Factor Affecting Logistics Service Competencies - An Empirical Study of Logistics Service ...

178 Pages·2012·1.13 MB·English

Factors Affecting Logistics Service Competencies: An Empirical
Study of Logistics Service Providers in China

A thesis submitted in fulfillment of the requirements for the degree of
Doctor of Philosophy

Ming Juan Ding
M. Bus. Logistics Management
School of Business Information Technology and Logistics
Business Portfolio
RMIT University
August 2011
DECLARATION

I certify that except where due acknowledgement has been made, the work is that of the
author alone; the work has not been submitted previously, in whole or in part, to qualify for
any other academic award; the content of the thesis is the result of work which has been
carried out since the official commencement date of the approved research program; any
editorial work paid or unpaid carried out by a third party is acknowledged; and, ethics,
procedures and guidelines have been followed.

Ming Juan Ding

August 2011

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ACKNOWLEDGEMENTS
I would like to express my heartfelt thanks to a number of extraordinary people. Without their
guidance and support, this research would not have been possible.
First, I would like to thank my senior supervisor, Assoc. Prof. Booi Kam, who provided me
with unfailing support, spending long hours refining my research study, critiquing my
literature review, coaching me in designing the survey questionnaire, organising the data
collection and conducting the data analysis, and reviewing all my drafts. His professional
guidance eased the pain of this research, enabling me to navigate this demanding journey
smoothly to its final stage. His constructive and invaluable suggestions to improve my
research made this project possible.
I would also like to extend my sincere thanks to Dr Eva Tsahuridu and Assoc. Prof. Robert
Inbakaran, both of whom provided me invaluable advice, guidance, and encouragement
throughout my candidature. I also wish to thank Dr Shahadat Khan and Dr David Wilson who
guided me to start my PhD research journey. Thanks to all RMIT business staff and my
colleagues, who encouraged me to overcome the difficulties during my candidature period.
A special thank goes to Prue Lamont and other staff in the Research Development Unit, who
facilitated the processes for postgraduate research students and supported me through every
stage of the process.
Finally, I would like to express my thanks and love to my whole family. My parents, Zhaoqin
and Chunhua, and my parents-in-laws, Fusheng and Xiumei, who helped me look after my
three-year old son, Rodney, and my two-year old daughter, Tanya, in the past three years.
Their guidance, care, unconditional love and support throughout my life helped me reach
goals I never imagined were possible. My husband, Fei (Thomas) and my two lovely babies,
who were born during my PhD study, were the source of my strength and endurance. Their
never-ending love and faith helped me survived this lengthy challenging journey. This thesis
is dedicated to this lovely family of mine.
Ming Juan Ding
August 2011
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TABLE OF CONTENTS

DECLARATION .................................................................................................................................................. II

ACKNOWLEDGEMENTS ............................................................................................................................... III

TABLE OF CONTENTS .................................................................................................................................... IV

LIST OF TABLES ............................................................................................................................................. VII

LIST OF FIGURES .......................................................................................................................................... VIII

LIST OF PUBLICATIONS................................................................................................................................. IX

GLOSSARY OF ACRONYMS ............................................................................................................................ X

ABSTRACT ........................................................................................................................................................... 1

CHAPTER 1 .......................................................................................................................................................... 3

OVERVIEW OF THE RESEARCH .................................................................................................................... 3

1.1 INTRODUCTION ......................................................................................................................................... 3

1.2 BACKGROUND ............................................................................................................................................ 3

1.3 RATIONALE FOR THE RESEARCH ............................................................................................................ 4

1.4 RESEARCH OBJECTIVES AND QUESTIONS ............................................................................................. 7

1.5 RESEARCH METHOD ............................................................................................................................... 10

1.6 CONTRIBUTION OF THE STUDY ............................................................................................................. 10

1.7 OUTLINE OF THESIS ................................................................................................................................ 11

CHAPTER 2 ........................................................................................................................................................ 13

LOGISTICS SERVICE INDUSTRY IN CHINA ............................................................................................. 13

2.1 INTRODUCTION ....................................................................................................................................... 13

2.2 LOGISTICS SERVICE INDUSTRY IN CHINA ............................................................................................ 13

2.2.1 Undeveloped and highly fragmented .................................................................................................. 13

2.2.2 Monopolistic regulations and local protectionism .............................................................................. 14

2.2.3 High logistics costs ............................................................................................................................. 15

2.3 BRIEF PROFILE OF LSPS IN THE CHINESE MARKET ........................................................................... 15

2.3.1 State-owned Logistics Firms ............................................................................................................... 16

2.3.2 Private-owned Logistics Firms ........................................................................................................... 17

2.3.3 Foreign-owned Logistics Firms and Joint-ventures ............................................................................ 18

2.4 BARRIERS AND CHALLENGES FACED BY LSPS IN CHINA ................................................................... 20

2.5 INTERNAL ISSUES OF LSPS IN CHINA .................................................................................................... 22

2.5.1 Service Offerings ................................................................................................................................. 22

2.5.2 Logistics Expertise .............................................................................................................................. 23

2.5.3 Technological Factors ......................................................................................................................... 23

2.5.4 Cultural Factors.................................................................................................................................. 25

2.6 SUMMARY .................................................................................................................................................. 25

CHAPTER 3 ........................................................................................................................................................ 27

DEVELOPMENT OF RESEARCH MODEL .................................................................................................. 27

3.1 INTRODUCTION ....................................................................................................................................... 27

3.2 RESEARCH ON LSPS ................................................................................................................................. 27

3.2.1 External Environmental Context ......................................................................................................... 29

3.2.2 Internal Organizational Context ......................................................................................................... 30

3.3 RESOURCE-BASED THEORY AND APPLICATION ................................................................................. 32

3.4 DEVELOPMENT OF RESEARCH MODEL ............................................................................................... 34

3.4.1 Logistics and Supply Chain (L&SC) Competencies ............................................................................ 34

3.4.2 L&SC Competencies of LSPs in China ............................................................................................... 37
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3.4.2.1 Positioning competency ................................................................................................................................. 37

3.4.2.2 Distribution support ...................................................................................................................................... 38

3.4.2.3 Agility ............................................................................................................................................................ 39

3.4.3 Business Processes and Standard Operations Procedures (BP&SOPs) ............................................. 40

3.4.3.1 Processes for benchmarking performance (PBP) .......................................................................................... 42

3.4.3.2 Processes for increasing responsiveness (PIR) .............................................................................................. 43

3.4.3.3 Processes for increasing flexibility (PIF) ....................................................................................................... 44

3.4.4 Human Resource Management (HRM) practices................................................................................ 45

3.4.4.1 Performance management (PM) .................................................................................................................... 47

3.4.4.2 Training and development (TD) .................................................................................................................... 47

3.4.4.3 Reward management (RM) ........................................................................................................................... 48

3.4.5 Moderating Effects .............................................................................................................................. 50

3.4.5.1 Using Guanxi as a moderator ....................................................................................................................... 50

3.4.5.2 ICT support as a moderator .......................................................................................................................... 54

3.4.6 Control Variables ................................................................................................................................ 57

3.4.6.1 Company size (CS) ........................................................................................................................................ 58

3.4.6.2 Physical assets and resources (PAR) ............................................................................................................. 58

3.5 A RESEARCH MODEL ............................................................................................................................... 60

3.6 SUMMARY .................................................................................................................................................. 62

CHAPTER 4 ........................................................................................................................................................ 63

RESEARCH METHODOLOGY ....................................................................................................................... 63

4.1 INTRODUCTION ....................................................................................................................................... 63

4.2 RESEARCH DESIGN AND PARTICIPANTS ............................................................................................... 63

4.3 INSTRUMENT DEVELOPMENT ............................................................................................................... 64

4.3.1 Scale development process .................................................................................................................. 65

4.3.1.1 Define constructs ........................................................................................................................................... 65

4.3.1.2 Develop potential items ................................................................................................................................. 66

4.3.1.3 Pilot test and item purifications ..................................................................................................................... 66

4.3.1.4 Assessment of reliability ................................................................................................................................ 67

4.3.1.5 Assessment of validity .................................................................................................................................... 68

4.3.1.6 Testing theory ................................................................................................................................................ 69

4.3.2 Questionnaire design .......................................................................................................................... 69

4.4 PILOT TEST ................................................................................................................................................ 70

4.5 SAMPLING AND DATA COLLECTION METHOD .................................................................................... 71

4.6 METHOD OF DATA ANALYSIS .................................................................................................................. 72

4.7 OPERATIONALIZATION OF MEASUREMENT ITEMS ............................................................................ 74

4.7.1 Dependent variables ........................................................................................................................... 74

4.7.2 Control variables ................................................................................................................................ 81

4.7.3 Independent variables ......................................................................................................................... 82

4.7.4 Moderators .......................................................................................................................................... 83

4.8 SUMMARY .................................................................................................................................................. 84

CHAPTER 5 ........................................................................................................................................................ 85

ANALYSIS AND RESULTS ............................................................................................................................... 85

5.1 INTRODUCTION ....................................................................................................................................... 85

5.2 SAMPLE PROFILE ..................................................................................................................................... 85

5.3 MEASUREMENT MODELS ....................................................................................................................... 88

5.3.1 CFA of L&SC competencies ................................................................................................................ 90

5.3.2 CFA of Physical resource and assets ................................................................................................... 95

5.3.3 CFA of BP&SOPs ................................................................................................................................ 95

5.3.4 CFA of HRM practices ........................................................................................................................ 96

5.3.5 CFA of moderators .............................................................................................................................. 96

5.4 RELIABILITY ASSESSMENT ...................................................................................................................... 96

5.5 HYPOTHESIS TESTING ............................................................................................................................. 98

5.5.1 Positioning competency .................................................................................................................... 102

5.5.2 Distribution support .......................................................................................................................... 104

5.5.3 Agility competency ............................................................................................................................ 107

5.6 SUMMARY ................................................................................................................................................ 110
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CHAPTER 6 ...................................................................................................................................................... 113

INTERPRETATION AND DISCUSSION ....................................................................................................... 113

6.1 INTRODUCTION ..................................................................................................................................... 113

6.2 CONTROL VARIABLE RELATIONSHIPS ................................................................................................ 113

6.3 MAIN EFFECTS ....................................................................................................................................... 115

6.3.1 Main effects of BP&SOPs ................................................................................................................. 115

6.3.2 Main effects of HRM Practices ......................................................................................................... 117

6.4 INTERACTION EFFECTS ........................................................................................................................ 120

6.4.1 Interaction effects of Guanxi ............................................................................................................. 120

6.4.2 Interaction effects of ICT support ..................................................................................................... 120

6.5 SUMMARY ................................................................................................................................................ 123

CHAPTER 7 ...................................................................................................................................................... 125

IMPLICATIONS, CONCLUSIONS, AND LIMITATIONS .......................................................................... 125

7.1 INTRODUCTION ..................................................................................................................................... 125

7.2 IMPLICATIONS ........................................................................................................................................ 125

7.2.1 Implications for Research and Practice ............................................................................................ 126

7.2.2 Contributions .................................................................................................................................... 129

7.3 LIMITATIONS AND FUTURE RESEARCH DIRECTIONS ...................................................................... 130

REFERENCES .................................................................................................................................................. 133

APPENDIX A ..................................................................................................................................................... 147

SURVEY QUESTIONNAIRE .......................................................................................................................... 147

MANAGEMENT ............................................................................................................................................... 147

APPENDIX B ..................................................................................................................................................... 154

RESULT OF AN INDEPENDENT GROUPS T-TEST FOR LIKERT-SCALE ITEMS ............................. 154

APPENDIX C .................................................................................................................................................... 158

SCATTERPLOTS OF RESIDUAL ................................................................................................................. 158

APPENDIX D .................................................................................................................................................... 161

COLLINEARITY DIAGNOSTICS MATRIXES ........................................................................................... 161

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LIST OF TABLES

TABLE 3.1 HYPOTHESES FOR L&SC COMPETENCIES OF LSPS IN CHINA ................................................................ 61

TABLE 4.1: POSITION OF PARTICIPANTS FROM RESPONDING FIRMS.......................................................................... 72

TABLE 4.2: STATISTICAL TECHNIQUES UTILIZED IN THE STUDY............................................................................... 74

TABLE 4.3: DIMENSIONS OF L&SC CAPABILITIES AND COMPETENCIES .................................................................. 76

TABLE 4.4: VARIABLE DESCRIPTION OF DEPENDENT VARIABLES, INDEPENDENT VARIABLES AND MODERATORS ..... 78

TABLE 5.1: PROFILE OF RESPONDING LSPS ............................................................................................................ 86

TABLE 5.2 MEASUREMENT CONSTRUCTS FOR CFA ................................................................................................ 91

TABLE 5.3 SUMMARY OF GOF INDICES FOR MEASUREMENT MODELS ................................................................... 93

TABLE 5.4: CORRELATION TABLE ........................................................................................................................... 94

TABLE 5.5: SCALE RELIABILITIES ........................................................................................................................... 97

TABLE 5.6: HYPOTHESES FOR L&SC COMPETENCIES OF LSPS IN CHINA ............................................................. 100

TABLE 5.7: HIERARCHICAL REGRESSION RESULT FOR POSITIONING COMPETENCY ................................................ 103

TABLE 5.8: HIERARCHICAL REGRESSION RESULT FOR DISTRIBUTION SUPPORT COMPETENCY ............................... 106

TABLE 5.9: HIERARCHICAL REGRESSION RESULT FOR AGILITY COMPETENCY ....................................................... 108

TABLE 5.10 HYPOTHESES RESULTS SUMMARY ..................................................................................................... 111

TABLE 4.5: INDEPENDENT T-TEST FOR LIKERT-SCALE ITEMS ................................................................................ 154

TABLE 5.10: COLLINEARITY DIAGNOSTICS MATRIX OF DEPENDENT VARIABLE: POSITIONING ............................. 161

TABLE 5.11: COLLINEARITY DIAGNOSTICS MATRIX OF DEPENDENT VARIABLE: DISTRIBUTION SUPPORT ............ 163

TABLE: 5.12: COLLINEARITY DIAGNOSTICS MATRIX OF DEPENDENT VARIABLE: AGILITY ................................... 165

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LIST OF FIGURES

FIGURE 1.1: KEY COMPONENTS OF THE STUDY ........................................................................................................ 9

FIGURE 3.1: MAPPING OF THE LITERATURE REVIEW .............................................................................................. 28

FIGURE 3.2: A CONCEPTUAL MODEL OF BP&SOPS, HRM PRACTICE AND L&SC COMPETENCIES ........................ 50

FIGURE3.3: PROPOSED MODERATING MODEL OF GUANXI ...................................................................................... 54

FIGURE 3.4: PROPOSED MODERATING MODEL OF ICT SUPPORT ............................................................................ 57

FIGURE 3.5: PROPOSED MODEL OF L&SC COMPETENCIES OF LSP ........................................................................ 60

FIGURE 4.1: SCALE DEVELOPMENT PROCESSES ..................................................................................................... 66

FIGURE 5.1: A MODEL OF L&SC COMPETENCIES OF LSPS IN CHINA ..................................................................... 99

FIGURE 5.2: PROPOSED MULTIPLE HIERARCHICAL REGRESSION MODEL OF POSITIONING ................................... 102

FIGURE 5.3: PROPOSED MULTIPLE HIERARCHICAL REGRESSION MODEL OF DISTRIBUTION SUPPORT .................. 105

FIGURE 5.4: PROPOSED MULTIPLE HIERARCHICAL REGRESSION MODEL OF AGILITY .......................................... 107

FIGURE 6.1: CONTROL VARIABLES AND L&SC COMPETENCIES ............................................................................ 114

FIGURE 6.2: INDEPENDENT VARIABLES AND L&SC COMPETENCIES ..................................................................... 116

FIGURE 6.3: MODERATING EFFECTS OF ICT SUPPORT ........................................................................................... 121

FIGURE: 5.5: SCATTERPLOT OF DEPENDENT VARIABLE: L& SC SOLUTION .......................................................... 158

FIGURE: 5.6: SCATTERPLOT OF DEPENDENT VARIABLE: DISTRIBUTION SUPPORT ................................................. 159

FIGURE: 5.7: SCATTERPLOT OF DEPENDENT VARIABLE: AGILITY ......................................................................... 160

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LIST OF PUBLICATIONS
Ding, M. J; Kam, B.H & Chandra S. L. (2011), Operational Processes and Supply Chain
Competencies of Chinese Logistics Service Providers, Proceedings of the 16th International
Symposium on Logistics (ISL) 2011, Berlin, Germany, July 2011

Ding, M. J. & Kam, B.H. (2010), ‘Business Processes and Logistics Service Competencies of
Logistics Service Providers in China’, in T Blecker, W Kersten & C Lüthje (eds), Innovative
Processes Optimization Methods in Logistics, Emerging Trends, Concepts and Technologies,
Erich Schmdit Verlag, Berlin, vol.13, pp.81-98. ISBN: 978-3-503-126835

Ding, M. J. & Kam, B.H. (2010), Business Processes and Logistics Service Competencies of
Logistics Service Providers in China, Proceedings of the Hamburg International Conference
of Logistics (HICL) 2010, Hamburg, Germany, September

Kam, B.H., Tsahuridu, E & Ding, M. J. (2010), ‘Does Human Resource Management
Contribute to the Development of Logistics and Supply Chain Capabilities? An Empirical
Study of Logistics Service providers in China’, Research and Practice in Human Resource
Management (RPHRM), vol. 18, no. 2, pp. 15-34. ISSN 0218-5180 MICA (P) 094/09/2009

Kam, B.H. & Ding, M. J. (2009), Competing in China Logistics Service Market: Factors
Affecting Logistics Service Providers’ Performance in China, Proceedings of the ALRT’s
Third International Conference on Logistics in Conjunction with GU8 Consortium and
Regional IAME, Incheon, Korea, April, 2009

Kam, B.H., Tsahuridu, E & Ding, M. J. (2009), Does Human Resource Management
Contribute to the Development of Logistics and Supply Chain Capabilities? An Empirical
Study of Logistics Service providers in China, Proceedings of the Eleventh International
Conference of Society for Global Business & Economic Development, Bratislava, Slovak
Republic, May, 2009

Ding, M. J. & Khan, S. (2005), Market Expansion by International Logistics Service
Providers into Chinese Market, Proceedings of the 2005 Australia and New Zealand
International Business Academy (ANZIBA) Conference, Melbourne, Australia, November

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GLOSSARY OF ACRONYMS
AGFI Adjusted goodness-of-fit index
AMOS Analysis of Moment Structure
AVE Average Variance Extracted
BP&SOP Business Processes and Standard Operations Procedures
CAAC Civil Aviation Administration of China
CFI Comparative fit index
CS Company Size
EDI Electronic Data Interchange
EMS Express Mail Service
CFA Confirmatory Factor Analysis
CR Construct Reliability
COSCO China Ocean Shipping (Group) Company
CRM Customer Relationship Management
EDI Electronic Data Interchange
ERP Enterprise Resource Planning
FDI Foreign Direct Investment
GAC General Administration of Customs
GPS Global Positioning System
GOF Goodness of Fit
GDP Gross Domestic Product
HMR Hierarchical Multiple Regression
HRM Human Resource Management
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