Factors affecting logistics service competencies: an empirical study of logistics service providers in China

Despite the growing literature on logistics service providers (LSPs), efforts to investigate the causal links between routine business processes and standard operations procedures (BP&SOPs), human resource management (HRM) practices, and logistics and supply chain (L&SC) competencies are limited. Responding to this challenge, this research explores the effects of three BP&SOPs and three HRM practices in nurturing three specific L&SC competencies against the backdrop of a structurally fragmented Chinese logistics service industry. Drawing on responses from 117 logistics firms to a questionnaire survey of LSPs in China conducted in 2009, this study developed a research model and formulated 36 hypotheses, linking three sets of BP&SOPs (i.e., processes for performance benchmarking, increasing responsiveness, and increasing flexibility) and three sets of HRM practices (i.e., performance management, training & development and reward management) to three distinctive L&SC competencies (i.e., positioning, distribution support and agility). The model also tested the moderating effects of Guanxi and information and communication technology (ICT) support on the relationships between the three sets of BP&SOPs and the three L&SC competencies. Confirmatory factor analysis was used to establish constructs representing dependent and independent variables. The formulated model was tested using hierarchical multiple regression analysis, controlling for the effects of firm size, physical resources and ICT. The results of the hierarchical regression analysis confirmed 10 of the hypotheses, but did not support the remaining, unveiling some unexpected insightful information on the relationships between BP&SOPs, HRM practices and L&SC competencies. Among the three BP&SOP variables examined, only processes for increasing responsiveness (PIR) was found to have a significant positive effect on all three L&SC competencies. Processes for increasing flexibility (PIF) have a significant positive relationship only with positioning competency, while processes for benchmarking performance (PBP) have no effect on the three L&SC competencies. For the three HRM practice variables, only training and development emerged as a significant positive predictor for all three L&SC competency variables. Reward management shows a significant positive effect only on distribution support, while performance appraisal was found to be negatively related to distribution support. The hierarchical regression analysis also found that Guanxi does not moderate the relationships between BP&SOPs and L&SC competencies. However, it revealed that ICT support has a significant positive moderating effect on the relationships between PBP and distribution support, and between PBP and agility, but imposes a negative moderating effect on the relationship between PIR and agility, and between PIF and distribution support. The unexpected effects of BP&SOPs as well as HRM practices on the three L&SC competencies suggest that despite over three decades of open-door policy and economic reform, and ascension to the World Trade Organization, China continues to present a distinctively unique market environment. The ingredients for operational success differ vastly from those of the developed economies. Equally, the insignificant moderating effect of Guanxi, and the contrasting effects of ICT support on the relationships between BP&SOPs and L&SC competencies also defy established reasoning. While notable contributions made to the literature on the Chinese logistics market, these findings open up fruitful avenues for further research