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Why Do Carriers Use Owner Operators in the U.S. For‐Hire Trucking Industry?

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  • Chaodong Han
  • Thomas M. Corsi
  • Curtis M. Grimm

Abstract

Using the theoretical lenses of transaction cost economics and the structure‐conduct‐performance paradigm, this article examines the rationale for U.S. for‐hire trucking carriers' use of owner operator contract drivers. The analysis employs a cross‐sectional financial and operational data set from the U.S. Department of Transportation on the largest U.S. for‐hire trucking carriers. Regression results show that the use of specialized equipment and the engagement in less‐than‐truckload services reduce the use of owner operators. These findings provide a strong support for Williamson's core notion of asset specificity as a driver of make‐or‐buy decisions. Results also demonstrate that higher segment concentration levels reduce the use of owner operators. This suggests that lack of segment competition may facilitate a higher level of vertical integration among for‐hire trucking carriers as evidenced by a greater reliance on employee drivers as opposed to contract owner operators.

Suggested Citation

  • Chaodong Han & Thomas M. Corsi & Curtis M. Grimm, 2008. "Why Do Carriers Use Owner Operators in the U.S. For‐Hire Trucking Industry?," Transportation Journal, John Wiley & Sons, vol. 47(3), pages 22-35, June.
    • Handle: RePEc:wly:transj:v:47:y:2008:i:3:p:22-35
    DOI: 10.2307/20713712
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