Buyer-Seller Relationships in the Procurement of Logistical Services

A study presents a 2-phase model of interfirm exchange in the logistical supply industry. The first phase uses transaction cost analysis to identify conditions leading to market-based transactions, unilateral agreements and bilateral alliances. The 2nd phase illustrates how formal controls and relational norms yield performance in market, unilateral and bilateral governance systems. A test of the model with data from 189 logistical supply relationships suggests that bilateral alliances emerge through the interaction of user investments in the logistics supplier, supplier logistical services and marketplace uncertainty. Bilateral alliances attain desired outcomes through participative management and flexibility. By contrast, market-based transactions yield desired outcomes through formalization and solidarity. Implications for logistics management and theory are discussed.