Service provider boundaries in competitive markets: the case of the logistics industry

Abstract

The study empirically investigates service provider firms’ attempts to move to higher value added market segments in competitive and fragmented markets; using logistics services as a context. Novelty is added by taking the provider not the customer or outsourcing actor perspective, common to current third-party logistics perspectives. Data were collected in the form of semi-structured interviews with management at various provider firms. The interview guide was based on theoretical constructs regarding tangible and intangible capabilities (RBV) as well as constructs related to governance and integration (TCE). Unlike customer focused studies, this study is able to identify what distinguishes the rare successful boundary crossing attempts that lead to a more profitable market position. The key finding which contradicts studies based on the customer/outsourcing actor perspective, is that a switch from a highly commoditized market position to a higher margin position is only possible, if relationships and network capabilities are leveraged, regardless of the assets and physical resources available to the firm. The presentation of service boundaries as both dynamic and fluid and the use of RBV are contributions, building on existing theory, illustrating why providers of commoditized services cannot escape from low-margin, competitive market positions simply by acquiring tangible assets.