JOURNAL OF BUSINESS LOGISTICS, Vol. 31, No. 1, 2010 79 THE EMPOWERMENT OF FRONTLINE SERVICE STAFF IN 3PL COMPANIES Alexander E. Ellinger University of Alabama Scott B. Keller The University of West Florida and Aye Banu Elmada Ba Istanbul Technical University The critical role of third-party logistics (3PL) companies in today’s increasingly service-driven economy is well-recognized (Bolumole 2003; Hertz and Alfredsson 2003; Knemeyer and Murphy 2005; Lynch 2004, 2005). Approximately 55 % of logistics cost in U.S. firms is spent on outsourcing services (Langley et al. 2006) and current reports indicate exponential growth within the 3PL industry (Armstrong 2006; Blanchard 2007; Langley et al. 2006; Lieb and Bentz 2005; O’Reilly 2006). Third-party logistics companies specialize in managing a wide range of service-related activities for clients and are viewed as key contributors to the success of their customers (Knemeyer, Corsi, and Murphy 2003; Lynch 2005). Success in the highly competitive 3PL industry is largely dependent upon a firm’s responsiveness to customer needs and the ability to provide reliable service to achieve often complex and unplanned customer requirements. The ability to give high levels of logistics customer service has been consistently linked to improved performance for service providers and their customers (Daugherty, Stank, and Ellinger 1998; Innes and LaLonde 1994; Mentzer, Flint, and Hult 2001; Roth and Jackson 1995; Stank et al. 2003). Researchers describe such business-to-business service providers as being “market-oriented;” that is, centrally-focused on the needs of customers and highly- equipped to fulfill customer needs while also achieving their own business goals (Beverland and Lindgreen 2006; Day 1994; Martin and Grbac 2003). However, current surveys of 3PL customers indicate concern and dissatisfaction with the quality of service received from 3PL companies (Establish Inc./Herbert W. Davis and Co. 2006; Langley et al. 2006). One particularly critical area is the ability to recover from service failures. When logistics service suffers and service failures occur, effective recovery is essential (Johnston and Hewa 1997; Smith, Bolton, and Wagner 1999). Service recovery represents “the efforts made by the firm to return aggrieved customers to a state of satisfaction following a service failure” (Boshoff and Allen 2000, p. 63). The most effective service recoveries entail immediate response by frontline employees (Zeithaml and Bitner 1996), and frontline employees who are appropriately empowered to take action have a higher likelihood of being able to quickly and efficiently resolve customer concerns than employees who are not (Boshoff and Allen 2000; Boshoff and Leong 1998; Bowen and Lawler 1992, 1995; Rafiq and Ahmed 1998; Schlesinger and Heskett 1991; Smith, Bolton, and Wagner 1999). While research indicates that customer-oriented employees are important sources of competitive advantage for logistics organizations (Keller et al. 2006; Mentzer, Flint, and Hult 2001; Periatt, Chakrabarty, and LeMay 2007), relatively little is known about the influence of development and support for frontline staff on service provision and recovery in the 3PL industry. Service organizations should focus on the linkages between developing and supporting frontline personnel and service quality because a firm’s human resource practices influence the service that customers receive (Bowen and Ostroff 2004; Schneider and Bowen 1993). However, extant research on 3PL companies has been largely focused on managing customer relationships (Selviaridis and Spring 2007), rather than on the dynamics of managing frontline personnel who interact with customers on a daily basis. Our research therefore responds to calls for more research