Risk management strategies for international logistics: conceptualisation and validation

Purpose: This study aims to conceptualise the main strategies for mitigating risks in international logistics. It adopts information processing theory to investigate risk management strategies that can control the uncertainties from international logistics. It also develops and validates the measurement items for those strategies. Research Approach: This study rigorously applies both qualitative and quantitative methods. The concepts of strategies were framed by information processing theory and then populated by the review of the relevant studies and interviews with eight companies involved in international logistics. The measurement model, built upon the conceptualised research model, was tested by Q-sorting methods and pilot tests to ensure the content validity. A large-scale survey was later conducted with logistics professionals in South Korea. The results were analysed by Confirmatory Factor Analysis for testing validity and reliability of the research model. Findings and Originality: Extant research has suggested diverse operational/tactical responses to supply chain risks, but often these are not incorporated into logistics strategies. With the emphasis on the information and relationship management as the key drivers of managing international logistics risks, this study suggests four distinctive strategies which are (1) building a stable logistics network, (2) leveraging logistics information, (3) leveraging outsourcing contracts and (4) developing logistics collaboration. The scale items to measure the level of implementing the strategies were also suggested in reflection of various logistics tactics and practices to achieve the strategic goals. Research Impact: This is the first study to investigate the strategic dimensions of risk management for international logistics, which shows risk mitigating strategies can be differentiated in a firm’s strategic priorities. It also categorises diverse operational/tactical practices into four distinctive strategies with empirical rigor. Practical Impact: Firms can assess their level of risk management by using the measurement scales and can benchmark the best risk management knowledge and practices for international logistics operations. The strategies will indicate a firm’s direction of risk management based on top management decisions, organisational culture and logistics circumstances.