Linking inter-organizational trust with logistics information integration and partner cooperation under environmental uncertainty

Abstract

Abstract Many organizations have undertaken information integration to coordinate their logistics activities. Such logistics information integration serves to enhance the transactional and relational mechanisms which are instrumental for buyer and supplier firms in the logistics chain to gain performance. Based on the transaction cost economics and social exchange theory, we propose and empirically test the link between logistics information integration and inter-organizational trust and their effects on partner cooperation and buyer and supplier performance, and if so, whether these effects are contingent on environmental uncertainty. Our test results with survey data collected from 154 manufacturing firms indicate the value of logistics information integration and inter-organizational trust on buyer and supplier performance particularly when they encounter unforeseen market changes. Regardless of the environmental uncertainty relating to the difficulty in predicting product demand, rate of cannibalization, and technological advancement, logistics information integration and inter-organizational trust are shown to provide transactional and relational mechanisms helpful for improving performance in the logistics chain.