Environmental uncertainty, specific asset, and opportunism in 3PL relationships: A transaction cost economics perspective

Service provider opportunism is a serious concern in third party logistics (3PL) relationships. However, our knowledge about antecedents of 3PL providers' opportunism is limited. According to transaction cost economics (TCE), increased transaction costs give rise to opportunism. This study incorporates key constructs (i.e., environmental uncertainty, specific asset, and opportunism) from TCE and conducts a transaction cost analysis. We argue that environmental uncertainty and specific asset create exchange hazards that result in opportunism. Meanwhile, specific asset reduces coordination costs raised by environmental uncertainty. Building on the arguments, this study tests a model, which hypothesizes that environmental uncertainty (demand, supply, and technology uncertainty), and specific asset (user and supplier specific asset) are positively related to opportunism, and that environmental uncertainty is positively related to specific asset. Structural equation modeling is used to examine data from 247 3PL relationships from China. The results show that demand uncertainty decreases opportunism, supply uncertainty increases opportunism, and technology uncertainty does not have a significant effect. User specific asset increases opportunism, while provider specific asset decreases opportunism. Demand and supply uncertainty have positive effects on user specific asset, but non-significant effects on provider user asset, while technology uncertainty does not have a significant impact on user or provider specific asset. In general, our findings are supported by the rationale of TCE and some surprising findings may be explained by industrial or cultural distinctions. This study contributes to 3PL literature and practices.