The impact of stack trains on steamship lines' sales force governance decisions: A transaction cost analysis

Governance decisions in channels of distribution have received much empirical attention over the past decade in the supply-chain literature (Stern, El-Ansary, and Coughlan 1996). These decisions have been modeled appropriately through logit choice econometric models, based on Transaction Cost Economics (TCE) considerations. The robustness of the models have aided in both explanation and understanding of discrete choices in supply chain management (Anderson and Coughlan 1987, Dwyer and Oh 1988). One appropriate avenue to extend the distribution channels governance decision arena is in U.S. maritime shipping.; Anecdotal evidence suggests that steamship lines have been vertically integrating their sales forces over the past years. This integration may be in response to increasing transaction costs and an industry quest for operational efficiency and marketing advantage-the stack train. The vertical integration of the sales function in maritime shipping may in part be explained by Transaction Cost theory.; Transaction Cost Economics was operationalized in an effort to better understand and explain the vertical integration of the sales function in U.S. market/load centers in maritime shipping, as impacted by the stack train. This theory was chosen because of the theory's focus on the firm not as a production function, but rather as a governance structure. The theory was further favored because of its robustness in explaining vertical integration issues across business applications and for its efficacy in explaining integration decisions of marketing activities.; This dissertation reports the results of an empirical study and an estimated logistics sales force model. The model was estimated with data collected from industry executives in the summer and fall of 1998. The stack train was found a significant determinant in sales force integration. The results of the estimated model also suggest that, at least in part, transaction-cost considerations are important determinants of the vertical integration of the sales function in U.S. market/load centers of the maritime shipping industry. The findings in this study may be generalized both to other transportation industries, such as airlines and railroads; and, to other service-oriented industries.