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Why do Internet commerce firms incorporate logistics service providers in their distribution channels?
Author(s) -
Rabinovich Elliot,
Knemeyer A. Michael,
Mayer Chad M.
Publication year - 2007
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/j.jom.2006.05.012
Subject(s) - business , the internet , service provider , transaction cost , e commerce , asset (computer security) , distribution (mathematics) , database transaction , service (business) , marketing , industrial organization , computer science , computer security , world wide web , finance , mathematical analysis , mathematics , programming language
The Internet has redefined information‐sharing boundaries in distribution channels and opened new avenues for managing logistics services. In the process, firms have started to incorporate new service providers in their commercial interactions with customers over the Internet. This paper studies conceptually and empirically why Internet commerce firms (ICFs) have established relationships with these providers. Focusing on logistics services in outbound distribution channels, we rely on transaction cost theory to reveal that low levels of asset specificity and uncertainty drive Internet commerce firms to establish these relationships. Moreover, we apply strategic network theory to show that Internet commerce firms seek these providers because they offer access to relationship networks that bundle many complementary logistics services. In addition, logistics service providers make these services available across new and existing relationships between the Internet commerce firms, their customers, and their vendors.