1
Faculty of Economics and Business
MSc Supply Chain Management
MASTER THESIS
B2B E-COMMERCE: LOGISTICS FLEXIBILITY IN A
TRUSTWORTHY BUYER-SUPPLIER RELATIONSHIP ONLINE
June 26
th, 2017
ERIK FERNÁNDEZ MUYO
Student number: S3109550
JERRY VAN LEEUWEN
Supervisor/ University of Groningen
DAMIEN POWER
Second assessor/ University of Groningen
2
Abstract
The importance of logistics has been extensively researched showing their effects on the performance in business-to-business (B2B). Nevertheless, the ways of making business are evolving and new channels are emerging, making necessary to expand the knowledge of the positive outcomes of logistics in the new environments. Hence, this study aims to empirically identify the beneficial effects of logistics flexibility in the relation between supplier’s B2B e-commerce support and buyer’s trust. Findings are obtained from a survey with a sample of 43 Dutch companies in the construction industry, analysing the data with exploratory factor analysis and hierarchical regression. This results show that logistics flexibility and supplier’s B2B e-commerce have a positive direct relation with buyer’s trust, while there is no significant moderating effect of logistics flexibility in the previously mentioned relationship. Therefore, this results provide opportunities for future research in the area of logistics in the electronic environment, which might be expanded applying similar methods in different settings or including new related variables.
3 TABLE OF CONTENTS
1. Introduction... 5
2. Theoretical background and conceptual model... 6
2.1 B2B e-commerce in the construction industry... 6
2.2 Supplier’s Business-to-Business e-commerce support... 7
2.3 Buyer’s trust in the B2B e-commerce environment... 9
2.4 Logistics flexibility... 10
2.5 Hypothesis and conceptual model... 11
3. Methodology... 13
3.1 Sampling and data collection... 13
3.2 Development of constructs... 14
4. Analysis and results... 15
4.1 Properties of the measures... 16
4.2 Hypothesis results... 18
5. Discussion... 20
5.1 Theoretical implications... 21
5.2 Managerial implications... 22
6. Conclusion, limitations and further research... 23
References... 25
Appendix Appendix A: Interview protocol... 28
Appendix B: Questionnaire... 30
Appendix C: Description of constructs... 34
Appendix D: Cross loading analysis... 35
4 LIST OF TABLES
1. Table 1: logistics flexibility measurements... 11
2. Table 2: ratio of respondents who use B2B e-commerce... 15
3. Table 3: Survey descriptives... 15
4. Table 4: Validity and Reliability... 17
5. Table 5: Hierarchical regression analysis for Trust... 18
6. Table 6: H1 Results... 19
7. Table 7: H2 Results... 19
LIST OF FIGURES 1. Figure 1: Conceptual model... 12
5
1. INTRODUCTION
The use of Business-to-Business e-commerce (B2B EC) is growing every year and it has become an important business channel in the new century (Iyer, Germain & Claycomb, 2009; Gorla, Chiravuri & Chinta, 2015). Nowadays, it is remarkable the importance of B2B EC in the global trade. As a matter of fact, the size of this channel in United States is currently at least two times bigger than B2C e-commerce, and it is predicted that this difference will be amplified by 2019 (Hoar & Sheldon, 2015). Therefore, it is needed to know which elements are improved by using B2B EC and deeper research could show which elements are relevant in order to increase its use. E-commerce can be seen as a tool that can reduce service costs and improve the quality of goods and the service delivery (Kalakota & Whinston, 1997). This means that logistics play an important role in order to achieve that, and therefore it needs special attention in this environment. Consequently, logistics appear as a critical factor to create an effective B2B EC to deliver products in a fast and reliable way (Gunasekaran, Marri, McGaughey & Nebhwani, 2002). Hence, this article tries to provide new insights in the field focusing on the logistics flexibility and how it can influence the buyer’s trust on the suppliers when using B2B EC platforms.
For many years information and communication technologies (ICT), as electronic data interchange (EDI), have been implemented to improve the management of buyer-supplier relationships (Gunasekaran & Ngai, 2004). However, new web based technologies have overcome those technologies by improving the transparency, availability and efficiency of the information (Cagliano, Caniato & Spina, 2003). For instance, B2B EC presents itself as a web based technology capable to improve the business processes and the flow of information between buyers and suppliers, even though organizations are still hesitating about the possible benefits of this channel, and researchers are trying to find what factors are more relevant for its adoption (Gorla et al. 2015; Sila, 2013; Subramaniam & Shaw, 2002). Some of those possible advantages for the suppliers are the access to a wide range of customers, the possibility to avoid working with intermediaries or lower selling costs (Porter, 2001). While for the buyers, some of the benefits are the access to a broad variety of suppliers or the reduction in transaction costs (Kaplan & Sawhney, 2000). Hence, in this context, trust appears as a determinant factor. Previous studies showed the role of trust in the implementation of B2B EC (Alsaad, Mohamad & Ismail, 2017;Sila, 2013) while in this paper it is researched which elements can increase buyer’s trust in a B2B EC setting in order to increase the number of users in this platform.
6 Franwick, 2004). Therefore, in this study we try to analyse a specific characteristic of logistics which might have a positive impact in the use of B2B EC. In particular, we analyse the effect of the logistics flexibility as a determinant factor to increase the relation between the supplier’s B2B EC support and the buyer’s trust. Hence, the main question that arises in this research is:
Does logistics flexibility influence the relationship between buyer’s trust and the supplier’s channel support in a B2B e-commerce environment?
By answering this question, this study aims to empirically show the influence of the logistics flexibility as an element that can improve the buyer’s trust in the B2B EC channel. Furthermore, from the practical point of view, it tries to show the possibilities that B2B EC can offer in the transactions between buyers and suppliers to improve the efficiency in their logistics activities. In order to answer our main question, a survey research is conducted. The survey is developed based on the literature review and the insights from an interview with a supplier to gain in depth knowledge about the current practical situation.
The rest of the paper is structured as follows: first, a literature review that explores the existing framework about the main constructs of the research is developed. Second, the methodology used to answer the research question will be showed. Then, the results and the data analysis will show the findings that will be discussed. And finally, the conclusion, and the practical and theoretical contribution will be explained, and the limitations and further research are argued.
2. THEORETICAL BACKGROUND AND CONCEPTUAL MODEL
This section is dedicated to cover the theoretical foundation of the study. First, a literature review about B2B e-commerce and the setting of this research is discussed in relation with its importance in the latest years. Second, a review about the main elements related with buyer’s trust behaviour are analysed based on literature. Then, the role of logistics flexibility in the previous relationship is discussed. Finally, the hypothesis and the conceptual model of this study are presented.
2.1. B2B e-commerce in the construction industry
7 Hence, in order to recognize the characteristics of B2B EC, the construction industry in the Netherlands will be analysed because of the specific features of this industry, which is having a slower pace of implementation of these new technologies than other sectors. This industry has an important weight in the economy of the Netherlands and it represents in the latest years around 5% of the GDP in the country. This industry is facing necessity and resistance to change when implementing new ways of technological sourcing of materials (Scenter & Scenter, 2010). Nevertheless, there are some benefits that are pushing this industry towards the use of electronic commerce as well, such as the possibility of improvement of the communication and exchange of information that can make the supply chain faster and more flexible (Kong, Li, Hung, Shi, Castro-Lacouture & Skibniewski, 2004). Adding some other benefits such as the possibility to easily reach more suppliers or potential buyers (Anumba & Ruikar, 2002).
On the contrary, there are some inherent barriers that limit the use of B2B EC in the construction industry. For instance, the trust in the electronic systems and online providers. Moreover, in this industry there are other specific barriers to the implementation of the new technologies because of the importance of SMEs in this sector and the difficulty for them to implement this technologies due to the high investment needed (Anumba & Ruikar, 2002). These authors added also that trust is built easier by telephone calls than by e-mail, and to be successful electronic communication has to improve the trust. Therefore, because trust is a key in this sector and there are important benefits of using this platforms, the buyer’s trust will be studied as a dependent variable that could be improved by the supplier’s B2B EC support and the logistics flexibility that will be defined in the next subsections.
2.2. Supplier’s Business-to-Business e-commerce support
8 However, not only it is important the supplier’s implementation of B2B EC, but also it is necessary the level of involvement of the buyer and its willingness to participate in this new channel. Hence, suppliers have to convince the buyers about the benefits of B2B EC and encourage them to use it. Buyers will not use B2B EC if vendors do not offer support to shift from traditional B2B to the new environment (Deeter-Schmelz, Bizzari, Graham & Howdyshell, 2001). Additionally, Deeter-Schmelz et al. (2001) define supplier support as the extent to which encouragement, incentives and guidance in the use of the platform are offered by the supplier. Therefore, aspects related with the online platform such as usability, functionality, reliability or privacy and security might influence the overall trust of the buyer towards the supplier (Chen & Dhillon, 2003). In addition to the characteristics of supplier’s support, Premazzi, Castaldo, Grosso, Raman, Brudvig & Hofacker (2010) claim that incentives may change the buyer’s trust behaviour and make them more willing to share information. This means that when a company offer some incentives, buyer’s trust might be increased because they can see it as a matter of firm’s stability (Premazzi et al., 2010).
Additionally, some critical factors have been determined important for buyers when deciding the use of electronic channels. For example, factors such as the useful information or the wide range of products and services that e-commerce can provide, have been determined as really important for buyers in the medical supply chain (Wang, Mao, Johansen, Luxhoj, O’Kane, Wang, Wang & Chen, 2016). Furthermore, Wang et al. (2016) determine that there are other relevant and high performance factors such as the functionality of the channel and the agreements among companies. Factors that are important in that industry which could also be relevant in other industries such as the construction industry and applied to the support that suppliers can offer.
9 2.3. Buyer’s trust in the B2B e-commerce environment
As it has been previously mentioned, an important element in the use of B2B EC for buyers is trust. This concept has many definitions, which makes it complex and broad. Hence, in the development of this research, we focus on trust as the one that buyers have on their suppliers. Thus, trust is described as the credible and benevolent relationship between firms, defining credible as the buyer’s confidence that suppliers will act in a reliable and effective way, and defining benevolent as the supplier’s intention to act for the best interests of each partner (Doney & Cannon, 1997). When this trust is high the implication is that the buyer finds its partner as a reliable source when it comes to the delivery process, and it improves the information sharing among partners (Devaraj, Vaidyanathan & Mishra, 2012). Moreover, it has been demonstrated that trust between organizations has a positive effect on performance because it lowers costs of negotiation and conflict (Zaheer, McEvily & Perrone, 1998) which remarks the importance of study B2B EC. Trust has been studied in the B2B EC literature from different perspectives, sometimes as a moderator and sometimes as an element that has a direct effect in other variables. Authors like Sila (2013) has shown that trust on the suppliers has a direct impact in the adoption of B2B EC when the contextual variables such as firm size or firm type are excluded. In contrast, trust has been also studied as a moderator on the intentions of companies to adopt B2B EC (Alsaad et al., 2017).
One of the factors which has a positive influence for customers who are considering to use B2B EC is the quality of service (Chen, Chen & Capistrano, 2013). Therefore, any effort from the suppliers that can increase this aspect could lead to achieve more trust from the buyer, and as a consequence more probability that the buyer will use this channel. Because e-commerce is mainly used in a global environment, trust is found as an important factor to deal with problems and conflicts that are difficult to solve in this environment. (Ratnasingam & Phan, 2003). From the logistics point of view, it is argued that elements such as the logistics information integration is positively related to the inter-organizational trust (Wei, Wong & Lai, 2012). This is added to the literature as one of the positive relations that logistics have towards buyer’s trust whereas the link between logistics flexibility and trust will be further analysed in this research.
10 To our knowledge, many of the studies found in literature are related with the implementation of B2B EC by the suppliers but they are not that much focused in the benefits for the buyers and how some elements can help to encourage buyers to participate in this channel. In order to implement this channel in a cost-efficient way, it is necessary that suppliers encourage their customers to make use of it, since scalability is an important issue to be successful in a new channel. In order to do this, trust should be established to exchange information among partners to enable collaboration (Alrubaiee, Alshaibi & Al-bayati, 2012). Finally, logistics is an important part of the operational performance so if this new platform enables them to achieve a higher logistics flexibility, they will be more willing to use this tool.
2.4. Logistics flexibility
Flexibility has been a concept extensively researched. Previous studies focused on the manufacturing flexibility which was analysed from an internal perspective in the organizations. However, in the latest years, the concept of flexibility has become more popular and the focus has expanded to embrace the whole supply chain, studying flexibility from an inter-organizational perspective instead of focusing inside only one company (Stevenson & Spring, 2007). This supply chain flexibility is important since it is positively related with company’s performance (Sánchez & Pérez, 2005). Therefore, because companies operate in a global economy, it is important not only to focus on the manufacturing aspects but also to expand the scope and give attention to the external aspects of the company, especially to logistics due to its impact in the firm’s performance (Garavelli, 2003).
Consequently, this paper analyses and tries to identify the important logistics elements which influence the relationship between the supplier’s platform and the buyer’s trust, characterizing flexibility in terms of logistics. In an extensive literature review, Jafari (2015) described how logistics flexibility has been defined in previous studies. In his research, Jafari (2015) classifies the studies of this concept in three levels of analysis: firm, dyad and supply chain level, referring to the dyad level as the direct relation between buyer and supplier. Hence, because the scope of this research is the buyer-supplier relation, we focus in this article on the dyad level for the analysis.
11 and described logistics flexibility as the ability to reduce the negative effect of market and process variability on supply chain performance. They also create a classification, which is the one that we are going to follow to develop our construct by selecting the main relevant elements for our study. Therefore we do not use trans-shipment, postponement, launch flexibility and other types of flexibility.
In Table 1 we present the definitions of the main items of logistics flexibility:
Type of logistics flexibility
Definition References
Delivery flexibility
“The ability of the integrated logistic system to distribute and deliver the product
economically and with no additional time from the raw material source to the final customer”
(Sánchez & Pérez, 2005); (Kumar, Fantazy, Kumar
& Boyle, 2006); (Singh & Acharya, 2013) Sourcing
flexibility
“It is related to the company’s ability to find another supplier for each specific component or raw material”
Response flexibility
“The capability of supply chain partners to respond economically and with no additional time to the market changes to satisfy
customer demand”
Access flexibility
“The ability to provide widespread or intensive distribution coverage”
Table 1: logistics flexibility measurements
The elements displayed in Table 1 will be the main items that will be developed to create the core of our research and they will be showed in the methods section. Finally, in the next sub-section the main hypothesis and the conceptual model of our research will be presented.
2.5. Hypothesis and conceptual model
Based on the theoretical framework we can highlight the importance of trust behaviour as a factor that can increase the probability of the use and expansion of B2B EC in business. Moreover, it was remarked the possible effects that supplier’s support in B2B EC could have in trust behaviour. Hence, our first hypothesis is:
12 This would imply that the efforts of the suppliers in promoting the new channel, encouraging the customers to use their platforms or making special agreements in the electronic channel, could have a positive effect in the perception that the buyers have on the suppliers and the channel. Defining this perception as an increase of the trust.
On the other hand, we introduced the concept of logistics flexibility. As they were defined before, both trust and logistics flexibility are variables affecting inter-organizational relationships which is a basic relation in B2B EC where two partners (for the level of this study) are involved in a transaction. Additionally, as it was previously explained, we suggest logistics flexibility can interact with the support that suppliers provide, influencing the first relation. Therefore, we suggest that logistics flexibility can positively moderate the effect between supplier’s B2B EC support and buyer’s trust. As a result we present our second hypothesis of this study:
H2: Logistics flexibility has a significant positive moderating effect on the relation between supplier’s B2B EC support and buyer’s trust.
This means that when the suppliers offer a wide range of support in the channel to the buyer, and at the same time they are able to offer more flexibility in terms of logistics, the buyers could perceive this as a positive signal that the supplier is a good provider. If the buyers perceive this and are confident that the suppliers are able to meet what they promise, their trust will increase and indirectly they will be more willing to use the new platform.
Finally the conceptual model is depicted in Figure 1 presenting the main variables of this research and their relations. This figure depicts the main hypothesis formulated, showing the positive direct relationship between supplier’s B2B EC support and buyer’s trust, and the positive moderating effect that logistics flexibility has in this relationship in the environment of Business-to-Business e-commerce.
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3. METHODOLOGY
3.1. Sampling and data collection
The empirical setting of this research is based on the relation between buyers and suppliers in the building industry in the Netherlands. Since the aim of this research is to find the logistics effect in the electronic environment, a project based sector such as the construction sector seems suitable to find relevant insights. This traditional industry often goes behind in the implementation of new technologies. Therefore, if we are capable to identify some effects or problems in our research, we expect that they could give us guidance to understand the same effects they can have in other more technological advanced industries such as consumer electronics, pharmaceutical, etc. Therefore, this setting provides a good starting point to analyse important logistics effects in the B2B e-commerce channel.
Consequently, first in this research, an exploratory interview with a big supplier in the industry was conducted to get insights about the characteristics of the supplier’s B2B EC platform and the support they provide to this channel. Following, based on that interview and the study of the literature, a questionnaire was developed to be answered by buyers in the building industry. Finally, this survey was revised, translated into Dutch and distributed to the buyers to be answered. The survey research was conducted following the guidelines of Karlsson (2016).
In particular, an interview with one of the largest suppliers of building materials in the Netherlands was conducted. In this interview, questions related with the study were asked to the Logistics Project Manager of the company to confirm the validity of the hypothesis and their relevance in real application. This interview confirmed our expectations from the previous literature review and the hypothesis were confirmed as valid for the empirical research. Some further insights related to the study were found during the interview. For instance, it is remarkable that currently only 5% of the sales belongs to the electronic channel while the intentions are to expand this channel to reach around 30% or even 40% of the total sales in the coming years. Also, due to the traditional sector in which this empirical research is based, the difficulties to implement B2B e-commerce in the daily transactions among companies is probably bigger than in other more technological advanced industries. The interview protocol can be found in Appendix A.
14 Once every instrument was demonstrated to be clear and valid, the online survey was sent to 3000 companies in the building industry in the Netherlands. The questionnaire was divided in four sections, a first part where the companies decided if they have ever used B2B e-commerce or not and three next sections where the questions for the main constructs with their respective items were asked. In case they have never used an electronic channel, they were excluded for the following analysis of this study since they are out of the scope of this research. Moreover, respondents were required to be responsible or to have knowledge of the logistics or sourcing of materials in the company. Hence, most of the respondents were from medium to senior level positions. Finally, the questions were measured using five-point Likert scales (“1 = not at all” to “5 = to a very large extent”).
3.2. Development of constructs
In this study, constructs and items which were developed in previous studies are adapted for the purpose of our research in order to provide face and content validity. The first construct, “Supplier’s B2B EC support” is conceptualized using the same items that Deeter-Schmelz et al. (2001) developed and adding some of the critical success factors that Wang et al. (2016) found in the B2B e-commerce in the Chinese medical supply chain that can be applied in the building industry in this channel. Therefore, this construct is based on the services and functionality offered by the online supplier platform and the relationship established between buyer and supplier in the online channel.
Second, the construct “Trust” is conceptualized using eight items that cover the credible and benevolent relationship between buyer and supplier which were tested by Doney & Cannon (1997) and Devaraj et al. (2012) and applied for the online channel. A trust that, as we previously hypothesized, might be increased in the electronic channel by the supplier’s support on the online platform. This means that all the supportive elements the suppliers provide might help them to be seen from the buyers as reliable and trustworthy partners, taking care about their common and not only individual interests when implementing new technologies that improve the business processes in the supply chain.
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4. ANALYSIS AND RESULTS
The survey was distributed by e-mail to 3000 companies in the building industry in the Netherlands, and completed by 85 of them. Even though, the Dillman, Tortora & Bowker (1998) principles for developing a web survey were followed, the response rate was low. The proportion of respondents was 2.83%, a low response rate that could happen for different reasons: the topic, time it takes to fill it, sponsorship, sensitive concerns, etc. (Fan & Yan, 2010). Another possible reason could be that the questionnaires were sent to the main contact e-mail of the companies which could make more difficult to reach the target people that should fill the survey.
From a sample of 85 respondents, approximately half of them stated that they do not use any electronic platform with their suppliers. This results are shown in Table 2.
Characteristics Details Percent
Use of B2B e-commerce Yes 50.6
No 49.4
Table 2: ratio of respondents who use B2B e-commerce. N=85
Further analysis was only developed with the respondents who stated that they have used B2B e-commerce channel, having a remaining sample of 43 respondents. Based on this sample we can observe that most of the respondents were managers in the companies and they use B2B e-commerce to a little extent in most of the cases. This results are shown in table 3.
Characteristics Details Percent
Position Owner 16.3 Manager 37.2 Purchaser 18.6 Administration 14.0 Missing 14.0 Province Drenthe 4.7 Friesland 11.6 Gelderland 16.3 Groningen 9.3 Noord Brabant 9.3 Noord Holland 7.0 Overijssel 11.6 Utrecht 7.0 Zuid Holland 4.7 Missing 18.6
Extent of use of B2B e-commerce Little extent 62.8
To some extent 30.2
Great extent 7.0
16 4.1. Properties of the measures
In order to develop a survey with valid and reliable constructs the different methods from Gerbing & Anderson (1988) are followed for Supplier’s B2B e-commerce Support, Buyer’s Trust and Logistics Flexibility. The validity for the constructs rely on previous studies which have used those constructs in a similar to provide face validity. As a result, we conducted some tests for validity and reliability of the constructs and their respective items, whose results are presented in this section.
Unidimensionality
Unidimensionality refers to the items that belong to one dimension or more dimensions. In order to assess this, we conducted Exploratory Factor Analysis (EFA). Even though the items were obtained in its majority from previous studies, we made some modifications and some other items were added to the construct, which made better to use exploratory instead of confirmatory to measure the correlations and dimensions of the constructs.
Therefore, in order to measure and interpret unidimensionality, we used varimax rotation and Principle Component Analysis (PCA). Because this analysis is easier to compute than common factor analysis, it is preferable to use it due to the similar results they provide (Gorsuch, 1997). Using the output of the test, some of the items included were removed because of the cross loadings found. Three items from the construct supplier’s B2B EC, four items from trust and one item from logistics flexibility were deleted because they were highly loaded in one of the other variables. The table with the final items selected and the cross loadings of all the items together is shown in Appendix D, where it can be seen that after removing the items which presented some cross loadings, there are no more remarkable problems among them. After this analysis, we determine the final relevant items for the constructs that appear in Table 4 with their respective factor loadings.
Reliability
17 Construct validity
Finally, construct validity is determined by two aspects: convergent and discriminant validity. Convergent validity defines the extent of the relation of two measures that are theoretically related. In order to determine this aspect, it can be seen in Table 4 that all the factor loadings were above 0.5. We also calculated the average variance extracted (AVE) showing results for the three constructs above 0.5, which is the lower limit to consider the validity of this constructs (Fornell & Larcker, 1981). On the other hand, discriminant validity determines if two measures that are not related on theory, are not related. In order to determine this element, the correlations between constructs were calculated and the average of them was 0.394 which is a moderate correlation that confirm discriminant validity in the model.
Construct Item label and description Factor Loadings Cronbach’s Alpha Average Variance Extracted (AVE) Supplier’s B2B EC support
SS1: Most of my suppliers encourage me to use their Internet sites
0.835 0.773 0.578
SS2: My suppliers provide effective guidance in the use of their Internet sites
0.751
SS3: Many of my suppliers offer incentives for using their Internet purchasing options
0.893
SS4: Solid business agreements are established with my suppliers on the e-commerce channel
0.636
Trust TRST1: Our online suppliers are genuinely concerned that our business succeeds
0.833 0.828 0.573
TRST2: When making important decisions, our online suppliers consider our welfare as well as its own
0.867
TRST3: We trust that our online suppliers keep our best interests in mind
0.773
TRST4: Our online suppliers are trustworthy
0.781 Logistics
flexibility
LF1: My suppliers have flexible delivery scheduling and routing
0.771 0.756 0.552
LF2: My suppliers are capable to maintain consistent on-time delivery
0.773 LF3: My suppliers service flexibility is
capable to meet customers’ needs
0.721 LF4: My suppliers have extensive
operation hours
0.809
18 Based on the results showed, it can be determined that our constructs are valid and reliable when removing some of the items that were related and cross loaded in other construct (Appendix D).
4.2. Hypothesis results
In this section, based on the sample of 43 respondents who use B2B e-commerce, we present the results for the hypothesis developed in this study. In order to do this we use the hierarchical regression method in order to test the effect of some independent variables on the dependent variable of this study, trust. Consequently, we use five different models to test our hypothesis, using trust as the dependent variable. In Model 1 we introduced the control variables. Afterwards, we introduced the independent variable Supplier’s B2B EC support (SS) in Model 2. For Model 3, we removed SS and we introduced Logistics flexibility (LF) as the independent variable. Afterwards, in model 4 we kept LF and added SS at the same time. Finally, in Model 5 we use the moderating effect of logistics flexibility in the relationship between SS and Trust to test our second hypothesis. This results are shown below in Table 5.
Independent Variable Model 1 Sig. Model 2 Sig. Model 3 Sig. Model 4 Sig. Model 5 Sig. (Constant) 3.691 0.000 2.783 0.000 1.862 0.004 1.492 0.017 3.676 0.000 Gender -0.318 0.164 -0.225 0.281 -0.226 0.266 -0.171 0.372 -0.296 0.207 Firm Size 0.013 0.926 0.016 0.899 -0.091 0.484 -0.070 0.569 0.013 0.928 SS 0.334 0.004 0.257 0.018 LF 0.546 0.001 0.447 0.006 SS x LF -0.048 0.635 R2 0.050 0.233 0.270 0.371 0.056 Adjusted R2 0.003 0.174 0.213 0.305 -0.017 F 1.055 3.953 4.800 5.608 0.766 df 2 1 3 4 3 Sig. 0.358 0.015 0.006 0.001 0.520
Table 5: Hierarchical regression analysis for Trust
19 H1: There is a positive relationship between supplier’s B2B EC support and buyer’s trust.
Independent variable Coefficient SD T statistic P value Supplier’s B2B EC support (SS) 0.334 0.107 3.292 0.004
Table 6: H1 Results
Based on the results which can be seen in Table 6, our first hypothesis is supported. In this hypothesis we predicted that there is a positive linear relationship, between the support offered by the supplier in the online channel and the trust that the buyer have in them. The results, show that this relationship is positive and significant (β = 0.334; p < 0.05) which confirm our initial expectations. This means that the support offered from the suppliers such as encouragement, agreements, incentives or guidance in the buying process online, has a positive effect in the trust that buyers have on the supplier and platform.
H2: Logistics flexibility has a significant positive moderating effect on the relation between supplier’s B2B EC support and buyer’s trust.
Interaction variable Coefficient SD T statistic P value Logistics Flexibility x SS -0.048 0.084 -0.591 0.635
Table 7: H2 results
For the second hypothesis we predicted that the logistics flexibility could act as a moderator that increase the relation between the independent and dependent variables. We developed this hypothesis because we expected that the effect that different forms of logistics flexibility that the supplier can offer to the buyer, could interact with the support that the supplier provides in the electronic channel. Nevertheless, the results show (Table 7) that it cannot be verified that logistics flexibility is a moderator of such relationship (β = -0.048; p > 0.05). Hence, second hypothesis is rejected. Therefore, we cannot confirm that suppliers that offer more flexibility in their logistics activities, generate more trust than those which do not offer high flexibility. This moderation effect is graphically represented in Figure 2 where it can be seen that low or high supplier’s B2B EC commerce does not influence the buyer’s trust when there is low or high logistics flexibility.
20 is a relation between these elements. This suggests that logistics flexibility could be analysed independently from the support that suppliers offer in the electronic channel.
Figure 2: Interaction effect between supplier’s B2B EC support and logistics flexibility on buyer’s trust
To sum up, the results have supported our first hypothesis and rejected the second one. Moreover, the analysis has shown that there is a positive relationship between logistics flexibility and buyer’s trust, although this was not expected from the beginning of this research. This findings give us information to further discuss in the next section.
5. DISCUSSION
B2B EC is expanding every year and it has already been introduced in so many different industries. Moreover, new competitors and e-marketplaces are emerging in the electronic channel, competing in different sectors with off-line firms. Since B2B EC is already implemented in many industries, for the purpose of this study we have selected a traditional industry with a low rate of implementation of this channel to find relevant insights. As it was said in the interview with one of the suppliers of materials in the Netherlands, their proportion of sales in the B2B e-commerce is currently around 5%, while the expectations of growth in the coming years is to reach around 30%-40%. This has important implications because it means that in this industry, the electronic channel has a big opportunity to grow, transforming the sector and its processes.
As it could be seen in the previous section, most of the respondents declared that they use the electronic channel to some (30.2%) or little extent (62.8%), which means that the implementation of this channel in the construction industry is still relatively small. This supports the theory developed at the beginning of this study, since a lower use of B2B EC would require bigger efforts from the supplier to increase its use. The empirical results justified the first hypothesis of this research showing that the support offered by the supplier in the online channel is positively related
21 with the buyer’s trust. Hence, the supplier’s support could play an important role in the improvement of trust of the buyer, which is necessary for a bigger implementation of this channel in traditional industries such as the building sector. Encourage, make special agreements online, offer incentives or guide the buyer in the new channel can increase the buyer’s feeling that the supplier is concerned about the benefit for each part and the perception the supplier is trustworthy.
On the other hand, the research question of this study is if logistics flexibility influence the previously explained relation between supplier’s B2B EC support and buyer’s trust. Based on the interview with the supplier of building materials (Appendix E) and the theoretical background we expected that logistics flexibility could act as a moderator. Therefore, we hypothesized that logistics flexibility moderate that relationship. Nevertheless, the empirical results showed that our second hypothesis could not be proved. What’s more, the results showed that the hypothesis of logistics flexibility as a moderator is rejected, but a direct relationship between logistics flexibility and buyer’s trust was significant. This means that while there is no interaction effect between supplier’s B2B EC support and logistics flexibility, both independently affect buyer’s trust and this is important to take into account when applying managerial actions. Hence, the direct effect of logistics flexibility on buyer’s trust is more important than the moderation effect that was hypothesized, having also relevant theoretical implications that are explained in the next subsection.
Lastly, we assumed that logistics flexibility is a positive characteristic that increase their positive effects when it is expanded. However, it exists the possibility that offering more flexibility can decrease the trust of the buyer when it increases. For example, offering a wide range of options might be perceived from the buyer as an element of low service quality, and consequently this could reduce the trust the buyer has on the supplier when increasing the flexibility.
5.1. Theoretical implications
22 In this research, the variables have been empirically analysed in the context of the building industry finding some remarkable issues. The difficulties in this sector, in relation with the electronic channel, appear among other reasons because of the project based view that is predominant in the construction industry, which makes more difficult the flow of information and collaboration among the participants (Anumba & Ruikar, 2002). However, the aim was to analyse what elements are determinant to increase the trust that buyers have on the suppliers in the B2B EC channel, since trust has been demonstrated a basic element in the implementation of the new technologies (Alsaad et al., 2017).
Finally, it can be seen from the empirical analysis of this research that the most important finding of this study is the positive direct relation between logistics flexibility and buyer’s trust. This finding has relevant scientific implications since it expands the knowledge of the significance of logistics flexibility to increase the trust that buyers have on their suppliers. While other studies of logistics flexibility focused on its relation with speed or uncertainty (Jafari, 2015), this research argues that a flexible delivery, response and access increase the confidence of the buyers in terms of a credible and benevolent buyer-supplier relationship.
5.2. Managerial implications
Our findings showed that the sales through the online channel of one of the biggest suppliers in the building industry in the Netherlands represents around 5% of the total sales of the company. At the same time, the survey revealed that only 50% of the companies have ever used the tool and mostly, to a little extent. This difference could be explained taking into account that there are more suppliers selling online to these firms and more important, because the buyers declared that they use this channel to a little extent. This means that they buy sporadically or in small quantities that do not represent a big percentage of the total sales of the supplier, suggesting that for the sourcing of most of the materials buyers are still using the traditional channel. Additionally, the construction sector is a traditional industry that takes more time to adopt changes (Issa, Flood & Caglasin, 2003). This indicates that the electronic channel has space to grow in this sector. Thus, based on the results we can determine some managerial implications.
23 market since it is possible the appearance of new players that can develop more efficient process in the supply chain by using this channel.
Second, not only it is important the support that suppliers provide to increase the trust of the buyers in this channel, but logistics also plays an important role. And specifically, the logistics flexibility. It could not be demonstrated in this research that logistics flexibility interact in the relation between supplier’s B2B EC support and buyer’s trust. However, these elements were treated independently with each other, not interacting, in order to observe how they contributed to increase the buyer’s trust, showing that, indeed, there is a direct effect from both independent variables on the dependent variable. Therefore, companies should give special attention to those elements and analyse the possible benefits or disadvantages of applying them.
Finally, the ultimate goal of this research was to identify some aspects of logistics that have an important influence in e-commerce. In this case, logistics flexibility is demonstrated as an element that suppliers might use to improve the buyer’s trust which could contribute to overcome some of the barriers of implementation of B2B EC in some industries. There are factors that influence the performance of an effective use of logistics flexibility such as costs, delivery problems or communication between the parts involved. However, if these aspects are properly managed, logistics flexibility can turn into an important asset for any company. And this could be especially important in B2B EC, where elements such personal interaction with the buyer or supplier might be lost and it has to be replaced by other supportive elements that reinforce the confidence.
6. CONCLUSION, LIMITATIONS AND FURTHER RESEARCH
In conclusion, this research has attempted to determine important elements that influence the buyer’s trust in a Business-to-Business electronic channel, focusing on the role of logistics in this environment. The results highlight that suppliers should encourage, provide guidance, develop special agreements or offer incentives to increase the buyer’s trust to increase the probability that the buyers will use this platform. On the other hand, the results also indicate that elements of logistics such as delivery, sourcing or response flexibility could not be confirmed as factors that can make this relationship stronger, but they are directly related to the increase of buyer’s trust.
24 industries, so the results could be different. Moreover, the studied was carried out in the Netherlands, and there could be some differences among countries due to the different level of technological implementation. Third, regarding the variables used and its operationalization, even though they were found relevant in the literature, they presented some difficulties in their analysis. This is because it was discovered that some of the original items were highly cross loaded, which could mean that they presented some similarities among them. Because the literature review provided face validity, the items were included in the constructs but based on the Exploratory Factor Analysis, some of them had to be removed. Furthermore, because this study was developed in the construction industry some elements could have been overlooked since it is not the expertise field of the author. Lastly, the small period of time in which this study has been conducted has limited the possibility to do a more extensive research that takes into account more logistics factors that can influence the relationships showed.
Based on the findings of this study, we can determine that there is opportunity to expand the research in this area. Some questions have raised from this research that could be used in the future for new investigation. For instance, the trade-off between the application of logistics flexibility and its costs. In this study the costs of applying logistics flexibility were not analysed. At the same time logistics flexibility could benefit the buyer, some costs of delivery, transport or service could be increased when applying it which could be an aspect that buyers would not be willing to afford. Hence, further research should analyse this costs in order to get the view of the trade-offs that can appear. Moreover, as it was mentioned before, offering high flexibility could be perceived by the buyers as a bad signal of the service quality. Therefore, future studies could attempt to measure if there is a U-inverted relationship between logistics flexibility and some buyer’s behaviours.
Additionally, it could be possible to observe this concepts applied in other settings and situations. The findings were applied in the construction sector in the Netherlands, and research could be expanded to observe if the study is replicable in different countries or in different industries. Likewise, because the setting of this research is the building industry, a traditional sector, it would normally take more time and effort to implement new technologies such as B2B EC, so the necessity of the supplier’s support could have a bigger impact in the buyer’s trust than in other industries which are more used to the use of IT systems in their transactions.
25
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Appendix A: Interview protocol
Name of the interviewer: Date of the interview: Location of the interview: Company’s information Name of the company: Address:
Contact information Name of interviewee: Position in the company: E-mail:
The goal of this interview is to discover the influence of the supplier’s B2B e-commerce support on the buyer’s trust and the importance of the logistics flexibility to strength this relationship. The setting of this research is the construction industry in the Netherlands. This company represents one of the main suppliers in this sector in the Netherlands. The interview will take approximately 45 minutes and it will be conducted with the logistics project manager of the company with knowledge in the area of the B2B e-commerce channel and the logistics department. Please make sure if the interviewee has any questions concerning the interview before asking the first question.
General information about the interview:
This research will be conducted exclusively for academic purposes.
The interview will be recorded to be analysed afterwards. The recorded audio will be only use for the purpose of the research.
Ask if the interviewee has any prior questions. Current time:
Start audio recording now.
Question set 1. Breaking the ice.
Ask this questions directly (spend at most 10 min on this part): - What is your name?
- What is your position at this company?
- How long have you been working in this company? - What responsibilities do you have in the company?
29 Question set 2. Supplier’s B2B e-commerce support
- What is approximately the weight of B2B e-commerce in the sales to your customers? (%) - What are the main problems that your company faces in their electronic channel?
- How is the relation between your company and the buyers in the online encounter? Are they partner customers or companies which does not have any relation with your company? - Do you encourage your customers to use your B2B EC channel?
- Do you offer incentives for using the Internet channel? - What are the benefits of using B2B EC?
- What are the advantages of using B2B EC instead of traditional B2B?
- How do you use this platform for things such as collaboration and contract management with your customers?
- Do you consider that a good support of your electronic channel could improve the trust that the buyers have in your company?
Question set 3. Logistics flexibility.
- Do you offer a flexible delivery scheduling and routing?
- In general terms, how difficult is to maintain consistent on-time delivery?
- What is your policy to handle complaints when a failure in the service delivery occurs? - What are your operations hours?
-What kind of delivery do you offer to your customers through the B2B EC platform? (Last mile delivery, pick-up points…)
- Do you work with one exclusive transportation company or do you use multiple partners to deliver your products?
- Does the electronic channel increase or reduce the costs of logistics?
30
APPENDIX B: Questionnaire
Province (Optional)
What is your job position in the company? (Optional) What is your gender?
Male Female
What is the size of your company? Small (0-50 employees)
Medium (51-250 employees) Large (more than 250)
Have you ever used the B2B e-commerce platform to buy from a supplier? (Webshop, online channel, etc)
Yes No
To what extent do you use B2B e-commerce platform in your transactions with the suppliers? (Webshop, online channel, etc)
Not at all Very little To some
extent Great extent
To a very large extent
Use of B2B
31 B2B e-commerce supplier's support - To what extent do you agree with the following statements about the B2B e-commerce channel of your suppliers?
Not at all Little extent To some
extent Great extent
To a very large extent
Most of my suppliers encourage me to use their Internet
sites My suppliers provide effective guidance in the use of their Internet sites Many of my suppliers offer incentives for using their Internet purchasing options
32 Trust - To what extent do you agree with the following statements about your trust in your online suppliers?
Not at all Little extent To some
extent Great extent
To a very large extent
Our online suppliers keep
promises it makes to our firm
Our online suppliers are not
always honest with us We believe the information that our online suppliers provide us Our online suppliers are genuinely concerned that our business succeeds When making important decisions, our online suppliers consider our welfare as well as its own
We trust that our online suppliers
33 Logistics flexibility- To what extent do you agree with the following statements about the logistics flexibility that your suppliers offer?
Not at all Little extent To some
extent Great extent
34
Appendix C: Description of constructs
Construct Description Literature
Supplier’s B2B EC support
Most of my suppliers encourage me to use their Internet sites My suppliers provide effective guidance in the use of their Internet sites
Many of my suppliers offer incentives for using their Internet purchasing options
The features and functionality of the online purchased products on my suppliers' B2B e-commerce channel can be easily understood
My suppliers' e-commerce systems can provide timely, effective, accurate and detailed information
A variety of products/services is available in the B2B e-commerce channel of my suppliers
Solid business agreements are established with my suppliers on the e-commerce channel
Deeter-Schmelz et al. (2001)
Wang et al. (2016)
Trust Our online suppliers keep promises it makes to our firm Our online suppliers are not always honest with us (reverse coded)
We believe the information that our online suppliers provide us
Our online suppliers are genuinely concerned that our business succeeds
When making important decisions, our online suppliers consider our welfare as well as its own
We trust that our online suppliers keep our best interests in mind
Our online suppliers are trustworthy
We find it necessary to be cautious with online suppliers (reverse coded) Doney & Cannon (1997); Devaraj et al. (2012) Logistics flexibility
My suppliers have flexible delivery scheduling and routing My suppliers are capable to maintain consistent on-time delivery
My supplier are capable to handle problems and complaints My suppliers service flexibility is capable to meet customers’ needs
My suppliers have extensive operation hours
35
APPENDIX D: Cross loading analysis
Items Supplier’s B2B
EC support
Trust Logistics flexibility SS1: Most of my suppliers encourage me to
use their Internet sites
0.860 0.133 -0.107
SS2: My suppliers provide effective guidance in the use of their Internet sites
0.741 0.102 0.107
SS3: Many of my suppliers offer incentives for using their Internet purchasing options
0.875 0.108 0.093
SS4: Solid business agreements are established with my suppliers on the e-commerce channel
0.507 0.356 0.114
TRST1: Our online suppliers are genuinely concerned that our business succeeds
0.314 0.673 0.335
TRST2: When making important decisions, our online suppliers consider our welfare as well as its own
0.327 0.727 0.330
TRST3: We trust that our online suppliers keep our best interests in mind
0.027 0.857 -0.075
TRST4: Our online suppliers are trustworthy 0.136 0.758 0.236 LF1: My suppliers have flexible delivery
scheduling and routing
0.407 0.120 0.699
LF2: My suppliers are capable to maintain consistent on-time delivery
-0.103 0.345 0.714
LF3: My suppliers service flexibility is capable to meet customers’ needs
0.099 0.032 0.739
LF4: My suppliers have extensive operation hours
36
APPENDIX E: Analysis of the interview
Variables Questions Answers
SUPPLIER’S B2B E-COMMERCE SUPPORT
What is approximately the weight of B2B e-commerce in the sales to your
customers?
- 5% is electronic and 95% is still traditional
- Next three years the expectation is to reach between 30% and 40%
What are the main problems that your company faces in their electronic channel?
- The ordering is different: traditional orders are always the same kind of products, in e-commerce there is more variability.
- The promotion wise is different. - Logistics has to adapt to marketing and the new tools.
Do you encourage your customers to use your B2B EC channel?
- Yes, with marketing.
Do you offer incentives for using the Internet channel?
- No. But we believe that we can offer some specialization
- We want simple orders via online. What are the benefits of
using B2B EC?
- More orders with same amount of people.
- Order input is done by the customer. How do you use this
platform for things such as collaboration and contract management with your customers?
- It’s really basic at the moment. - No special agreements.
- They have more information on the website.
- Platform to share information. Do you consider that a
good support of your electronic channel could improve the trust that the buyers have in your company?
- Yes. If it’s easier for them and we deliver what they expect, the trust will increase.
- New generations are more willing to use e-commerce.
- It’s a good thing if we adapt to the change.
LOGISTICS FLEXIBILITY
Do you offer a flexible delivery scheduling and routing?
- Yes, we do.
- Time flexibility during some hours and also the place where goods has to be delivered.
In general terms, how difficult is to maintain consistent on-time delivery?
- It is difficult. Especially in the cities. - Everyone wants the goods to be
delivered at 7 (peak time) but it’s difficult due to capacity.
What is your policy to handle complaints when a failure in the service delivery occurs?
- The customer speaks with sales department. And sales department with logistics department.
What are your operations hours?
- Mostly between 7 and 4.
37 What kind of delivery do
you offer to your
customers through the B2B EC platform? (Last mile delivery, pick-up points…)
- Normal delivery and use of cross docking.
- Not special requirements for the trucks.
Does the electronic
channel increase or reduce the costs of logistics?
- For the moment it increases. Due to marketing activities mostly.
Do you work with one exclusive transportation company or do you use multiple partners to deliver your products?
- Multiple partners.
Have you reached a bigger number of costumers since you introduced the B2B EC channel?
- Not for the moment.
- We try to push our usual customers to use the platform.
Do you consider that offer logistics flexibility in your channel could increase the trust that buyers have in your company?
- Not sure.
