Demand choices of high-tech industry for logistics service providers - an empirical case of an offshore science park in Taiwan

Abstract

This study presents a methodological framework for analyzing factors that influence market share of third-party logistics (TPL) in high-tech industry. An emerging science park located in Southern Taiwan was chosen as the empirical case for the study. Confirmatory factor analysis was first conducted to examine the reliability and validity of the census data (136 outsourcing cases from 68 high-tech manufacturers). This was followed by calibrations of a binary logit model that examines the demand choices of the manufacturers in selecting two types of TPLs, express and forwarder. Results indicate that the strongest determinant of industrial demand choices is the service performance of the TPL, followed by service cost, and added value. In improving these service factors, the market share effect of express-based TPL is found to be slightly greater than that of forwarder-based. The analysis indicates that high-tech manufacturers with larger annual sales or smaller shipments favor express services over forwarding services. (C) 2006 Elsevier Inc. All rights reserved.