A multi-methodological study of the firm boundary decision in automotive distribution and logistics: Theory, practice, and performance

The application of lean principles has elevated the importance of the distribution and logistics function within the automotive industry. While some firms have elected to completely outsource their distribution and logistics services, others have elected a model closer to in-house capability development. This research seeks to understand these observed firm boundary differences and, further, to determine if the firm boundary decision can affect operational performance.; A multi-methodological approach is employed that combines both qualitative and quantitative analysis, along with both empirical and theoretical work. Such an approach provides the requisite variety to understand the complex issues inherent in the study of supply chain management. The more theoretical portion of the research uses real options to model the firm boundary decision in a manner that seeks to unify aspects of two prominent extant theories---transaction cost economics and resource-based theories of the firm. Complementing this more theoretical research is empirical research that employs a multiple embedded case study methodology that draws upon cases from the supply chains of two automotive companies. The case study research includes semi-structured interviews and ethnographic, participant observation aimed at observing how such firm boundary decisions are made in practice. The relative performance of the cross docks is then examined using data envelopment analysis. The final empirical study involves a broadly administered survey regarding the sourcing of distribution and logistics services within the automotive supplier industry. Statistical analysis of the resulting data is performed to investigate consistency with theoretical expectations.