Outsourcing distribution and logistics services within the automotive supplier industry Kingsley A. Reeves Jr. * , Fethullah Caliskan, Ozan Ozcan 4202 E. Fowler Ave., ENB118 Tampa, FL 33547, USA article info Keywords: Transaction cost economics Resource-based view Outsourcing Logistics abstract This paper reports on an empirical study that examined a suite of distribution and logistics services commonly used to manage inbound materials en route to plants. The sourcing decision is examined through the lenses of transaction cost economics and the resource- based view of the firm and the results lend limited support for both theories in the context of such services. Results further indicate that there is little evidence supporting differences between internal versus external decision-makers. Published by Elsevier Ltd. 1. Introduction Outsourcing involves the procurement of physical and/or service inputs from outside organizations either through ces- sation of an activity that was previously performed internally or abstention from an activity that is well within the capability of the firm (Barrar and Gervais, 2006). Outsourcing continues to be a significant management concern and topic of academic research (Baker and Hubbard, 2002; Benn and Pearcy, 2002; Chan and Chan, 2004; Chow et al., 1995; Fisher et al., 2008; Howells et al., 2008; McIvor, 2005; Mol, 2007; Rieple and Helm, 2008; Stank and Daugherty, 1997). It affects manufacturing and service technologies alike. Management practices such as sub-contracting, as well as the outsourcing of business pro- cesses such as human resources and customer call centers, have been employed for decades (Davis and Spekman, 2004). Presently, the politically charged topic of offshoring is evidence that outsourcing is increasingly extending across interna- tional borders and is as relevant today as in the past. Moreover, the flow of capital that results from such offshoring can affect not only the economies of nations worldwide, but can affect the political environment of these nations as well. Thus, under- standing what drives outsourcing decisions is an important and worthwhile undertaking. This research seeks to examine the validity of theoretical constructs from both the resource-based view of the firm and transaction cost economics in the context of a service technology. In this case, the service technology is the provision of dis- tribution and logistics services (e.g. design of truck routes and delivery schedules, management of reverse logistics, measure- ment of transportation and logistics performance). More specifically, this research investigates how suppliers within the automotive industry manage their inbound material shipments and determine which distribution and logistics services to provide internally and which to outsource. In contrast to much of the resource-based view and transaction cost economics literature that focuses on the sourcing of discrete physical products (Dyer, 1996; Masten, 1993; Schilling and Steensma, 2002), this research focuses on the sourcing of a service. Thus, the transaction cost economics and resource-based view con- structs that are normally applied to physical product characteristics must now be applied to intangible services such as movement, delivery, and sequencing. The automotive industry focus is unique because of the high volume of parts trans- ported and the variation in the size of these parts. The automotive industry supply chain handles not only mundane small 1366-5545/$ - see front matter Published by Elsevier Ltd. doi:10.1016/j.tre.2009.10.001 * Corresponding author. Tel.: +1 813 974 3352; fax: +1 813 874 5953. E-mail address: reeves@eng.usf.edu (K.A. Reeves). Transportation Research Part E 46 (2010) 459–468 Contents lists available at ScienceDirect Transportation Research Part E journal homepage: www.elsevier.com/locate/tre