Does bureaucracy affect the outcome of logistics performance? Empirical evidence from South Asia
ISSN: 1935-5181
Article publication date: 21 December 2020
Issue publication date: 2 April 2021
Abstract
Purpose
The purpose of this paper is to develop and test theory-driven hypothesis on trade costs’ effect of logistics performance (LP) and bureaucratic efficiency, primarily from SAARC (South Asian Association for Regional Cooperation) perspective.
Design/methodology/approach
The paper develops hypothesis based on the review of the literature and theory linking LP, trade costs and institutions. The authors test the hypothesis using secondary data sources: World Bank-UNESCAP trade costs database, World Bank Logistics Performance Index (LPI) and Political Risk Service's Political Risk Rating. Fixed-effect approach is used to test the hypothesis.
Findings
The influential role of bureaucratic quality on relationship between LPI and South Asian trade costs (inter-SAARC and intra-SAARC) is evident. The results also point out that bureaucratic quality also conditions the effect of different dimensions of LPI on South Asian trade costs. Further, it is found that bureaucratic inefficiency mitigates the effects of LPI on South Asia's trade costs with its proximate trading partners APEC (Asia–Pacific Economic Cooperation) and ASEAN (Association of Southeast Asia Nations).
Research limitations/implications
The analysis is conducted using short span of data. With the availability of long span of data, the understanding of the relationship studies in this paper will improve.
Practical implications
The results suggests policymakers to improve bureaucratic efficiency for utilizing the full potential effect of LPI in deceasing trade costs. The study inspires businesses to act and advocate in favor of reforms in governance system.
Originality/value
This paper is among the first, which investigates the possibility that the relationship between LPI and trade costs depends on the bureaucratic efficiency. It provides a more detailed description of the LPI-trade costs relationship.
Keywords
Acknowledgements
The ideas detailed in this paper were presented at the Jaipuria International Management Conference (JIMC 2020), Indore, July 17-18, 2020.The authors would like to acknowledge conference organizers (Dr. Megha Jain, Dr. Kalyani Mulchandani, and Prof. Arindam Saha) of Jaipuria International Management Conference 2020 (JIMC 2020). We would also like to express our deepest thanks to internal reviewer and external reviewer (Dr. Basav Roychoudhury, Associate Professor, IIM Shillong) of JIMC 2020 for their constructive comments and suggestions. We also appreciate the anonymous reviewers for their valuable time and support. Their comments and suggestions helped enrich the quality of this manuscript to a great extent.Funding: The work is funded under UGC JRF Junior Research Fellowship) scheme with the award number [F.15-9 (JUNE 2015)/2015(NET)] granted by University Grant Commission, India.
Citation
Kumari, M. and Bharti, N. (2021), "Does bureaucracy affect the outcome of logistics performance? Empirical evidence from South Asia", American Journal of Business, Vol. 36 No. 1, pp. 84-102. https://doi.org/10.1108/AJB-08-2020-0134
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited