Gaining Customer Loyalty With Tracking Information Quality in B2B Logistics

Journal of Management Information Systems
ISSN: (Print) (Online) Journal homepage: www.tandfonline.com/journals/mmis20
Gaining Customer Loyalty with Tracking

Information Quality in B2B Logistics
Arun Rai, Xinlin Tang, Zhitao Yin & Steven Du
To cite this article: Arun Rai, Xinlin Tang, Zhitao Yin & Steven Du (2022) Gaining Customer
Loyalty with Tracking Information Quality in B2B Logistics, Journal of Management Information
Systems, 39:2, 307-335, DOI: 10.1080/07421222.2022.2063552
To link to this article: https://doi.org/10.1080/07421222.2022.2063552
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JOURNAL OF MANAGEMENT INFORMATION SYSTEMS
2022, VOL. 39, NO. 2, 307–335
https://doi.org/10.1080/07421222.2022.2063552
Gaining Customer Loyalty with Tracking Information Quality in

B2B Logistics
a b c d
Arun Rai , Xinlin Tang , Zhitao Yin , and Steven Du
a
Center for Digital Innovation & Department of Computer Information Systems, J. Mack Robinson College of
Business, Georgia State University, Atlanta, GA, USA; bBusiness Analytics, Information Systems and Supply Chain
Department, College of Business, Florida State University, Tallahassee, FL, USA; cDepartment of Information
Systems, Business Statistics and Operations Management, The Hong Kong University of Science and
Technology, Kowloon, Hong Kong; dFoster School District, Foster, RI, USA
ABSTRACT KEYWORDS
Although vendor firms invest heavily in technologies to digitalize busi Tracking information quality;
ness-to-business (B2B) service orchestration, little is known about the customer loyalty; use value;
mechanisms through which high quality information, a key resource exchange value; service
generated from digitalization, creates customer loyalty. Positioning our complexity; service
orchestration; digitalization;
work in the B2B logistics services context, we take a customer needs B2B logistics; customer
fulfillment perspective to understand value creation and capture from loyalty
digitalization of service orchestration in B2B logistics relationships. We
suggest that a vendor will capture exchange value, manifesting as custo
mer loyalty, for the customer’s perceived use value of the service enabled
by tracking information quality on service orchestration. We propose that
service flexibility and service efficiency provided by the logistics vendor
are two types of use value for customers, which serve as the value-
creation pathways through which tracking information quality affects
customer loyalty, the exchange value received by the vendor. We further
argue that service modal variety, a key aspect of service complexity,
moderates the value-creation pathways of tracking information quality.
Using survey and archival data of B2B relationships between a Fortune
100 logistics vendor and its major customers, we find empirical support
for the use value mechanisms through which tracking information quality
affects customer loyalty in the context of B2B logistics services.
Introduction
Gaining customer loyalty in B2B logistics services, and more broadly B2B services, remains a key
challenge for firms. Customer loyalty represents a customer’s willingness and desire to repeat
edly use a service from a vendor [75]. Loyal customers can be an important asset for the vendor’s
long-term success because the vendor can generate more profits without incurring acquisition
cost. Additionally, loyal customers can promote the purchase of services by sharing their
experiences with others and provide feedback that enables the vendor to improve and innovate
its services. Given these extensive benefits of customer loyalty, scholars have investigated and
advanced our understanding on how to achieve customer loyalty in the business-to-consumer
(B2C) context, surfacing customer satisfaction as a major predictor of it [e.g., 24,94].
CONTACT Arun Rai arunrai@gsu.edu Center for Digital Innovation & Department of Computer Information Systems,
J. Mack Robinson College of Business, Georgia State University, 35 Broad St. NW. Atlanta, GA 30303, USA.
Supplemental data for this article can be accessed online at https://doi.org/10.1080/07421222.2022.2063552
© 2022 Taylor & Francis Group, LLC
308 A. RAI ET AL.
However, the B2B context is dramatically different from the B2C context in that business
customers pay particular attention to the economic outcomes for their firms (e.g., sales
volume, profit margins, and discounts) that are derived from the sourcing relationship with
the vendor [34]. In fact, business customers who are satisfied with a vendor often switch to
a competitor [13, 14, 58] especially in industries such as logistics where competition is
intense. Based on an extensive review of the customer loyalty literature, Kumar et al. [47]
problematize the direct linkage between customer satisfaction and customer loyalty in the
B2B context. They caution that customer satisfaction, although a major predictor for
customer loyalty in the B2C context, only accounts for a small portion of the variance in
the B2B context. Motivated to advance our understanding of customer loyalty in the B2B
context, specifically B2B logistics, our study shifts the focus of scholarly conversation
regarding customer loyalty from customer satisfaction to employing a customer needs
fulfillment perspective to understand how value is created and captured in B2B logistics
relationships. As such, we approach the attainment of customer loyalty with a lens of
achieving use value of a service to fulfill customer needs, enabled by digitalization of service
orchestration, which leads the customer to reciprocate with loyalty to the vendor.
Specifically, the literature on supply chain management and B2B logistics indicates that
customers value (i) service flexibility, which captures a customer’s perception on the
vendor’s ability to adapt the service to meet the customer’s changing service requirements,
and (ii) service efficiency, which refers to a customer’s perception on the vendor’s ability to
render the service with cost-efficiency [56, 83, 96]. How well customers perceive that the
service provided by a vendor meets their needs for efficiency and flexibility can affect their
willingness and desire to stay with the vendor [78, 88]. Moreover, vendors have been
investing aggressively in the digitalization of service orchestration, seeking to generate
quality information to improve customer use value of the service. Thus, we focus on
illuminating the pathways linking information quality regarding service orchestration to
the use value of the service for efficiency and flexibility to the capture of exchange value as
customer loyalty.
We situate our work in the B2B logistics service context. With spending in the U.S. logistics
and transportation industry totaling $1.6 trillion in 2018 and representing 8 percent of annual
gross domestic product [80] B2B logistics is a key sector of the US economy. It serves as an
ideal research setting for our study for three reasons. First, because of the intensified
competition in this industry, obtaining customer loyalty has become a key for the survival
and success of logistics vendors. Second, emerging digital technologies, such as radio fre
quency identification (RFID), internet of things (IoT), and blockchain, have been increasingly
used to track the flows of goods, information and finance activities related to service
orchestration, improving transparency, security and even combating corruptions in supply
chains [50, 79]. B2B logistics vendors, such as United Parcel Service (UPS), Federal Express
(FedEx), and DHL, have been taking advantage of these technologies and developing cap
abilities that leverage the tracking information obtained from the digitalized service processes.
Tracking information can be leveraged to expose inefficiencies in the operational processes in
a customer’s supply chain and enable the customer to streamline how activities are coordi
nated with logistics vendors and supply chain partners. Moreover, the customer, in concert
with the logistics vendor, can adjust the orchestration of the supply chain as information
related to operational processes is revealed. Third, customers expect vendors to listen and
understand who they are and what their business does, and to tailor business communications
JOURNAL OF MANAGEMENT INFORMATION SYSTEMS 309
and services to meet their unique and changing logistics needs [70]. Thus, B2B logistics service
provides an excellent setting to understand how tracking information generated from digita
lization can be leveraged to create use value of the service and drive customer loyalty.
We evaluate the quality of tracking information provided by logistics vendors from the
customer perspective, as quality of information is necessarily a subjective assessment [27].
Quality appraisal of the same tracking information provided by the vendor can vary across
customers based on their respective needs for content, timeliness, and accuracy of informa
tion. For example, tracking information which renders moderate detail on timestamps, geo-
locations, and progression of events in the orchestration of the service can be considered as
high quality by one customer but low quality by another. Thus, understanding how
perceptions of tracking information quality relate to customer loyalty requires identifying
the mediating use value mechanisms. This leads us to ask:
Research Question 1: How does tracking information quality relate to customer loyalty through
the use value of the service for efficiency and flexibility?
Furthermore, we ask how the development of customer loyalty from tracking informa
tion quality through the types of use value is contingent on service modal variety, defined as
the variety in the modes of logistics service that are sourced from the vendor. Service modal
variety captures a unique aspect of complexity in the logistics service context. Where
multiple logistics modes (e.g., air, ground, ocean) are involved, the need to achieve multi
modal synchronicity in the flow of diverse components and resources arises [4, 46]. We
conjecture that the increased coordination requirements to achieve multimodal synchroni
city can change the importance of the use value pathways through which tracking informa
tion quality leads to value capture. Thus, we ask:
Research Question 2: How does service modal variety change the importance of the use value of
the service for efficiency and flexibility through which tracking information quality relates to
customer loyalty?
We answer the research questions using survey and archival data from a Fortune 100
logistics vendor and its major business customers. Our empirical evidence supports our
theorization that service efficiency and service flexibility are two use-value pathways
through which tracking information quality relates to customer loyalty. Interestingly, we
uncover asymmetric effects in terms of how service modal variety moderates the impor
tance of these two pathways. For customers whose sourced logistics service involves multi
ple logistics modes, tracking information quality plays a more substantial role in enhancing
service flexibility. However, it is service efficiency that contributes more to enhancing the
loyalty of these customers.
Theoretical Framework
Our theoretical framework is based on the premise that customer needs fulfillment is
essential to a successful B2B relationship and one that is likely to lead to customer loyalty.
We elaborate this premise by drawing on the lens of value creation and capture from the
strategy literature [11, 49]. As value creation and capture can occur at different levels of
analysis (e.g., individuals, teams, organizations), it is important to delineate the targets of
value (the stakeholder for whom value is created by the service) and the sources of value (the
310 A. RAI ET AL.
stakeholders who provides the service and captures a return for doing so). Accordingly, two
types of value can be differentiated: (i) use value, which refers to the quality of the service as
perceived by users (targets of value) in relation to their needs and (ii) exchange value, which
refers to the tangible or intangible benefits that are realized by the vendor (source of value)
in exchange for the service [11, 49, 84].
Although the service provided by the vendor can be the same, the use value of the
service is subjective and context-specific as target users often differ in their value
appraisal of the service that is offered by a vendor because of variations in users’
requirements, their knowledge to conduct an evaluation, and their understanding of
market alternatives [11]. The value assessed by the target user will influence their
willingness to exchange a monetary amount or a non-monetary return for the service.
Two economic conditions are necessary to sustain the value creation in the long term:
the target user has to assess the use value to be greater than the closest market
alternative for the service, while the benefits for the vendor must exceed their costs
to create the value.
Appropriating the value creation and capture lens to our context, we advance
a theoretical framework for value creation and capture in B2B logistics relationships from
the digitalization of service orchestration by vendors (Figure 1). The target of value is the
customer, and the source of value is the logistics vendor. Digitalization initiatives generate
information on service orchestration. Use value refers to the customer’s perceived value of
how well the logistics service that they source from the vendor meets their needs for
flexibility and efficiency. In contrast, exchange value refers to benefits (e.g., customer
loyalty) that accrue to the vendor by providing the service to the customer.
In establishing our theoretical framework, we look at the flow from digitalization
initiatives to use value to exchange value from the perspective of the customer. Even if
the vendor provides identical information to customers, the perceived information quality
pertaining to service orchestration can vary across customers because of differences in their
needs for timeliness, accuracy, and accessibility of information. Moreover, the exchange
value that the customer will be willing to give to the vendor for the service will be mediated
by their perceived use value of the service.
In sum, our framework explicates the link from customers’ perceived quality of
information resulting from the vendor’s digitalization initiatives, to their perceived use
value of the logistics service, to the exchange value realized by the vendor for the
service.
Figure 1. Value creation and capture from B2B logistics digitalization.

Review of Related Literature

Guided by our theoretical framework, we review the relevant literature streams to surface
research gaps, inform our research model, and define the constructs. We focus on three key
literature streams. First, we review the literature on achieving customer loyalty in B2B
contexts. Based on this stream, we define customer loyalty as a type of exchange value and
synthesize insights from past work to motivate the customer needs fulfillment perspective to
understand value creation and value capture in B2B logistics relationships. Second, we review
the literature on developing service capabilities for supply chains and B2B logistics. In doing so,
we identify and define service efficiency and service flexibility as two types of use value in B2B
logistics through which customer needs are fulfilled. Third, we review the literature on
information as a resource in supply chains and B2B logistics. Based on this review, we motivate
and define tracking information quality as an enabling resource of use value for B2B logistics
services and service modal variety as a contingency affecting this relationship. Collectively,
the literature synthesis enables us to identify the gaps in positioning our study as a bridge
across these streams to illuminate the pathways through which a vendor’s digitalization
initiatives of service orchestration can achieve customer loyalty in B2B logistics relationships.
Next, we discuss the insights obtained from reviewing each of these literature streams
(Online Supplemental Appendix A provides additional details on individual studies).
Literature Stream #1: Achieving Customer Loyalty in B2B Contexts

We define customer loyalty as a customer’s willingness and desire to repeatedly purchase
a product or use a service from a vendor [75], a type of exchange value that vendors seek to
capture from customers. Extant studies on customer loyalty in the B2B context have found
that in addition to customer satisfaction, customer value [10, 48], switching costs [65, 77], and
relationship quality [73] can contribute to customer loyalty. These studies reveal that, unlike in
the B2C context, the linkage between customer satisfaction and customer loyalty is tenuous in
the B2B context, and suggest future studies integrate novel antecedents and uncover the value
creation mechanisms through which customer loyalty is achieved in B2B relationships [47].
To advance our understanding of customer loyalty in B2B services, we shift the focus
from customer satisfaction to customer needs fulfillment. To identify the types of use value
that can fulfill customer needs that in turn enable vendors to capture exchange value, we
review the literatures on supply chain management and B2B logistics, and digitalization to
orchestrate supply chains and B2B logistics as we discuss next.
Literature Stream #2: Developing Service Capabilities for Supply Chains and B2B
Logistics
B2B service capabilities pertain to the vendor’s abilities to help “customers to get one or
more jobs done (i.e., accomplish a goal or resolve a problem)” [8, p. 44]. Extant research
suggests that customers obtain use value of logistics services from the vendor’s abilities to (i)
handle customer requests such as order fulfillment and product returns in a cost-efficient
way [43, 52, 56] and (ii) proactively adapt their services to meet customers’ changing
312 A. RAI ET AL.
requirements [88, 96]. From a customer’s perspective, we therefore identify customer’s

perceptions of service efficiency and service flexibility as the two types of use value for B2B
logistics services.
Specifically, service efficiency refers to customer perception of the vendor’s ability to
render the service with cost-efficiency [95]. Given the high competition in the logistics
industry, whether vendors ship goods between point of origin and point of consumption in
a cost-efficient manner is an important aspect that customers consider in their sourcing
decisions [43].
In contrast, service flexibility captures customer perception on the vendor’s ability to
adapt the service to meet the customer’s changing service requirements [95]. Logistics
involves coordinating the flows of information, goods, and finance across stages and
partners in the supply chain, with uncertainty stemming from various sources [69]. This
uncertainty can come from shocks such as inclement weather or severe pandemic, excep
tions such as delays in production schedules of partners, or lack of information on supply
and demand [71, 96]. As an example of the latter, Sport Obermeyer, a fashion sportswear
company, places a steady order for greige fabric each month and specifies the dye color, but
prints at a later point in time after acquiring additional information on customer prefer
ences of patterns and styles [30]. Although such a strategy can differentiate a firm’s products
from competitors, it generates significant uncertainty with risks of financial loss if the firm
cannot dynamically adjust its logistics process [96]. Thus, whether the vendor is able to
adjust its service orchestration to meet the changing requirements of a customer is a critical
use value for logistics services.
Literature Stream #3: Information as a Resource in Supply Chains and B2B Logistics
The digitalization of logistics service orchestration can generate granular and real-time
information encompassing different facets of service orchestration including origination
and fulfillment of orders, stocks and flows of shipments, flows of information and finances
between parties, disruptions and exceptions in plan execution, acknowledgment of excep
tions, and alerts [45, 71]. In the B2B context, leading logistics vendors such as UPS, FedEx,
DHL have invested in rapid-fire IT innovations ranging from RFID to IoT to blockchain to
redefine (i) the types of data that can be captured in the logistics process; (ii) the accuracy
and completeness of the captured data; (iii) how data across systems and partners in the
supply chain are integrated; and (d) how data can be shared with partners. Studies have
found timely and accurate exchange of information between partners to create value for
supply chain partners [18, 23, 85, 90]. Information on service orchestration not only
substitutes inventory holdings, thereby leading to operational efficiency [61], but also
moves manufacturing firms to outsource logistics [35]. Due to the importance of high-
quality information, emerging technologies such as blockchain and IoT are being incorpo
rated into digitalization initiatives to enhance the trustworthiness and security of
information related to supply chains and logistics [15, 16].
Thus, a key issue from a customer’s perspective is whether the tracking information
generated from the vendor’s digitalization initiatives meets their logistics process require
ments. We suggest that the quality of the tracking information on service orchestration is
a key resource to build requisite service capabilities to fulfill a customer’s needs. We
define tracking information quality as the degree to which the tracking information
provided by the logistics vendor meets a customer’s needs. This definition aligns with the
conceptualization of information quality as the degree to which the information
exchanged between organizations meets the needs of the organization for the particular
exchange process [62]. It also aligns with the idea that even when information on service
orchestration is generated by the same information system (e.g., a vendor’s logistics
system), the perception of information quality is likely to differ across users based on
their needs [6]. As such, a definition of information quality from a customer’s perspective,
like ours, “signifies and conveys a system’s ability to provide accurate, complete, timely,
and interpretable information to support work tasks, reporting, and decision making.”
[93, p. 158]
Another insight from our review of this literature stream, as well as related work on
supply chains and B2B logistics, is that service complexity is an important contingency in
value creation and value capture [88, 92]. Modal variety of a logistics service requires
managing resource flows across different modes of transportation (e.g., air, ground,
ocean), thereby increasing coordination complexity. When a customer sources
a multimodal service, tracking information can be leveraged to achieve synchro-modality,
or the seamless integration of the service across modes, which can be a source of differ
entiation for the vendor [2]. Accordingly, we consider service modal variety as
a contingency that can affect the importance of the use value through which tracking
information quality relates to customer loyalty.
Hypotheses
Figure 2 presents our research model, and we discuss the logic of our hypotheses in this
section.
Tracking Information Quality and Use Value of the Service

Digitalization of the service orchestration process generates large amount of information.
When shared with customers, this information can be leveraged for decision making and
coordination of business processes. In the logistics context, low-quality tracking information
implies that the information received by customers does not meet their requirements for (i)
the level of accuracy and transparency into events and (ii) the status of the stocks and flows of
goods that will enable them to make good decisions. In contrast, having high-quality tracking
information implies that customers receive the requisite visibility into the logistics process on
the stocks and flows of goods, as well as the associated financial transactions, to understand
the service orchestration. Moreover, when high-quality tracking information meets custo
mers’ requirements, they are better informed to collaborate with the vendor in making
decisions on how activities in the logistics process (e.g., shipment collecting, routing, deliv
ery), and related processes, can be executed with greater efficiency [25].
In addition, high-quality tracking information can be crucial in achieving flexibility of
logistics service to respond to changing customer needs. Take as an example the inter
dependence of a retailer’s product promotion campaign with its logistics process that is
orchestrated by a logistics vendor. Once the retailer launches the promotional campaign, it
needs to ensure that the promoted product is on the shelf promptly and throughout the
promotion period. Otherwise, sales will suffer, and reputation can be damaged. By knowing
314 A. RAI ET AL.
Figure 2. Research model.
exactly where the shipments are in real-time, the retailer can work with the logistics vendors
not only to identify the most cost-efficient way to ship the products to the stores, but also to
flexibly reroute the shipments to stores facing greater demand. As such, high-quality
tracking information can turn customers from “passive audiences” to “active players” in
executing the logistics process in ways that are likely to better meet their needs [67]. Thus,
high-quality tracking information, by promoting greater shared understanding and colla
boration between the customer and vendor in orchestrating the service, is likely to enhance
a customer’s perception on the use value of the service, manifesting as how well the service
sourced from the vendor meets the customer’s logistics needs for flexibility and efficiency.
Hypothesis 1 (H1): Tracking information quality is positively associated with (a) service flex
ibility, and (b) service efficiency.
Moderation Effects of Service Modal Variety on Tracking Information Quality for Use
Value of the Service
When a customer sources a variety of shipping modes (i.e., air, ground, water) from
a logistics vendor, the coordination complexity to provide an integrated service experience
for the customer increases [7]. Furthermore, the transition between modes introduces
additional risks of coordination errors into the logistics process [19]. For example, when
ground and water modes are used jointly to meet logistics needs, the customer and the
vendor not only need to consider distinctive requirements and constraints related to ground
and ocean transportation, (e.g., road conditions, weather, capacity), but also need to
coordinate the different modes such as the arrival time of trucks to allow for the loading
of freight, and the inspection and custom clearance of ocean freight. With such cross-modal
interdependence, tracking information quality becomes even more important in achieving
flexibility and efficiency of logistics services. The transparency brought by high-quality
tracking information allows the customer and the vendor to collaboratively identify risks
and vulnerabilities, and jointly adapt the logistics process to contexts relevant to the
customer. For example, with accurate and timely tracking information, customers could
use more eco-friendly and cheaper options such as barge and rail whenever possible to
achieve service efficiency. But when disruption occurs, they can intelligently switch back to
truck for fast speed. As such, tracking information quality will have higher impact on
customers' perceptions of efficiency and flexibility when they source the service in a variety
of modes than when they source the service in a single mode. Therefore, we expect:
Hypothesis 2 (H2): When service modal variety is higher, the positive relationships of tracking
information quality with (a) service efficiency and (b) service flexibility are stronger.
Use Value of the Service and Customer Loyalty

Customer loyalty is an important form of exchange value for the vendor [28] and widely
recognized as critical for long-term competitive advantage [75, 89]. Customers are more likely
to be loyal to a vendor who is able to optimize service orchestration and provide solutions to
meet their needs more effectively and efficiently than competing vendors [42]. In the context
of B2B logistics, customer loyalty becomes even more important due to increased competition
and customer expectation for faster, more flexible, and lower-cost services [86]. We argue that
service flexibility and service efficiency are two types of use value for customers of logistics
services. Therefore, customers are likely to be loyal to vendors who they perceive as providing
services with higher use value, as we explain in the following sections.
On the one hand, customers perceive higher value if the logistics vendor can provide
cost-efficient and adaptive services to meet their business goals [60]. Specifically, service
flexibility enables the vendor to tailor its service to meet the customer’s changing needs and
cope with disruptions in supply chain processes and environmental uncertainty. The ability
to tailor the service creates the perception of increased choices for the customer [87], signals
high quality, and leads to a better match between customer requirements and the service
[33]. On the other hand, service efficiency means that the vendor can offer high quality
service at a reasonable cost relative to market alternatives, thereby improving the bottom
line for customers. Since customers typically pay particular attention to economic outcomes
such as sales volume, margins, and discounts that can be obtained from the relationship
[34], they are more likely to stay with a vendor who can help them improve their bottom
line. As such, service flexibility and service efficiency are essential for the vendor to garner
customer loyalty. We anticipate:
Hypothesis 3 (H3): Customer loyalty is positively associated with (a) service flexibility and (b)
service efficiency.
Moderation Effects of Service Modal Variety on Use Value of the Service for Customer
Loyalty
In general, firms are bounded by their disparate organizational cultures, routines, and
management systems, leading to differences in their abilities to effectively meet the coordi
nation requirements that arise from various sources of complexity [36]. Thus, logistics
316 A. RAI ET AL.
vendors who are able to meet these coordination requirements can create greater use value
of their services than those who cannot [74]. Correspondingly, customers would value those
vendors more if they are able to meet their service needs under complex operational
conditions.
In our study, when multiple logistics modes are involved in the service, the coordination
of the logistics process increases in complexity. In this case, there is also likely to be greater
causal ambiguity in terms of how the vendor integrates resources to effectively coordinate
the logistics modes. Accordingly, we suggest a customer’s perceptions of service efficiency
and service flexibility should be more strongly associated with customer loyalty when the
customer sources the logistics service in a variety of modes. Hence:
Hypothesis 4 (H4): When service modal variety is higher, the positive relationships between (a)
service flexibility and customer loyalty and (b) service efficiency and customer loyalty are
stronger.
Integrated Hypotheses on the Use Value Mechanisms and their Conditionality

Building on the earlier discussions, we theorize the mediation mechanisms through which
tracking information quality drives customer loyalty. Specifically, we develop arguments for
two claims: (i) service flexibility and service efficiency are mediating factors of the relation
ship between tracking information quality and customer loyalty, and (ii) these indirect
effects are conditional on service modal variety.
Studies on IT business value have surfaced the enabling role of information systems
(IS) in creating value for firms across a wide range of contexts from innovation, to
operations, to specific business processes. A common theme from these studies is that
higher-order organizational capabilities are the pathways through which digital resources
create value [e.g., 55, 72]. Following this logic, we propose service flexibility and service
efficiency as two types of use value of the service through which tracking information
quality generates customer loyalty. To start with, high quality tracking information
provided by a vendor’s digitalization of service orchestration can enable its customers
to understand stocks and flows of goods through the logistics process and thereby
coordinate related business processes such as production and inventory management.
However, providing high-quality tracking information is not sufficient to convince
a focal customer to use a logistics vendor repeatedly. Rather, the customer sources
logistics services from a vendor primarily to achieve cost-efficiency and flexibility of
logistics services. Accordingly, leveraging high-quality tracking information for customer
loyalty requires that the vendor collaborates with the customer to improve service
efficiency and service flexibility that it provides to the customer. For example, high-
quality tracking information can be used to determine cost-efficient routes for the
delivery of shipments and dynamically adjust these routes based on disruptions or
changes in customer requirements. Only when the customers perceive that their service
needs are fulfilled by the vendor, will they return the vendor with repeat business. Thus,
we hypothesize:
Hypothesis 5 (H5): The relationship between tracking information quality and customer loyalty is
mediated by (a) service flexibility and (b) service efficiency.
Based on H2 and H4, we propose that service modal variety moderates the mediated
relationships posited in H5a and H5b, such that the indirect effects of tracking information
quality on customer loyalty through service flexibility and service efficiency will be more
pronounced with high service modal variety. In this case, cross-modal coordination is likely
to be an important consideration for the customer. As tracking information is a key
resource to coordinate activities during service orchestration, we expect it to be more
valuable in developing customer loyalty for those customers who require multi-modal
service from the vendor. Thus, we propose the following two integrated moderated-
mediation hypotheses:
Hypothesis 6a (H6a): The positive indirect effect of tracking information quality on customer
loyalty through service flexibility is stronger when service modal variety is higher.
Hypothesis 6b (H6b): The positive indirect effect of tracking information quality on customer
loyalty through service efficiency is stronger when service modal variety is higher.
Control Variables
We include variables at the levels of the firm, relationship, and industry to control for their
potential impacts on customer loyalty. Specifically, we endeavor to identify mechanisms
that go beyond customer satisfaction to achieve customer loyalty in B2B logistics. To ensure
the validity of our identified mechanisms, we control for customer satisfaction in our
research model as it has been considered as a key antecedent of customer loyalty [e.g., 24,
94]. Meanwhile, we control for customer’s firm size as it is related to customer loyalty [53].
In addition, we control for the number of logistics vendors that a customer uses as
a customer may be less loyal to a vendor when it sources from a large supply base [17].
Moreover, as the IS success literature suggests, in addition to information quality, system
quality, and service quality can affect IS value creation [27, 63]. Therefore, we include
system quality and service quality to account for their potential impacts on customer
loyalty. At the relationship level, we include relationship duration and interfirm commu
nication for business development to control for the potential impacts of relationship
longevity and interaction frequency on customer loyalty [71]. Finally, we account for any
industry-level differences on customer loyalty by including the customer’s industry dum
mies as control variables.
Empirical Setting
We obtained data from a Fortune 100 logistics vendor on its active relationships with
customers in the United States. To reduce the potential issues of common method bias, we
collected data from three archival sources provided by the focal logistics vendor.
The main data source to operationalize customer loyalty, use value of the service (service
efficiency and service flexibility), and tracking information quality is based on a large-scale
customer survey conducted by a professional market research firm to obtain
a comprehensive understanding of customers’ feedback on the service operations of the
focal logistics vendor. Specifically, the market research firm conducted phone interviews
with the key decision makers (KDM) of approximate 3,000 randomly selected customers
318 A. RAI ET AL.
across a variety of industries and with different relationship duration. To ensure that these
customers were significant partners for the focal logistics vendor, this random sample
targeted active customers that shipped at least one package per week or yielded $10,000
in annual revenue to the vendor.
The survey data was then matched with the records in the customer relationship
management (CRM) and financial archival to obtain data on service modal variety and
control variables. Our final sample includes 1,281 customers for the focal logistics vendor.
Table 1 presents a summary of the sample profile.
Instrument Development and Construct Operationalization

The survey was jointly developed by an academic expert and a group of logistics service
practitioners who have domain expertise in IS and relationship management in the logistics
industry. Where possible, established measures in the relevant literatures on IS success,
service process management, and B2B customer loyalty were adapted to the B2B logistics
service context. The survey was systematically reviewed and revised, following survey
design practices [32]. Specifically, a two-stage Q-sorting process was conducted [57] with
seven subject experts for content validity. This was followed by a pilot test with ten internal
managers at the vendor firm and fifty core customers to solicit input on the content, flow,
and instructions. The survey was revised based on the feedback from this pilot test. We next
discuss the measures for the primary constructs in our model.
Customer loyalty (CL) is often measured from a behavioral perspective (that is, repeated
purchase behavior or intention), or an attitudinal perspective (that is, favorable attitude
toward a good or service, or towards the company supplying the good or service). We
measure this dependent variable (DV) from an attitudinal perspective as Day [22] cautions
that loyalty viewed from a behavioral perspective in terms of purchase decisions may not
distinguish between “loyalty” and “spurious loyalty”. Following the literature [e.g., 59, 73,
88], we developed three items to measure customer loyalty: (i) the omnibus loyalty of a B2B
customer, (ii) intention of the customer to recommend the vendor to partners, and (iii) how
comfortable the customer is to continuously source from the vendor. These three items
Table 1. Sample profile.

Variable Category Percentage
Executives (president, vice president, owner) 11.5
Role of key decision maker in customer firm Functional managers (manager, director, supervisor) 44.4
Logistics operations 44.1
Manufacturing (SIC 20-39) 34.6
Transportation and public utility (SIC 40-49) 2.2
Industry
Wholesaler and retailer (SIC 50-59) 42.9
Services (SIC 73-89) 20.3
<5 13.6
5 and <10 17.8
Relationship duration
10 and <15 14.8
(Years)
15 and <20 15.2
>=20 38.6
<50 14.2
50 and <100 35.8
Customer size 100 and <500 22.1
(# of Employees) 500 and <1000 11.0
>=1000 16.9
were measured on a 1–10 scale, with 1 representing not at all loyal/not at all recommend/
completely disagree and 10 representing completely loyal/very highly recommend/completely
agree.
Our remaining constructs were measured on a 10-point scale with 1 indicating terrible
and 10 indicating excellent. We draw on the IS success literature to develop the measure
ment items for our independent variable (IV), tracking information quality (TIQ). In this
research stream, information quality has been measured as a single reflective construct [e.g.,
63, 70], or a second-order formative constructs with multiple dimensions [e.g., 81,91].
Despite the different measures employed for information quality in extant studies, scholars
acknowledge that the most common characteristics of information quality are timeliness,
accuracy, and accessibility [e.g., 26, 64]. To control the length of the questionnaire, we
employed a composite of three items, corresponding to Wixom and Todd’s [91] measure of
information quality, to assess a customer’s perception on the timeliness, accuracy, and
accessibility of tracking information provided by the vendor. These items also capture the
most relevant aspects for a customer to track the orchestration of logistics services provided
by the vendor.
We draw on the literature of service capability to develop the measurement items for the
two mediation variables (MV). We measured service flexibility (SF) by three items that
evaluate a customer’ perception on the logistics vendor’s ability and willingness to meet its
service needs [20]. We measured service efficiency (SE) by three items that assess a customer’s
perception on the cost, quality, and competitiveness of the received service [20].
To measure service modal variety (SMV), we constructed a Blau index of the air, ground,
and ocean shipping volume for a focal customer [9, 39] as follows:
2
Blau Index ¼ 1 �pk ;
where p is the proportion of shipping volume of each mode and k is the number of shipping
modes sourced from the vendor.
In terms of the control variables, relationship duration was measured as the length of
time since a customer account was created. Customer size was measured as the logarithmic
transform of the total number of employees. Interfirm communication was measured as the
aggregate number of visits and phone calls in the previous year between the customer and
the vendor’s account executives. IT service quality was measured as an omnibus item on the
vendor’s performance in servicing the customer’s IT applications. IT system quality was
measured by three items on the IT application’s usefulness, ease of use, and ability to
provide online tracking [91]. Customer satisfaction was measured by an omnibus item
assessing the overall satisfaction of the customer with the logistics vendor [51, 54].
Online Supplemental Appendix B provides details on these measures and the corre
sponding data sources.
Descriptive Statistics
Online Supplemental Appendix C presents the descriptive statistics and correlation coeffi
cients of the variables. The highest correlation coefficient among the principal constructs is
.67, which is below the .8 threshold suggested by Bagozzi et al. [5], indicating that each of
our constructs captures a unique aspect of the phenomenon of interest.
320 A. RAI ET AL.
Common Method Bias

Since five of our constructs (IV: tracking information quality; MV: service efficiency and
service flexibility; DV: customer loyalty; and system quality, which is a control) were
measured using the KDM survey, we conducted two tests to evaluate common method
bias. First, we conducted the Harman's one-factor test with the measurement items for these
constructs. Five factors corresponding to the five constructs emerged. They collectively
accounted for 84.59 percent of the variance in these items, with the first factor explaining
32.16 percent of the variance. Second, following Podsakoff et al. [66], we included
a common method factor in the measurement model. All measurement items have sig
nificant and substantial loadings on their respective constructs, while their loadings on the
common method factor are insignificant and trivial. Therefore, both tests indicate that
common method bias is not a major concern.
Construct Validity
We evaluated the factor structure of the measures through a confirmatory factor analysis of
the multi-item constructs in our model, including tracking information quality, service
flexibility, service efficiency, customer loyalty, and system quality. The factor loadings and
cross-loadings of these constructs are presented in Online Supplemental Appendix D. The
five-factor model fit the data well (χ2 = 361.46, d.f. = 80, CFI = .97, NFI = .96, IFI = .97,
RMSEA = .05) [40]. All the composite reliabilities are higher than .70, indicating good
internal consistency reliability as shown in Online Supplemental Appendix B. Each of the
measurement items loaded significantly on their corresponding constructs, providing
evidence of convergent validity (p < .001). The standardized factor loadings are in the
range of .71–.90, indicating good indicator reliability [37]. Pairwise correlations among
the constructs are significantly different from zero, but well below the cut-off value of .90
[5], demonstrating distinctiveness of theoretical content captured by the individual con
structs. In addition, Online Supplemental Appendix C shows that the square root of the
AVE for each construct is much higher than its pairwise zero-order correlation with other
constructs [31]. Therefore, both tests suggest good discriminant validity.
Potential Endogeneity Concerns

Endogeneity may arise from omitted variables that are common drivers of tracking infor
mation quality, the use value of the service, and customer loyalty. For example, one such
common driver could be the logistics vendor as it is the source for both tracking informa
tion and the use value of the service, and the major beneficiary of customer loyalty. Thus,
the logistics vendor may choose to share higher quality and more information with the
customer, as well as provide better service, to win the long-term business of a customer.
Endogeneity may also arise from reverse causality as loyal customers may value tracking
information quality and service quality more.
Although an instrumental variable is commonly used to address endogeneity concerns, it
is less feasible in our study as it would be challenging, if not impossible, to find strictly
exogenous variables that are strongly correlated with tracking information quality, but not
with the use value of the service or customer loyalty [76]. As cautioned by Ketokivi and
McIntosh [44, p. 7], “applying instrumental variables amounts to trading one set of
untestable assumptions for another, and using a bad instrument may well make things
worse than sticking to OLS . . . ” Thus, rather than using the instrumental variable approach,
we adopted the strategy of controlling for potential variables that may raise endogeneity
concerns if excluded [82]. We then conducted the Durbin-Watson (DW) test for our
research model. The DW statistics are in the range of 1.94–2.17, which fall in the 1.5–2.5
range, indicating no severe residual autocorrelations [29].
Hypotheses Testing
Since our hypotheses include direct, moderated, mediated, and integrated effects among
constructs, we use corresponding regression techniques with 5,000 bootstrapping samples
to test the hypothesized effects [68]. To construct our interaction terms, we mean-center
the main variables to alleviate multicollinearity [1, 41]. The statistics package used is
SPSS 22.0.
Main Results
In Table 2, we present the stepwise ordinary least squares (OLS) regression results for
Hypotheses 1-4. Overall, the proposed model accounts for 48, 39, and 42 percent of the
variance in service flexibility, service efficiency, and customer loyalty, respectively.
H1a and H1b predict that tracking information quality would be positively associated
with service flexibility and service efficiency. In support of these two hypotheses, we find
positive and significant effects of tracking information quality on service flexibility (β = .44,
p < .001) and service efficiency (β = .24, p < .001). Hypotheses 2a and 2b propose that service
modal variety would moderate the relationships between tracking information quality and
the use value of the service, such that the relationships would be enhanced if service modal
variety is high. Although we detect a significant moderation effect on the relationship
between tracking information quality and service flexibility (β = 0.96, p < .05), we do not
observe a significant impact of service modal variety on the relationship between tracking
information quality and service efficiency (β = -.11, p > .10). Thus, we find partial support
for H2. Panel A in Figure 3 depicts the interaction effect of service modal variety and
tracking information quality on service flexibility.
Hypotheses 3a and 3b predict that service flexibility and service efficiency would posi
tively affect customer loyalty. We find support for both hypotheses because service flex
ibility has a positive and significant impact on customer loyalty (β = .19, p < .001) as does
service efficiency (β = .26, p < .001). Hypotheses 4a and 4b propose that the positive
relationships between each type of use value of the service and customer loyalty would be
strengthened with high service modal variety. However, we only observe a positive inter
action effect between service modal variety and service efficiency on customer loyalty (β
= .95, p < .05), but no significant effect between service modal variety and service flexibility
on customer loyalty (β = .21, p > .10). Panel B in Figure 3 plots the interaction effect of
service modal variety and service efficiency, which reveals that the positive relationship
between service efficiency and customer loyalty is significantly stronger when a customer
uses multiple shipping modes to meet its logistics needs.
322
A. RAI ET AL.
Table 2. Stepwise regression results (H1-H4).

Variables DV=Service Flexibility DV=Service Efficiency DV=Customer Loyalty
Base Main Full Base Main Full Base Main Full
Control Relationship duration .01(.01) .01(.01) .01(.01) .00(.01) .00(.01) .00(.01) .00(.01) .00(.01) .00(.01)
Variables Customer size .07(.04) .08(.04)* .08(.04) * .07(.04) .08(.04)* .08(.04) ** -.01(.05) -.05(.05) -.05(.04)
Interfirm communication .01(.01) .01(.01) .01(.01) .01(.01) .01(.01) .01(.01) .01(.01) .00(.01) .01(.01)
IT service quality .27(.04)*** .21(.04)*** .20(.04) *** .18(.03)*** .15(.04)*** .15(.04) *** .19 (.04)*** .11(.04)** .09(.04)*
IT system quality .30(.06)*** .08(.07) .06(.07) .31(.06)*** .19(.07)** .19(.07) ** .13(.08) .07(,08) .05(.08)
# of logistics vendors .09(.06) .04(.05) .05(.05) -.05(.05) -.05(.05) -.05(.05) -.17(.07)** -.17(.06)** -.16(.06)**
Customer satisfaction .05(.01)*** .05(.01)*** .05(.01)*** .05(0.01)*** .05(.01)*** .05(.01)*** .07(.01)*** .05(.01)*** .05(.01)***
Manufacturing .01(.43) .03(.42) .01(.42) -.04(.42) -.05(.42) -.05(.41) .14(.53) .15(.51) .16(.50)
Wholesaler & retailer .16 (.44) .19(.43) .15(.42) -.02(.42) -.03(.41) -.03 (.41) -.09(.52) -.12(.50) -.12(.50)
Service . 00(.45) .06(.43) .06(.42) .08(.43) .10 (.42) .10(.42) .19(.54) .28(.50) .21(.51)
Independent Variable (IV) Tracking IQ (TIQ) .44(.06)*** .48(.06) *** .24(.06)*** .24(.06) *** .05(.07) -.09(.08) -.06(.07)
Moderation Variable Service modal variety (SMV) -.24(.34) -.12(.34) -.31(.34) -.33(.34) -.30(.43) -.17(.41) -.05(.41)
Mediation Variables Service Flexibility (SF) .19(.06)*** .16(.06) **
(MV) Service Efficiency (SE) .26(.06)*** .27(.06) ***
Moderation Effects SMV * TIQ .96(.38) * -.11(.38) -.64(.54)
SMV * SF .21(.31)
SMV * SE .95(.39)**
Intercept .63(.68) 1.43(.65)* 1.51(.65)* 1.96(.65)** 2.42(.64)*** 3.47(.62)*** .77(.82) 3.59(.91)*** 3.49(.90)***
R2 .51*** .57*** .58*** .47*** .50*** .50*** .41*** .46*** .48***
∆ R2 .06*** .01* .03*** .00 .05*** .02**
Note: * p < .05; **p < .01; ***p < .001. Two-tailed t-test; unstandardized coefficients shown; standard error from 5000 bootstrapping in parentheses; N = 751 (listwise deletion); Three dummy
variables are created to represent if the focal customer is in the manufacturing, wholesale and retailer, and service industries respectively. The customer belongs to the transportation and
public utility industry when all the three dummy variables are zero.
Hypotheses 5 and 6 propose integrated mediation and moderated-mediation effects.

They predict that tracking information quality affects customer loyalty indirectly through
service flexibility and service efficiency and that those effects are conditional on service
modal variety. We use the PROCESS macro1 by Preacher et al. [68] and Hayes [38] to assess
the mediation and moderated-mediation effects. This approach employs a bootstrapping
method to generate the confidence intervals of the interaction terms for hypotheses testing.
Since this approach does not require any assumptions about the sampling distribution
underlying the mediation and/or moderation model, it is considered to provide more
reliable results than the traditional Sobel test [97].
Table 3 presents the results of the mediation test for H5a and H5b. The direct effect of
tracking information quality on customer loyalty is insignificant (β = -.09) as the 95 percent
confidence interval contains zero. But the indirect effects of tracking information quality on
customer loyalty through service flexibility and service efficiency are both significant, as
suggested by the positive 95 percent confidence interval. Therefore, H5a and H5b are
supported.
Furthermore, the results presented in Table 4 show that the strength of the indirect effect
of tracking information quality through service flexibility on customer loyalty is greater
when service modal variety is high than when it is low (γ = .15 vs. γ = .03). Similarly, we
observe stronger indirect effects of tracking information quality through service efficiency
on customer loyalty when service modal variety is high than when it is low (γ = .12 vs.
γ = .03).
Figure 3. Moderation effects of service modal variety.
Table 3. Mediation test (H5).

Hypothesis Path Effect 95% CI
TIQ → Customer Loyalty -.09 (.08) [-.24, .06]
H5a TIQ → Service Flexibility → Customer Loyalty .06 (.02) [.02, .12]
H5b TIQ → Service Efficiency → Customer LSSoyalty .08 (.03) [.01, .15]
Note: Unstandardized coefficients shown; N = 751 (listwise deletion). Standard error generated from 5,000 boot
strapping reported in parentheses.
324 A. RAI ET AL.
Since the 95 percent confidence intervals for the indirect means are asymmetric, we
follow Cumming [21] to compute the arm ratio to compare the indirect effects at high and
low levels of service modal variety (Figure 4).
For H6a, we first evaluate the lengths of the two overlapping arms: which are .04 when
modal variety is low (.07-.03 = .04) and .11 when modal variety is high (.15-.04 = .11). Since
the longer arm is less than twice the length of the shorter, the rules specified by Cumming
apply. The overlap of the two arms is .03 (.07-.04 = .03), which is less than half of the average
arm length of .074 ((.11+.04)/2 = .075; arm ratio = 2.50), indicating that the indirect effects
at high and low levels of service modal variety are different at p ≤ .05.
Similarly, the lengths of the two overlapping arms for H6b are .04 for low service
modal variety (.07-.03 = .04) and .08 for high service modal variety (.12-.04 = .08). The
overlap of the two arms is .03 (.07-.04 = .03), which is a little over half of the average
arm length ((.04+.08)/2 = .06; arm ratio = 2.08), indicating the indirect effects are
different at p ≤ .05. Thus, the moderated mediation tests support H6a and H6b that
Table 4. Moderated mediation test (H6).

Hypothesis Path Indirect Effects 95% CI Arm Ratio
Tracking Information Quality → Service Flexibility → Customer Loyalty
H6a For low modal variety .03 (.02) [-.01, .07] 2.50
For high modal variety .15 (.06) [.04, .28]
Tracking Information Quality → Service Efficiency → Customer Loyalty
H6b For low service modal variety .03 (.02) [-.02, .07] 2.08
For high service modal variety .12 (.05) [.04, .22]
Note: Unstandardized coefficients shown; N = 751 (listwise deletion). Standard error generated from 5,000 bootstrapping
reported in parentheses.
Figure 4. Comparing indirect means using confidence intervals.

the indirect effects of tracking information quality on customer loyalty through service
flexibility and service efficiency are enhanced when the customer uses multiple ship
ping modes from the logistics vendor.
Robustness Checks
As our results could be sensitive to outliers or subject to the potential impact of multi
collinearity, we reassess our research model by winsorizing (at the 5 percent level) and
orthogonalizing the focal variables in the study. The results are qualitatively consistent,
indicating that our results are not likely biased by extreme values or multicollinearity. We
removed the item of recommendation from customer loyalty because of its low loading on
the construct. Since recommendation captures a unique and important aspect of attitudinal
loyalty, we re-estimate our research model with this item included. The test results are
statistically unchanged, indicating that removing this item does not affect our results
significantly.
We argue that service modal variety moderates the relationships between tracking
information quality and the use value of the service, and those between the use value of
the service and customer loyalty. It is possible that tracking information quality and the use
value of the service may drive a customer to use more shipping modes. We thus examined
the impacts of tracking information quality and the use value of the service on service modal
variety. The results indicate that service efficiency (β = .001, t = .147) and service flexibility
(β = .004, t = .253) do not have a significant impact on service modal variety. However,
tracking information quality has a negative association with service modal variety (β = -
.011, t = -2.013). There are two possible explanations for this result. First, with the increased
transparency of service orchestration brought by high-quality tracking information, custo
mers have greater control over the process and thus opt for fewer shipping modes. Second,
with a more complex logistics process to coordinate, customers may have a higher require
ment for the accessibility, timeliness, and accuracy of tracking information, leading to
a lower appraisal of quality. Nevertheless, since we detected a significant impact of tracking
information quality on service modal variety, we reassessed our research model by includ
ing the residual of regressing tracking information quality on service modal variety. The
residual does not have a significant impact on the models and the results are consistent with
those presented in Table 3.
We propose that service modal variety serves as a moderator for both stages of our
mediation model, IV → MV and MV → DV. In our main analysis, we find service
modal variety to moderate a different relationship at each of the stages (i.e., TIQ →SF
for TIQ →SF →CL; SE →CL for TIQ →SE →CL). We performed three additional
analyses to evaluate whether the detected moderations are robust. We evaluated
models that included (i) moderation effects only at the first stage (IV →MV), (ii)
moderation effects only at the second stage (MV →DV), and (iii) moderation effects
only on TIQ →SF and SE →CL. As reported in Online Supplemental Appendix E, the
results are consistent with the main results. Furthermore, nonlinear relationships
between independent variables and dependent variable can be disguised as moderation
effect [12]. To delineate the potential nonlinear impact of tracking information quality,
we added its quadratic term into the model. As reported in Online Supplemental
326 A. RAI ET AL.
Appendix F, the inclusion of the nonlinear effect of tracking information quality does
not change the test results. Overall, these tests indicate that the moderation effects of
service modal variety are robust.
In the main analysis, we only examine attitudinal loyalty in our research model. As
suggested by previous studies, customer loyalty can be measured by both attitudinal
loyalty and behavioral loyalty. High attitudinal loyalty can turn into behavioral loyalty,
such as a larger share of business from the same customer or higher profitability
[e.g., 3]. Following this logic, we extend the current research model to examine how
customer loyalty affects the customers’ future share of wallet,2 which is an objective
measure reported in the KDM survey that captures the share of logistics business
a customer allocated to the vendor in the following year. The result indicates that
customer loyalty has a significant impact on the future share of wallet (β = 6.11, p
< .001), suggesting that when customer loyalty increases one point on a 1-10 scale,
future share of wallet can increase 6.11 percent. This result supports the validity of our
dependent variable and also provides evidence of its economic significance.
Additionally, the results from the PROCESS procedure further indicate that the effect
of tracking information quality on future share of wallet is fully mediated by service
flexibility, service efficiency, and customer loyalty. The total indirect effect of tracking
information quality on future share of wallet is 1.7 percent. Considering the average
logistics spending of customers in our dataset is about $200,000 per year, a 1.7 percent
increase in the share of wallet represents $3,400 spending increase per year on average
from each customer. With 300,000 active customers, the focal vendor can attract over
$1 billion additional spending from its customers, a striking economic impact.
Discussion
We advance a customer needs fulfillment perspective where digitalization of service
orchestration by B2B logistics vendors can enhance customer loyalty through the use
value of the service. Our results support the value creation and capture pathways that
link tracking information quality to customer loyalty, as a type of exchange value,
through service efficiency and flexibility, as types of use value. They also support that
coordination complexity arising from multiple modes of a service affects the impor
tance of the type of use value linking tracking information quality to customer loyalty.
Theoretical Implications
Departing from past work on customer loyalty that has been primarily conducted in the
B2C context and identified customer satisfaction as the key antecedent to customer loyalty
[e.g., 24, 94], we provide a novel perspective of customer needs fulfillment to attain
customer loyalty in the B2B logistics context. We differentiate between (i) information on
service orchestration that is generated by a vendor’s digitalization initiatives, (ii) use value of
digitally-enabled services offered by a logistics vendor and (iii) exchange value in terms of
the benefits that accrue to the vendor. Building on these distinctions, we suggest tracking
information quality pertaining to service orchestration generates customer loyalty when it is
leveraged to increase the use value of the service in terms of efficiency and flexibility. Based
on the customers’ perceived use value of the sourced logistics service, and the enabling
tracking information on service orchestration, they will return exchange value to the vendor
in the form of customer loyalty. By doing so, we answer the call for identifying novel
antecedents and mechanisms in the B2B context that go beyond the insights from previous
work in the B2C context that takes customer satisfaction as pivotal for customer loy
alty [47].
An important contribution of our work is bridging the literatures on customer loyalty, service
capabilities in supply chains and B2B logistics, and information resources for supply chains and
B2B logistics to advance our understanding on the development of customer loyalty from
vendors’ digitalization initiatives pertaining to service orchestration. A core insight from the
literature on information resources in supply chains and B2B logistics is that information on
service orchestration can play a pivotal role in building service capabilities and thereby gaining
the commitment of the customer to the relationship [16, 35]. Although this literature has
advanced our understanding about how information and related digital resources create value
in supply chains and B2B logistics [e.g., 55, 72], the service capability literature views capabilities
from the perspective of fulfilling customer needs [e.g., 43, 71, 96]. Adopting this needs fulfillment
perspective, we identify service flexibility and service efficiency as two types of use value that
connect quality of tracking information on service orchestration with customer loyalty. We
propose and find strong evidence that tracking information quality affects customer loyalty
through the two types of use value rendered by service flexibility and service efficiency rather than
directly. The mediation mechanisms show that tracking information quality is likely to accrue
loyalty if customers see such information as providing valuable resources to meet their needs for
efficiency and flexibility of the logistics process.
Our work also contributes to our understanding of information as a resource in supply
chains and logistics, and the use value of the service by integrating the contingent role of
coordination complexity. We reveal the asymmetry in how the two types of use value of the
service—efficiency and flexibility, increase in importance for customer loyalty with greater
service modal variety. While tracking information quality is more strongly associated with
service flexibility in a context where service modal variety is greater, service efficiency is
more strongly associated with customer loyalty in this context. When multiple logistics
modes are involved in a logistics service that is sourced by a customer, granular and timely
tracking of activities can be valuable to synchronize across modes of service and thereby
create use value in terms of service flexibility. Whereas, use value of the service in terms of
cost-efficiency increases in importance for customer loyalty with higher service modal
variety, suggesting that customers are responsive to the bottom line in their continuing
commitment to the vendor in the competitive logistics industry.
Managerial Implications
A key practical implication of our work is surfacing the link between the perceived
tracking information quality, the use value of the service perceived by customers, and
the exchange value manifesting as customer loyalty in the B2B logistics context. With
logistics vendors investing in digital technologies, ranging from shipment tracking
systems, to IoT, to RFID, to blockchain-based-track-and-trace systems, to mobile
apps, digital technologies are redefining the tracking information on service orchestra
tion that can be generated. As our results indicate, customers see such information as
high quality, but channeling it to gains in customer loyalty requires the customer to
328 A. RAI ET AL.
see the information as enabling the use value of the service. Toward this end,
managers at vendor firms responsible for customer relationships, operations, and IT
need to develop shared understanding on how digitalization of service orchestration
can be channeled to meet customers’ service needs on cost-efficiency and flexibility.
The enabling role of digitalization for the use value of the service needs to be clearly
communicated and demonstrated to the customer in their contexts.
Meanwhile, managers at the vendor firm can engage with their counterparts at the
customer firm to assess the timeliness, accuracy and completeness of tracking information
relative to the customer’s requirements and identify further opportunities brought by digital
technologies to enhance perceived information quality by the customer. The vendor and the
customer firm can collaborate to explore how digitalization initiatives by the vendor can
better meet the customer’s needs for service cost-efficiency. For example, they can explore
how high-quality tracking information can provide greater visibility to stocks and flows of
goods, and potentially reduce inventory and holding costs. Similarly, they can explore if
events such as proof of delivery can trigger invoicing and collections and shorten the cash
conversion cycle. With respect to how digitalization of service orchestration can enhance
service flexibility, the vendor and customer can explore how tracking information can be
used to dynamically adjust plans and activities in response to disruptions and changes in
customer requirements (e.g., changes in the production plans of a supply-chain partner,
need to re-route a shipment, or need to merge shipments during transit to fulfill the order).
When a customer’s service requires multiple logistics modes, the vendor can utilize
tracking information to dynamically synchronize across the modes of service based on the
needs of the customer, and thereby increase service flexibility. In such cases, dynamically
switching transportation mode to achieve synchromodality in response to real-time events
such as changes in operational requirements or inclement weather can enhance the use
value of the service in terms of service flexibility. However, it is important for vendors to
make the cost-efficiencies that are achieved through effective coordination across logistics
modes salient to the customer, as service efficiency is a source of differentiation and can
increase customer loyalty in the highly competitive logistics industry.
Limitations and Future Research

Although our study generates important theoretical and practical insights, it has limitations and
opens avenues for future research. First, our data is cross-sectional in nature, thus any inferences
regarding causality in our model are based on a theoretical foundation. Future research using
longitudinal designs would be able to empirically establish causality. Furthermore, while we have
adopted measures to exclude potential endogeneity concerns, we note that endogeneity cannot
be eliminated completely with our research design, and can be better assessed and addressed with
longitudinal data. In addition, to control the length of the questionnaire, we only focus on
attitudinal loyalty and the main aspects of tracking information quality for logistics services.
Although this choice is meaningful for this study, a more elaborate examination of different
aspects of customer loyalty and other facets of information quality on service orchestration can
generate additional insights on the mechanisms linking information quality and customer loyalty
through the types of use value for logistics services.
Second, our data is from customers of a leading vendor in the logistics industry. Although this
research design controls for heterogeneity on the vendor side of a B2B relationship, it constrains
the generalizability of our findings beyond the logistics industry and a leading vendor. Future
research can evaluate the wider external validity of our results by considering other types of
vendors as well as other service industries such as IT services, banking, and insurance.
Third, our sample exhibits relatively low variation on tracking information quality.
While this makes it a more stringent context to detect the proposed effects, future research
can evaluate the research model in service contexts where there is greater heterogeneity in
information quality among the customer base. In addition, we assessed service complexity
by focusing on modal variety for logistics services. Future research can identify other aspects
of service complexity that may affect the salience of the use value mechanisms through
which information quality on service orchestration relates to customer loyalty.
Conclusion
We adopted the customer needs fulfillment perspective to theorize and empirically tested the use
value mechanisms through which tracking information quality on service orchestration
enhances customer loyalty in the B2B logistics context. We bridge the literatures on customer
loyalty, service capabilities, and information resources in supply chains and B2B logistics to
illuminate that customers’ perceptions of two types of use value—service efficiency and flex
ibility, mediate the relationship between tracking information quality and customer loyalty. We
further surface how service modal variety influences the efficacy of each of these use value
mechanisms. When multiple modes of service are involved, high-quality tracking information
can be leveraged to further enhance service flexibility. Whereas cost-efficiencies through effec
tively coordinating across modes of logistics can be a source to further increase customer loyalty.
The integrated moderated mediation model provides a holistic view of how tracking information
quality on service orchestration can enhance customer loyalty through the use value of B2B
logistics services.
Notes
1 For details of PROCESS macro, see https://processmacro.org/index.html and Hayes [38]. Since
we propose moderation effects on both IV →MV and MV →DV, we use Model 58 as described
in Hayes [38] for model testing.
2 In addition to customer loyalty, the following variables were included: tracking information
quality, service modal variety, service efficiency, service flexibility, and controls (relationship
duration, customer size, interfirm communication, IS service quality, IS system quality, # of
logistics vendors that the customer uses, customer satisfaction, and three industry dummies).
Acknowledgments
We thank the Editor-in-Chief, Vladimir Zwass, and three anonymous reviewers for their constructive
feedback and valuable suggestions. We also thank the executives of the logistics firm and its customers
for sharing their perspectives in numerous discussions and for providing us access to the data.
330 A. RAI ET AL.
Disclosure Statement
No potential conflict of interest was reported by the authors.
Notes on contributors
Arun Rai (arunrai@gsu.edu; corresponding author) is Regents’ Professor, holds the Howard S. Starks
Distinguished Chair, and is the director of the Center for Digital Innovation at the Robinson College
of Business at Georgia State University. His research has focused on the development and deployment
of information systems to drive innovation and create value. His work has contributed to under
standing the digital transformation of organizations and supply chains, governance of IT investments
and platform ecosystems, and deployment of digital innovations at scale to empower individuals and
address societal problems including poverty, health disparities, infant mortality, and digital inequal
ity. Dr. Rai served as editor-in-chief for the MIS Quarterly. He is a Fellow of the Association for
Information Systems (AIS) and a Distinguished Fellow of the INFORMS Information Systems
Society, and received the AIS LEO Award for Lifetime Exceptional Achievement in the
Information Systems discipline.
Xinlin Tang (xtang2@business.fsu.edu) is an Associate Professor of MIS at the College of Business at
Florida State University. Her research interests include digitally-enabled innovation and value
creation, IT governance in the inter-organizational relationships and business networks, and strategic
issues related to emerging technology. Her work has been published in Information Systems Research,
Journal of Management Information Systems, Journal of Operations Management, and IEEE
Transactions on Engineering Management, among others. Dr. Tang is an associate editor for
Information Systems Research and has served as an associate editor for MIS Quarterly.
Zhitao Yin (zhitaoyin@ust.hk) is an Assistant Professor at the School of Business and Management,
Hong Kong University of Science and Technology. He is interested in understanding the value, risk,
and governance of digital innovation, and the social and economic implications of human-machine
dynamics.
Steven Du (steve.du@paineschool.org) is an administrator for the Foster School District in Rhode
Island, where he manages technology, and a research associate for the Center for Digital Innovation at
Georgia State University. He received his Ph.D. in Computer Information Systems from Georgia State
University, an MBA from the University of California, Berkeley, an MS from Stanford University and
a BS in Electrical Engineering from Princeton University. He has experience in the software industry
as a product manager and an applications consultant. Dr, Du’s research has focused on interorgani
zational information systems and has been published in MIS Quarterly, Decision Support Systems,
Journal of Informatics Education Research, and Journal of Information Systems Education.
ORCID
Arun Rai http://orcid.org/0000-0002-3655-7543
Xinlin Tang http://orcid.org/0000-0003-1065-8087
Zhitao Yin http://orcid.org/0000-0002-4991-612X
Steven Du http://orcid.org/0000-0003-1822-0661
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Gaining Customer Loyalty with Tracking

Arun Rai, Xinlin Tang, Zhitao Yin & Steven Du

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Gaining Customer Loyalty with Tracking Information Quality in

Figure 1. Value creation and capture from B2B logistics digitalization.

Review of Related Literature

Literature Stream #1: Achieving Customer Loyalty in B2B Contexts

requirements [88, 96]. From a customer’s perspective, we therefore identify customer’s

Tracking Information Quality and Use Value of the Service

Figure 2. Research model.

Use Value of the Service and Customer Loyalty

Integrated Hypotheses on the Use Value Mechanisms and their Conditionality

Instrument Development and Construct Operationalization

Table 1. Sample profile.

Common Method Bias

Potential Endogeneity Concerns

Table 2. Stepwise regression results (H1-H4).

Hypotheses 5 and 6 propose integrated mediation and moderated-mediation effects.

Figure 3. Moderation effects of service modal variety.

Table 3. Mediation test (H5).

Table 4. Moderated mediation test (H6).

Figure 4. Comparing indirect means using confidence intervals.

Limitations and Future Research

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