Trust, Transactions, and Information Technologies in the U.S. Logistics Industry

How does information technology (IT) alter the organizational dynamics in an industry? In this article, we examine changes in competition and interfirm relations in the U.S. logistics industry, particularly whether “trust-base” interfirm relationships are being substituted by “competition-base” relationships and the rationale for outsourcing. We also examine how new IT tools and outsourcing interact and how logistics contracts, the size of firms, and knowledge lead to integration or disintegration within the industry. The results of our research demonstrate that while the use of IT tools is widespread, traditional trust-based relationships exhibit a considerable resilience in the logistics industry. The industry is also undergoing a complex process of restructuring in response to technological change, on the one hand, and the persistence of geographic and functional specialization, on the other hand. The industry’s focus on the delivery of high-quality services, coupled with excess capacity in the industry in the past few years, has contributed to these contradictory trends. As a result, elimination of the middleman has not been as widely observed as expected.