Factors influencing the decision to outsource logistics services of SMEs in Vietnam

Abstract

This study examines the factors influencing the decision to outsource logistics services of small- and medium-sized enterprises (SMEs). The Cronbach’s Alpha test, exploratory factor analysis, confirmatory factor analysis, and structural equation modeling were employed to analyze data collected from 204 Vietnamese SMEs in the export of agricultural products, seafood, and textile industries. The results show that the motivation to reduce costs and the characteristics of service providers have the most significant impact on these enterprises’ decisions to outsource logistics services. Moreover, outsourcing strategy also affects logistics outsourcing decisions. Based on the results, this study provides recommendations for logistics service providers to attract customers and advise SMEs on the decision-making process to outsource or operate logistics activities themselves.