Determinants of logistics outsourcing performance among small and medium enterprises

Abstract

The purpose of this study is to establish determinants of logistics outsourcing performance and their relationship with logistics performance among manufacturing small and medium enterprises (SMEs). The increasing use and challenge of logistics outsourcing require that SMEs establish relationship factors that determine high outsourcing performance to enhance overall logistics performance. Data was collected from 406 SMEs using a structured questionnaire. Factor analysis was applied and four constructs were extracted; three were found to be determinants. Partial least squares structural equation modelling was performed to determine the associations among the constructs. Communication-trust, innovation and cooperation between the manufacturing SMEs and logistics service providers were identified as key determinants of logistics outsourcing performance. Strong associations were validated between communication-trust, innovation and cooperation. Only communication-trust was positively associated with logistics performance. The results guide SME managers to promote communication-trust in logistics outsourcing relationships.