Introduction
Due to an increasing trend towards outsourcing and globalized supply chains the logistics industry is rapidly growing (Anderson et al., 2011; Ellinger et al., 2008). Many logistics service providers (LSPs) try to take their share in this expanding market segment. Fierce competition often results in thin profit margins for LSPs. In this context, innovations provide LSPs an opportunity to strengthen their competitive position. The launch of new services offers additional revenue streams and can establish a unique selling point to the customer. Improved processes are valuable contributions to cost savings as well as increased quality. However, the innovative output of the logistics service industry is rather low. Wagner (2008) shows exemplarily for German firms that the share of innovators in the transportation sector is only 30% compared to an average of 60% innovators in manufacturing companies or 52% innovators in knowledge-intensive services. These figures indicate that LSPs face significant deficits concerning their innovation management.
The development of new logistics services differs from the development of tangible products as performed by manufacturing firms. Services have special characteristics calling for new approaches of innovation management (de Brentani, 1989; Gallouj and Weinstein, 1997). As services are intangible, they cannot be stored and their actual performance occurs during the process of consumption. Furthermore, their production usually requires the participation of the client (Gallouj, 2002; Cowell, 1988). Accordingly, service innovation relies even more on customer orientation and integration than product innovation.
Today logistics service innovations are predominantly developed as a reaction to specific customer requests (Wallenburg, 2009; Burnson, 2013). Such reactive innovations are more difficult to manage than proactive innovations, because they are restricted by extreme time pressure (Oke, 2008). Furthermore, following such a reactive approach to new service development hampers the development of standardized solutions. Usually, a large additional development effort is required to offer these individualized innovations to other customers (Wagner and Franklin, 2008). Besides, often only minor improvements strongly based on industry trends are generated, because these ad hoc unplanned innovation efforts are seldom supported by methods of innovation management (Busse and Wallenburg, 2011; Wagner and Franklin, 2008).
Furthermore, empirical results indicate that proactive improvements can strongly foster customer loyalty (Wallenburg, 2009; Cahill, 2007). A large customer segment does not perceive logistics services as a commodity (Anderson et al., 2011) For these customers, the offered logistics services are essential to their business performance. Therefore, they choose LSPs that provide good quality services and show their ability to proactively develop new service solutions (Cahill, 2007; Anderson et al., 2011). Finally, service innovation capability can directly lead to higher levels of market performance for LSPs (Grawe et al., 2009) and innovative LSPs profit from lower logistics costs as well as higher EBIT margins (Little, 2007).
Traditionally, LSPs are very operative oriented and only a few LSPs have special personnel or a budget for innovation management. Hence, it seems unlikely that these companies will be able to enhance their innovative output based on solely internal resources and capabilities. Therefore, we suppose that the concept of open innovation (Chesbrough, 2003) will help to identify practices and methods to increase the innovation performance of LSPs and thereby improve their competitive position. Accordingly, the aim of this paper is to analyze the concept of open innovation for the logistics sector. It needs to be evaluated if certain practices and methods of open innovation are suitable to overcome innovation deficits of LSPs. In order to answer this question, special demands of LSPs concerning their innovation context are raised in interviews with leading persons from LSPs.
In the following section the concept and methods of open innovation are introduced. Then, in section three, our research approach is described. Afterwards, in section four, results of our qualitative investigation are presented. The paper concludes with a discussion of results and an outline for future research.