The dark side of logistics outsourcing – Unraveling the potential risks leading to failed relationships

We identify and empirically examine the potential risk factors and their structural relationships that can cause a logistics outsourcing relationship to fail. Specifically, we investigate how the relationship risk as perceived by apparel wholesalers as user firms influence their evaluation on the asset and competence entrusted with their logistics service providers, which are logistics outsourcing risk factors considered important by the former in determining continued relationships with the latter. The results highlight the need for relationship management by user firms to mitigate the risks in asset and competence specifically invested in logistics service providers for their outsourced activities.

► We examine the risk factors that can cause a logistics outsourcing relationship to fail.
► These risk factors include relationship, asset, and competence risks.
► Relationship management helps mitigate the risks in asset and competence in logistics outsourcing.