting and storing phar-
maceutical products), while company N is engaged in a new port
transaction market and a tracing system project, both of which require
building and investing on new competences. On the other hand, com-
panies Y and L were classified into the architectural BMI category and
they also present different level of implementation in architectural BMI.
Company Y transforms itself from a professional cold chain LSP to the
operator of an online-to-offline medical device service platform, which
is a business competence reconstruction. By contrast, company L goes
even further. It rebalances its business portfolio and provides various
but correlated differentiating offerings based on its excellent logistics
service capabilities and expertise. This newly established business
model also contains an online-to-offline business, which is similar to
company Y.
In this research, we propose that state ownership and regulatory
pressure as contingency factors which would influence a company's BMI
implementation level. Table 5 shows that, controlled levels of reg-
ulatory pressure, companies characterized with high state-owned share
have lower implementation level of BMI compared with their coun-
terparts (i.e., H versus Y, and N versus L). Considering that architectural
BMI needs more radical change than modular BMI, our coding results
show that given a certain level of state ownership, companies under
high regulatory pressure develop lower BMI than the ones under low
pressure (i.e., H versus N, and Y versus L). A conceptual model is pre-
sented in Fig. 2.
6. Discussion and propositions
Prior studies have suggested that LSPs are not particularly
Influencing factors LSP’s practices
in emerging markets
State ownership LSP’s innovation practices
Rigorous efficiency vs.
Differentiating offerings
Product vs. Process
Modular BMI vs.
Regulatory pressure
Architectural BMI
Fig. 2. Conceptual framework.
9
Industrial Marketing Management xxx (xxxx) xxx–xxx
innovative (Busse, 2010; Oke, 2007; Wagner, 2008). For example, by
using an annual survey on innovation behaviours of German firms,
Wagner (2008) showed that German transportation firms on average
are less innovative than the other eight service industries (e.g. whole-
sale trade and financial service). Busse (2010) compared the differences
of LSPs versus non-LSPs in their innovativeness and found that “other
things being equal, relatively low returns on innovation would result
for the average of LSP” (Busse, 2010, p.55). However, the results of this
research depict a different scenario. As shown in previous sections,
these case firms consider innovation as a key factor to maintain their
competitiveness and do spend great amounts of resources in various
innovation practices. The reasons for this observed enthusiasm (i.e.
competing through innovation, especially by offering differential values
innovatively) from leading cold chain LSPs in China may result from
some context-specific characteristics.
First, China is among the most dynamic emerging markets in the
world. It is experiencing an on-going transition from a market featured
as heterogeneous, local and fragmented to the one that is more in-
tegrated and industrialized (Sheth, 2011). Owing to globalization and
deregulation, LSPs are facing mounting demands for value-added,
comprehensive logistics services and increasingly severe competition
(da Mota Pedrosa, Blazevic, & Jasmand, 2015). To survive in a com-
petitive market, LSPs have to innovate. This is also manifested in the
cold chain context (China Cold-chain Logistics Association, 2016). One
of the prominent features of this industry is the so-called “consumption
upgrading”. The overall consumer base keeps growing rapidly, and
consumers are increasingly aware of the importance of product quality
and safety. Therefore, cold chain LSPs have to employ innovation
strategies focusing on rigorous efficiency in improving their service
capacities and leveraging the benefits of scale efficiency (Sheth, 2011).
Failing in this aspect may result in the shrinking of market share and
the loss of market leadership. The results of our case study provide
details on how leading LSPs innovate in building advanced IT and di-
gital capabilities and extending standardization and industrialization
for smoothing information flows and reducing service costs (see Table 3
and Appendix B).
Second, the cold chain industry is in the growth lifecycle phase
(Karniouchina, Carson, Short, & Ketchen Jr, 2013; Miles, Snow, &
Sharfman, 1993), since thousands of companies are competing in var-
ious market segments, and the annual sales of the whole industry grows
rapidly (China Cold-chain Logistics Association, 2016). Through the
interviews, we recognize that our case firms treat this growth phase as a
precious opportunity window. They committed resources to innovation
for “winning the tickets to industry giants club” (quoted from the cor-
porate vice present of company Y), since they expect that the compe-
tition would become more intense in the upcoming future and “most of
the companies that are not large and innovative enough would struggle
for survival” (quoted from the corporate president of company L). For
seizing this growth opportunity, leading LSPs tend to invest more re-
sources in innovation initiatives that facilitate differential service of-
ferings than the efficiency innovation initiatives. This is because by
LSP’s outcomes
Competitiveness
J. Dai, et al.
extending their business domains and providing new value-added yet
related services to customers, they could widen and deepen their
market intelligence in the industry, and also foster customer loyalty if
they do well. Since they cultivate these resources (e.g. market in-
telligence and customer loyalty) through innovation initiatives, which
are not common in the industry, they actually generate comparative
advantages based on these resources.
In sum, according to the Resource-Advantage Theory, these re-
source comparative advantages would further lead to competitive ad-
vantage in terms of better market positions, and then result in superior
financial performance (Hunt & Davis, 2008; Hunt & Morgan, 1995).
Busse (2010) also indicates that LSPs with market novelties, which
means innovation in value-added service products, receive more com-
pensation than others. This argument is also consistent with research on
LSPs in emerging markets (e.g. Chu et al., 2018; Cui, Su, & Hertz, 2012).
Thus, we propose:
Proposition 1a. Leading cold chain LSPs in emerging markets tend to
employ innovation strategies for gaining market competitive
advantage.
Proposition 1b. Leading cold chain LSPs in emerging markets tend to
spend more efforts in providing new value-added and differential
services than other innovation strategies for gaining market
competitive advantage.
Emerging markets are also featured as immersed in enormous in-
fluence of socio-political governance. Socio-political institutions in
emerging markets, such as governments, religion, business groups,
nongovernmental organizations and local communities, usually have
greater impact on markets than competition (Sheth, 2011). In this re-
search, we further investigate the role played by government influen-
cing cold chain LSPs' innovation initiatives in China, since this is a
country experiencing a transitional period from planned economy to
market economy with respect to resource allocation, and the govern-
ment still has formidable power over companies. In the following
paragraphs, we discuss on how the government exerts its influence on
the cold chain service innovation through state ownership and reg-
ulatory pressure.
Through the lens of Resource-Advantage Theory, state ownership
could be treated as a kind of resources generated from the government
and provides comparative resource advantages from easier access to
specific and scarce technological resources and financial supports (Choi
et al., 2012). Our coding results show that high state-owned share re-
lates to less innovation activities and lower levels of BMI implementa-
tion in cold chain LSPs. One of the reasons for this negative relationship
is that explicit or implicit government endorsements generate enough
comparative resource advantages for these LSPs maintaining their
leading market positions. Thus, leading LSPs with high state-owned
share are less motivated to engage in innovation activities, since in-
novation is always related to risks and responsibilities. For example,
most of the orders received by company H are placed by its parent
company, which is a giant pharmaceutical SOE. Given its high state
ownership, some large local hospitals even suggest other pharmaceu-
tical suppliers using their logistics service, because “the information
about the pharmaceuticals are well-organized and can be easily re-
trieved if anything unexpected happened”, and “they trust our service
quality because they know we will comply with state regulations
strictly” (quoted from the quality control supervisor of company H).
Another reason may be rooted in the potential conflict between
governments' socio-political goals and the LSPs' pursuit of profit max-
imization (Choi et al., 2011). In recent years, the Chinese government
pays increasing attention to the development of cold chain logistics
industry, since service quality of these LSPs has a direct impact on the
quality of perishable products, which is critical for human health
(Olafsdottir et al., 2010). High state-owned share means high pressures
to actively comply with government's socio-political goals in cold chain
10
Industrial Marketing Management xxx (xxxx) xxx–xxx
logistics service. LSPs with high state-owned share have to allocate
resources accordingly and stick to these businesses that they are des-
tined to do. For example, in the interview with company H, their vice
general manager often referred to words like “social responsibility”,
“our obligations” and “social impact” for making sense of their beha-
viours. They were also very proud of being praised by government
departments for their efforts on improving quality of their businesses.
Therefore, it seems less necessary for LSPs with high state-owned share
to develop a more sophisticate business model for securing their market
positions. In sum, we suggest the following propositions:
Proposition 2a. State ownership is negatively related to the overall
level of innovation initiated by leading cold chain LSPs in emerging
markets.
Proposition 2b. State ownership is negatively related to the level of
BMI implementation initiated by leading cold chain LSPs in emerging
markets.
High regulatory pressure forces firms to make additional ex-
penditures to avoid severe penalties (Stewart, 1981). It also raises costs
for the firms violating regulations by impairing their legitimacy per-
ceived by stakeholders (Suchman, 1995). Therefore, firms have the
incentives to invest on infrastructures or R&D for meeting these reg-
ulatory requirements. That is why regulatory pressure is positively re-
lated to firms' innovation in some studies (Beerepoot & Beerepoot,
2007; Jaffe & Palmer, 1997; Kammerer, 2009). However, the coding
results in our research indicate that high regulatory pressure relates to
lower levels of cold chain LSPs' innovation and the level of BMI im-
plementation in China.
As Sheth (2011) suggests, chronic shortage of resources and in-
adequate infrastructure are two important features of emerging mar-
kets. These features are also prominent in Chinese cold chain industry.
Through the case interviews, we recognize that there is a tension be-
tween the increasingly strict regulations and shortage of resources for
LSPs investing in cold chain logistic infrastructure and facilities. As we
mentioned in Section 4, in the case of company Y, most medical device
producers outsource their product transportation to parcel delivery
companies, since only few professional cold chain LSPs with adequate
infrastructure and service capacities are in the market. However, these
parcel delivery services do not conform to the requirements of the
RSMMD released several years ago. This tension suggests that cold
chain LSPs in high regulatory pressure market segments may be
struggling to meet the regulatory requirements, and few resources are
left for innovation. In other words, they are far from the stage of in-
novatively solving service problems and fulfilling various requirements
from the body of increasingly strict regulations. They are striving to use
any resource available to keep up with the changing regulations. Even
for leading LSPs like company Y, their general manager said that “we
are very prudent to initiate any new innovative projects, and we want
to focus on what we have established, and to achieve our goals at an
incremental and sturdy pace.”
On the contrary, a low level of regulatory pressure indicates a
system of regulations with narrow scope and less stringency (Cook,
Shortell, Conrad, & Morrisey, 1983). Firms under this sort of system are
facing tremendous uncertainties. With fewer constraints, firms can
freely revise their value propositions serving customers based on their
internal resource endowment and external network, which may lead to
unique business models. Leading cold chain LSPs under low regulatory
pressure may tend to increase their degree of BMI implementation to
the extent that is “sufficiently differentiated and hard to replicate for
incumbents and new entrants” (Teece, 2010, p.173). Company L offers
a great example for this argument. Therefore, according to the coding
results and our analysis, we propose:
Proposition 3a. Regulatory pressure is negatively related to the overall
level of innovation initiated by leading cold chain LSPs in emerging
markets.
J. Dai, et al. Industrial Marketing Management xxx (xxxx) xxx–xxx

Proposition 3b. Regulatory pressure is negatively related to the level of
BMI implementation initiated by leading cold chain LSPs in emerging
markets.
7. Conclusions
7.1. Theoretical implications
The present study contributes to the literature in several ways. First,
our investigation contributes to the literature on logistics service in-
novation, particularly in cold chain industry. Research on service in-
novation in logistics industry is still limited (Busse & Wallenburg,
2011), especially in emerging markets like China (Chu et al., 2018; Cui
et al., 2012). Our investigation is a response to the call for more re-
search on logistics service innovation (Busse & Wallenburg, 2011;
Grawe, 2009). Our study provides empirical evidence for cold chain
logistics service innovation in the Chinese context.
Second, our study also contributes to cold chain logistics research by
examining the effects of two institutional factors, i.e. state ownership
and regulatory pressure, on innovation practices. Undoubtedly, gov-
ernments play an important role in both cold chain industry and
emerging markets. However, there is a dearth of comprehensive con-
sideration of their influence on LSP innovation. Our study fulfils this
research gap through a multiple-case study, and scrutinizes the influ-
ence of governments from the perspective of internal ownership
structure and external regulatory pressure.
7.2. Managerial implications
Since we selected leading cold chain LSPs as case firms, our findings
could offer potential benchmark for general cold chain LSPs. Through
multiple-case study, we provide evidence that leading cold chain LSPs
in China consider innovation as an important way to gain competitive
advantages. For those cold chain LSPs aiming to develop new services
could be encouraged to follow leading firms and use them as bench-
mark. Our findings also suggest that leading cold chain LSPs in China
tend to spend more efforts in providing new value-added and differ-
ential services than other innovation strategies for gaining competitive
advantages. These findings are particularly important for Chinese cold
chain LSPs because benchmark is provided. Cold chain LSPs need to
differentiate themselves in highly competitive markets. They have to do
so through innovation and offering advanced logistics services. The
innovation activities we summarized in Table 3 could act as a potential
list for general LSPs to develop service innovation.
While considering state ownership and regulatory pressure, this
study could also provide implications to government and policy makers.
Our findings suggest that the negative effect of state ownership and
high pressure on encouraging cold chain LSPs to develop service in-
novation. Usually private firms face fewer constraints from govern-
ment, thus it is easier for them to create new services. High regulatory
pressure is another constraint to refrain firms' flexibility and creativity.
Thus, in order to encourage service innovation in cold chain logistics
industry, government and policy makers should design policy portfolios
in a way of which on one side could prevent low quality service and
ensure the food and medicine security, and on another side, could
provide resources for innovation and encourage flexibility and crea-
tivity.
7.3. Limitations and future research
Complementing other research, this study contributes to a more
comprehensive view of how innovation functions in cold chain logistics.
However, there are limitations warranting future research. First, this
study only covers four leading cold chain LSPs. Future research may
involve more cases to improve the result robustness and achieve a
better external validity. Second, the case study approach is particularly
suitable for generating insights and developing new theories when
there is little previous research. The sample is derived following a
theoretical sampling logic to fulfil the research concern. A following
quantitative research with sophisticated design needs to be im-
plemented to test the generalizability of our research findings.
Acknowledgement
This work was supported by the National Natural Science
Foundation of China under Grant numbers 71602096, 71821002 and
71472166.

Appendix A. Interview protocol1

A.1. The research

1) Explain research purposes and scope

2) Obtain interviewees’ titles and responsibilities
3) Ask possible ways to get further materials

A.2. The firm

1) Basic information about the firm (e.g. history, key businesses, key processes, state ownership)
2) Describe key internal factors and their influence on firm’s pursuit of competitiveness
3) Any support or impediment on the business from internal factors

A.3. Business environment

1) Describe key external factors and their influence on the firm’s pursuit of competitiveness
2) Any important laws, regulations, industrial standards or norms that influence the firm’s operations (and innovation); how they exert their
influences and how the firm respond to them
3) Any support or impediment on the business from external factors (e.g. any stakeholder)

1
There are six topics in the protocol. In each topic, interviewees were asked multiple open-ended questions. These questions were generally guided by the listed
statements, while often tailored and adapted in each interview according to unique features of the firm, the context and the role of the interviewees.

11
J. Dai, et al. Industrial Marketing Management xxx (xxxx) xxx–xxx

A.4. Cold chain innovation practices (comparing to peers, new to industry)

1) Any technology is developed or adopted

2) Any unique value offered, or ways to advance efficiency
3) Any unique services, operations or processes, management practices
4) Any unique practices developed from interaction with supply chain partners, governments or other types of stakeholders
5) Describe the business model, and any uniqueness about it
6) Describe any practice that is new compared to competitors
7) Describe any practice that the firm do for facilitating innovation
8) Assess the novelty of innovation practices

A.5. Outcomes of innovation

1) Describe explicit and implicit outcomes of implementing innovation practices

2) Your ideas about the relationship between innovation and the firm’s competitiveness

A.6. Factors influencing innovation

1) Any support or impediment on the firm’s innovation from internal factors (especially the effects of state ownership)
2) Any support or impediment on the firm’s innovation from external factors (especially the effects of regulatory pressure)
3) Describe the fundamental motivations for enhancing innovation

Appendix B. Coding details of innovation activities

Factors H Y N L

Focus on rigorous effi- A lean organization and gov-

ciency ernance
Advanced IT and digital cap-
abilities
• Integrated IT system • Opened
form
online order plat- • Tailored WMS and MTMS
Standardization and indus- • New facilities • Solar roof • New facilities
trialization • SOPs in IVD logistics service • Upstream
zation
product standardi-

• Transportation
agement
partner man-

Focus on differentiating Human resources excellence

offering Dynamic value pricing
Specialization and focus • Professional logistics service • Transaction center • Region-based 4PL service
for IVD • Process reengi- • Financial services
• O2O business model neering • Online B2B and B2C
• Tracking
project
system • E-commercial
bator
startups incu-

• Offline network
Long-term customer partner-
ships
• Customers
building
capability • Customer relationship
maintaining

Appendix C. Coding details of innovation practices in product and process innovation

Product innovation Processes innovation

Company H • Customers capability building • Integrated IT system

Company Y • Professional logistics service for IVD; • New facilities
• O2O business model • SOPs in IVD logistics service;
• Opened online order platform
Company N • Transaction center • Process reengineering
• Tracking system project • Solar roof
Company L • Region-based 4PL service • Tailored WMS and MTMS
• Financial services • New facilities
• Online B2B and B2C • Upstream product standardization
• E-commercial startups incubator • Transportation partner management
• Offline network • Customer relationship maintaining

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