Why do Internet commerce firms incorporate logistics service providers in their distribution channels?. The role of transaction costs and network strength

Elliot Rabinovich, A. Michael Knemeyer, Chad M. Mayer

Research output: Contribution to journalArticle

55 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)661-681
Number of pages21
JournalJournal of Operations Management
Issue number3
StatePublished - Apr 1 2007



  • Electronic commerce
  • Empirical study
  • Logistics
  • Operations strategy
  • Service operations
  • Strategic networks
  • Transaction costs

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

Cite this