An Empirical Study on the Environment, Strategy and Performance of Logistics Firms

Abstract

The purpose of this study is to analyze the relationship between environment, strategy and performance of logistics firms. In other words, the focus was on analyzing the effect of the environment in terms of strategy choice as well as the effect of strategy on performance. First of all, previous studies on environment, strategy and performance were analyzed to determine specific variables to represent each major variable. Thus, the uncertainty of the business environment is used to represent the environment, while differentiation, low cost (cost leadership cost) and innovation strategy are used to represent strategy. Meanwhile, business performance is regarded as financial performance. A total of 161 samples was utilized and the results were analyzed using path analysis. Result revealed that the environment affects strategy. Specifically, uncertainty of environment has a negative influence on low cost strategy. However, unlike the hypotheses, low cost strategy affects financial performance of Logistics firms negatively. This indicates that logistics firms are pursuing a low cost strategy, but lacking sufficient capacity and capacity to achieve low cost strategy. Moreover, this study shows that strategy affects performance. Differentiation and innovation strategies affect financial performance of logistics firms positively. In conclusion, logistics firms must carefully analyze market conditions and develop strategies for it.