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Date Published:
30/03/2023
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Bui, L. D., & Nguyen, H. T. D. (2023). Factors influencing the decision to outsource logistics services of small- and medium-sized enterprises in Vietnam. Journal of International Economics and Management, 23(1), 106-118. https://doi.org/10.38203/jiem.023.1.0064
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Factors influencing the decision to outsource logistics services of small- and medium-sized enterprises in Vietnam
Main Article Content
Abstract
This study examines the factors influencing the decision to outsource logistics services of small- and medium-sized enterprises (SMEs). The Cronbach’s Alpha test, exploratory factor analysis, confirmatory factor analysis, and structural equation modeling were employed to analyze data collected from 204 Vietnamese SMEs in the export of agricultural products, seafood, and textile industries. The results show that the motivation to reduce costs and the characteristics of service providers have the most significant impact on these enterprises’ decisions to outsource logistics services. Moreover, outsourcing strategy also affects logistics outsourcing decisions. Based on the results, this study provides recommendations for logistics service providers to attract customers and advise SMEs on the decision-making process to outsource or operate logistics activities themselves.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Keywords
Decision, Logistics outsourcing, SMEs
References
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Anders, I. and Bjorn, L. (2015), “Outsourcing strategies and their impact on financial performance in small manufacturing firms in Sweden”, International Journal of Business and Finance Research, Vol. 9 No. 4, pp. 11 - 20.
Aron, R. and Singh, J. (2005), “Getting offshoring right”, Harvard Business Review, Vol. 83 No. 12, pp. 135 - 143.
Bajec, P. (2013), “The possibility of developing intelligent logistics outsourcing in Slovenia”, Transport Journal, Vol. 28 No. 3, pp. 244 - 255.
Bandeira, R.A.M., Macada, A.C.G. and De Brito Mello, L.C.B. (2015), “Logistics outsourcing: the decision-making process in contracting companies”, International Journal of Logistics Systems and Management, Vol. 21 No.1, pp. 92 - 114.
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Bourlakis, M. and Melewar, T.C. (2011), “Marketing perspectives of logistics service providers: present and future research directions”, European Journal of Marketing, Vol. 45 No. 3, pp. 300 - 310.
Coase, R.H. (1937), “The nature of the firm”, Economical, Vol. 6 No. 16, pp. 331 - 351.
Dang, N.T.T. (2014), Factors affecting the decision to choose a logistics service provider in Ho Chi Minh City, Master Thesis, University of Economics Ho Chi Minh City.
Dong, H., Seongcheol, K., Changi, N. and Ja, W. (2007), “Developing a decision model for business process outsourcing”, Computers & Operations Research, Vol. 34 No. 12, pp. 3769 - 3778.
Gewald, H. and Dibbern, J. (2009), “Risks and benefits of business process outsourcing: a study of transaction services in the German banking industry”, Information & Management, Vol. 46 No. 4, pp. 249 - 257.
Hafeez, A. and Andersen, O. (2014), “Factors influencing accounting outsourcing practices among SMEs in Pakistan context: transaction cost economics (TCE) and resource-based views (RBV) prospective”, International Journal of Business and Management, Vol. 9 No. 7, pp. 19 - 32.
Hair, J.F., Black, W.C., Babin, B.J. and Anderson, R.E. (2010), Multivariate data analysis, 7th Edition New York, Pearson.Hair, J., Hult, T., Ringle, C. and Sarstedt, M. (2014), A primer on partial least squares structural equation modeling (PLS-SEM), Thousand Oaks, CA: Sage Publications, Inc.
Hsiao, H.I., Kemp, R., Vorst J.G.A.J. and Omta, S.W.F. (2011), “Logistics outsourcing by Taiwanese and Dutch food processing industries”, British Food Journal, Vol. 113 No. 4, pp. 550 - 576.
Ketler, K. and Walstrom, J. (1993), “The outsourcing decision”, International Journal of Information Management, Vol. 13 No. 6, pp. 449 - 459.
Kremic, T., Tukel, O.I. and Rom, W.O. (2006), “Outsourcing decision support: a survey of benefits, risks, and decision factors”, Supply Chain Management, Vol. 11 No. 6, pp. 467 - 482.
Gonzalez, R., Gasco, J. and Llopis, J. (2010), “Information systems outsourcing reasons and risks: a new assessment”, Industrial Management and Data Systems, Vol. 110 No. 2, pp. 284 -303.
Ministry of Planning and Investment. (2021), The White Book on Vietnamese Business 2021, Statistical Publishing House.
Nguyen, T.H.G. (2020), Factors influencing the decision to outsource logistics services of Japanese enterprises in Ho Chi Minh City and Binh Duong, University of Economics Ho Chi Minh City.
Omta, H.H.J. (2010), “Developing a decision making framework for levels of logistics outsourcing in food supply chain networks”, International Journal of Physical Distribution and Logistics Management, Vol. 40 No. 5, pp. 395 - 414.
Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988), “SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality”, Journal of Retailing, Vol. 64, pp. 12 - 40.
Prahalad, C.K. and Hamel, G. (1990), “The core competence of the corporation”, Harvard Business Review, Vol. 68 No. 3, pp. 79 - 91.
SCMP. (2013), The Definitive guide to supply chain best practices: comprehensive lessons and cases in effective SCM, Council of Supply Chain Management Professionals.
Sheng, C.C. (2008), “Determinants of outsourcing decisions: an empirical investigation in an Asian NIC - Singapore”, Journal of Business-to-Business Marketing, Vol. 9 No. 3, pp. 1 - 25.
Solakivi, T., Töyli, J. and Ojala, L. (2013), “Logistics outsourcing, its motives and the level of logistics costs in manufacturing and trading companies operating in Finland”, Production Planning and Control, Vol. 24 No. 4, pp. 388 - 398.
Solli-Sæther, P.G.H. (2005), “Critical success factors from IT outsourcing theories”, Industrial Management and Data Systems, Vol. 105 No. 6, pp. 685 - 702.
Tsai, M.C., Lai, K.H., Lloyd, A.E. and Lin, H.J. (2012), “The dark side of logistics outsourcing – Unraveling the potential risks leading to failed relationships”, Logistics and Transportation Review, Vol. 48 No. 1, pp. 178 - 189.
Williamson, O.E. (1975), Markets and hierarchies: analysis and antitrust implications, NY: Free Press.
Anders, I. and Bjorn, L. (2015), “Outsourcing strategies and their impact on financial performance in small manufacturing firms in Sweden”, International Journal of Business and Finance Research, Vol. 9 No. 4, pp. 11 - 20.
Aron, R. and Singh, J. (2005), “Getting offshoring right”, Harvard Business Review, Vol. 83 No. 12, pp. 135 - 143.
Bajec, P. (2013), “The possibility of developing intelligent logistics outsourcing in Slovenia”, Transport Journal, Vol. 28 No. 3, pp. 244 - 255.
Bandeira, R.A.M., Macada, A.C.G. and De Brito Mello, L.C.B. (2015), “Logistics outsourcing: the decision-making process in contracting companies”, International Journal of Logistics Systems and Management, Vol. 21 No.1, pp. 92 - 114.
Bourdieu, P. (1986), “The forms of capital”, in Richardson, J. (Ed.), Handbook of Theory and Research for the Sociology of Education, Greenwood, pp. 241 - 258.
Bourlakis, M. and Melewar, T.C. (2011), “Marketing perspectives of logistics service providers: present and future research directions”, European Journal of Marketing, Vol. 45 No. 3, pp. 300 - 310.
Coase, R.H. (1937), “The nature of the firm”, Economical, Vol. 6 No. 16, pp. 331 - 351.
Dang, N.T.T. (2014), Factors affecting the decision to choose a logistics service provider in Ho Chi Minh City, Master Thesis, University of Economics Ho Chi Minh City.
Dong, H., Seongcheol, K., Changi, N. and Ja, W. (2007), “Developing a decision model for business process outsourcing”, Computers & Operations Research, Vol. 34 No. 12, pp. 3769 - 3778.
Gewald, H. and Dibbern, J. (2009), “Risks and benefits of business process outsourcing: a study of transaction services in the German banking industry”, Information & Management, Vol. 46 No. 4, pp. 249 - 257.
Hafeez, A. and Andersen, O. (2014), “Factors influencing accounting outsourcing practices among SMEs in Pakistan context: transaction cost economics (TCE) and resource-based views (RBV) prospective”, International Journal of Business and Management, Vol. 9 No. 7, pp. 19 - 32.
Hair, J.F., Black, W.C., Babin, B.J. and Anderson, R.E. (2010), Multivariate data analysis, 7th Edition New York, Pearson.Hair, J., Hult, T., Ringle, C. and Sarstedt, M. (2014), A primer on partial least squares structural equation modeling (PLS-SEM), Thousand Oaks, CA: Sage Publications, Inc.
Hsiao, H.I., Kemp, R., Vorst J.G.A.J. and Omta, S.W.F. (2011), “Logistics outsourcing by Taiwanese and Dutch food processing industries”, British Food Journal, Vol. 113 No. 4, pp. 550 - 576.
Ketler, K. and Walstrom, J. (1993), “The outsourcing decision”, International Journal of Information Management, Vol. 13 No. 6, pp. 449 - 459.
Kremic, T., Tukel, O.I. and Rom, W.O. (2006), “Outsourcing decision support: a survey of benefits, risks, and decision factors”, Supply Chain Management, Vol. 11 No. 6, pp. 467 - 482.
Gonzalez, R., Gasco, J. and Llopis, J. (2010), “Information systems outsourcing reasons and risks: a new assessment”, Industrial Management and Data Systems, Vol. 110 No. 2, pp. 284 -303.
Ministry of Planning and Investment. (2021), The White Book on Vietnamese Business 2021, Statistical Publishing House.
Nguyen, T.H.G. (2020), Factors influencing the decision to outsource logistics services of Japanese enterprises in Ho Chi Minh City and Binh Duong, University of Economics Ho Chi Minh City.
Omta, H.H.J. (2010), “Developing a decision making framework for levels of logistics outsourcing in food supply chain networks”, International Journal of Physical Distribution and Logistics Management, Vol. 40 No. 5, pp. 395 - 414.
Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988), “SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality”, Journal of Retailing, Vol. 64, pp. 12 - 40.
Prahalad, C.K. and Hamel, G. (1990), “The core competence of the corporation”, Harvard Business Review, Vol. 68 No. 3, pp. 79 - 91.
SCMP. (2013), The Definitive guide to supply chain best practices: comprehensive lessons and cases in effective SCM, Council of Supply Chain Management Professionals.
Sheng, C.C. (2008), “Determinants of outsourcing decisions: an empirical investigation in an Asian NIC - Singapore”, Journal of Business-to-Business Marketing, Vol. 9 No. 3, pp. 1 - 25.
Solakivi, T., Töyli, J. and Ojala, L. (2013), “Logistics outsourcing, its motives and the level of logistics costs in manufacturing and trading companies operating in Finland”, Production Planning and Control, Vol. 24 No. 4, pp. 388 - 398.
Solli-Sæther, P.G.H. (2005), “Critical success factors from IT outsourcing theories”, Industrial Management and Data Systems, Vol. 105 No. 6, pp. 685 - 702.
Tsai, M.C., Lai, K.H., Lloyd, A.E. and Lin, H.J. (2012), “The dark side of logistics outsourcing – Unraveling the potential risks leading to failed relationships”, Logistics and Transportation Review, Vol. 48 No. 1, pp. 178 - 189.
Williamson, O.E. (1975), Markets and hierarchies: analysis and antitrust implications, NY: Free Press.