JSCM Video: Asset ownership and non-contractible actions: The case of trucking

Editor’s note: This video is collaboration between the Journal of Supply Chain Managementand Supply Chain Management Review. Each month, we bring SCMR readers a video interview from the pages of JSCM.

In this month’s video, we hear from Jason Miller and Keith Skowronski about Asset ownership and incentives to undertake non-contractible actions: The case of trucking, their recent work with John Saldanha.

As supply chain manager, there are times when you need a supplier to undertake an action. A classic example might be the expectation that an independent trucker who owns his or her own rig will keep up with required maintenance or comply with traffic regulations like speeding. Yes, there will be extra costs, but the owner of the asset will just internalize those costs.

Research from the authors suggest that may not be the case: An independent trucker, for instance, may be reluctant to take a rig out of service or to slow down if it might cost them money. The authors put that idea to the test by examining how trucking companies’ use of independent contractors affected the rate at which they improved compliance with different types of safety rules following a major regulatory change. What they found is that the use of independent contractors slowed carriers’ rate of firm‐wide improvement on compliance with hours‐of‐service and vehicle maintenance rules relative to driving safety rules. These results, which remain after extensive robustness testing, have important implications for theory and practice.

Be sure to check on the video. You can access the full article here.

You can also read more from Jason Miller on SCMR.com.