Technology Management in Multi-Tier Chains: A Case Study of Agency in Logistics Service Outsourcing

Shippers and logistics service providers (LSPs) implement information communication technology (ICT) in outsourced logistics to increase efficiency and remedy information asymmetry. However, the nature of outsourced logistics operations can create technology management challenges due to the organizational distances between the technology initiator and the technology users. Here, we apply the lens of positivist agency theory (PAT) to study four cases of technology management and agency in multi-tier outsourced logistics services. Our findings suggest that while ICT remedies some information asymmetry, it also creates new information asymmetry—and gives rise to user privacy concerns. Furthermore, the setting of multi-tier subcontracted logistics services appears to be a critical factor in designing governance mechanisms for effective technology management (e.g., performance-based contracts, rotating staff). In addition to our theoretical contributions to technology management in multi-tier outsourcing, we offer an empirical account of agency, proposals for future research, and practical suggestions to help managers tackle agency issues that arise from information asymmetry.

KEYWORDS: agency theory, information asymmetry, information and communication technology, logistics service providers, subcontracting, service triads, case study research