Incoterms® Use in Buyer-Seller Relationships: a Mixed ...

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Incoterms® Use in Buyer-Seller Relationships: aMixed Methods StudyThomas J. SchaeferUniversity of Missouri-St. Louis, [email protected]

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Recommended CitationSchaefer, Thomas J., "Incoterms® Use in Buyer-Seller Relationships: a Mixed Methods Study" (2017). Dissertations. 692.https://irl.umsl.edu/dissertation/692

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i

INCOTERMS®USEINBUYER-SELLERRELATIONSHIPS:AMIXEDMETHODSSTUDY

ThomasJ.Schaefer

M.B.A.–UniversityofMissouri-St.Louis,2004B.S.B.A.–UniversityofMissouri-St.Louis,2002

ADissertationSubmittedtoTheGraduateSchooloftheUniversityofMissouri-St.LouisinpartialfulfillmentoftherequirementsforthedegreePh.D.InBusinessAdministration

withanemphasisinLogisticsandSupplyChainManagement

August2017

AdvisoryCommittee

DonaldC.SweeneyII,Ph.D.Chairperson

RayMundy,Ph.D.Co-Chair

KarlManrodt,Ph.D.

DouglasL.Smith,Ph.D.

ii

©2017

THOMASJ.SCHAEFER

AllRightsReserved

iii

TABLEOFCONTENTS

TableofContents……………………………………………………………………………………………………….. iii

ListofFigures……………………………………………………………………………………………………………….ix

ListofTables……………………………………………………………………………………………………………….. x

Dedication……………………………………………………………………………………………………………….. xiv

Acknowledgements………………………………………………………………………………………………….. xv

Abstract…………………………………………………………………………………………………………………… xvii

Chapter1–Introduction…………………………………………………………………………………………... 1

1.1ResearchObjectiveandResearchQuestions…………………………………………… 16

1.2JustificationforthisResearch…………………………………………………………………. 17

1.3ResearchApproach…………………………………………………………………………………….17

1.4ContributionsofthisResearch……………………………………………………………………20

1.5DissertationOrganization……………………………………………………….……………….. 22

Chapter2–LiteratureReview………………………………………………………...………………..……….23

2.1Buyer-SellerRelationships…………………………………………..………………………….…23

2.2LogisticsManagement.………………………………………………………………….…………. 27

2.3Incoterms®………………………………………………………………………………………………..29

2.3.1HistoryofIncoterms®………………………………………………………………… 29

iv

2.3.1.1RulesforAnyModeorModeofTransport……………………………... 30

2.3.1.2RulesforSeaandInlandWaterTransport……………………………… 33

2.3.2ProperUseofIncoterms®……………………………………………………………………… 36

2.4LiteratureReviewMethodology.…………………………………………………………………38

2.4.1ReviewProcess…………………………………………………………………………. 40

2.4.2ClassificationFramework…………………………………………………………… 40

2.4.3Results………………………………………………………………………………………..41

2.4.4Discussion……………………………………………………………………………………42

2.5MixedMethodsResearch………………………………………………………………………… 52

2.5.1Definition…………………………………………………………………………….…… 52

2.5.2History……………………………………………………………………………………… 54

2.5.3PhilosophicalFoundation…………………………………………………………. 56

2.5.4Rationale………………………………………………………………………………..… 62

2.5.5 Comparison of Qualitative, Quantitative, and Mixed MethodsResearch……………………………………………………………………………………………. 63

2.5.6BasicSteps……………………………………………………………………………….. 68

2.5.7ResearchDesigns……………………………………………………………………… 68

2.5.8PrevalenceandUseinBusinessResearch……………………………………70

2.5.9Recommendations…………………………………………………………………… 72

v

2.6Experiments…………………………………………………………………………………………… 72

Chapter3–Methodology…………….………………………………………………………………………….. 75

3.1Introduction…………………………………………………………………………………………… 75

3.2StudiesOneandTwo:QualitativeDesignOverview…………………………………. 79

3.2.1GroundedTheory……………………………………………………………………… 81

3.2.2Design………………………………………………………………………………………. 82

3.2.3DataCollectionProcedures………………………………………………………. 83

3.2.4Analysis…………………………………………………………………………………… 84

3.2.5Sampling…………………………………………………………………………………… 86

3.2.6ResearchTrustworthiness………………………………………………………… 87

3.3Study3:QuantitativeDesignOverview…………………………………………………… 87

3.3.1.Sample……………………………………………………………………….……………. 88

3.3.2Procedure………………………………………………………………………………… 89

3.3.3Pretest……………………………………………………………………………………… 91

3.3.4InstrumentsandMeasures………………………………………………………. 91

3.3.5DataAnalysis……………………………………………………………………………. 92

Chapter4–DataAnalysisandResults……………………………………………………………………… 95

4.1StudyOne:PilotCaseStudy(QualitativeResearchFindings)…………….……. 95

vi

4.1.2DiscussionofthePilotCaseStudy…………….………..…………..…………107

4.2StudyTwo:MultipleCaseStudies(QualitativeResearchFindings)……………108

4.2.1Introduction…………..…………..…………..…………..…………..……………….108

4.2.2DataCollection…………..…………..…………..…………..…………..…………..109

4.2.3Sample…………..…………..…………..…………..…………..…………..…………..110

4.2.4DataCodingandAnalysis…………..…………..………..…………..………… 111

4.2.5TheoreticalSaturation…………..…………..…………..…………..…………….117

4.2.6ResearchTrustworthiness…………..………..…………………….……..…… 119

4.2.7DiscussionofQualitativeStudyTwoResults………………..………….. 121

4.2.7.1aHowdobuyer-sellerdyadsnegotiatelogisticsmanagementdecisions?……………………………………………………………………..121

4.2.7.1bGeneralNegotiationProcess……………………………………... 121

4.2.7.1cNegotiationProcessforTransportation……………………… 125

4.2.7.2Howdobuyer-sellerdyadscommunicatelogisticsmanagementdecisions?……………………………………............ 129

4.2.7.3Whydoerrorsinlogisticsmanagementdecisioncommunicationoccurwithinbuyer-sellerdyads,andwhataretheconsequencesoftheseerrors?…………………….…. 132

4.2.8OtherCategoriesDiscovered…………..…………..…………..…………….. 147

4.2.8.1Sellersfocusonsale,notexecution………………………….. 147

4.2.8.2RevenueRecognition………………………………………………… 148

4.2.8.3Expeditedfreight……………………………………………………… 149

vii

4.2.8.4FCAvs.EXWIncoterms®…………………………………………… 150

4.2.9Whatcanimprovethequalityofbuyer-sellerdyads’communicationoflogisticsmanagementdecisions?……………………………………….. 151

4.2.10 HypothesesforStudyThree…………………………………………………. 155

4.3StudyThree:QuantitativeResearchFindings–TestingHypotheses……….. 156

4.3.1ExperimentalDesign………………………………………………………………… 156

4.3.2Questionnaire…………………………………………………………………………. 157

4.3.3QuestionnairePretest.………………………………………………………………164

4.3.4QuestionnaireSample………………………………………………………..…… 164

4.3.5Analysis…………………………………………………………………………………… 170

4.3.5.1NonresponseBias……………………………………………………… 170

4.3.5.2BeforeandAfterReminderDemographicComparisons.170

4.3.5.3FullQuestionnaireResponsesVersusNotFullyCompletedDemographicComparisons………………………………………176

4.3.5.4QuestionnaireResponseAnalysis–ByScenario……….. 183

4.3.5.5ScenarioOneDescriptiveStatistics…………………………….186

4.3.5.6ScenarioTwoDescriptiveStatistics…………………………….188

4.3.5.7ScenarioThreeDescriptiveStatistics………………………… 189

4.3.5.8ScenarioFourDescriptiveStatistics…………………………….191

4.3.5.9ScenarioFiveDescriptiveStatistics……………………………. 192

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4.3.5.10QuestionnaireResponseAnalysis–Overall………………195

4.3.6DiscussionofStudyThreeResults……………………………………………..203

Chapter5–Contributions,Limitations,andFutureResearch…………….…………………….206

5.1OverallContributionsandManagerialImplications…………………….………….206

5.1.1OverallContributions……………………………………………………………...206

5.1.2ManagerialImplications……………………………..……………………….…..208

5.2ResearchLimitations………………………………………………………………………….……210

5.3FutureResearch.………………………….………………………………………………………...211

5.4ConcludingRemarks…………………….………………………………………………………...213

References……………………………………………………………………………………………………….…..….215

AppendixI–LiteratureReview…………………………………………………………………..…………..241

AppendixII–StudyTwoIn-DepthSemi-StructuredInterviewGuide…………………….….256

AppendixIII–WordCloudBeforeCoding……………………………………………………….……….259

AppendixIV–WordCloudAfterCoding………………………………………………………………….. 260

AppendixV–WordCloudAfterNodetoCategoryCoding………………………………….…….261

AppendixVI–StudyThreeQuestionnaire……………………………………….………………………. 262

Treatment1:OperationalDefinitionsFullySpelledOut……………………..………… 264

Treatment2:Incoterms®Used………………………………………………………………………269

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LISTOFFIGURES

Figure1.1:TotalCostComponents……………………………………………………………………………….6

Figure1.2:Incoterms®RulesResponsibilities…………………………………………………………… 10

Figure2.1:Lee’s(1991)Framework…………………………………………………………………………… 57

Figure4.1:ProcessFlowfromInterviewtoDiscussion………………………………………………112

Figure4.2:SampleProcess……………………………………………………………………………………… 117

Figure4.3:NegotiationProcess………………………………………………………………………………. 123

Figure4.4:MapofRespondents……………………………………………………………………………….166

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LISTOFTABLES

Table2.1:SummaryofArticlesReviewed…………………………….……………………………………. 40

Table2.2:SummaryofArticleClassification………………………………………………………………. 41

Table2.3:SummaryofAcademicArticlesonIncoterms®……………………………………………43

Table2.4:Rationalesforutilizingmixedmethodsresearch…………………………………………62

Table2.5:StrengthsandWeaknessesofQuantitativeResearch………………………………… 64

Table2.6:StrengthsandWeaknessesofQualitativeResearch……………………………………65

Table2.7:StrengthsandWeaknessesofMixedMethodsResearch…………………………… 67

Table2.8:RecommendationsforDesigning,Implementing,andReportingMixed

MethodsStudies………………………………………………………………………………………. 72

Table4.1:CustomerUsage………………………………………………………………………………………… 96

Table4.2:SupplierUsage……………………………………………………………………………………………97

Table4.3:CombinedUsage(CustomerandSupplier)………………………………………………… 98

Table4.4:FrequencyofIncoterms®2010Use…………………………………………………………… 99

Table4.5:FrequencyofuseofIncoterms®2000,DAF,DES,andDDU……………………… 100

Table4.6:FrequencyofOtherShippingTermUse…………………………………………………… 100

Table4.7:ParticipantandDyadTable……………………………………………………………………… 111

Table4.8:CasetoNodeCodingTable……………………………………………………………………… 113

xi

Table4.9:CasetoNodeCodingTable……………………………………………………………………….114

Table4.10:NodetoCategoryCodingTable……………………………………………………………….115

Table4.11:NodetoCategoryCodingTable………………………………………………………………116

Table4.12:ResearchTrustworthiness……………………………………………………………………… 120

Table4.13:DemographicFrequencies………………………………………………………………………166

Table4.14:GenderFrequencyTable…………………………………………………………………………167

Table4.15:AgeFrequencyTable………………………………………………………………………………167

Table4.16:JobRoleFrequencyTable……………………………………………………………………….168

Table4.17:WorkExperienceFrequencyTable………………………………………………………… 168

Table4.18:Incoterms®TrainingFrequencyTable……………………………………………………. 169

Table4.19:WhenIncoterms®TrainedFrequencyTable……………………………………………169

Table4.20:CrossTabulationofGenderandReminder………………………………………………171

Table4.21:CrossTabulationofAgeandReminder……………………………………………………172

Table4.22:CrossTabulationofJobRoleandReminder…………………………………………… 173

Table4.23:CrossTabulationofWorkExperienceandReminder………………………………174

Table4.24:CrossTabulationofIncoterms®TrainingandReminder………………………….175

Table4.25:CaseProcessingFinished………………………………………………………………………..176

Table4.26:CrossTabulationofGenderwithFinishedtheQuestionnaire………………… 177

xii

Table4.27:CrossTabulationofAgeReminderwithFinishedtheQuestionnaire……….178

Table4.28:CrossTabulationofJobRoleFinishedwithFinishedtheQuestionnaire….179

Table4.29:CrossTabulationofWorkExperiencewithFinishedtheQuestionnaire…. 180

Table4.30:CrossTabulationofIncotermsTrainedwithRespondentsWhoFinishedthe

Questionnaire…………………………………………………………………………………………………………...182

Table4.31:NumberofScenarioQuestionsRespondedtowithCorrectAnswer………. 183

Table4.32:ValidResponsesbyScenarioQuestion……………………………………………………183

Table4.33:FrequencyofTotalNumberofCorrectResponses………………………………… 184

Table4.34:ResponsetoScenarioOneQuestion……………………………………………………… 187

Table4.35:ModelSummary……………………………………………………………………………………. 187

Table4.36:EstimationResultsofAnsweringQuestion1Correctly………………………….. 188

Table4.37:ResponsetoScenario2Question……………………………………………………………188

Table4.38:ModelSummary.……………………………………………………………………………………. 189

Table4.39:EstimationResultsofAnsweringQuestion2Correctly……………………………189





xiii

Table4.44:ModelSummary…………………………………………………………………………………… 192





Table4.49:ResponsetoAllScenarioQuestions………………………………………………………. 195

Table4.50:CaseProcessingSummary………………………………………………………………………198

Table4.51:ModelFitting……………………………………………………………………………………….… 198

Table4.52:Goodness-of-Fit…………………………………………………………………………………….. 199

Table4.53:PseudoR-Square…………………………………………………………………………………… 199

Table4.54:ParameterEstimates…………………………………………………………………………….. 200

Table4.55:CellInformation………………………………………………………………………………….… 201

Table4.56:TestofParallelLines………………………………………………………………………….…. 201

Table4.57:SummaryTestsofHypotheses……………………………………………………………... 204

xiv

DEDICATION

Thisdissertationisdedicatedtoallofthose,especiallymyfamilyandfriends,

whoguided,supported,andencouragedmeduringmylongacademiccareeratthe

UniversityofMissouri-St.Louis(UMSL).Thisdissertationisfurtherdedicatedtomywife,

Sunny,forherpatience,support,andsacrificeduringmydoctoraldegreepursuit.

xv

ACKNOWLEDGEMENTS

Thepursuitofadoctoraldegree,thefeelingwhilepursuing,andthedissertation

processarebestdescribedbythesongwriterThomasEarlPettyet.al(1989),whosings:

I’mrunnin’downadream.Itneverwouldcometome.Workingona

mystery.Goingwhereveritleads.Runnin’downadream.

Thedreamhasfinallybecomeareality,soIwouldliketothankallofthosewhoplayeda

roleinhelpingmecompletemydoctoraldegreeattheUniversityofMissouri-St.Louis

(UMSL).

First,Iamverythankfultomydissertationcommitteemembers:Dr.Karl

Manrodt,Dr.RayMundy,Dr.L.DouglasSmith,andDr.DonaldC.SweeneyII.All

committeemembersplayedanimportantrole.Nowordsorgesturecanproperly

expressmyappreciationtothedissertationcommitteechairperson,Dr.DonaldC.

SweeneyII,fortheastronomicalamountoftimethathespentwithmeandmy

dissertation.Hisguidanceandknowledgemadeahugedifference.Totheco-chair,Dr.

RayMundy,thankforyouforyouradviceandsuggestionsthroughout.Youprovided

keyinputsatcriticaltimes.Ialsoacknowledgehistemptationtotryoutandapplyto

thedoctoralprogram.IwouldalsoliketothankhimforintroducingmetoDr.Karl

Manrodt,andhence,completingthefour-persondissertationcommittee.ToDr.Karl

Manrodt,thankyouforservingonadissertationcommitteeoutsideofyourown

university,andespecially,Iamverygratefulforyourguidanceandknowledgealong

theway.ToDr.L.DouglasSmith,thankyouforaskingthe“why”question.Thisonly

xvi

madethedissertationbetter.

IalsoacknowledgethatImayneverhavepursuedanydegreeattheUniversity

ofMissouri-St.Louis(UMSL)withouttheamazingopportunitytoplayfouryearsof

divisionIIcollegiatetennis.ThankyoutoCoachRickGyllenborgforthatopportunity.

Themulti-taskingandprioritizationskillslearnedasastudent-athletemadethisdoctoral

degreepossible.

Also,Iamveryappreciativeofmyemployers,managers,andcoworkerswho

haveencouragedandsupportedmethroughoutmypursuitofadoctoraldegree.

Iwouldliketoespeciallythankmyfamily.Mymother,Valda,hasalways

sacrificedandtriedtoprovideopportunitytome,andthishasledtothesuccessesthatI

haveachieved.Ialsoacknowledgemylategrandparents,StanleyandGenevieve,who

helpedraisemeandinstilledinmedetermination,drive,andfocus.Iamvery

appreciativeofmywifeSunny’ssupportwhilepursuingthisdoctoraldegree.Shemade

alotofsacrifices.

Lastly,toDr.RayMundy,thankforyouforhavingthevisiontopushforpart-

timedoctoralstudentsintheprogram.Withoutthis,Imayneverhaveachievedmy

dreamandmaystillberunnin.

Thankstoeveryoneagain.

xvii

INCOTERMS®USEINBUYER-SELLERRELATIONSHIPS:AMIXEDMETHODSSTUDY

BY

THOMASJ.SCHAEFER

(UnderthedirectionofDonaldC.SweeneyII)

ABSTRACTThenegotiationandcommunicationoflogisticsmanagementdecisionsbetween

buyersandsellersofgoodsiscriticalforeffectivesupplychainmanagement.Incoterms®

rules,asetofthreecharacteracronyms,areoftenusedbybuyersandsellersto

communicateeachparty’slogisticsmanagementresponsibilitieswhentransacting

goods.InappropriateapplicationofIncoterms®rulescanleadtomiscommunicationof

logisticsresponsibilitiesandexposeeitherpartytounanticipatedcostsandrisks.This

three-partmixedmethodsresearchexploresthecircumstancesthatcontributetoerrors

inlogisticsmanagementdecisioncommunicationwithinbuyer-sellerdyads,the

consequencesoftheseerrors,andmethodstoimprovelogisticsmanagementdecision

communication.

Study1isaqualitativepilotcasestudythatexploreshowbuyer-sellerdyads

negotiateandcommunicatelogisticsmanagementdecisionsandthecommunication

errorsthatoccurwithinalarge,anonymous,internationalcorporation.Study2conducts

multiplequalitativecasestudiesutilizingin-depthsemi-structuredinterviewsthat

explorehowbuyer-sellerdyadsnegotiateandcommunicatelogisticsmanagement

decisionsandthecommunicationerrorsthatoccurwithinthesebuyer-sellerdyads.

Study3quantitativelytestshypothesesdevelopedfromanalysisoftheresultsofStudy

xviii

2,usingascenario-basedexperimentdeployedviaaquestionnaire,andseekstofind

methodstoimprovethequalityofcommunicationoflogisticsmanagementdecisionsin

buyer-sellerdyads.

ThehypothesestestedinStudy3areH1:Incoterms®trainingleadstoadecrease

inmiscommunicationoflogisticsdecisions;H2:usingfullyspecifiedandexplicit

Incoterms®definitionsleadstoadecreaseinmiscommunicationoflogisticsdecisions;

andH3:usingbothfullyspecifiedandexplicitIncoterms®definitionsandIncoterms®

trainingleadstoafurtherdecreaseinmiscommunicationoflogisticsdecisions.

Examiningtheresultsofthequestionnaire,usingbinarylogisticregressionandordinal

logisticsregression,H1issupported,H2ispartiallysupported,andH3isnotsupported.

Thefindingsoftheresearchdetailtheprocessusedinthenegotiationand

communicationoflogisticsmanagementdecisions.WhileIncoterms®rulesappear

widelyusedingoodstransactionstocommunicatelogisticsdecisions,their

inappropriateusecausesavarietyofissuesincludingunanticipatedcostsandrisks.

Incoterms®trainingisshowntohavethebiggestimpactonimprovingthequalityof

buyer-sellerdyads’communicationoflogisticsmanagementdecisions.

INDEXWORDS:Incoterms,Shippingterms,Buyer-sellerrelationships,Logistics

management,Supplychainmanagement,Mixedmethods,Casestudy,Experiment,

Binarylogisticregression,Ordinallogisticregression

1

CHAPTER1

INTRODUCTION

Buyer-sellerrelationships,logistics,negotiation,purchasing,andsupplychain

researchhavenotconvergedtoexplorethekeylinkamongthem--thenegotiationand

communicationoflogisticsmanagementdecisionsbetweenbuyersandsellersofgoods.

Thisstudyholisticallyexploresthatcrucialarea.Beyondnegotiationand

communication,thisstudyexpandstoexploreerrors,theconsequencesoftheseerrors,

andthewaystoimprovebuyer-sellercommunicationoflogisticsmanagement

decisions.

Whilenotanewconcept,theideaofcooperativebuyer-sellerrelationshipshas

takenalongtimetogaintraction.AccordingtoRamsay,

onemayarguethatitispossibletodiscernanarrativeinthepartsofthe

purchasing,marketingandsupplychainliteraturesdealingwithbuyer-seller

relationships[..]thatdescribesachangeovertimefromanacceptanceofshort-

term,arms-length,competitiverelationshipstoafocusonlong-termco-

operationandpartnerships.(Ramsay,2004,p.219)

AsmentionedbyRamsay(2004),theideaofco-operativeratherthanadversarialbuyer-

sellerrelationships,althoughpresent25yearsago,hastakenalongtimetogain

recognition(Farmer&Macmillian,1978;Ramsay,1979;Ramsay,2004).

TheCouncilofSupplyChainManagementProfessionals(CSCMP)definessupply

2

chainmanagementas,

theplanningandmanagementofallactivitiesinvolvedinsourcingand

procurement,conversion,andalllogisticsmanagementactivities.Importantly,it

alsoincludescoordinationandcollaborationwithchannelpartners,whichcanbe

suppliers,intermediaries,thirdpartyserviceproviders,andcustomers.In

essence,supplychainmanagementintegratessupplyanddemandmanagement

withinandacrosscompanies.Supplychainmanagementisanintegrating

functionwithprimaryresponsibilityforlinkingmajorbusinessfunctionsand

businessprocesseswithinandacrosscompaniesintoacohesiveandhigh-

performingbusinessmodel.Itincludesallofthelogisticsmanagementactivities

notedabove,aswellasmanufacturingoperations,anditdrivescoordinationof

processesandactivitieswithandacrossmarketing,sales,productdesign,

finance,andinformationtechnology(CSCMP,2016).

Thisstudyincludesitemsusuallystudiedinmanydifferentiatedfields:purchasing

(sourcingandprocurement),logisticsmanagement,andmarketing(coordinationand

collaborationwithchannelpartners)(Frankeletal.2008;CSCMP,2016).

Traditionalsupplychainmanagement(SCM)hasfocusedona“survivalofthe

fittest”mentality(Spekmanetal.,1998),andfirmshaveusedvariousbiddingprocesses

forsupplierselection(Stuart,1993).TheSCMfunctionhassimplyconcentratedon

minimizingcosts(Benton&Maloni,2005).Historically,companieshavetriedtosqueeze

supplierprofitmarginsforunitcostreductionsorotherfavorabletermstoimprove

3

short-termprofits(Anderson&Katz,1998).Evenwithinrecentyears,Anheuser-Busch

InBevtoldsuppliersthattheymustconformto120-daypaymentterms(Kesmodel&

Vranica,2009).However,duetothechangingbusinessenvironment,interesthasgrown

insupplierpartnershipsleadingtoamoremodernSCM,wheresupplierpartnerships

consistoftheestablishmentandmaintenanceofongoingrelationshipsbetween

“partners”(Stuart,1993).ModernSCMencouragestight-knitpartnershipswith

compatibleobjectivesbothinternallyandexternally(Spekmanetal.,1998).

AsstatedbyFlynnandfellowresearchers,“Whenitcomestosupplychain

management,it’sallaboutrelationships”(Flynn,etal.,2008,p.169).Theheartofsupply

chainmanagementisinprocurementandsupplierrelationships.Wal-Mart,Dell,oreven

McDonald’swouldnotbeassuccessfulifprocurementandsupplierrelationswerenot

deemedimportant.Furtheringthis,Suetal.contendthat,“thereisanincreasing

interestininter-firmrelationships,asmorefirmsrelyonresourcesoutsidetheirown

firmtocompetesuccessfullywiththetrendofglobalizationandtechnology

transformation”(2008,p.263).Soosayetal.statethat,

Organisationsinsupplychainsarecompelledtorestructureandre-engineer

relentlesslytoincreasetheireffectivenessandsatisfycustomers.Thisrealization

requiresfirmstolookbeyondtheirorganizationalboundariesandevaluatehow

theresourcesandcapabilitiesofsuppliersandcustomerscanbeutilizedto

createexceptionalvalue”(2008,p.160).

FromaninternationalSCMperspective,theirSCMstructuretendstobemorecomplex

4

thanpurelydomesticsupplychains(Meixell&Gargeya,2005).Withthisadded

complexity,managingrelationshipsamongsupplychainpartnersisstrainedfurther.

Supplychainsarefullofbuyer-sellerrelationships(Mentzeretal.,2001;Xu&

Beamon,2006;Frankeletal.,2008;Thomas,2013),andnegotiationsareakeypartof

thosebuyer-sellerrelationships(Thomas,2013).Negotiationoffersanexceptional

vantagepointtostudyinter-organizationallinkagesinsupplychains(Dwyeretal.,1987;

Atkin&Rinehart,2006).Negotiationbehaviorisa“fundamentalphenomenon”forthe

industrialmarketinter-firmbehavior(Perdueetal.,1986;Atkin&Rinehart2006),and

withintheindustrialmarket,buyer-sellerinteractionplaysakeyrole(Anderson&

Narus,2004;Fang,2006;Herbstetal.,2011).Negotiationisadyadicprocess,meaning

thatthereisaninter-relationshipbetweenthebuyerandthesellerthatissupposedto

solveproblemsendinginbenefitsforbothdyadicparticipants(Rinehartetal.,1988;

Atkin&Rinehart,2006).Mostimportantlyforpurchasingorsupplymanagement,

negotiationistheprocessbywhichabuyerandsellercometoestablishtermsina

purchaseagreement(Dobleretal.,1984;Atkin&Rinehart,2006,).AscoinedbyAtkin

andRinehart(2006),“contractformality”isestablishedwhenthebuyerandseller

explicitlystateactionsviaacontract(Mohretal.1996;Atkin&Rinehart,2006).As

foundinAtkinandRinehart,FawcettandMagnan(2000)affirmthisbystating,“inthe

absenceoftrust,aneffortismadetolegislatecooperation”viaacontract(2006,p.54).

Thereismuchresearchinterestonformalandinformalagreementswithinthebuyer-

sellerrelationship(Lassar&Zinn,1995;Frankeletal.,1996;Atkin&Rinehart2006).

5

Inthecontextofabuyer-sellerdyad,logisticsmanagementrequirements

influencethebuyer’spurchasingandtheassociatedlogisticsmanagementchoices

(Wagner,1987).AccordingtotheCSCMP’sdefinition,logisticsmanagementis

thatpartofsupplychainmanagementthatplans,implements,andcontrolsthe

efficient,effectiveforwardandreverseflowandstorageofgoods,services,and

relatedinformationbetweenthepointoforiginandthepointofconsumptionin

ordertomeetcustomers'requirements.(CSCMP,2016).

Inaddition,theCSCMPconsidersthatlogisticsmanagementactivitiestypicallyinclude

inboundandoutboundtransportationmanagement,fleetmanagement,

warehousing,materialshandling,orderfulfillment,logisticsnetworkdesign,

inventorymanagement,supply/demandplanning,andmanagementofthird

partylogisticsservicesproviders.Tovaryingdegrees,thelogisticsfunctionalso

includessourcingandprocurement,productionplanningandscheduling,

packagingandassembly,andcustomerservice.Itisinvolvedinalllevelsof

planningandexecution--strategic,operationalandtactical.Logistics

managementisanintegratingfunction,whichcoordinatesandoptimizesall

logisticsactivities,aswellasintegrateslogisticsactivitieswithotherfunctions

includingmarketing,salesmanufacturing,finance,andinformationtechnology.

(CSCMP,2016).

Thisstudywillusetheabovedefinitionoflogisticsmanagement.

Strongerbuyer’slogisticmanagementneedsincreasetheimportanceoflogistics

6

management,andpossibly,thelogisticsmanagementcostcomponent(Wagner1987).

Withinlogisticsmanagement,distributionplaysasignificantroleinsecuringproper

transportationarrangements(Wagner,1987).Anotherdimensionoflogistics

managementisthatitisincludedinthetransactionnegotiation,whichincludesthe

purchasingofgoods(Novacketal.,1992).Thebuyerand/orsupplierownershipor

controlofvariouslogisticsmanagementcomponentscanalterthetotalpurchasecost

(Wagner,1987).Appropriateunderstandingandanalysisofthelogisticsmanagement

componentofanoverallpurchaseiscriticaltokeepingcostscompetitive(Wagner,

1987).Buyersarelookingforanyopportunitytosecurelowerlogisticsmanagement

costs(Wagner,1987).Rinehartetal.(1988)examinedtheconceptualfoundationsofthe

negotiationprocessusedbyshippersandcarrierstoarriveatcontractualagreements

forcontractsofcarriage.However,whileaplethoraofnegotiationandbuyer-seller

relationshipresearchexists,researchershavenotfocusedonthebuyer-seller

negotiationoflogisticsmanagementservicesbetweenfirmstransferringgoods.Littleis

knownofthisnegotiationprocess.Buyer-sellerrelationshipsandnegotiationresearch

hasfocusedonthepurchasepriceofgoods.Thenegotiationresearchhasleftoutan

importanttotalcostcomponent:logisticscost.ThisisillustratedinFigure1.

Figure1.1:TotalCostComponents

Goods Logistics TotalPrice

7

Thetotallandedcostofproductincorporatesallcostsincurredwithinthesupply

chaininordertomakeaproductavailableforconsumption.Anychangetototallanded

costcomponentshasamajorimpact.Logisticsmanagementcostsshouldbeconsidered

inanysupplychainmanagementpurchase.Otherwise,thefirmisleavingmoneyonthe

tableinanegotiation.

Logisticsmanagementiscriticalintheoverallsupplychain’ssuccess(Stank&

Goldsby,2000).In1997,logisticsmanagementcostsaccountedfor57%ofU.S.firms’

supplychaincosts(Berg,1998;Stank&Goldsby,2000).AsnotedinStank&Goldsby

(2000),BowersoxandCloss(1996)foundthatoneinsevenjobsintheU.S.islogistics

managementrelated.However,manyshippersusepre-1980slogictomakelogistics

managementdecisions(Stank&Goldsby,2000)leadingtopoorperformanceassupply

chainmanagementprogresses(Moultrie,1998;Stank&Goldsby2000).Expectationsof

logisticsmanagementhavechangedovertimefromlowcostandhighservicecriteriato

cutting-edgetechnologytomeetincreasinglystringentservicerequirementsand

steadilyloweringcosts(Stank&Goldsby,2000).Theoverallsupplychainisonlyas

strongastheweakestcomponentandunfortunately,logisticsmanagementisoneofthe

supplychain’sweakestcomponents(Stank&Goldsby,2000).

Whiletheimportancethatcommunicationhasoncollaborationisofrecent

scholarlyinterest,simplifyingandstandardizingcommunicationamongbuyersand

sellersisnotnew.Business-to-business(B2B)transactions,whetherdomesticor

international,requireanagreementbetweenbuyersandsuppliers.These,often

8

intermediate,transactionsinvolvesomeagreementformonetaryexchangetoprovide

goodsorservices.Beyondprice,especiallywhencontractingforgoods,thepartiesneed

toagreeupontheresponsibility,handling,andcostsrelatedtotransportation,risks,

insurance,customsformalities,andotherassociateditems.Whiletheseagreementsare

oftentakenforgranted,considerablecareisrequired.Oftentimes,thebuyerandseller

donotspeakthesamelanguage,literallyinsomecases,sotheconsistencyand

predictabilityofB2Btransactionscanbeaffected.

Sheuetal.(2006)concludethatcollaborationiscrucialforprosperoussupply

chainandorganizationalperformance.Collaborationalsohasapositiveeffectonbuyer

performancewithtrustanddependenceplayinganimportantroleinthesupplier

relationship(Corsten&Felde,2005).

Nevertheless,WildingandHumphriesremarkthat“closelycollaborative,long-

termsupplychainrelationshipsinevitably”sufferstrainsduetoconstraintsontheir

freedomofactionduetounavoidablecompromise.However,theycanreducesources

offrustrationthatgeneratenegativebehaviorsbytakingjointactionstoseekinnovative

waysofdealingwith“environmental”issueslike“oldproducts,obsolescence,staffand

organisationalupheavals,poorend-customervisibilityandlackofinvestmentinmodern

proceduresandsystems”(Wilding&Humphries(2006,p.14)

AccordingtoPeng,“abasicenablerfortightsupplychaincollaborationisinter-

organizationalcommunication”(2011,p.17).Manyscholarshaveexpressedthat

communicationisthekeytoholdingsupplychainpartnerstogether(Mohr&Nevin,

9

1990;Lamming,1996;Stuart&McCutcheon,1996;Lee&Whang,2000;Minetal.,

2005;Sheuetal.,2006;Chopra&Meindl,2007;Peng,2011).Effectiveandefficient

communicationisalsosignificanttotheseinter-firmrelationships(Paulrajetal.,2008).

Conversely,themaincauseofcollaborationfailuresiscommunicationdifficulty(Peng,

2011).Misunderstandingsandconflictscanoccuramongsupplychainpartnerswhen

miscommunicationoccurs(Paulrajetal.,2008;Caoetal.,2010;Peng,2011).

AccordingtotheInternationalChamberofCommerce(ICC),asthevolumeand

complexityofbusinessincreasesespeciallyglobally,sotoodothepossibilitiesforsupply

chainpartners’disputesormisunderstandings(2010).Asetoftradetermscalled

Incoterms®ruleswasdesignedtostandardizeB2Bpracticewhencontractingforgoods

bytheICC.TheseIncoterms®rulescameintoexistencetotackleinterpretation

problemsamongtradingpartnersandtodefinedyadicbuyer-sellerresponsibilities

(Stapletonetal.,2014b).Whenincorporatedintoacontractofsale,Incoterms®rules,of

whichthelatestversionis2010,designatetheresponsibilitiesfortasks,costs,andrisks

involvedinthedeliveryofgoodsfromsellerstobuyersthroughthreecharacter

acronyms,asshowninthefollowinggraphic(ICC,2010).

10

Figure1.2:Incoterms®rulesResponsibilities

Hence,theseIncoterms®rulesdefinedyadicresponsibilitiesbetweenbuyersandsellers

(Stapletonetal.,2014b).Inessence,theyattempttoprovideverydetailedoperational

definitionsbyusingonlythreecharacteracronyms.Operationaldefinitionsaredefined

byMundyasputting“communicablemeaningintoaconcept[..]thatpeoplecando

businesswith[andwhich]hasthesamemeaningtosupplierandcustomer”(Mundy,

1997,p.2).Mundynotedalsothatitisimportantforboththebuyerandsellertohavea

commonunderstandingofwhatismeantbyaconcept,anditisimportantforboththe

buyerandsellertohaveavalidmeasurementinstrument(Mundy,1997).

Typicaldeliveryperilsareriskoflossorriskofdamage(Yao-Hua&Thoen,2000).

Riskdoesnotincludeothershipmentrisks,suchasdelaysornon-fulfillment(Yao-Hua&

Thoen,2000).Incoterms®arethetrademarkedproductoftheICCandclearlydefine

sellerandbuyerobligationsthusreducingtheparties’legalrisks(ICC,2010).Asstated

bestbyRoos:

Trustbetweenbuyerandsellerisofcourseveryimportant.It’sevenmore

Incoterms®

Tasks Costs Risk

11

importantthatthepartiesinvolved(salesandshippingdepartments)possessthe

knowledgetheyneed:anunderstandingoftherulesofthegameofinternational

tradeandhowtoapplythem.Itmightalsobementionedthatmanypeoplein

logisticssupportservicesneedtopayagreatdealmoreattentiontothecorrect

applicationofIncoterms.(Roos,2011,p.5)

AccordingtotheICC,Incoterms®rulesareintendedtobeself-explanatory(ICC,

2010).However,researchershavefoundIncoterms®usageerrors(Stapleton&Saulnier,

2001;Reynolds,2010;Bergami,2011;Glitz,2011;Malfliet,2011;Ramberg,2011;Roos,

2011;Bergami,2012;Bergami,2013;Stapleton,2014;Stapletonetal.,2014a;Stapleton

etal.,2014b).Theseusageerrorscanleadtomisunderstandings(Reynolds,2010).

Reynoldsconsiderswheremostcommercialproblemsstart:misunderstanding!Such

misunderstandingoccursbetweensellersandbuyers,betweensellersandtheirown

factories,andbetweeneitherpartyandcarriers.“Forinternationaltransactions,addthe

potentialformisunderstandingbetweenexportersandtheirfreightforwarders,

importersandtheircustomsbrokers,banksandeveryoneelse,andfailuretoobserve

applicablegovernmentregulations”(Reynolds,2010,p.17).

Stapletonetal.(2014a)suggestthatshippersmayuseless-than-optimal

Incoterms®strategiescreatedthroughalackofknowledgeofvulnerabilitiesandsloppy

implementations.Theyalsomentionthattradersare“creaturesofhabit”andmany

timesrepeatedlymakethesameIncoterms®usageerrorsleadingtopreventablerisk.

Bergamioffersasimilarsentimentnotingthat“therearesignificantproblemsingetting

traderstochangefromtheestablishedroutinestomoreappropriateandcorrectuseof

12

Incoterms”(2012,p.37).Stapletonetal.(2014a,2014b)provideninecommonusage

errors:

1. UsingFOB(freeonboard)orotherseaandinlandwaterwayIncoterms®for

containerizedtransport.

2. UsingIncoterms®ruleswithoutclearlyspecifyingageographicplace.

3. NotadoptingarecentIncoterms®ruleversion,suchasIncoterms®2000or2010.

4. BelievingthatusingIncoterms®rulesleadstoalegalcontractofsale.

5. MisunderstandingthedeliveryandriskpointswhenusingCFR(costandfreight).

6. Misunderstandingloopholesinthe1936CarriageofGoodsbySeaAct(COGSA).

7. EliminatingShip’srail”asatransferpointinIncoterms2010.

8. ProblematicallyusingFOBwithdocumentarylettersofcredit(DLC).

9. Requiringdifferingdutiesofshippersbybankinginstitutions.

Stapleton(2014)andStapletonetal.(2014b)alsogointomoredetailsbeyondwhathas

alreadybeenmentionedaboutFOB’sinappropriateuse.Forexample,theycitethe

widespread“naked”FOB(i.e.notfollowedbyaportname)useonAlibaba.com.

Additionally,theymentionthedistinctionbetweenFCA’s(freecarrier)“loading,”which

isconsistentwithcontainerizedortruckfreight,and“placing”ofthegoods,whichis

consistentwithbreak-bulkfreight.Bergami(2013)foundthatbankingpracticesmay

placerequirementsuponsellersthatarecontrarytotheIncoterms®rules.Supporting

thisfinding,Roos(2011)foundthatbanksplacesecondaryimportanceonIncoterms®,

andU.S.Customsdoesnotrecognizethem.GlitzreviewedcourtcasesinBraziland

13

foundthatcourtsmay“endupgivingthecustomaryinterpretation”oftheshippingand

deliverytermsusedbytraders,asBraziliandoctrineandjurisprudencemaybe

unfamiliarwithIncoterms®rules(2011).

ResearchersprovidedetailedexamplesasevidenceofIncoterms®errors.

StapletonandSaulnier(1999,2001)provideanexamplewhereaU.S.Midwesternfirm

wasshippingfullcontainersofpensandotheritemsworth$125,000USDthatthey

procuredfromAsiasuppliers,whoengravedcorporatelogosandthenresoldtoclients

globally.ThefirmnegotiatedandusedtheIncoterms®FOBSingapore,butthesellerwas

willingtotakeonmoreriskandtasks(i.e.CorDIncoterms®rules).FOBrequiresthatthe

buyercontractmaincarriageandon-carriage.Thesteamshiplinehitroughwaters,and

thecontainerwaslostatsea.PerCOGSA1937,asteamshiplineisonlyresponsiblefor

$500percontainer,sothefirmlost$124,500USD.Thefirmmadeacostlyandavoidable

mistake.AlthoughnotstatedinStapletonandSaulnier(1999,2001),FOBismisusedfor

containertransport.

Bergami(2012,2013)surveyedbankletterofcreditformsforcontainer

transport.HefoundthatwaterwayIncoterms®(FOB,CFR,CIF)accountfor55%,

multimodalIncoterms®(FCA,CPT,CIP)accountfor34%,andothersareeithermadeup,

outdated,orothernon-Incoterms.Bergami(2012,2013)notesthatifFOBisused,there

isamismatchbetweenlossofphysicalcontrol(e.g.canbehandledsixtoeighttimes

beforeloadingonavessel)andrisktransferpoint.Heconcludesthatbanksarenot

knowledgeableaboutIncoterms®,andthatbankrequirementsincreaserisktotheseller.

14

Hestatesthatitis“strangethatthetermFOB,coinedatleasttwohundredyearsbefore

theeraofcontainerisation(fromthe1960’s),hasbeensoreadilyadoptedand

inappropriatelyappliedtomoderndaycontainerhandlingpractices”(Bergami,2012,

p.37).

Stapletonetal.(2014b)surveyed1,000freightforwarders,andtheyfoundthat

misusewasprevalent:49%haveusedFOBforcontainerizedfreight,37%reportedusing

CIFforcontainerizedfreight,60%usedCFRforcontainerizedfreight,and14%reported

usingC&F,whichhasnotbeenanofficialIncoterm®fordecades.Theyalsofoundthat

Incoterms®aresometimesdeliberatelymisusedincertaincountriestomanipulateor

gamethesystemandevensometimestoenablekickbacks.Largeshippers,likeWal-

MartandAldi,useEXWorFCAtoprovidesupplychainvisibility.

Zhai(2013)providesanotherexampleofevidenceofIncoterms®errorthat

occurredinAugust2004betweenacandleproducerinChangsha,HunanProvince,

China(seller)andawholesalerinYinchuan,QinghaiProvince,China(buyer).Theparties

agreedtoacontractfor200cartonsfor20,000YuanwithanOctober2004delivery,but

theplaceofdeliverywasnotclearlystated.Thesellertransported200cartonsin

Septemberviarail,butuponbuyerinspection,60cartonshadbecomedeformeddueto

heatdamage.Thebuyerpaidthesellershort,andthecasewenttocourt,which

providedtwoimportantfindings.First,thesellerisresponsible,ashedidnotfulfillthe

200cartonscontract.Second,thecarriercausedtheissue,sothesellerisnot

responsible,andthebuyerowestheremainingamount.Theverdictbeyondthese

15

opinionsisnotclear.Zhaiexclaimsthat“noriskpointinthecontractistheunforgivable

error”andthatIncoterms®impactonChina’sdomesticgoodtradeis“landmark”(Zhai,

2013,p.13).

However,muchoftheevidenceofcommonusageerrorsisanecdotal(Stapleton

etal.,2014a).ThisiscompoundedbyBergami’s(2012,2013)findingofascarcityof

Incoterms®2010literaturebeyondthatpublishedbytheICC.AsnotedbyBergami,

mostresearchavailableonIncoterms®isfromshortarticlesintradepublications(2013).

AcademicresearchinthelastfewyearshasjuststartedtoexploretheIncoterms®arena

leavingawideopeningforcontinuedandexpandedacademicresearch.Newtraining

methodsforlearningIncoterms®havealsoemergedtocombatthelackofIncoterms®

understanding(Holley&Haynes,2003;Kocketal.,2008).

Insummary,buyer-sellerrelationshipsarecriticalforthesupplychain.Within

thesebuyer-sellerrelationships,negotiationisanimportantaspectofsolvingproblems

andconflictthatleadstodyadicbenefits(Rinehartetal.,1988;Ramsay,2004;Atkin&

Rinehart,2006).Whileaplethoraofnegotiationandbuyer-sellerrelationshipresearch

exists,researchershavenotfocusedonthebuyer-sellernegotiationoflogistics

managementservicesbetweenfirmstransferringgoods.Littleisknownofthis

negotiationprocess.Interestingly,akeycomponentofnegotiationisdyadicagreement

onresponsibilitiesoflogisticsmanagementcomponentsrelatedtothesale.Incoterms®

rules,throughthreecharacteracronyms,defineanddesignatethedyadic

responsibilitiesfortasks,costs,andrisksinvolvedinthedeliveryofgoodsfromsellersto

16

buyers(ICC,2010,Stapletonetal.2014b).However,researchershavefounderrorsin

Incoterms®usage(Stapleton&Saulnier,2001;Reynolds,2010;Bergami,2011,2012,

2013;Glitz,2011;Malfliet,2011;Ramberg,2011;Roos,2011;Stapleton,2014;Stapleton

etal.,2014a,2014b)leadingtodyadicmisunderstandings(Reynolds,2010).

1.1RESEARCHOBJECTIVEANDRESEARCHQUESTIONS

Thisresearchutilizesandbuildsonexistingpurchasing,marketing,legal,logistics

management,andsupplychainliteratureguidingthereaderthroughbuyer-seller

relationships,theassociatedlogisticsmanagementdecision,andtheircommunication.

Thisinter-organizationalcommunicationisnecessaryforeffectivesupplychain

collaboration(Peng,2011).Basedupontheidentifiedliteraturegapsandmissing

connectionsbetweenvariousstudies,thefollowingfourresearchquestionsare

developed:

1. Howdobuyer-sellerdyadsnegotiatelogisticsmanagementdecisions?

2. Howdobuyer-sellerdyadscommunicatelogisticsmanagementdecisions?

3. Whydoerrorsinlogisticsmanagementdecisioncommunicationoccurwithin

buyer-sellerdyadsandwhataretheconsequencesoftheseerrors?

4. Whatcanimprovethequalityofcommunicationoflogisticsmanagement

decisionswithinbuyer-sellerdyads?

Todate,scholarshavenotfocusedtheirresearchonthebuyer-sellernegotiation

process,communication,oroutcomesoflogisticsmanagementdecisions.Thefour

researchquestionsareinvestigatedviathreerelatedstudies.Thefirststudyisa

17

qualitative,pilotcasestudy.Thesecondstudyinvolvesmultiplequalitativecasestudies.

Thethirdstudyisaquantitative,experimentalstudy.

1.2JUSTIFICATIONFORTHISRESEARCH

Thisresearchisessentialforsixreasons.First,thisstudyexploreshowbuyer-

sellerdyadsnegotiatelogisticsmanagementdecisions.Second,thisstudyexploreshow

buyer-sellerdyadscommunicatelogisticsmanagementdecisions.Bothare

underexploredareasofnegotiationandbuyer-sellerrelationshipresearch.Third,

anecdotalevidenceisprevalentregardingIncoterms®usageerrors(Stapletonetal.,

2014a),yetnothoroughlycomprehensiveoracademicallyrigorousevidenceexists.This

studywillapplyappropriatesystematicrigortoexploreIncoterms®usageerrors.Fourth,

ascarcityofIncoterms®researchexists,andmostresearchavailableisfromshort

articlesintradepublications(Bergami,2012,2013).Incoterms®researchwillbe

systematicallyreviewedandsummarizedinaliteraturereview.Thisstudywilladdto

Incoterms®literature.Fifth,mixedmethodsresearchisanunderutilizedresearch

methodwithinpurchasing,marketing,andsupplychainliterature,andthisstudywill

usethisunderutilizedresearchmethod.Lastly,thisstudyseekstoimprovethequalityof

buyer-sellerdyadcommunicationoflogisticsmanagementdecisions.

1.3RESEARCHAPPROACH

Researchwithintheareaofsupplychainmanagementhasusedvarious

methodologiesincludingquantitative,qualitative,contextual,andanalyticalapproaches

(Sachan&Datta,2005;Frankeletal.,2008).Buyer-sellerrelationshipbusinessresearch

18

isverypopular,whichhadledtoacornucopiaoftheoriesandmethodstoexaminethe

phenomena(Autry&Golicic,2010).

Thisstudywilluseamixedmethodsresearchapproachdefinedastheuseof

bothquantitativeandqualitativeresearchinasinglestudy.Qualitativeresearchfocuses

on“induction,discovery,exploration,theory/hypothesisgeneration,theresearcheras

theprimary‘instrument’ofdatacollection,andqualitativeanalysis”(BurkeJohnson&

Onwuegbuzie,2004).Contrastingly,quantitativeresearchfocuses“ondeduction,

confirmation,theory/hypothesistesting,explanation,prediction,standardizeddata

collection,andstatisticalanalysis”(BurkeJohnson&Onwuegbuzie,2004).However,by

understandingthestrengthsandweaknessesofquantitativeandqualitativeresearch

methods,theresearcherispositionedtomixmethodstherebyprovidingasuperior

studycomparedtomono-methodresearch(Johnson&Turner,2003;BurkeJohnson&

Onwuegbuzie,2004).

UsingtheresearchofBurkeJohnson&Onwuegbuzie(2004),thisstudy’smixed

methoddesignswilltransactasmallerqualitativestudy,followedbyafull-scale

qualitativestudythatinformsaquantitativestudy(qualàQUALàQUAN).Study1isa

qualitative,pilotcasestudythatseeksevidenceoflogisticsmanagementcommunication

erroroutcomesorIncoterm®usageerroroutcomeswithinapurposefulsampleofan

anonymouslarge,internationalcorporationintheindustrialmarket.Anonymityis

providedtothiscorporationtoprotecttheircorporateimage,proprietarydataand

allowsubjectstobemorecomfortablewithsharinginformation.Study2qualitatively

19

conductsmultiplecasestudiesthatexplorebuyer-sellerdyadnegotiation,howthedyad

communicateslogisticsmanagementdecisions,andthecommunicationerrorsthatoccur

betweenthem,withinapurposefulsampleofananonymouslarge,international

corporationintheindustrialmarket.Rinehart(2016)arguesthatrelationshipscan’t

reallybeunderstoodunlesstheyarevieweddyadically.Therefore,interviewswith

dyadicmemberswithinandoutsidethecompanyareconducted.U.S.tonon-U.S.dyads

areexploredaswellasU.S.toU.S.dyadsandnon-U.S.tonon-U.S.countrydyads.This

willprovideaholisticviewofglobaldyads.Duetotheexploratorycharacteristicsofthe

research,groundedtheoryisdeemedappropriatetoallowtheflexibilityneededfor

appropriateexplorationinstudiesoneandtwo(Glaser&Strauss,1967;Patton,1990;

Eisenhardt,1989;Yin,1989;Pappu&Mundy,2002;Thomas,2013).Groundedtheory

allowsthediscoveryoftheoriesfromsystematicallyobtaineddata(Pappu&Mundy,

2002).Study3quantitativelyteststhehypothesesexploredanddevelopedinStudy2,

andseekstofindwaystoimprovethequalityofbuyer-sellerdyadcommunicationof

logisticsmanagementdecisions.Thishypothesistestingisconductedviadesigned

experimentsatananonymouslarge,internationalcorporationintheindustrialmarket.

Theexperimentaldesignisfittingforthesystematictestingoftheory(Thye,2007;

Siemsen,2011;Thomas,2013).

Buyer-sellerrelationshipscandifferduetoindustrialcircumstances(Goffinetal.,

2006;Autry&Golicic,2010).Therearesignificantmeasurementdifferencesand

variancesfromindustrytoindustryandfromfirmtofirm(Goffinetal.,2006;Autry&

Golicic,2010).Researchers,whoreviewdesignandexecutionplansacrossfirmsand

20

industriessubsequentlyaggregateorcomparethemand,thus,arelikelytocreateerrors

duetometricdis-uniformityperhapsunderestimatingthetrueeffectsinonecontext

whileoverstatingtheminothers(Autry&Golicic,2010).Therefore,thisresearchwillbe

restrictedtoasinglecompanyandindustry,thusenhancinginternalvalidityatsome

expensetoexternalvalidity.

1.4CONTRIBUTIONSOFTHISRESEARCH

Thisresearchmakessiximportantcontributionstoscholarsandpractitioners.

First,thisresearchsystematicallyinvestigatestheusageerrorsdescribedinthe

Incoterms®literature.Currently,onlyanecdotalevidenceisprevalentregarding

Incoterms®usageerrors(Stapletonetal.,2014a).Thisstudyexploresandreportsonthe

outcomesthatIncoterms®rulesactuallyhave.

Second,andrelatedtotheabove,usageerrorsfoundinthisresearchwhichare

notdescribedinexistingresearchareidentified.Theseusageerrorsaredescribed,

characterizedandtestedforprevalence.

Third,thisprobingresearchshedslightonanareainlogisticsmanagement

negotiationsandcommunication,Incoterms®,withlittleprioracademicallyrigorous

research.Practitionerattentionisclearlypresentasshownintheliteraturereview.

However,whilesomeacademicresearchdoesexist,thisstudy’sintentistohighlightthe

importanceandwide-rangingusageofIncoterms®,thereby,drivingmoreattentionand

researchtothearea.Arenewed,andperhapsdifferent,practitionerfocusisalso

suggestedthroughapplyingproperacademicrigortoexploreIncoterms®.

21

Fourth,withinthescopeofbuyer-sellerdyadicnegotiations,thisstudyexplores

andexplainshowdyadsnegotiateandcommunicatetheagreeduponlogistics

managementresponsibilities.Therefore,notonlyarethenegotiationoutcomes(i.e.

usageerrors)exploredandexplained,sotooarethenegotiationprocessandthe

communicationoflogisticsmanagementdecisions.

Fifth,itisshownthattheappropriateresearchmethoddependsuponthetopic

andresearchquestionsbeinginvestigated.Findingandvalidatingthebestresearch

methodforatopicisexamined.Differentinsightsaregainedbyapplyingdifferent

researchmethods,andthereisadanger,suchasmethodweaknessesorsingularity,if

onereliestoomuchonasinglemethod(Stewart,2009;Davisetal.,2011).Incontrast

withthetypicalresearchparadigmofemployingeitheraquantitativeorqualitative

approach,amixedmethodsapproach,isusedtostudythesupplychainmanagement

topicofhowdyadicbuyer-sellerrelationshipscommunicatelogisticsmanagement

decisions.Therefore,thisstudyappliesmixedmethodsresearchinthesupplychain

managementdomain.Otherdisciplinesmayalsobenefit.Themergerofqualitativeand

quantitativeresearchmethodsisshowntocomplementandaddfurthervalidityand

generalizabilitytothisstudy.Byusingmixedmethodsresearch(MMR)tostudythe

samephenomenon,morerobustandcompellingfindingsmaybeanticipated(Stewart,

2009;Davisetal.,2011).Mixedmethodsresearchisstillasomewhatnovelapproach

withinpurchasing,marketing,andsupplychainliterature,anditiscertainlyanew

approachtoexploringandexplainingtheIncoterm®phenomena.Thisstudyprovidesa

22

“how-to”guideforconductingthisformofmixedmethodsresearch,whichisbeshown

tobeanappropriateandpracticalresearchtechniqueforthisresearch.

Lastly,thisstudyaddstotheverylimitedresearchusingpracticingmanagersas

participantsindesignedexperiments.Participantsinnegotiationresearchgenerally

havebeenMBAstudents,andtheuseofreal-lifeparticipantsisverylimited(Mestdagh

&Buelens,2003).MestdaghandBuelensfoundthatpracticingmanagersareincludedas

participantsinonly5%ofstudies(2003).

1.5DISSERTATIONORGANIZATION

Thisdissertationcomprisesfivechapters.Chapter1introducesthephenomena,

logisticsmanagementdecisionswithindyadicbuyer-sellerrelationships.Chapter2

reviewsexistingresearchonthetopicsofbuyer-sellerrelationshipsandlogistics

management,synthesizesthetopicandliteratureonIncoterms®,andexploresthe

literatureonmixedmethodsresearch.Chapter3developsindetailtheappropriate

mixedmethodsmethodology,thepilotcasestudy,themultiplecasestudies,andthe

experiment,usedtoinvestigatethephenomenon.Chapter4reportsontheresultsof

themixedmethodsresearch.Thefirstsectiondescribesthepilotcasestudy.Thesecond

sectiondetailsthemultiplecasestudies,andthethirdsectionreportsonthe

experiment.Chapter5interpretstheresultsofallthreestudies,sothatpractitioners

andscholarscanfindtheresultsuseful.Italsoidentifiesthelimitationsoftheresearch

andlikelybeneficialdirectionsforfutureresearch.

23

CHAPTER2

LITERATUREREVIEW

Thissectionreviewsexistingresearchonthetopicsofbuyer-sellerrelationships,

logisticmanagement,Incoterms®,mixedmethodsresearch,andexperiments.This

researchisthusgroundedinthisexistingliterature.

2.1BUYER-SELLERRELATIONSHIPS.

Manysocialsciencedisciplineshavestudiedinter-organizationalrelationships

(Autry&Golicic,2010).Marketingresearchershaverepeatedlyfocusedonbuyer-seller

exchanges(Dwyeretal.,1987),andsomehaveevendeclaredtheprimaryfocusof

marketingtobetheexchangerelationship(Kotler&Levy,1969;Luck,1969;Ferber,

1970;Kotler&Zlatman,1971;Kotler,1972;Luck,1974;Dwyeretal.1987).Thesedyadic

buyer-sellerrelationshipsarecrucialforthesupplychainmanagementdiscipline,where

manycustomerandsupplierrelationshipsdriveindustrysuccess(Autry&Golicic,2010).

Thereverseisalsotrue;poordyadicbuyer-sellerrelationshipscanleadtopoorindustry

performance(Autry&Golicic,2010).Accordingtomanyresearchers,anessentialpiece

ofsupplychainmanagementisthemanagementofbusinessrelationships(Lambertet

al.,1996;Staughton&Johnston,2005;Cousins&Menguc,2006;Autry,&Griffis,2008;

Autry&Golicic,2010).Thereismuchresearchinterestonformalandinformal

agreementswithinbuyer-sellerrelationships(Lassar&Zinn,1995;Frankeletal.,1996;

Atkin&Rinehart,2006).

24

Overthedecades,thepressureofglobalcompetitionhasforcedmanufacturers

tofocustheirin-houseundertakingsoncorecompetenciesandtooutsourcenon-core

competencies(Prahalad&Hamel,1990;Atkin&Rinehart,2006).Thistrendhas

increasedinterestintheintegrationofvarioussupplychainlayers(Frohlich&

Westbrook,2002;Atkin&Rinehart,2006).ThisbuildsonPorterandMillar’s(1985)

conceptofthevaluesystemorvaluechain,whichwasintroducedover30yearsago

(Porter&Millar,1985;Atkin&Rinehart.2006).Today,thereisatendencytooutsource

someofthenon-criticalvaluechainactivities,whichmagnifiestheinterdependenceof

supplychainmembers(Atkin&Rinehart,2006).

Duetotheaforementionedtrend,itisnotsurprisingthattoday’ssupplychains

arecharacterizedbymanybuyer-sellerrelationships(Mentzeretal.,2001;Xu&

Beamon,2006;Frankeletal.,2008;Thomas,2013),andnegotiationsareakeypartof

thosebuyer-sellerrelationships(Thomas,2013).Therefore,itisexpectedthat

negotiationsbetweenmembersofthesupplychainareessentialforcompetitiveness

(Atkin&Rinehart,2006).Thereisasymbioticrelationshipbetweenmemberswithinthe

supplychain(Ramsay,2004;Atkin&Rinehart,2006;Thomas,2013).Interestingly,

dyadicbuyer-sellerrelationshipsaredynamic,wherebythereisasimultaneousstruggle

betweencooperationandcompetitionwithintherelationship(Jap,2001;Nairetal.,

2011).AsfoundinDaugherty(2011),Dwyeretal.(1987)stressedthesignificanceofthe

changetowardscloseandon-goingbuyer-sellerrelationships.

Manytypesofbuyer-sellerrelationshipsexistinthesupplychain,suchas

25

manufacturer-distributor,materialsupplier-manufacturer,shipper-carrier,etc.(Thomas,

2013),butmanyresearchersandmanagersareparticularlyinterestedinverticalbuyer-

supplierrelationships(Autry&Golicic,2010).Muchofthisinterestisaresultofstrong

verticalbuyer-supplierrelationshipsleadingtoimprovedperformanceandcompetitive

advantagesforbothdyads(Morgan&Hunt,1994;Day,2000;Krauseetal.,2007;Autry

&Golicic,2010).

Negotiationisaspecifictypeofinteractionwithinbuyer-sellerrelationships

(Thomas,2013).Thenegotiationprocessistheprincipalmethodofhandlingconflict

withinsuchrelationships(Ramsay,2004),anditisadyadicprocessthatissupposedto

solveproblemsresultinginbenefitsforbothdyadicparticipants(Rinehartetal.,1988;

Atkin&Rinehart,2006).Negotiationoffersanexceptionalvantagepointtostudyinter-

organizationallinkagesinsupplychains(Dwyeretal.,1987;Atkin&Rinehart,2006).In

addition,negotiationsareveryrelevantbecausemanysalesconditions,suchasprice,

dateofdelivery,andwarranties,arenegotiatedbetweenvaluechainpartners

(Anderson&Narus,2004;Fang,2006;Herbstetal.,2011;Thomas,2013).Most

importantly,forpurchasingorsupplymanagement,negotiationistheprocessbywhich

abuyerandsellercometoestablishtermsinapurchaseagreement(Dobleretal.,1984;

Atkin&Rinehart2006).Thetwocorporatefunctionsthatdealwithmostnegotiationare

thepurchasingandsellingfunctions(Ramsay,2004).Itisalsosaidthat25%ofa

manager’stimeisspentonnegotiations(Mestdagh&Buelens,2003;Thomas,2013).

Thedyadsarecompelledtofindthebestresultswithinthebuyer-sellertransactions

(Herbstetal.,2011).Firmsmosteffectivelynegotiatingmaybemorelikelyto

26

outperformrivals(Thomas,2013).

Today,firmsarecreatingcollaborativerelationshipswiththeircounterpartsin

thebuyer-sellerdyadtogaincompetitiveadvantage(Nyagaetal.,2010).Itisnot

surprisingthatnewbuyer-sellerapproachessuchasthe“vestedoutsourcing”approach

haveemerged(Vitasek&Manrodt,2012a,2012b).Ongoingbuyer-sellerrelationships,

whicharedescribedaslong-termassociationswithformalcontractsandtermed

“domesticatedmarkets”areexplainedastransactionsthatareplannedand

administeredratherthanbeingconductedonanadhocbasis(Dwyeretal.,1987;Arndt,

1979).Asopposedtotheserelationalexchanges,discretetransactionscanbedescribed

ashavingverylittlebuyer-sellercommunicationorrelationship(Dwyeretal.,1987).As

coinedbyAtkinandRinehart(2006),“contractformality”isestablishedwhenthebuyer

andsellerexplicitlystaterequirementsviaacontract(Mohretal.,1996;Atkin&

Rinehart,2006;).AsnotedbyAtkinandRinehart(2006),FawcettandMagnan(2000)

affirmthisbystating,“intheabsenceoftrust,aneffortismadetolegislate

cooperation”viaacontract.

Interactionsbetweenthebuyer–sellerplaykeyroleswithinindustrialmarkets

(Håkansson,1988;Gemünden,1997;Håkansson&Ford,2006;Herbst,2011).

Negotiationbehaviorisa“fundamentalphenomenon”forindustrialmarkets’inter-firm

behavior(Perdueetal.,1986;Atkin&Rinehart,2006),andwithintheseindustrial

markets,buyer-sellerinteractionsplayakeyrole(Anderson&Narus,2004;Fang,2006;

Herbstetal.,2011).

27

2.2LOGISTICSMANAGEMENT

Over30yearsago,PorterandMillarintroducedtheconceptofthevaluesystem

orvaluechain(1985).Theydefinedactivitiesrelatedtothecreationanddeliveryofa

productorservice.Theirfiveprimaryactivityareasareinboundlogistics,operations,

outboundlogistics,marketingandsales,andservice.AsshowninAtkinandRinehart

(2006),PorterandMillar(1985)maintainedthatthesuccessfulperformanceofthese

activitiesandtheabilitytoproperlymanagetheirlinkagesleadtocompetitive

advantage(Porter&Millar,1985;Atkin&Rinehart,2006).

Similartothetranscendenceofpartnerswithinthesupplychain,Daugherty

(2011)assertedthatBowersoxetal.(1989)andLaLondeetal.(1988)bothindicated

thatlogisticsrelationshipshavechanged.Alargevarietyofdifferentlogistics

managementserviceshaveemergedsincethederegulationoftheU.S.interstate

truckingindustry(Smithetal.,2007).Termssuchas“partners”and“alliances”emerged

intheliterature(Daugherty,2011).Inaddition,itwasclearthatbothacademicsand

practitionersbegantoseetheimportanceoflogisticsmanagement(Daugherty,2011).

AsnotedinDaugherty,(2011),StankandDaugherty(1997)notethatduringthe1980’s

and1990’s,companiesfacedpressuretoprovide“better,faster,cheaperlogistical

services,”andsimilartotheoverallsupplychain,companiesdecidedtofocusoncore

competenciesandoutsourcethenon-corecompetenciesoflogistics.Thesecompanies

specializinginexternallogisticsofferedmorecost-effectivewaystoachievecompany

goals(Daugherty,2011).Duringthattime,logisticsservicesweresomeofthemost

28

commonbusinessareastobeoutsourced(LaLonde&Maltz,1992;Daugherty,2011)

withstrongdemandovertime(Knemeyer&Murphy,2005).Itisnotedthatduringthe

1990s,logisticsmanagementresearchalsoshiftedbeyondtheboundariesofan

individualformtostudybothinter-firmrelationshipsaswellasbothpartsofdyads

(Langley&Holcomb,1992;Frankeletal.,2008).

Logisticsmanagementiscriticalintheoverallsupplychain’ssuccess(Stank&

Goldsby,2000).In1997,logisticsmanagementcostsaccountedfor57%ofU.S.firms’

supplychaincosts(Berg,1998;Stank&Goldsby,2000).AsnotedinStankandGoldsby

(2000),BowersoxandCloss(1996)foundthatoneinsevenjobsintheU.S.arelogistics

managementrelated.However,manyshippersusepre-1980slogictomakelogistics

managementdecisions(Stank&Goldsby,2000)leadingtopoorperformanceassupply

chainmanagementadvances(Moultrie,1998;Stank&Goldsby,2000).Expectationsof

logisticsmanagementhavechangedovertimefromlow-costandhigh-servicecriteriato

cutting-edgetechnologyinordertomeetincreasinglystringentservicerequirements

andsteadilyloweringcosts(Stank&Goldsby,2000).Theoverallsupplychainisonlyas

strongastheweakestcomponentandunfortunately,logisticsmanagementisoneofthe

supplychain’sweakestcomponents(Stank&Goldsby,2000).

Inthecontextofabuyer-sellerdyad,thebuyers’logisticsmanagement

requirementsinfluencetheirpurchasingandtheassociatedlogisticsmanagement,

choices.Strongerbuyerlogisticsmanagementneedsincreasetheirimportanceand

possiblytheassociatedcostcomponent.Withinlogisticsmanagement,distributionplays

29

asignificantroleinsecuringsuitabletransportationarrangements.Thebuyerorsupplier

controlofvariouslogisticsmanagementcomponentscanalterthetotalpurchasecost.

Appropriateunderstandingandanalysisofthelogisticsmanagementcomponentofan

overallpurchaseiscriticalforkeepingcostscompetitive.Buyerslookforany

opportunitytosecurelowerlogisticsmanagementcosts(Wagner,1987).

2.3INCOTERMS®

Thissectionoftheliteraturereviewprovidesthehistoryandusageof

Incoterms®rules.Italsosystemicallyidentifiesandsynthesizesacademicjournalsand

practitionerpublicationsonthetopicofIncoterms®,whicharebroadlydefinedas

shippingterm(s).

2.3.1HistoryofIncoterms®.

ThetraditionofusingtradetermsstartedduringthenineteenthcenturyinGreat

Britain(Malfliet,2011).However,itwasnotuntil1921thatIncoterms®ruleswerefirst

consideredbytheICCandultimatelybroughtintousein1936(ICC,2010,2015a).Prior

tothistime,tradetermswereoftensubjective,leadingtovariousinterpretationsand

frequentdisputesandlitigation(Gupta,2010;Bergami,2011).AsstatedbytheICC,“a

TradeTermsCommitteewiththeassistanceoftheICCNationalCommitteesdeveloped

thefirstsixrulesin1923:FOB,FAS,FOT,FOR,FreeDeliveredCIFandC&F,whichwere

theprecursorofwhatwouldlaterbeknownastheIncoterms®rules”(2015a).Thesesix

rulesaredescribedasFreeonboard(FOB),Freealongsideship(FAS),Freeontruck

30

(FOT),Freeonrail(FOR),Cost,insurance,andfreight(CIF),andCostandfreight(C&F).

Sincethen,theICChasupdatedIncoterms®rulesregularlytoreflecttheever-changing

businessenvironment,commercialpractices,typesofgoodsandtransports,and

internationallaws(ICC,2010,2015a).Ramberg(2011)notesthatIncoterms®revisions

require“somethingimportant”tohavetakenplaceincommercialpractice.TheICC’s

CommissiononCommercialLawandPractice,whichiscomposedofmemberswith

expansiveglobalandsectorexpertise,istaskedtoensurethattheIncoterms®rules

reflectandrespondtoB2Bglobalneeds(ICC,2010).Initialrevisionisdelegatedtoa

smallglobalDraftingGroup,whosemembershipisformedofexpertsfromassorted

nationschosenfortheircontributionstointernationalcommerciallawandtotheICC

(ICC,2015a).Fromthere,reviseddraftsaredisseminatedinternationallyandbroadly

throughtheICC,withtheresultingcommentsandsuggestionsprovidedbacktothe

DraftingGroup(ICC,2015a).WhentheICCCommissiononCommercialLawandPractice

approvesthefinaldraft,itissubmittedforadoptiontotheICCExecutiveBoard(ICC,

2015a).TheICCstatesthatthe“broadinternationalconsultationaimstoensurethat

officialICCproductspossessanauthorityasrepresentingthetrueconsensusviewpoint

oftheworldbusinesscommunity”(ICC,2015a).

Ontheirwebsite,theICC(2015b)providesashortdescriptionoftheeleven2010

Incoterms®rules:

2.3.1.1RULESFORANYMODEORMODESOFTRANSPORT

EXWExWorks-“ExWorks”meansthatthesellerdeliverswhenitplacesthe

31

goodsatthedisposalofthebuyerattheseller’spremisesoratanothernamed

place(i.e.works,factory,warehouse,etc.).Thesellerdoesnotneedtoloadthe

goodsonanycollectingvehicle,nordoesitneedtoclearthegoodsforexport,

wheresuchclearanceisapplicable.

FCAFreeCarrier-“FreeCarrier”meansthatthesellerdeliversthegoodstothe

carrieroranotherpersonnominatedbythebuyerattheseller’spremisesor

anothernamedplace.Thepartiesarewelladvisedtospecifyasclearlyas

possiblethepointwithinthenamedplaceofdelivery,astheriskpassestothe

buyeratthatpoint.

CPTCarriagePaidTo-“CarriagePaidTo”meansthatthesellerdeliversthe

goodstothecarrieroranotherpersonnominatedbytheselleratanagreed

place(ifanysuchplaceisagreedbetweenparties)andthatthesellermust

contractforandpaythecostsofcarriagenecessarytobringthegoodstothe

namedplaceofdestination.

CIPCarriageAndInsurancePaidTo-“CarriageandInsurancePaidto”meansthat

thesellerdeliversthegoodstothecarrieroranotherpersonnominatedbythe

selleratanagreedplace(ifanysuchplaceisagreedbetweenparties)andthat

thesellermustcontractforandpaythecostsofcarriagenecessarytobringthe

goodstothenamedplaceofdestination.Theselleralsocontractsforinsurance

coveragainstthebuyer’sriskoflossofordamagetothegoodsduringthe

carriage.ThebuyershouldnotethatunderCIP,thesellerisrequiredtoobtain

32

insuranceonlyonminimumcover.Shouldthebuyerwishtohavemore

insuranceprotection,itwillneedeithertoagreeasmuchexpresslywiththe

sellerortomakeitsownextrainsurancearrangements.

DATDeliveredAtTerminal-“DeliveredatTerminal”meansthattheseller

deliverswhenthegoods,onceunloadedfromthearrivingmeansoftransport,

areplacedatthedisposalofthebuyeratanamedterminalatthenamedportor

placeofdestination.“Terminal”includesaplace,whethercoveredornot,such

asaquay,warehouse,containeryardorroad,railoraircargoterminal.The

sellerbearsallrisksinvolvedinbringingthegoodstoandunloadingthematthe

terminalatthenamedportorplaceofdestination.

DAPDeliveredAtPlace-“DeliveredatPlace”meansthatthesellerdeliverswhen

thegoodsareplacedatthedisposalofthebuyeronthearrivingmeansof

transportreadyforunloadingatthenamedplaceofdestination.Thesellerbears

allrisksinvolvedinbringingthegoodstothenamedplace.

DDPDeliveredDutyPaid-“DeliveredDutyPaid”meansthatthesellerdelivers

thegoodswhenthegoodsareplacedatthedisposalofthebuyer,clearedfor

importonthearrivingmeansoftransportreadyforunloadingatthenamed

placeofdestination.Thesellerbearsallthecostsandrisksinvolvedinbringing

thegoodstotheplaceofdestinationandhasanobligationtoclearthegoods

notonlyforexportbutalsoforimport,topayanydutyforbothexportand

import,andtocarryoutallcustomsformalities.

33

2.3.1.2RULESFORSEAANDINLANDWATERWAYTRANSPORT

FASFreeAlongsideShip-“FreeAlongsideShip”meansthatthesellerdelivers

whenthegoodsareplacedalongsidethevessel(e.g.,onaquayorabarge)

nominatedbythebuyeratthenamedportofshipment.Theriskoflossofor

damagetothegoodspasseswhenthegoodsarealongsidetheship,andthe

buyerbearsallcostsfromthatmomentonwards.

FOBFreeOnBoard-“FreeOnBoard”meansthatthesellerdeliversthegoodson

boardthevesselnominatedbythebuyeratthenamedportofshipmentor

procuresthegoodsalreadysodelivered.Theriskoflossofordamagetothe

goodspasseswhenthegoodsareonboardthevessel,andthebuyerbearsall

costsfromthatmomentonwards.

CFRCostandFreight-“CostandFreight”meansthatthesellerdeliversthe

goodsonboardthevesselorprocuresthegoodsalreadysodelivered.Theriskof

lossofordamagetothegoodspasseswhenthegoodsareonboardthevessel.

Thesellermustcontractforandpaythecostsandfreightnecessarytobringthe

goodstothenamedportofdestination.

CIFCost,Insurance,andFreight-“Cost,Insurance,andFreight”meansthatthe

sellerdeliversthegoodsonboardthevesselorprocuresthegoodsalreadyso

delivered.Theriskoflossofordamagetothegoodspasseswhenthegoodsare

onboardthevessel.Thesellermustcontractforandpaythecostsandfreight

necessarytobringthegoodstothenamedportofdestination.Theselleralso

34

contractsforinsurancecoveragainstthebuyer’sriskoflossofordamagetothe

goodsduringthecarriage.ThebuyershouldnotethatunderCIF,theselleris

requiredtoobtaininsuranceonlyonminimumcover.Shouldthebuyerwishto

havemoreinsuranceprotection,itwillneedeithertoagreeasmuchexpressly

withthesellerortomakeitsownextrainsurancearrangements.

ThecompleteIncoterms®2010EnglishEditionpublishedbytheICCisavailableat

http://store.iccwbo.org/incoterms-2010(ICC,2015b).Listedbelowaresomeofthe

mostsignificantrevisionsthathaveledtotheIncoterms®2010version:

• 1980–ThetermFCAisintroduced(ICC,2015a).

• 1990–EDI-messageswereallowedtofulfilltheseller’sobligationforproofof

delivery(ICC,2015a).

• 2000–Twochangesweremade.First,theexportclearanceresponsibilityunder

FASwasplaceduponthebuyer(previouslyseller)(ICC,2015a).Second,forFCA,

claritywasprovidedinthatunderthisterm,thesellerwasnotobligatedtoload

goodsontothebuyer’scollectingvehicle,andthebuyer’sobligationtoreceive

theseller’sarrivingvehicleunloadedwasnoted(ICC,2015a).

• 2010-OnJanuary1,2011,Incoterms®2010rulestookeffectcreatingtwonew

rules(DATandDAP)replacingfourIncoterms®2000rules(DAF,DES,DEQ,and

DDU)(ICC,2010,2015a).

ThroughtheIncoterms®years,therehavebeenattemptstogetIncoterms®

endorsedinternationally(Bergami,2011).In1969,Incoterms®of1953attemptedto

35

gainendorsementfromtheUnitedNationsCommissiononInternationalTradeLaw

(UNCITRAL),butthisattemptwasnotsuccessful(Bergami,2011).Finally,in1992,

Incoterms®1990wasendorsedbyUNCITRAL,whichisthecommissionthatformulates

andregulatesinternationaltrade,atits480thmeeting(Bergami,2011).Incoterms®2000

wasalsoendorsedbyUNCITRAL(Bergami,2011).

Incoterms®arenottobeconfusedwiththe1941RevisedAmericanForeign

TradeDefinitionsorthe1951UniformCommercialCode(UCC)shippinganddelivery

terms,thatareprimarilyusedwithinNorthAmerica,especiallyintheU.S.(Bergami,

2011,2012;LegalInformationInstitute,2015).However,othershavefoundUCC

shippinganddeliveryterminfluencesoutsideoftheUnitedStates,suchasinChina

(Zhai,2013).WiththisIncoterms®“competitor”(Bergami,2011),threeoftheUCC

shippinganddeliverytermacronyms(FOB,FAS,andCIF)overlapwithIncoterms®2010

rules(Bergami,2012;LegalInformationInstitute,2015).Whilemuchofsame

terminologyexists,UCCtermsallowvariations(i.e.OriginorDestination)toprovide

differentmeanings(Bergami,2011).CriticallydifferentfromIncoterms®,UCCshipping

anddeliverytermsdoindicatetransferoftitleorownership,andtheymayindicate

obligationsbeyondthoseofIncoterms®(Bergami,2012;LegalInformationInstitute,

2015).ThesimilaritiesinUCCandIncoterms®terminologyleadtoconfusioninthe

marketplace(Bergami,2011).In2004,theUCCeliminatedshippinganddeliveryterms,

openingthedoorforwideracceptanceofIncoterms®rules(Bergami,2011).

36

2.3.2ProperUseofIncoterms®

Whenusedproperly,usingIncoterms®is“aneffectiveriskmanagementtool”

(Bergami,2013).TheICCstatesthattherearefourmainconsiderationsforproper

Incoterms®use(ICC,2010):

1) UseIncoterms®2010rulesinthecontractofsale–IfyouwanttouseIncoterms®

rulesinacontract,youshouldclearlyspecifybystatingtheIncoterms®rule,

followedbythenamedplaceorport,andthenspecifyingtheIncoterms®

versions,suchasIncoterms®2010.

2) IdentifytheappropriateIncoterms®rule–UsetheGuidanceNotesforeach

Incoterms®ruletodeterminetheappropriatethreecharacterIncoterm®.

3) Stipulatetheplaceorportaccurately–Preciselynamingtheplaceorportafter

theIncoterms®ruleiscriticaltoavoidmisunderstandingsbetweenparties.

4) Incoterms®donotprovideacompletecontractofsale–Incoterms®rulesonly

specifyaparty’sobligationtosecurecarriageorinsurance,whendeliveryoccurs

betweensellerandbuyer,andthecostobligationsofeachparty.Incoterms®

rulesdonotstatethepricetobepaidnorthepaymentmethod.Additionally,

theydonotindicatetransferoftitleorownershiporcontractbreach

consequences.

Onoccasion,partiesmaywanttoaltertheIncoterms®rules.Althoughnot

prohibited,potentialdangersdoarise.IfanIncoterms®ruleisaltered,theICCstrongly

suggeststhatthedeliberateeffectismadeexceptionallyclearinthecontractofsale

37

(ICC,2010).

SinceIncoterms®rulesarenotabodyoflaw,theymustbespecificallyincluded

inthedyadicsalescontractfortheIncoterms®rulestoapply(Bergami,2012).When

usedinasalescontract,Incoterms®rulesarebindingonthebuyer-sellerdyad,butthe

Incoterms®ruleobligationsmayrequireothercontractstobeformed,suchasa

contractwithatransportationproviderorcustomsbroker.Thesethirdpartiesarenot

boundbythedyadicbuyer-sellersalesagreement,butratherbytheirindividual

agreements(Bergami,2013).

Foreachofthe11Incoterms®rules,verydetailedguidancenotesareprovidedin

Incoterms®2010:ICCrulesfortheuseofdomesticandinternationaltradeterms.The

guidancenotesclarifythespecificsofeachIncoterms®rule,suchaswhenitshouldbe

used,whenriskpassesfromsellertobuyer,andhowcostsareallocatedbetweenseller

andbuyer.Toclarify,theguidancenotesarenotpartoftheactualIncoterms®2010

rules,butareintendedtohelptheusercorrectlyandefficientlynavigatetowardsthe

suitableIncoterms®ruleforaparticulartransaction(ICC,2010).AsstatedbytheICC

(2010),thefollowingguidancenotesareprovidedforeachIncoterms®rule.

• A–Theseller’sobligations

o A1–Generalobligationsoftheseller

o A2–License,authorizations,securityclearances,andotherformalities

o A3–Contractsofcarriageandinsurance

o A4–Delivery

38

o A5–Transferofrisks

o A6–Allocationsofcosts

o A7–Noticestothebuyer

o A8–Deliverydocuments

o A9–Checking–packaging–marking

o A10–Assistancewithinformationandrelatedcosts

• B–Thebuyer’sobligations

o B1–Generalobligationsofthebuyer

o B2–License,authorizations,securityclearances,andotherformalities

o B3–Contractsofcarriageandinsurance

o B4–Takingdelivery

o B5–Transferofrisks

o B6–Allocationsofcosts

o B7–Noticestotheseller

o B8–Proofofdelivery

o B9–Inspectionofgoods

o B10–Assistancewithinformationandrelatedcosts

2.4LITERATUREREVIEWMETHODOLOGY

TheABI/InformComplete1971–Presentdatabasewasusedtoidentify

academicjournalsandpractitionerpublicationsonthetopicofIncoterms®.Multiple

39

ABI/InformCompletesearcheswereconductedusingthe“AdvancedSearch”

functionality.Theinitialkeywordsearchfocusedonthesingularform(incoterm)or

pluralform(incoterms)ofIncoterms®.Noadditionallimitationsonthesearchwere

used.Thisinitialsearchyielded199resultsintheperiodthroughJune2017.Asecond

keywordsearchwasthenconductedonthesingularform(shippingterm)orpluralform

(shippingterms)ofshippingterms.Onceagain,noadditionallimitationsonthesearch

wereused.Thissecondsearchyielded62results.Therefore,261totalarticleswere

foundfromthetwosearches.All261articlescitationswerethentransferredto

MicrosoftExcel.AppendixI–LiteratureReviewcontainsthiscompletelistofarticles.

Takingacomprehensiveapproach,all261articleswerereviewed.Upon

reviewingeacharticle,andwithintheMicrosoftExcelfile,eacharticlewasmarkedas

eitherrelevant“1”ornotrelevant“0”tothetopicofIncoterms®.Articlesweredeemed

relevantiftheycontainedanydiscussiononthetopicofIncoterms®.Additionally,itwas

notedwhethereacharticlewaspeerreviewed(“1”peerreviewed).Further,abrief

articlesummarywasrecordedinaseparateMicrosoftExcelcolumn.Byutilizingthe

MicrosoftExcelsortfunction,duplicatearticleswerefoundandnotedinaseparate

MicrosoftExcelcolumn.Byconductingotheradhocsearchesusingdifferentarticle

searchenginesandbyfollowingcitations,15additionalrelevantarticlesmerged.A

summarybytotalandpercentageisshowninTable2.1.Ofthe276articles,only25,or

9.06%,werefoundinpeerreviewedscholarlyjournals.Thirty-twoduplicate(i.e.same

articlelistedmorethanonce)articleswerefound.

40

Table2.1SummaryofArticlesReviewed

Relevant NotRelevant PeerReviewed Duplicate

154 122 25 32

55.80% 44.20% 9.06% 11.59%

Total 276

2.4.1ReviewProcess

UsingtheaforementionedExcelfileandafterremovalofduplicates,142total

articleswereascertainedasrelevanttothetopicofIncoterms®.Ofthe142remaining

articles,only14wereconsideredtoberelevant,peerreviewed,academicjournal

articles.Theremaining130articlesappearedinpractitionerpublications.

2.4.2Classificationframework

Bythoroughlyreviewingthe142articles,fourgroupingsoftheliteratureemerged.

1) ExplainsIncoterms®-ArticlesinthisgroupeitherattempttoexplainIncoterms®

overalloraspecificIncoterms®ruleorconcept.

2) NewIncoterms®version–Thesearticlesalertreadersthatanewrevisionis

forthcomingorwasrecentlyintroduced(i.e.Incoterms®2010takingeffect

January1,2011).

3) Training–Articlesinthisgroupalertorenticereaderstoparticipateintraining

workshopsinIncoterms®.

41

4) Other–Articlesnotfittingintotheotherthreegroupswereclassifiedas“other.”

2.4.3Results

Usingtheclassificationframework,the142articleswerecategorizedintothe

fourgroupings.AtotalandpercentsummaryofthesegroupsisshowninTable2.2.

Table2.2SummaryofArticleClassification

ExplainsIncoterms NewIncotermsVersion Training Other

69 41 13 19

48.59% 28.87% 9.15% 13.38%

Thelargestgroup,with69ofthe142articles(48.59%),isthe“Explains

Incoterms®”group.ThesearticleseitherattempttoexplainIncoterms®overallora

specificIncoterms®ruleorconceptinparticular.Forexample,from2002until2013,

ColinBarrett,thepresidentofBarrettTransportationConsultants,tookIncoterms®

questionsandprovidedanswers(Q&A)intwopractitionerpublications:Journalof

CommerceandTrafficWorld(Barrett,2002,2005,2006,2010a,2010b,2013).

Thenextlargestgroup,with41articles(28.87%),isthe“NewIncoterms®

version”group.ThesearticlesalertreadersthatarevisionoftheIncoterms®rulesis

forthcomingorhasrecentlybeenintroduced.Understandably,thesearticlestypically

appearedjustpriortoorshortlyafterarevisionoftheIncoterms®rules.Forexample,

manyofthesearticleswerepublishedaroundJanuary1,2011whenIncoterms®2010

42

becameeffective.

While110articles(77.46%)focusedoneitherexplainingIncoterms®or

describingnewIncoterms®versions,only13articles(9.15%)focusedonIncoterms®

trainingortrainingworkshops.Ofthese,onlytwoarticles(Holley&Haynes,2003and

Kocketal.,2008)discussednewtrainingdesignsormethodswithIncoterms®.Therest

ofthesearticlessimplyenticedreaderstofreeorpaidworkshopsorinstruction.

Theremaining19articles(13.38%)wereplacedintoan“Other”group.The

“Other”grouparticlesvariedgreatlyintopics.Manysuggestedmandatoryorglobal

supportforIncoterms®,whileothersrecommendedorintroducedtoolsforIncoterms

use.

2.4.4Discussion

Baseduponthisliteraturereview,itispossibletooffersomeobservations.First,

thereisscarcityofpeerreviewedacademicliteratureasitrelatestoIncoterms®.After

updatingtheliteraturereviewinJune2017,only14articleswereidentifiedinpeer

reviewedacademicjournals.Asshownbelow,the14articlescoveredallfourcategories:

ExplainsIncoterms,NewIncotermsversion,Training,andOther.However,beyondthese

articles,thereissomeotheracademicattentiononthesubjectofIncoterms®via

universitypublications,newsletters,andconferencepresentations(Stapleton&

Saulnier,2001;Căruntu&Lăpădusi,2010;Malfliet,2011;Bergami,2012;Stapleton,

2014).

43

Table2.3SummaryofAcademicArticlesonIncoterms®

Article

ExplainsIncoterms

NewIncotermsVersion

Training

Other

Bergami(2011) 0 1 0 0

Bergami(2013) 1 0 0 0

Glitz(2011) 0 0 0 1

Holley&Haynes(2003) 0 0 1 0

Kocketal.(2008) 0 0 1 0

Kumar(2010) 0 0 0 1

McKinnon(2014) 0 0 0 1

Ramberg(2011) 0 1 0 0

Stapletonetal.(2014a) 1 0 0 0

Stapletonetal.(2014b) 1 0 0 0

Stapleton&Saulnier(1999) 0 1 0 0

Stapleton&Saulnier(2002) 1 0 0 0

Yao-Hua&Thoen(2000) 0 0 0 1

Zhai(2013) 0 0 0 1

4 3 2 5

28.57% 21.43% 14.29% 35.71%

Manyjournalandscholarlyarticles,universitypublications,newsletters,and

conferencepresentationsintroduce,provideahistory,andsummarizeIncoterms®rules

44

(Stapleton&Saulnier,1999,2001,2002;Căruntu&Lăpădusi,2010;Bergami,2011,

2012,2013;Glitz,2011;Malfliet,2011;Ramberg,2011;Stapleton,2014;Stapletonetal.,

2014a,2014b).Similarly,manyjournalandscholarlyarticles,universitypublications,

newsletters,andconferencepresentationsexplainthedifferencesbetweenthelatest

Incoterms®ruleversionandthepreviousversion(Stapleton&Saulnier1999,2001;

Căruntu&Lăpădusi,2010;Bergami,2011,2012,2013;Malfliet,2011;Ramberg,2011;

Stapletonetal.2014a,2014b).Yetotherjournalandscholarlyarticles,university

publications,newsletters,andconferencepresentations,moreinterestinglydiscuss

Incoterms®application(Stapleton&Saulnier,2001;Căruntu&Lăpădusi,2010;Bergami

2011,2012,2013;Malfliet,2011;Stapleton,2014;Stapletonetal.,2014a,2014b)and

commonusageerrorsintheirapplication(Stapleton&Saulnier,2001;Bergami,2011,

2012,2013;Glitz,2011;Malfliet,2011;Ramberg,2011;Stapleton,2014;Stapletonet

al.2014a,2014b).Thesearediscussedbelow.

RegardingtheapplicationofIncoterms®,Stapletonetal.(2014a)provide

importantconsiderationsthattheBuyerandSellershoulddifferentiateandclarify

amongstthedyadbystating:

a) Whopaysforthevariousdispatchanddeliveryelements;

b) Whoinitiallypaysforwhatinagivenprocess;obviously,theBuyer

alwayspaysintheendeithertothefreightmover(e.g.,carriers)directly

orwhenchargedbytheSelleronanexportinvoice;

c) Whereexactlydeliverytakesplace;remember,tradersalwaysneedto

45

definedeliverypointsveryprecisely;

d) Finally,whererisksandcostresponsibilitiespassfromtheSellertoBuyer,

whichnormallythoughnotalwaysoccuratthepointofdelivery.

TheBuyerandSellershouldhaveaclearunderstandingofwhattheyagreeto,

andthecontractofsaleshouldclarifyanynuances(Stapletonetal.2014a).Importantly,

andasnotedbytheICC(2010),Incoterms®usealonedoesnotconstituteacontractof

sale,anditshouldbeincorporatedintothecontractofsale(Stapletonetal.,2014a)to

bebinding(Bergami,2012).Bergami(2012)andRamberg(2011),alsopointoutthat

Incoterms®rulesdoexcludeaspectsofthesalescontract,suchasmethodofpayment

ortitletransfer,nordotheyexplainwhathappenswhenadyadicmemberfailsto

performanobligation(i.e.contractbreach).Stapletonetal.(2014a)mostsignificantly

noteanymemberoftheBuyer-Sellerdyadshouldonlytakeonresponsibilityfor

functionsthattheyeitherhavecontroloforcanexercisecontrolover.Similarto

Stapletonetal.(2014a),Căruntu&Lăpădusi(2010)providevariouscasestoillustrate

totalcostdifferencesincurredbyusingdifferentIncoterms®rules.

Beyondtheapplicationbenefitsalreadymentioned,Bergami(2011)citesthat

manytradingnationshavesignedtheUnitedNationsConventiononContractsforthe

InternationalSalesofGoods(CISG),alsoreferredtoastheViennaConventionof1980.

AsofDecember18,2015,84nationshadratifiedtheCISG,representingalargebreadth

oftradingnations(Wikipedia,2016).SinceIncoterms®rulesindicateaprecisedelivery

pointandvariousseller-to-buyerprocedures,theymayoverride,inapositiveway,

46

manyaspectsofArticle31oftheCISG(Bergami,2011).

LiteraturealsosuggestscommonIncoterms®usageerrors.Asmentionedby

Reynolds(2010)inanon-academicbook,thesemistakescanleadtomisunderstandings.

Muchoftheevidenceofcommonusageerrorisanecdotal(Stapletonetal.,2014a).

Stapletonetal.(2014a)suggestthatshippersmayuseless-than-optimalIncoterms®

strategiescreatedthroughalackofknowledgeofvulnerabilitiesandsloppy

implementations.Theyalsomentionthattradersare“creaturesofhabit”andmany

timesrepeatedlymakethesameIncoterms®usageerrorsleadingtopreventablerisk.

Bergamioffersasimilarsentiment“therearesignificantproblemsingettingtradersto

changefromtheestablishedroutinestomoreappropriateandcorrectuseof

Incoterms”(2012,p.37).

Stapletonetal.(2014a)listsixcommonusageerrorsasfollows:

1. UsingFOBorotherseaandinlandwaterwayIncoterms®forcontainerized

transport.

2. UsingIncoterms®ruleswithoutclearlyspecifyingageographicplace.

3. NotadoptingtoarecentIncoterms®ruleversion,suchasIncoterms®

2000/2010.

4. BelievingthatusingIncoterms®rulesleadstoalegalcontractofsale.

5. BuyersmisunderstandingthedeliveryandriskpointswhenusingCFR.

6. BuyersandSellersintheU.S.misunderstandingloopholesintheCarriageof

GoodsbySeaAct,orCOGSA,of1936.

47

Stapletonetal.(2014b)addothercommonusageerrors.

1. “Ship’srail”asatransferpointwaseliminatedinIncoterms2010.

2. ProblemsarecreatedwhenusingFOBwithdocumentarylettersofcredit(DLC).

3. Bankinginstitutionregulationsoftenrequiredifferentdutiesofshippers.

Stapleton(2014)andStapletonetal.(2014b)alsogointomoredetailsbeyondwhat

hasalreadybeenmentionedaboutFOB’sinappropriateuse.Forexample,theycitethe

widespread“naked”FOB(i.e.notfollowedbyaportname)useonAlibaba.com.

Additionally,theymentionthedistinctionbetweenFCA’s“loading,”whichisconsistent

withcontainerizedortruckfreightofthegoods,andFOB’s“placing,”whichisconsistent

withbreak-bulkfreightofthegoods.McKinnon(2014)alsoindicatesthesubstantial

importerandexporterinappropriateuseofFOB(andCIF,CFR,FAS)forcontainerized

freight.Bergami(2013)foundthatbankingpracticesmayplacerequirementsupon

sellersthatarecontrarytotheIncoterms®rules.Supportingthisfinding,Roos(2011),

althoughnotinanacademicbook,foundthatbanksplacesecondaryimportanceon

Incoterms®,andU.S.Customsdoesnotrecognizethem.Glitz(2011)reviewedcourt

casesinBrazilandfoundthatcourtsmayeventuallyprovide“thecustomary

interpretation”oftheshippinganddeliverytermsusedbytraders,asBraziliandoctrine

andjurisprudencemaybeunfamiliarwithIncoterms®rules.

Zhai(2013)investigatesIncoterms®ruleinfluenceintheP.R.ofChina’sdomestic

trade.Indoingso,Zhai(2013)providesanexampleofanIncoterms®errorthatoccurred

inAugust2004betweenacandleproducerinChangsha,HunanProvince,China(seller)

48

andawholesalerinYinchuan,QinghaiProvince,China(buyer).Thepartiesagreedtoa

contractfor200cartonsfor20,000YuanwithanOctober2004delivery,buttheplaceof

deliverywasnotclearlystated.Thesellertransported200cartonsinSeptemberviarail,

butuponbuyerinspection,60cartonshadbecomedeformedduetoheatdamage.The

buyerpaidthesellershort,andthecasewenttocourt,whichprovidedtwofindings.

First,thesellerisresponsible,asitdidnotfulfillthe200cartonscontract.Second,the

carriercausedtheissue,sothesellerisnotresponsible,andthebuyerowesthe

remainingamount.Theverdictbeyondtheseopinionsisnotclear.Zhaiexclaimsthat

“noriskpointinthecontractistheunforgivableerror”andthatIncoterms®impacton

China’sdomesticgoodtradeis“landmark”(Zhai,2013,p.13).

Kumar(2010)suggestsswitchingfromFOBtoFCAIncoterms®inordertoreduce

freightcostsforaglobalretailsupplychain.ThebenefitofFCAisgeneratedbycloser

portroutings,duetoBuyer’sandnotSeller’spreferenceofport,andareductioninduty

toBuyer.Interestingly,KumardescribesIncoterms®as“aseriesofsalestermsusedby

businessesthroughouttheworldprimarilytofacilitateeasiertransactionsin

internationaltradebyclearlydefiningtheterms,conditions,transactioncosts,and

ownership/transferofgoodsinatransaction”(2010,p.52)Whiletheoverallbenefit

(reducedU.S.Customsduty,moreflexiblelogisticsrouting,greaterretailerlogistics

control,andthepotentialtoleveragepreferentialU.S.importerstatus)isaccurate,

Kumar(2010)makesacommonIncoterms®errorbystatingthattheIncoterms®

indicateownershiptransfer,whiletheICCclearlystatesthatIncoterms®donotindicate

ownershiptransfer(ICC,2010).

49

McKinnon(2014)examinestheinfluencethatshipperscanhaveoncarbon

emissionsfromthedeep-seacontainersupplychain.Indoingso,McKinnonsurveys34

largeUnitedKingdomshipperswithsupplementedfocusgroupdiscussionsand

interviewsofkeydeep-seacontainersupplychainstakeholders.Oneitemexploredis

thechoiceoftradeterms,whicharenotedasIncoterms®.McKinnonconcludesthat“it

isnotknowntowhatextentthechoiceofIncoterms®iscurrentlyinfluencedby

environmentalconsiderations”(McKinnon,2014,p.16).Whilenotpointedoutinthe

article,thearticledidfindsubstantialimporterandexporterinappropriateuseofsea

andinlandwaterwayIncoterms®rules(CIF,CFR,FAS,andFOB)forcontainerizedfreight.

Yao-HuaandThoen(2000)indicatethatelectroniccommerce,doingbusinessvia

electronicnetworks,hasstartedtoreplacepaper-basedtradeasitrelatestoB2B.They

acknowledgetheimportanceofIncoterms®inthesetransactionsand,most

appropriately,findthat“differencesbetweenIncotermscanbeverysubtle.”They

mentionthatthenegotiationprocessbetweenBuyerandSellerintheirdetermination

thatselectingtheoptimalIncoterm®isabarrierininternationaltrade“becauseit

requiresanexpertknowledgeaboutIncoterms®thatmostsmall-andmedium-sized

companiescannotafford”(2000,p.391).WhileIncoterms®guidesandbooksmaybe

useful,Yao-HuaandThoenobserve,“itstillrequiresaconsiderableefforttofamiliarize

oneselfwiththecontent”(2000,p.391).Accordingly,theauthorsnotethat“when

negotiatingthedeliverytermsofacontracton-lineitwouldbeveryhelpfulwhenthe

negotiatorcouldconsultanon-lineautomatedexpertsystemthatgivessome

explanationaboutthemeaningofthespecificdeliverytermsproposedinthecontract”

50

(2000,p.390).Therefore,Yao-HuaandThoendevisedaProlog-based“INCotermsAdvise

System”(INCAS)togiveusersadviceontheIncoterms®(2000).

Inthe“Training”category,HolleyandHaynes(2003)devisedamultimediatool

toassistinlearningIncoterms®contentrelatedtotheInternationalPurchasingmodule

oftheBusinessOperationsManagementundergraduatedegreeofferedbytheBusiness

SchoolattheUniversityofNorthLondonandforpart-timeprofessionalstudents

preparingfortheCharteredInstituteofPurchasingandSupply(CIPS)examination.

Withinthiscontext,HolleyandHaynesidentifiedproblemsassociatedwithteachingand

learningIncoterms®includingitsperceiveddullness,lessperceivedvaluebystudents

comparedtootherbusinessknowledge,littleretentionofcontent,perceivedlimited

applicabilityofIncoterms®bystudents,noavailabletrainingvideos,onlybrief

explanationsavailableonline,andtherequirementtobuytheIncoterms®bookforin-

depthknowledge.WhileHolleyandHaynesfoundthattheirmultimediaIncoterms®

trainingtoolincreasedstudentlearning,theyalsoobservedthatstudentsstillrequireda

hardcopyofIncoterms®information.(2003)

SimilartoHolleyandHaynes,Kocketal.(2008)testedweb-basedlearningfor

Incoterms®.Humorously,theirtestsusedweb-basedsimulatedthreats,suchasa

pictureofasnakeinastrikingposition,tostimulateusers’increasedlearningof

Incoterms®,whichwereinferredtobeadullsubject.Thestudyparticipants,whohad

nopriorIncoterms®knowledge,tested28%betterwhentheyreceivedthethreat

stimuli(2008).

51

Interestingly,fewarticlessuggestfutureresearchdirections.Stapletonand

Saulnier(1999,2001)suggestedthatfutureresearchshouldinvestigatehowIncoterms®

influenceinternationaltradeandstrategybetweenthebuyerandsellerdyad,how

variousIncoterms®influencebuyerandsellerdyadicshippingpractices,andhow

transportationprovidersreacttovariousIncoterms®use.

Bergamiadvocateddiscoveryofanyproblemsexperiencedwithinindustryand

whetherornottheseproblemswerethesamegloballyorratherlocalizedtospecific

geographicareasorindustries,rightfullypointingoutthatsuchresearchcannotbe

conducteduntilthemostrecentversionofIncoterms®ruleshavebeenusedfortwoto

threeyears(2012).Bergamisuggestedthatfutureresearchopportunitiesexistin

studyingthepowerrelationshipsbetweenbanksandtraders,inconductingresearch

throughoutmanyindustriesandcountriesforenrichingdataandrigorousanalysis,and

intheinfluencethatbankscanhaveoncontractsincludingtheadditionalcoststhat

exportersmayface(2013).

Stapletonetal.proposethatfutureresearchshouldcreateanexpertsystemto

betterguideBuyersandSellersinappropriateIncoterms®use.Theyrecommendthat

thesystembegroundedinTransactionCostEconomicswithGameTheorymechanisms

(2014a).

52

2.5MIXEDMETHODSRESEARCH

2.5.1Definition

Mixedmethodsresearchisanincreasinglychosenareaofmethodologyformany

researchersanddisciplines(Miller&Cameron,2011;Cameron&Molina-Azorin,2014).

Nosingle,widelyaccepteddefinitionofmixedmethodsresearchexists,andmany

researchersprovidevariousdefinitions(Creswelletal.,2003;BurkeJohnson&

Onwuegbuzie,2004;JournalofMixedMethodsResearch,2006;Creswell&PlanoClark,

2007;Thurstonetal.,2008;Teddlie&Tashakkori,2010;Davisetal.,2011;Cameron&

Molina-Azorin,2014).Creswelletal.definemixedmethodsresearchas“thecollection

ofanalysisofbothquantitativeandqualitativedatainasinglestudyinwhichdataare

collectedconcurrentlyorsequentially,aregivenapriority,andinvolvetheintegrationof

thedataatoneormorestagesintheprocessofresearch”(2003,p.212).BurkeJohnson

&Onwuegbuzie(2004)definemixedmethodsresearchformallyas“theclassof

researchwheretheresearchermixesorcombinesquantitativeandqualitativeresearch

techniques,methods,approaches,conceptsorlanguageintoasinglestudy”(2004).

CameronandMolina-Azorin(2014)recallthattheJournalofMixedMethodsResearch,

initscallforpapers,specifiedmixedmethodsas“researchinwhichtheinvestigator

collects,analyzes,mixes,anddrawsinferencesfrombothquantitativeandqualitative

datainasinglestudyoraprogramofinquiry”(2006).CreswellandPlanoClarkstated

that,

53

Mixedmethodsresearchisaresearchdesignwithphilosophicalassumptionsas

wellasmethodsofinquiry.Asamethodology,itinvolvesphilosophical

assumptionsthatguidethedirectionofthecollectionandanalysisofdataand

themixtureofqualitativeandquantitativedatainasinglestudyoraseriesof

studies.Itscentralpremiseisthattheuseofquantitativeandqualitative

approachesincombinationprovidesabetterunderstandingofresearch

problemsthaneitherapproachalone.(2007,p.5)

AsnotedbyCameronandMolina-Azorin(2014a),Thurstonetal.statethat

“mixedmethodsstudiescaneithercombinemethodsfromdifferentparadigmsoruse

multiplemethodswithinthesameparadigm,ormultiplestrategieswithinmethods”

(2008,p.3).Whereas,MillerandCameron(2011)presentTeddlieandTashakkori’s

(2010)definitionofmixedmethodsmethodologyas“thebroadinquirylogicthatguides

theselectionofspecificmethodsandthatisinformedbyconceptualpositionscommon

tomixedmethodspractitioners(e.g.,therejectionof‘either-or’choicesatalllevelsof

theresearchprocess”(2010,p.5).MillerandCamerondistinguishtheMMRapproach

toconductingresearchfromthatpracticedineitherthequantitativeorqualitative

approach(2011).

Mixedmethodsresearchisnottobeconfusedwithmultiplemethodsresearch.

Davisetal.helpclarifythat“multiplemethodsstudiesmayemploytwoormore

qualitativemethods,twoormorequantitativemethods,oracombinationofqualitative

andquantitativemethodsinwhatiscalledamixedmethodsapproach”(2011,p.468).

54

Miller&Cameron(2011)alsoattempttoclarifythedifferencesbycitingthe

InternationalJournalofMultipleResearchApproachescallforpapersbyLeechet.al

(2008),whichstated,

Mixedmethodologiesisdistinguishedfrommultiplemethodologies,wherein

mixedmethodologiesreferstoapproachesinwhichquantitativeandqualitative

researchtechniquesareintegratedintoasinglestudy,whereasmultiple

methodologiesrefertoapproachesinwhichmorethanoneresearchmethodor

datacollectionandanalysistechnique(includingtwoormoremethodswithin

thesameparadigm)isusedtoaddressresearchquestions.(2011,p.389)

Bysimplifyingtheoverlappingcharacterizationsfromabove,mixedmethods

researchisdefinedhereastheuseofbothquantitativeandqualitativeresearchina

singlestudy.

2.5.2History

Hansonetal.statethat“thehistoricalevolutionofmixedmethodsresearchhas

notbeentracedcompletelybyanyoneauthororsource,althoughDatta(1994)and

TeddlieandTashakkori(1998,2003)haveidentifiedmanyofthemajordevelopmental

milestones”(2005,p.225).Themethodofmultipledatacollectionistracedbackto

earlysocialscienceresearch(Hansonetal.,2005).AsshowninHansonetal.(2005),the

CampbellandFiske(1959)validationstudyofpsychologicaltraitsbroughtmultipledata

collectionmethodsintothelimelight.Althoughnotpuremixedmethodsasdefined

above(multiplequantitativedatawereused),thestudyencouragedmultiplemethods

55

andformsofdatawithinasinglestudyandhence,influencedresearchers(Sieber,1973;

Hansonetal.,2005).Later,theterm,triangulation,lentfromnavalsciencesignifyingthe

useofmultiplereferencepointstouncoveranobject’sexactposition,wasusedto

supportthecomplementarymethodologyofusingbothquantitativeandqualitative

datatoexploreaphenomenon’sexactnature(Denzin,1978;Jick,1979;Hansonetal.,

2005;Davisetal.,2011).Theuseofbothquantitativeandqualitativedatacould

unearth“someuniquevariance”thatcouldotherwisebeoverlookedbyanyone

particularapproach(Jick,1979;Hansonetal.,2005).

AsshowninbothMillerandCameron(2011)andCameronandMolina-Azorin

(2014),CreswellandPlanoClark(2007)alsoplottedabriefhistoryofmixedmethods

researchandfoundfour,sometimesoverlappingtimeperiodsofmixedmethods

researchevolution.Theseare1)theformativeperiod(1950sto1980s);2)theparadigm

debateperiod(late1970sto1990s);3)theproceduraldevelopmentperiod(late1980s

to2000);and4)theadvocacyasaseparatedesignperiod(2000+).

Mixedmethodsresearchhasbecomea“viablealternative”asasupplemental

researchmethod(Hansonetal.,2005)aswellasastand-alone,legitimateresearch

design(Greeneetal.,1989;Tashakkori&Teddlie,1998,2003,2010;Creswell,2002,

2003;Hansonetal.,2005),andprominentmixedmethodsresearchscholarshave

emerged(Greene&Caracelli,1997;Mingers&Gill,1997;Tashakkori&Teddlie,1998;

2003,2010;Creswell,2003;Hansonetal.,2005;Mertens,2005;Creswell&PlanoClark,

2007;Bazeley,2008;Bergman,2008;Bryman,2008;Miller&Cameron,2011;Cameron

56

&Molina-Azorin,2014).Beyondacademicjournalpublications(Miller&Cameron,2011;

Cameron&Molina-Azorin,2014),mixedmethodsresearchinteresthasalsospilledover

tochapterswithinresearchtexts(McMillan&Schumacher,2006;Sheperisetal.,2010),

andtoentiretextbooks(Cook&Reichardt,1979;Bryman,1988;Brewer&Hunter,1989;

Reichardt&Rallis,1994;Greene&Caracelli,1997;Newman&Benz,1998;Tashakkori&

Teddlie,1998,2003,2010;Bamberger,2000;Creswell,2002,2003;Toddetal.,

2004;,Creswell&PlanoClark,2007;Greene,2007;Bergman,2008;Andrew&Halcomb,

2009;Morse&Niehaus,2009;NagyHesse-Biber,2010).Specificacademicjournalshave

alsoemerged,suchastheJournalofMixedMethodsResearch,theInternationalJournal

ofMultipleResearchApproaches,theInternationalJournalofMixedMethodsinApplied

BusinessandPolicyResearch,QualitativeSocialResearch,andtheFieldMethodsand

QuantityandQuality(Hansonetal.2005,Miller&Cameron2011,Cameron&Molina-

Azorin2014).Practicalmixedmethodresearchguideshavealsoappeared(Hansonetal.

2005,Miller&Cameron2011,Cameron&Molina-Azorin2014).TheHandbookofMixed

MethodsinSocialandBehavioralResearch,currentlyinitssecondedition(Tashakkori&

Teddlie,2003,2010),isnotedasthe“mostcomprehensivepublicationofmixed

methodstodate”(Miller&Cameron2011,Cameron&Molina-Azorin2014).Specialized

conferencesandSpecialInterestGroups(SIGs)onmixedmethodsresearcharealso

emergingacrossdisciplines(Miller&Cameron2011).

2.5.3PhilosophicalFoundation

Afewauthorshaveendeavoredtodescribethephilosophicalfoundationfor

57

mixedmethodsresearch.TheseeffortsstartwithLee’s(1991)proposalforaframework

integratingpositivistmethods,suchasinferentialstatistics,withinterpretive

approaches,suchascasestudies.Leerefutedthenotionthatpositivistandinterpretive

approachesareopposedandirreconcilable,demonstratinginfacthowthesetwo

approachescouldbemutuallysupportiveratherthanmutuallyexclusive(1991).

Figure2.1-Lee’s(1991)framework

TheLeeframework,whichisdescribedverbatimbelow,containsthreelevelsof

understanding.

1. Thesubjectiveunderstanding,whichconsistsoftheeverydaymeanings

andeverydaycommonsensewithwhichtheobservedhumansubjects

seethemselvesandtheorganizationalworldaroundthem,

2. Theinterpretiveunderstanding,whichconsistsoftheorganizational

researcher’sreadingorinterpretationofthesubjectiveunderstanding,

Theinterpretiveunderstanding

Thepositivistunderstanding

Thesubjectiveunderstanding

58

developed,withthehelpofsuchmethodsasthoseofphenomenological

sociology,hermeneutics,ethnography,andparticipant-observation,and

3. Thepositivistunderstanding,whichconsistsoftheoreticalpropositions,

manipulatedaccordingto

a. Therulesofformallogic

b. Therulesofhypothetico-deductivelogic

sothattheresultingtheorysatisfiestherequirementsof

i. falsifiability

ii. logicallyconsistency

iii. relativeexplanatorypower

iv. survival.

Lee,1991,p.364

Lee’s(1991)frameworkcreatesatriangle,whichisdepictedinFigure2.1.Arrow

1goesfromsubjectiveunderstandingtotheinterpretiveunderstanding,whileArrow2

goesinthereversedirection.Arrow3goesfrominterpretiveunderstandingtothe

positivistunderstanding.Arrow4goesinreverseofArrow3.Arrow5goesfrom

positivistunderstandingtosubjectiveunderstanding.Arrow6travelsthereverseof

Arrow5,fromsubjectiveunderstandingtopositivistunderstanding.IncomparingLee’s

(1991)framework,Arrow1showsthat“subjectiveunderstandingprovidesthebasison

whichtodevelop[the]interpretiveunderstanding”(Lee,1991,p.351).Lee’sdirective

“totestthevalidityoftheresultinginterpretiveunderstanding,theresearchermay

59

referbacktothesubjectiveunderstanding”(p.352)isdepictedbyArrow2.WithArrow

3,“interpretiveunderstanding,oncejudgedtobevalid,maythenprovidethebasison

whichtodevelop[the]positivistunderstanding”(p.352).Leestipulatesthreeteststhat

wouldresultinpositivistunderstanding.Forthefirsttest,followingArrow4,“the

researcherrefersbacktothesubjectivemeaningsearlierrecordedintheinterpretive

understanding,[..]whichwouldthenserveasthepointofcomparisonforjudgingthe

subjectivemeaningscontainedinthepositivistunderstanding”(p.352),which

consequentlyfollowsArrow3.

Thirteenyearslater,BurkeJohnsonandOnwuegbuzie(2004),whenreferringto

mixedmethodsresearch,statethat,“philosophically,itisthe‘thirdwave’orthird

researchmovement,amovementthatmovespasttheparadigmwarsbyofferinga

logicalandpracticalalternative”(p.17).Theyfurtherexpandbysayingthatmixed

methodsresearch“isanattempttolegitimatetheuseofmultipleapproachesin

answeringresearchquestions,ratherthanrestrictingorconstrainingresearchers’

choices(i.e.,itrejectsdogmatism)”(p.17).Theygoontopostulatethat,“mixed

methodsresearchshould,instead(atthistime),useamethodandphilosophythat

attempttofittogethertheinsightsprovidedbyqualitativeandquantitativeresearch

intoaworkablesolution”(p.16).Theysuggestthatpragmatismwillnotendthe

philosophicaldebatesnorshouldthedebatesend.However,theyagreewithothersthat

forthemixedmethodsresearchmovement,thediscussionofpragmatismwouldbe

productive.Theyfurtherexclaimthat,“werejectanincompatibilist,either/orapproach

toparadigmselectionandwerecommendamorepluralisticorcompatibilistapproach”

60

(p.17).

BurkeJohnson&Onwuegbuzie(2004)“endorsepragmatismasaphilosophythat

canhelptobuildbridgesbetweenconflictingphilosophies,pragmatism,likeallcurrent

philosophies,hassomeshortcomings”(p.17).Someofthepragmaticshortcomings

mentionedare:1)Receivinglessattentionthanappliedresearch,whichmayappearto

producemoreimmediateandpracticalresults;2)Promotingincrementalchangerather

thanmorefundamental,structural,orrevolutionarychangeinsociety;3)Failingto

provideasatisfactoryanswertothequestion“Forwhomisapragmaticsolution

useful?”(Mertens,2003);4)Creatingambiguityinworkabilityorusefulnessunlessthe

researcherexplicitlyaddressesthem;5)Enduringdifficultyindealingwiththeoriesof

truthusefulnesscases;6)Failingasasolution(logical,asopposedwithpractical)to

manyphilosophicaldisputes;7)Enduringcompleterejectionbyneo-pragmatists,such

asRortyandpostmodernists,forcorrespondenceoftruthinanyform.BurkeJohnson&

Onwuegbuzie(2004)suggestthatresearchersshouldbe“reflexiveandstrategic”to

avoidpotentialconsequencesofpragmaticweaknessesintheirworks.

FollowingBurkeJohnson&Onwuegbuzie(2004),Hansonetal.(2005)identify

twoitems,paradigm-methodfitand“best”paradigm,thathavearousedconsiderable

debateastothephilosophicalbasisofmixedmethodsresearch.Hansonetal.(2005)

statethattheparadigm–methodfitissuerelatestothequestion,“Dophilosophical

paradigms(e.g.,postpositivism,constructivism)andresearchmethodshavetofit

together?”Thisfirstdebatesurfacedinthe1960sand1970s,whichsawthepopularity

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ofqualitativeresearchincreasealongwithphilosophicaldistinctionsbetweentraditional

postpositivistandnaturalisticresearch.Thiseventuallyledtoaseparationbetween

traditionalinquiryparadigmsandnaturalisticparadigms.Forexample,somehave

arguedthatapostpositivistphilosophicalparadigmshouldonlybecombinedwith

quantitativemethods,andanaturalisticparadigmshouldonlybecombinedwith

qualitativemethods.ReichardtandRallis(1994)referredtoissueasthe“paradigm

debate.”Thisledtotheviewthatmixedmethodsresearchwasincompatiblebecause

nolegitimatefitexistsbetweencertainparadigmsandmethods(Smith,1983).However,

ReichardtandCook(1979)counteredthatcompatibilitydoesexistbetweendifferent

philosophicalparadigmsandmethodsbyarguingthatparadigmsandmethodsarenot

inherentlylinked.Theperspectivestillexiststhatmixedmethodsresearchcanbeused

withinoneresearchstudytakingadvantageofthepositiveaspectsofbothquantitative

findings,suchastherepresentativenessandgeneralizability,andofqualitativefindings,

suchasitsin-depth,contextualnature(Greene&Caracelli,2003).

Hansonetal.(2005)alsoaddressedthe“best”paradigmissuebyaddressingthe

question“Whatphilosophicalparadigmisthebestfoundationformixedmethods

research?”Multipleperspectivesalsoexistforthisquestion(Tashakkori&Teddlie,

2003).Oneviewisthatmixedmethodsresearchintentionallyusescompeting

paradigmsbygivingeachoneequalmeritandfooting.However,Hansonetal.(2005)

suggest“honoringandrespectingthedifferentparadigmaticperspectives”inastudy.

Theyidentifiedsixdifferentmixedmethodsresearchdesigns,andtheirperspective

suggeststhatmixedmethodsresearchbeviewedasa“method”thatallowsresearchers

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tojustifyitsusebyanynumberofphilosophicalfoundations,andhence,the“best”

paradigmisdeterminedbytheresearcherandtheresearchproblemnotthemethod.

Hüttingeretal.(2014)remarksthatMatthyssens(2007)encouragesdisablingthe

methodologicaldividesbydisplayingparadigmatictoleranceandpluralism,hence

advocatingmixedmethodsresearch.

2.5.4Rationale

Buildingontheschemesofothers(Greeneetal.,1989),Bryman(2006)identifies

18differentrationalesforutilizingmixedmethodsresearch.TheyarelistedinTable2.4.

Table2.4-Rationalesforutilizingmixedmethodsresearch

1) Triangulationorgreatervalidity–referstothetraditionalviewthatquantitativeandqualitativeresearchmightbecombinedtotriangulatefindings,sothattheymaybemutuallycorroborated.

2) Offset–referstothesuggestionthattheresearchmethodsassociatedwithbothquantitativeandqualitativeresearchhavetheirownstrengthsandweaknesses,sothatcombiningthemallowstheresearchertooffsettheirweaknessesbydrawingonthestrengthsofboth.

3) Completeness–the“notionthattheresearchercanbringtogetheramorecomprehensiveaccountoftheareaofinterestifbothquantitativeandqualitativeresearchmethodsareemployed.

4) Process–quantitativeresearchprovidesanaccountofstructuresinsociallife,butqualitativeresearchprovides[a]senseofprocess.

5) Differentresearchquestions–Theargumentthatquantitativeandqualitativeresearchcaneachanswerdifferentresearchquestionsbutthisitemwascodedonlyifauthorsexplicitlystatedthattheyweredoingthis.

6) Explanation–onemethodisusedtohelpexplainfindingsgeneratedbytheother.

7) Unexpectedresults–quantitativeandqualitativeresearchcanbefruitfullycombinedtogeneratesurprisingresults.

8) Instrumentdevelopment–qualitativeresearchcanbeemployedtodevelopquantitativeinstruments,suchasquestionnairesandscaleitems,sothatbetterwordingormorecomprehensiveclosedanswerscanbegenerated.

9) Sampling–onemethodcanbeusedtofacilitatethesamplingofrespondentsorcases.

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10) Credibility–employingbothapproachesenhancestheintegrityoffindings.11) Context–thecombinationofresearchmethodscanprovidecontextual

understandingcoupledwitheithergeneralizable,externallyvalidfindingsorbroadrelationshipsamongvariables.

12) Illustration–qualitativedataisusedtoillustratequantitativefindings,oftenreferredtoasputting”meatonthebones”of”dry”quantitativefindings.

13) Utilityorimprovingtheusefulnessoffindings–combiningthetwoapproachesismoreusefultopractitioners,asuggestion,whichismorelikelytobeprominentamongarticleswithanappliedfocus.

14) Confirmanddiscover–qualitativedataisusedtogeneratehypotheses,whilequantitativeresearchisusedtotestthemwithinasingleproject.

15) Diversityofviews–thisincludestwoslightlydifferentrationales–namely,combiningresearchers’andparticipants’perspectivesthroughquantitativeandqualitativeresearchrespectively,anduncoveringrelationshipsamongvariablesthroughquantitativeresearchwhilealsorevealingmeaningsamongresearchparticipantsthroughqualitativeresearch.

16) Enhancementorbuildinguponquantitative/qualitativefindings–quantitativeorqualitativefindingscanbeaugmentedbygatheringdatausingaqualitativeorquantitativeresearchapproach.

17) Other/unclear18) Notstated

Bryman,2006,p.105-107

Bryman(2006)suggeststhatresearchersclearlyindicatethegroundsformixed

methodsresearchuse.However,thereisanunderstandingthatresultsmaybe

unpredictable,andhence,actualpracticemayvaryfromtherationalegiven(Bryman,

2006).

2.5.5ComparisonofQualitative,Quantitative,andMixedMethodsResearch

Morgansumsupthereasonforusingmixedmethodsverywellbystating,

“virtuallyeverydiscussionofthereasonsforcombiningqualitativeandquantitative

methodsbeginswiththerecognitionthatdifferentmethodshavedifferentstrengths”

(1998,p.362).BurkeJohnsonandOnwuegbuzie(2004)provideausefulcomparisonof

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qualitative,quantitative,andmixedmethodsresearch.Foreffectivemixedmethods

research,theysuggestthatresearchersconsideralloftherelevantcharacteristicsof

quantitativeandqualitativeresearch.Theyconsiderthemajorcharacteristicsof

quantitativeresearchtobefocused“ondeduction,confirmation,theory/hypothesis

testing,explanation,prediction,standardizeddatacollection,andstatisticalanalysis”

(BurkeJohnson&Onwuegbuzie,2004,p.18).Contrastingly,qualitativeresearchfocuses

on“induction,discovery,exploration,theory/hypothesisgeneration,theresearcheras

theprimary“instrument”ofdatacollection,andqualitativeanalysis”(BurkeJohnson&

Onwuegbuzie,2004,p.18).

BurkeJohnsonandOnwuegbuzie(2004)listthestrengthsandweaknessesfor

quantitativeandqualitativeresearchmethods.Thestrengthsandweaknessesof

quantitativeresearchmethodsarelistedinTable2.5.

Table2.5:StrengthsandWeaknessesofQuantitativeResearch

Strengths1)Testingandvalidatingalreadyconstructedtheoriesabouthow(andtoalesserdegree,why)phenomenaoccur.2)Testinghypothesesthatareconstructedbeforethedataarecollected.Cangeneralizeresearchfindingswhenthedataarebasedonrandomsamplesofsufficientsize.3)Cangeneralizearesearchfindingwhenithasbeenreplicatedonmanydifferentpopulationsandsubpopulations.4)Usefulforobtainingdatathatallowquantitativepredictionstobemade.5)Theresearchermayconstructasituationthateliminatestheconfoundinginfluenceofmanyvariables,allowingonetomorecrediblyassesscause-and-effectrelationships.6)Datacollectionusingsomequantitativemethodsisrelativelyquick(e.g.,telephoneinterviews).7)Providesprecise,quantitative,numericaldata.8)Dataanalysisisrelativelylesstimeconsuming(usingstatisticalsoftware).9)Theresearchresultsarerelativelyindependentoftheresearcher(e.g.,effect

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size,statisticalsignificance).10)Itmayhavehighercredibilitywithmanypeopleinpower(e.g.,administrators,politicians,peoplewhofundprograms).11)Itisusefulforstudyinglargenumbersofpeople.

Weaknesses1)Theresearcher’scategoriesthatareusedmaynotreflectlocalconstituencies’understandings.2)Theresearcher’stheoriesthatareusedmaynotreflectlocalconstituencies’understandings.3)Theresearchermaymissoutonphenomenaoccurringbecauseofthefocusontheoryorhypothesistestingratherthanontheoryorhypothesisgeneration(calledtheconfirmationbias).4)Knowledgeproducedmaybetooabstractandgeneralfordirectapplicationtospecificlocalsituations,contexts,andindividuals.

(BurkeJohnson&Onwuebuzie,2004,p.19)

BurkeJohnsonandOnwuegbuziealsoclarifythestrengthsandweaknessesfor

qualitativeresearchmethods.TheseareshownbelowinTable2.6.

Table2.6-StrengthsandWeaknessesofQualitativeResearch

Strengths1)Thedataarebasedontheparticipants’owncategoriesofmeaning.2)Itisusefulforstudyingalimitednumberofcasesindepth.3)Itisusefulfordescribingcomplexphenomena.4)Providesindividualcaseinformation.5)Canconductcross-casecomparisonsandanalysis.6)Providesunderstandinganddescriptionofpeople’spersonalexperiencesofphenomena(i.e.,the“emic”orinsider’sviewpoint).7)Candescribe,inrichdetail,phenomenaastheyaresituatedandembeddedinlocalcontexts.8)Theresearcheridentifiescontextualandsettingfactorsastheyrelatetothephenomenonofinterest.9)Theresearchercanstudydynamicprocesses(i.e.,documentingsequentialpatternsandchange).10)Theresearchercanusetheprimarilyqualitativemethodof“groundedtheory”togenerateinductivelyatentativebutexplanatorytheoryaboutaphenomenon.11)Candeterminehowparticipantsinterpret“constructs”(e.g.,self-esteem,IQ).12)Dataareusuallycollectedinnaturalisticsettingsinqualitativeresearch.

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13)Qualitativeapproachesareresponsivetolocalsituations,conditions,andstakeholders’needs.14)Qualitativeresearchersareresponsivetochangesthatoccurduringtheconductofastudy(especiallyduringextendedfieldwork)andmayshiftthefocusoftheirstudiesasaresult.15)Qualitativedatainthewordsandcategoriesofparticipantslendthemselvestoexploringhowandwhyphenomenaoccur.16)Onecanuseanimportantcasetodemonstratevividlyaphenomenontothereadersofareport.17)Determineidiographiccausation(i.e.,determinationofcausesofaparticularevent).

Weaknesses1)Knowledgeproducedmaynotgeneralizetootherpeopleorothersettings(i.e.,findingsmaybeuniquetotherelativelyfewpeopleincludedintheresearchstudy).2)Itisdifficulttomakequantitativepredictions.3)Itismoredifficulttotesthypothesesandtheories.4)Itmayhavelowercredibilitywithsomeadministratorsandcommissionersofprograms.5)Itgenerallytakesmoretimetocollectthedatawhencomparedtoquantitativeresearch.6)Dataanalysisisoftentimeconsuming.7)Theresultsaremoreeasilyinfluencedbytheresearcher’spersonalbiasesandidiosyncrasies.


Byunderstandingthestrengthsandweaknessesofquantitativeandqualitative

researchmethods,theresearcherispositionedtomixmethods(Johnson&Turner,

2003;BurkeJohnson&Onwuegbuzie,2004,).Thisiscalledthe“fundamentalprinciple

ofmixedresearch”byJohnsonandTurner(2003).Thefundamentalprincipleofmixed

researchservesasamajorjustificationformixedmethodsresearchprovidingasuperior

studycomparedtomonomethods(BurkeJohnson&Onwuegbuzie,2004).

BurkeJohnsonandOnwuegbuzie(2004)alsoprovideanexcellentsummaryof

thestrengthsandweaknessesofmixedmethodsresearch,andthesearelistedinTable

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2.7.

Table2.7-StrengthsandWeaknessesofMixedMethodsResearch

Strengths1)Words,pictures,andnarrativecanbeusedtoaddmeaningtonumbers.2)Numberscanbeusedtoaddprecisiontowords,pictures,andnarrative.3)Canprovidequantitativeandqualitativeresearchstrengths(i.e.,seestrengthslistedinTables3and4).Researchercangenerateandtestagroundedtheory.4)Cananswerabroaderandmorecompleterangeofresearchquestionsbecausetheresearcherisnotconfinedtoasinglemethodorapproach.5)Thespecificmixedresearchdesignsdiscussedinthisarticlehavespecificstrengthsandweaknessesthatshouldbeconsidered(e.g.,inatwo-stagesequentialdesign,theStage1resultscanbeusedtodevelopandinformthepurposeanddesignoftheStage2component).6)Aresearchercanusethestrengthsofanadditionalmethodtoovercometheweaknessesinanothermethodbyusingbothinaresearchstudy.7)Canprovidestrongerevidenceforaconclusionthroughconvergenceandcorroborationoffindings.8)Canaddinsightsandunderstandingthatmightbemissedwhenonlyasinglemethodisused.9)Canbeusedtoincreasethegeneralizabilityoftheresults.10)Qualitativeandquantitativeresearchusedtogetherproducemorecompleteknowledgenecessarytoinformtheoryandpractice.

Weaknesses

1)Canbedifficultforasingleresearchertocarryoutbothqualitativeandquantitativeresearch,especiallyiftwoormoreapproachesareexpectedtobeusedconcurrently;itmayrequirearesearchteam.2)Researcherhastolearnaboutmultiplemethodsandapproachesandunderstandhowtomixthemappropriately.3)Methodologicalpuristscontendthatoneshouldalwaysworkwithineitheraqualitativeoraquantitativeparadigm.4)Moreexpensive.5)Moretimeconsuming.6)Someofthedetailsofmixedresearchremaintobeworkedoutfullybyresearchmethodologists(e.g.,problemsofparadigmmixing,howtoqualitativelyanalyzequantitativedata,howtointerpretconflictingresults).


Theintentofthislengthyreviewistoaidresearchersintheirdecisionaboutwhetherto

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usemixedmethodsinaresearchstudy.

2.5.6BasicSteps

Researchsuggeststhatsomebasicstepsareneededwhendesigningamixed

methodsstudy.Hansonetal.observesthreebasicsteps.First,theysuggestdeciding

aboutwhethertouseanexplicitparadigm.Theirsecondstepinvolvesimplementation

andprioritizationofdatacollection.Thelaststepisadecisiononthepointatwhich

dataanalysisandintegrationwilloccur(2005).Evenmoresimplistically,BurkeJohnson

andOnwuegbuziebelievethatresearchersshouldmakejusttwoprimarydecisions:

whethertheresearcheroperateswithonedominantparadigmandwhetherthe

researcherconductsphasesconcurrentlyorsequentially(2004).

2.5.7ResearchDesigns

Mixedmethodsresearchdesignscantakevariousforms.Sincemixedmethod

researchisrelativelynew,designtypologiesarecontinuallybeingdeveloped(Hansonet

al.,2005).Someofthemoreprominentdesignsaredescribedbelow.

OneexamplecomesfromTashakkoriandTeddlie(1998),whoobservedfour

basicresearchpurposesformixedmethodsresearchasfollows:1)Development–the

useofonestudytoinformasubsequentstudy;2)Initiation–theuseofapreliminary

studytolaunchamainstudy;3)Complementarity–concurrentexaminationofvarious

facetsofaphenomenonthroughtwoormorestudies;4)Interpretation–concurrent

useofasecondstudytoexplainorconfirmtheresultsfromamainstudy.

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AnotherexampleisofferedbyCreswelletal.(2003),whodescribesixprimary

designtypes:threesequential(explanatory,exploratory,transformative)andthree

concurrent(triangulation,nested,transformative).Thedesigntypesvaryaccordingto

“[the]useofanexplicittheoretical/advocacylens,[the]approachtoimplementation

(sequentialorconcurrentdatacollectionprocedures),[the]prioritygiventothe

quantitativeandqualitativedata(equalorunequal),[the]stageatwhichthedataare

analyzedandintegrated(separated,transformed,orconnected),andprocedural

notations”(Hansonetal.,2005,p.228).

Usinguppercaseletterstoindicatehighpriorityandlowercaseforlower

priority,Creswelletal.(2003)alsodescribedsixprimarydesigntypesasfollows:“Qual”

standsforqualitative,and“quan”standsforquantitative.1)Sequentialexplanatoryis

Quanàqual.2)SequentialexploratoryisQUALàquan.3)Sequentialtransformativeis

anadvocacylenswitheitherQuanàqualorQUALàquan.4)Concurrenttriangulation

isQUAN+QUALleadingtoresults.5)Concurrentnestediseitherqualnestedwithin

QUANorquannestedwithinQUAL.Lastly,6)concurrenttransformativeiseitheran

advocacylenswithQUAN+QUALleadingtoresultsoranadvocacylensQUALàquan

(Creswelletal.,2003).

Athird,moreelaborateexampleisdescribedbyBurkeJohnsonand

Onwuegbuzie(2004).Theirtypologyincorporatesninemixedmethoddesignsusingthe

followingnotations,baseduponMorse(1991).“Qual”and“quan”indicatequalitative

andquantitative,respectively.Aplus-sign“+”standsforconcurrent,andaright-arrow

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“à”standsforsequential.Uppercaseindicateshighpriority,andlowercaseshows

lowerpriority.QUAL+QUANrepresentsaconcurrenttimeorderdecisionandtheequal

statusofparadigmemphasis.QUALàQUANandQUANàQUALrepresenta

sequentialtimeorderdecisionandtheequalstatusofparadigmemphasis.QUAL+quan

andQUAN+qualrepresentaconcurrenttimeorderdecisionandthedominantstatusof

paradigmemphasis.Lastly,QUALàquan,qualàQUAN,QUANàqual,andquanà

QUALareallsequentialtimeorderdecisionsandshowthedominantstatusofparadigm

emphasis.Withthisapproach,theresearchersremark,“onecaneasilycreatemoreuser

specificandmorecomplexdesigns”(p.20)directingmixedmethodsresearchersto

“mindfullycreatedesignsthateffectivelyanswertheirresearchquestions”(p.20).In

usingtheirmatrix,theytellresearcherstodeterminetwoprimaryfactors;1)whether

theresearcheroperateswithonedominantparadigmand2)whetherornotthe

researcherconductsphasesconcurrentlyorsequentially(BurkeJohnson&

Onwuegbuzie,2004).

2.5.8PrevalenceandUseinBusinessResearch

Traditionally,businessresearchhasbeenundertakenquantitativelywiththe

emergingpresenceofqualitativeresearch(Miller&Marchant,2009;Miller&Cameron,

2011).Forexample,CameronandMolina-Azorinconcludethattheoverwhelmingly

dominantmethod,usedin76%oftheempiricalarticlessampledfrompeer-reviewed

journals,isquantitative(2014).Recentlyhowever,mixedmethodsresearchhasbecome

partofbusinessresearchandhaseventakenasignificantroleindoctorallevelbusiness

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research(Miller&Marchant,2009;Miller&Cameron,2011).Ofconcernistheslight

delayintheoveralladoptionofmixedmethodsresearchinbusinessdisciplines

comparedtoothersocialscienceareas(Miller&Cameron,2011).

Fortunately,mixedmethodsresearchhasgainedattentioninbusinessandas

such,prevalenceratestudieshaveemerged(Roccoetal.,2003;Hurmerinta-Peltomaki

&Nummela,2006;Hanson&Grimmer,2007;Bazeley,2008,Molina-Azorin,2008,2009;

Grimmer&Hanson,2009;Molina-Azorin&López-Fernández,2009;Cameron,2011,

Cameron&Molina-Azorin,2014).MillerandCameron(2011)investigatedthesestudies,

andtheyfindthattheprevalenceofmixedmethodsresearchratesrangefrom8%-25%

dependingonthefield.Fromtheirpointofview,thearealacksacknowledgement,and

thisposesabigchallengeforbusinessresearcherswhowanttousemixedmethods.The

empiricalevidenceinMillerandCameron(2011)showsthata“transitionalcreep,”

whichtheydefineas“aperiodicreflectionoftheevolutionofmixedmethodsasathird

methodologicalmovement”(p.398),hasenteredthebusinessdiscipline.Millerand

Cameron(2011)lamenttheimmaturityofthemixedmethodsmovement,asithasnot

yetenteredmainstreamuniversityteaching.However,theyacknowledgethatmixed

methodsresearchisagrowingmethodologychoiceforbusinessdisciplines,andthey

expectwideruseofmixedmethodsinthefuture.AsfoundinHüttingeretal.(2014),

Caddenetal.(2013)statesthatmixedmethodsaregainingimportanceinthefieldof

supplychainmanagement.Thoseinyoungfieldsofstudy,suchaspurchasingandsupply

management,agreethattheyshouldlearnfromadjacentfieldsandcombine

quantitativeandqualitativemethods,whichcouldofferthepotentialforaccelerated

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knowledgegrowth(Tazelaar,2007;Hüttingeretal.,2014).Similarly,asfoundin

Hüttingeretal.(2014),Matthyssens(2007)encouragestheuseofmixedmethodsin

purchasingandsupplymanagementstudies.

2.5.9Recommendations

Hansonetal.(2005)provideseightveryusefulrecommendationsfordesigning,

implementing,andreportingamixedmethodsstudy.ThisissummarizedinTable2.8.

Table2.8-RecommendationsforDesigning,Implementing,andReportingMixedMethodsStudies

• Paycloseconsiderationtotheoretical/paradigmaticissues• Givecarefulconsiderationtodesignandimplementation• Becomefamiliarwithdataanalysisandintegrationstrategiesasthesemayoccur

anypointintime• Workinresearchteamstoprovideexpertiseforbothqualitativeand

quantitativemethods• Usethephrase“mixedmethods”inthestudytitletohelpfocustheresearch• Statetherationaleforusingmixedmethodsintheintroduction• Specifythetypeofmixedmethodsresearchdesigntobeused• Discussthelegitimacyandviabilityofmixedmethodsresearchcandidly

Hansenetal.,2005,p.233

2.6EXPERIMENTS

Experimentsarethetraditional,researchmethodsemployedforinvestigations

ofbuyer-sellerrelationshipslikenegotiation(Mestdagh&Buelens,2003),andthistrend

hascontinued(Buchanetal.,2004;Wolfe&McGinn,2005;Bottometal.,2006;Krause

etal.,2006;Huangetal.,2008;Friend,2010;Thomasetal.,2010;Nairetal.,2011;

Thomas,2013;Özeretal.,2014).Experimentationissuitablefortheorytestingofcause-

and-effectrelationships(Thye,2007;Siemsen,2011;Thomas,2013)whilemaximizing

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controlandassessingcausality(McGrath,1982;Beatty&Ferrell,1998;Thomas,2013).

Unlikeotherresearchapproaches,asfoundinThomasetal.(2010),BeattyandFerrell

statethatexperimentsaretheonlyresearchapproachthatprovides“unequivocal

assessmentofcausality”(1998).Internalvalidityisaconcernwhentestingcausality

(Huangetal.,2008)asiscontroloverinternalvaliditythreats(Cook&Campbell,1979;

Huangetal.,2008).Experimentationiswellmatchedtoovercometheseconcerns

becauseexperimentsallowsdirectmanipulationoftreatmentsbyresearchersto

randomlyassignrespondentstoconditionsandtocontrolforconfoundingfactors

(McGrath,1982;Wacker,1998;Huangetal.2008).

Acommontypeofexperimentaldesignisscenario-basedexperimentation

(Huangetal.,2008;Friend,2010;Thomasetal.,2010;Thomas,2013).Scenario-based

experimentationcanhelptoreducebiases,memorylapses,rationalizationtendencies,

andconsistencyfactors(Greweletal.,2008;Thomasetal.,2010;Thomas,2013).Itis

also“lessthreateningtoparticipantsandallowsresearcherstoexploreinterfirm

relationshipphenomena”(Thomasetal.,2010).

Participantsinexperimentalresearchonbuyer-sellerrelationshipsaregenerally

MBAstudents(Mestdagh&Buelens,2003).ExamplestudiescanbefoundinHuanget

al.(2008),Friend(2010),Nairetal.(2011),Thomasetal.(2010),Thomas(2013),and

Özeretal.(2014).However,theuseofundergraduatestudentsisalsopresentinmany

studies(Buchanetal.,2004;Wolfe&McGinn,2005;Bottometal.,2006;Krauseetal.,

2006).Incontrast,theuseofnon-studentparticipantsisverylimited(Mestdagh&

74

Buelens,2003).MestdaghandBuelensfoundthat“only5%ofstudiesusepracticing

managersasparticipants”(2003),whichtheystateis“notexactlygoodnews”(2003).

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CHAPTER3

METHODOLOGY

3.1INTRODUCTION

Thisstudyusesamixedmethodsresearchapproach,definedhereastheuseof

bothquantitativeandqualitativeresearchinasinglestudy.Byunderstandingthe

strengthsandweaknessesofquantitativeandqualitativeresearchmethods,the

researcherispositionedtomixmethodstherebyprovidingasuperiorstudycompared

tomono-methodresearch(Johnson&Turner,2003;BurkeJohnson&Onwuegbuzie

2004).Byconductingmixedmethodsresearch,hencebecominga“mixed-

methodologist,”researchersarecapableofnotonlyemployingqualitativeand

quantitativemethods,butalsoofintegratingbothmethodstogetherina“third

methodology”(Bazeley,2003,2006;Halcomb&Andrew,2009).Mixedmethods

researchalsoprovidesresearcherstheopportunitytobecreativeinresearch

presentation(Halcomb&Andrew,2009).

UsingthemixedmethodsresearchofBurkeJohnson&Onwuegbuzie(2004),this

studytransactsqualàQUALàQUANviaapilotcasestudyandmultiplecasestudies,

followedbyanexperiment.Thissequentialmixedmethoddesignsupportsmore

compellingfindings(Halcomb&Andrew,2009).Bothcasestudyandexperimental

researchmethodsareappropriateforthe“how”and“why”typeofresearchquestions

(Yin,2014).

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Study1isaqualitativepilotcasestudythatseeksevidenceofoutcomesdueto

logisticsmanagementcommunicationerrors(i.e.Incoterm®usageerrors)withina

purposefulsampleofananonymoussingle,large,internationalcorporationoperatingin

multipleindustrialmarkets.

Study2conductsmultiplequalitativecasestudiesthatexplorehowbuyer-seller

dyadsnegotiateandcommunicatelogisticsmanagementdecisionsandthe

communicationerrorsthatoccurwithinbuyer-sellerdyads.Dyadsaredrawnfroma

purposefulsampleofcaseswhereatleastonedyadicmemberisassociatedwiththe

anonymouslarge,internationalcorporationoperatinginmultipleindustrialmarkets.

Interviewswithbothmembersofeachselecteddyadareconducted.U.S.tonon-U.S.

dyads,U.S.toU.S.dyads,andnon-U.S.tonon-U.S.dyadsareidentified,selected,and

explored.Thisprovidesaholisticviewofglobaldyads.Duetotheexploratory

characteristicsoftheresearchquestion,groundedtheoryisdeemedappropriateto

allowtheflexibilityneededforappropriateexplorationinStudyoneandStudytwo

(Glaser&Strauss,1967;Patton,1990;Eisenhardt,1989;Yin,1989;Pappu&Mundy,

2002;Thomas,2013).Groundedtheoryallowstheorydiscoveryfromsystematically

obtaineddata(Pappu&Mundy,2002).

Study3quantitativelytestshypothesesdevelopedfromanalysisoftheresultsof

Studytwoandseekstofindwaystoimprovethequalityofcommunicationoflogistics

managementdecisionsinbuyer-sellerdyads.Thishypothesistestingisconductedvia

experimentscompletedattheanonymouslarge,internationalcorporationoperatingin

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multipleindustrialmarkets.Anexperimentalresearchdesignisanappropriatesetting

forthesystematictestingoftheory(Thye,2007;Siemsen,2011;Thomas,2013).

Buyer-sellerrelationshipscandifferduetoindustrialcircumstances(Goffinetal.,

2006;Autry&Golicic,2010).Therearesignificantdyadicrelationshipmeasurement

differencesandvariancesfromindustrytoindustryandfirm-to-firm(Goffinetal.,2006;

Autry&Golicic,2010).Researchdesignandexecutionacrossmultiplefirmsand

industriesaresubsequentlyaggregatedorcomparedandarethuslikelytoencounter

errorsduetotheartificiallyimposeduniformityofmetricswhichmayunderestimate

thetrueeffectsinonecontextwhileoverstatingtheminothers(Autry&Golicic,2010).

Restrictingthisstudytodyadswhereatleastonememberisassociatedwithasingle

companyenhancesinternalvalidityatsomeexpensetoexternalvalidity.

RecognizingtheresearchquestionsandthequalàQUALàQUANresearch

approachstatedabove,therationalessuggestedbyBryman(2006)areappliedtothis

mixedmethodsresearch.ThefollowingsevenBryman(2006)rationalesarerelevantto

thisstudy:1)“Triangulation”istheexpectationthatthequalitativeandquantitative

portionswillmutuallycorroborateoneanother.Thisstudywillbuilduponcasestudy

researchandthenuseexperimentalresearchtofurthersubstantiateorrefutethe

qualitativefindings.Brymanalsoremarkedthatseparatingandsequencingthe

qualitativeandquantitativetechniqueswilldrawontheirstrengthsanddiminishtheir

weaknesses(2006).Strengthsandweaknessesofbothresearchapproacheswillbe

noted.2)With“Completeness,”acomprehensiveaccountisexpected(Bryman,2006).

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Forthisstudy’spopulation,usingbothqualitativeandquantitativemethodswillprovide

afullerexaminationofthephenomenonwithinthepopulationsetofbuyer-sellerdyads

intheanonymouslarge,internationalcorporationintheindustrialmarket.3)

“Explanation”isthatthequantitativemethodisexpectedtoexplainqualitativefindings

(Bryman,2006).Baseduponthequalitativefindings,furtherexplanationwillberealized

fromthequantitativefindings.4)“Instrumentdevelopment”appliesbecausethe

qualitativecasestudieswillbeusedtodevelophypotheses.Throughthisstudy’scase

studies,hypothesesandtreatmentswillbecomeevidentandfine-tunedpriorto

experimentalresearch.5)“Credibility”meansthatthefindingswillhavemoreintegrity.

6)“Utility”appliesbecausefindingsareexpectedtobeusefulforpractitionersandtheir

appliedfocus.ElucidationofIncoterms®challengeswillhelppractitionersand

researcherstofindwaystoovercomethesechallenges.7)“Confirmanddiscover”

meansthatthequalitativecasestudieswillassisthypothesisgenerationwiththe

quantitativeexperimenttestingthehypothesis.Thisstudy’scasestudyresearchwill

formthehypothesestobetestedviaexperimentalresearch.Theaboverationaleswill

bemoreevidentbytheendofthischapter.

Usingthemixedmethodsresearchmodel,bothqualitativeandquantitative

componentsareemployedtoaddresstheresearchquestion(Halcomb&Andrew,2009;

O’Cathain,2009).Theresearchquestionsareinvestigatedviathreesequentialand

integratedstudies.Study1isaqualitative,pilotcasestudyfocusingonthecorporate

perspective.Study2involvesqualitative,multiplecasestudiesfocusingonbuyersand

sellersbothfromtheindividualandcorporateperspectives.Study3isaquantitative,

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experimentalstudythatalsofocusesonbuyersandsellersfromtheindividualaswellas

corporateperspectives.Allstudiesaredescribedindetailbelow.

3.2STUDIESONEANDTWO:QUALITATIVEDESIGNOVERVIEW

Qualitativeresearchisappropriateforexploratoryresearch(Maholtra&

Peterson,2006;Yin,2011;Thomas,2013;Yin,2014).Thisresearchmethodisusedto

inquireintomeaningregardingsocialorhumanproblemsthataffectindividualsor

groups(Creswell,2007;Thomas,2013).Researchershavesuggestedthatqualitative

methodsbeemployedwithinbuyer-sellerrelationshipresearch,especiallyduetothe

subtlenuancesexhibitedwithinnegotiations(Rinehart,1989;Hopmann,2002;Ramsay,

2004;Thomas,2013).Withinqualitativeresearchmethods,casestudyresearchis

deemedmostappropriate.

Casestudyresearchhasbeendescribedinvariousways.Yindescribesthescope

ofacasestudyas,“anempiricalinquirythatinvestigatesacontemporaryphenomenon

(the‘case’)indepthandwithinitsreal-worldcontext,especiallywhentheboundaries

betweenphenomenonandcontextmaynotbeclearlyevident”(2014,p.16).In

essence,Yin(2014)suggestsusingacasestudytounderstandthereal-worlditems

importanttoyourinquiry.Yinfurtherstates,“acasestudyinquirycopeswiththe

technicallydistinctivesituationinwhichtherewillbemanymorevariablesofinterest

thandatapoints,andasoneresultreliesonmultiplesourcesofevidence,withdata

needingtoconvergeintriangulatingfashion,andasanotherresultbenefitsfromthe

priordevelopmentoftheoreticalpropositionstoguidedatacollectionandanalysis”

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(2004,p.17).ThisindicatesthatYin(2014)believesthatcasestudyresearchisan“all-

encompassingmethod”thatincludesdesign,collection,anddataanalysis.Gableadds

that“casestudiesdifferfundamentallyfromsurveys(andfromlaboratoryexperiments,

fieldexperimentsandfieldstudies)inthattheresearchergenerallyhaslesspresumptive

knowledgeofwhatthevariablesofinterestwillbeandhowtheywillbemeasured”

(1994,p.5).

Acommonmisconceptionofconductingcasestudyresearchisthatitisnot

“rigorous”becausevariablesmaynotbemathematicallyquantifiedandindependently

manipulated(Meredith,1998).However,asmanyresearchershavecommented,the

scientificmethoddoesnotrequirestatisticalcontrolsandmathematicalpropositions

(Reichardt&Cook,1979;Bonoma,1985;Lee,1989;Yin,1989;McCutcheon&Meredith,

1993;Meredith,1998).PerMeredith,casestudyresearchachievesrigorthrough

differentmeans(1998).AsdescribedbyMeredith(1998),Lee(1989)explainstheways

thatcasestudiesattaineachofthefourrequisitesofrigor:controlledobservations,

controlleddeductions,replicability,andgeneralizability.Asopposedtolaboratoryor

statisticalcontrols,casestudyresearchutilizescontrolledobservationsvianatural

controls,whicharesimilartothoseusedbyastronomersorgeologists.Secondly,as

formallogicencompassesmathematics,thecontrolleddeductionsrigorrequirementis

satisfiedbyapplyingtherulesofformallogictoverbalpropositionscomingfromacase

study.Accordingly,itisnotarequirementtomathematicallyquantifyallstudyvariables.

Regardingreplicability,identicalcasestudyconditionscannotbeduplicatedinanother

situation.However,replicabilityisachievedbyapplyingthecasestudytheoryattained

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toadifferentconditionset,whichmayresultinadifferentprediction.Accordingly,

whilethepredictionisdifferent,thesametheoryistested(Meredith,1998).According

toMeredith,theoreticgeneralizability,“wherethetheoryitselfindicatesthatitwould

beapplicableinaparticularsituation”(1998,p.450),isusedtovalidatetheabilityofa

casestudytobegeneralized.

3.2.1GroundedTheory

Groundedtheoryisappropriatefortheseexploratorystudies,asitis

recommendedwheninvestigatinguncharteredphenomenonorforatakingafreshlook

atanexistingphenomenon(Stern,1994;Pappu&Mundy,2002;Glaser&Strauss,

2008).Itallowstheflexibilityneededtoachievethelevelofexplorationappropriatefor

thisstudy(Pappu&Mundy,2002).GlaserandStrauss(1967)describegroundedtheory

asthatwhichisdiscoveredfromsystematicallyobtainedresearchdata.Straussand

Corbin(1990,1998)furtheraddthatthedatagoesthrougha“constantcomparative

method,”whichiswhentheresearchercontinuallymovesbackandforthbetweendata

codingandanalysislookingatdatafornewpropertiesandtheoreticalcategoriesineach

researchstage.PappuandMundydescribegroundedtheorybestbystating,the

“groundedtheoryprocessisverymuchlikeaniterativespiralconstantlyflitting

betweenenquiryandanalysis”(2002,p.38).Itisexpectedtoprovidemorerigorousand

robustresultsthanotherqualitativemethodologies(Stern,1994;Pappu&Mundy,

2002).CorbinandStraussnowgenerallyrefertogroundedtheoryastheoryoriginating

fromqualitativedataderivedviatheoreticalconstructs(2008).

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3.2.2Design

Acasestudydesignhasbeendeemedappropriateforthesestudies.Thisdesign

offersasignificantcontributiontotheorybuildingandknowledge(Yin,2014).An

anonymouslarge,internationalcorporationoperatinginmultipleindustrialmarketswas

chosenasthedomainofthisdesign.Study1usesaunitofanalysiswherepurposeful

personnelwithinthecompanyofferinformationfromacompanyperspective.Study2

usesinterviews,orcases,astheunitofmeasurewheredyadicbuyersandsellersoffer

informationfrombothindividualandcompanyperspectives.Thisallowsforcontrolof

spuriousevidence,andhenceafurtherincreaseininternalvalidity.

Yin(2014)identifiesfiverationalesforconductingasingle-casestudy:critical,

unusual,common,revelatory,andlongitudinal.Forthisstudy,fourofthefiverationales

apply(critical,common,longitudinal,andrevelatory).Thesingle-casestudyiscriticalto

thetheoryandtheoreticalpropositions(Yin,2014).Thecommoncaserationaleapplies

becausethisstudycapturesconditionsandcircumstancesofeverydaysituationsasthey

relatetotheoreticalinterests.Thelongitudinalrationalepertainsbecausesomeaspects

ofthesingle-casestudyoccurattwoormoredifferentpointsintime.Lastly,andmost

importantly,therevelatoryrationaleappliesbecausethisstudyisabletoaccess,

observe,andanalyzeaphenomenonwithuninhibitedaccesstothelarge,(anonymous)

internationalcorporation.Asmentionedabove,Study1isasingle,pilotcasestudy,

whereasStudy2involvesmultiplecasestudies.

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3.2.3DataCollectionProcedures.

Darkeetal.describeshowtocollectcasestudydataeffectivelyandefficiently,

notingthatit“requirescarefulplanningandjudicioususeofbothcaseparticipants’and

theresearcher’stime”(1998,p.282).Backgroundinformationoncasesubjects,which

maybefoundviapublicinformationorcompanypublicrelationsdepartments,is

neededpriortodatacollection.Thekeytopropercasestudyresearchisorganization

andcategorizationforbothanalysisandfuturereferencepurposes.Thisdatabasemay

includesuchcasedataasdocuments,video,audio,andfieldnotes(Darkeetal.,1998).

Yin(2014)listssixsourcesofcasestudyevidence:documentation,archival

records,interviews,directobservations,participantobservation,andphysicalartifacts.

Allbutphysicalartifactsapplytothisstudy.Emailsandothercompanydocumentshave

beenincluded.Archivalrecordsviaorganizationalrecords,suchasSAPreports,have

beenreviewed.Directobservationsoftheresearcher,suchasobservedIncoterms®use

onasalesorderwhileviewingaSAPR/3screenandparticipantobservationsprovided

totheresearcher,suchasverbalmisuseexamples,havebeenreported.Study1

primarilyincludesarchivalrecordsanddirectobservationsoftheresearcher.However,

mostdatacollectionespeciallyforStudytwohasbeenviainterviews.

Followingtheappropriategroundedtheoryguidelines(Glaser&Strauss1967,

2008;Strauss&Corbin1990,1998;Corbin&Strauss,2008),interviewshavebeen

completedwithbothmembersofbuyer-sellerdyadstoexplorehowthebuyer-seller

dyadsnegotiateandcommunicatelogisticsmanagementdecisionsaswellascommon

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communicationerrors.Dyadshavebeencharacterizedasinternalorexternalfacingto

thefocalcorporationaswellasbycountry.Anin-depth,semi-structuredinterview

approachhasbeenusedtomaintainfocusonthephenomenonofinterestwhile

allowingtheflexibilitytoproperlyexploreandelaborateit.Foruseduringthe

interviews,orcases,theresearcherhasformedanin-depthsemi-structuredinterview

guide.Thestreamofquestioningisfluidratherthanrigid,meaningthatthequestioning

ismeanttobeconversationalratherthaninorganic(Rubin&Rubin,2011;Yin,2014).

Theinterviewguidehelpstofacilitatediscussions,whiletheinterviewerallows

broadeneddiscussionifitrelatestothephenomenon.Whenpossible,audiorecording

hasbeenusedwiththepermissionoftheinterviewee,andtheconversationhasbeen

meticulouslytranscribed.Whenaudiorecordingwasnotpossible,detailednoteshave

beentaken.Study2wasassignedprojectnumber885996-2bytheUniversityof

Missouri-St.LouisInstitutionalReviewBoard(IRB),anditwasapprovedunder

exemptioncategory#2.

3.2.4Analysis.

Followinggroundedtheoryguidelines(Glaser&Strauss,1967,2008;Strauss&

Corbin,1990,1998;Corbin&Strauss,2008),rigorousanalysisofinterviewtranscripts

andnotesisessential.Priortoanalysis,interviewtranscriptsandnoteswerereadmany

timestodevelopacompleteunderstandingoftheinformationandconceptsdeveloped.

AsfoundinPappuandMundy(2002)andThomas(2013),StraussandCorbin(1990,

1998)furtherexpandbystatingthatthedatagoesthrougha“constantcomparative

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method,”whichiswhentheresearcherconstantlymovesbackandforthbetweendata

codingandanalysislookingatdatafornewpropertiesandtheoreticalcategoriesineach

researchstage.Thisconstantcomparisoncanoccursimultaneously(Locke,1996;

Thomas,2013).Words,sentences,andparagraphsarecodedandeventually,concepts

emerge.Thesameoccursforothersourcesofevidencedocumentation,archival

records,interviews,directobservations,andparticipantobservation.Study1reports

evidenceforoutcomesoflogisticsmanagementcommunicationerrorsorIncoterms®

usageerrors.Study2exploreshowbuyer-sellerdyadsnegotiateandcommunicate

logisticsmanagementdecisions.Italsoexpandstheknowledgeonlogisticsmanagement

communicationerrorsgainedfromStudy1andexploreswaystoimprove.Theoutcome

isaprocessdescriptionofthenegotiationtoarriveatlogisticsmanagementdecisions

withinthebuyer-sellerdyads.Further,thelogisticsmanagementtradeoffs(e.g.risk,

control,costs,etc.)andeventualIncoterms®consideredbythedyadsaredescribed.In

addition,waystoimprovecommunicationbetweenbuyer-sellerdyadsform

hypotheses.AsGlaserandStraussstate,“generatinghypothesesfromthedatarequires

onlyenoughdatatosuggestthehypothesis,notproveit”(1967,p.40).Thefollowing

hypothesesaretestedinStudy3:

H1:Incoterms®trainingleadstoadecreaseincommunicationerrorsevidencedbya

reductionininappropriateIncoterms®application.

H2:ProvidingfullyspecifiedandexplicitIncoterms®definitionsleadstoadecreasein

communicationerrorsevidencedbyareductionininappropriateIncoterms®

application.

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H3:ProvidingfullyspecifiedandexplicitIncoterms®definitionsandIncoterms®

trainingleadstoafurtherdecreaseincommunicationerrorsevidencedbya

furtherreductionininappropriateIncoterms®application.

Inaddition,otherobservationsarelikelyforinclusionwithinfutureresearchstudies

beyondthescopeofthisstudy’sresearchquestions.Forexample,Incoterms®areused

forpurposesotherthanthosestatedbytheICC.AnotherexamplemaybeIncoterms®

importanceforusewithatransportationmanagementsystem(TMS)thatallowsthe

TMStoclearlydefinethecompany’stransportationobligations.

3.2.5Sampling.

Followinggroundedtheoryguidelines(Glaser&Strauss,1967,2008;Corbin&

Strauss,2008;Strauss&Corbin,1990,1998),thisstudyhasutilizedpurposiveand

theoreticalsampling.Purposivesamplingistheselectionofspecificindividualsor

settingsbelievedtohaveknowledgeorexperiencerelevanttothephenomenon

(Thomas,2013).Buyers,sellers,andotherlogisticsfunctionswithinandexternaltothe

anonymouslarge,internationalcorporationintheindustrialmarkethavebeenselected

asmostlikelytohaveknowledgeofthephenomenon.Participantswereselected

throughtheresearcher’sknowledgeofthecorporation.Subsequentparticipantswere

selectedviatheoreticalsampling.Theoreticalsamplingiscollectingdatatoexploit

opportunitiestocultivateconcepts(Corbin&Strauss,2008;Thomas,2013).Sampled

participantsdirecttheresearchertootherindividualswhowerelikelytohave

knowledgeoftheconceptofinterest.Thekeyhereisthatconcepts(individualslikely

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havingconceptualknowledge)aresampledasopposedtopeople(Corbin&Strauss,

2008;Thomas2013).Theoreticalsamplingparticipants,ofwhichthereisnomagical

number,aredirectedtotheresearcher(Thomas,2013).Conceptsaturation,whichis

thecontinualemergenceofanotion,iseventuallymet.

3.2.6ResearchTrustworthiness.

Quantitativeassessorsofresearchrigor(internalvalidity,reliability,objectivity,

andexternalvalidity)arelessappropriateevaluationcriteriaforqualitativeresearch,

especiallygroundedtheory(Thomas,2013).Thomas(2013)developedninecriteriafor

groundedtheorytrustworthiness.Theyarecredibility,transferability,dependability,

confirmability,integrity,fit,understanding,generality,andcontrol.These

trustworthinesscriteriawereevaluatedaftercompletionofStudy2.

3.3STUDYTHREE:QUANTITATIVEDESIGNOVERVIEW

AsstatedbyCarterandStevens,“experimentsprovideavaluablecomplementto

existingfieldstudiesbyprovidinghighlycontrolledteststoexaminetheeffectsof

independentvariables.Althoughsomefacetsofexternalvaliditymaybecompromised,

thetradeoffinincreasedcontrolaffordsresearchersasoundbasisforinferringcasual

relationships”(2007,p.1039).Internalvalidityisaconcernwhentestingcausality

(Huangetal.,2008),asiscontroloverinternalvaliditythreats(Cook&Campbell,1979;

Huangetal.,2008).Experimentsarewellsuitedtoovercometheseconcernsbecause

theyallowdirectmanipulationoftreatmentsbyresearcherstorandomlyassign

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respondentstoconditionsandcontrolforconfoundingfactors(McGrath,1982;Wacker,

1998;Huangetal.2008).

TotestthehypothesesdevelopedinStudy2,hypotheticalscenariobased

experimentaldesignshavebeenutilizedwithinpurposefuldyadicbuyer-sellersamples

ofananonymouslarge,internationalcorporationintheindustrialmarket.Participants

couldfindascenariobasedapproachlessthreatening(Thomasetal.,2010).SinceStudy

3wasconductedwhollywithinthesameanonymouslarge,internationalcorporationin

theindustrialmarket,itwasimportantthatthesubjectsdidnotfeelthreatenedbythe

study.AnotheradvantageofthescenariobasedapproachstatedbyGreweletal.isthat

it“reducesbiasesfrommemorylapses,rationalizationtendencies,andconsistency

factors”(2008,p.428).

3.3.1Sample.

Withinbuyer-sellerrelationshipresearch,theuseofreal-lifeparticipants,as

opposedtostudents,isverylimited.AccordingtoMestdaghandBuelens,“only5%of

studiesusepracticingmanagersasparticipants,[whichis]notexactlygoodnews”

(2003,p.34).Thepresentstudyhadaccesstoananonymouslarge,international

corporationintheindustrialmarket.Thecorporationagreedtoextensiveaccessforthis

researchstudy.Therefore,theparticipantshavebeendrawnfromemployeeswholly

withinthislarge,internationalcorporation.Bothbuyers,whoareprimarilypartofthe

corporation’ssupplymanagementfunction,andsellers,whoarepartofthe

corporation’ssales,marketing,andcustomerservicefunctions,havebeenpurposefully

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sampled.Additionally,theanonymouslarge,internationalcorporationhadinternally

conductedIncoterms®trainingviatheirinternaltraininguniversityandgrouptraining

sessions.Bothtrainedanduntrainedindividualshavebeenpurposefullysampled.

3.3.2Procedure.

BaseduponthehypothesesdescribedinStudy2,thefollowingexperimental

procedurewasdevelopedforStudy3toquantitativelytesttheproposedhypotheses.

Aninternalemailcontaininganinvitationtoparticipateandalinktoaquestionnaire

initiatedStudy3.Theanonymouslarge,internationalcorporationprovidedaccesstoan

emaildistributionlistofemployeesinallbuyerandsellercorporatefunctions.The

emailsubjectandbodydescribedthestudyimportanceandinvitedemployeesto

participate.Thesameemailprovidedawebsitelinktostartthequestionnaire.

Voluntaryparticipantswererandomlyassignedtocompleteoneoftwoquestionnaires

presentingfiveidenticalhypotheticalscenariosregardingtheappropriateuseof

Incoterms®ineachscenario.Bothquestionnairesaskedrespondentstoanswersome

demographicquestionsincludingwhethertherespondenthadbeenrecentlytrainedin

theuseofIncoterms®.Thetwoquestionnairesweredifferentiatedbyproviding1)

operationaldefinitionsofcandidateIncoterms®whenselectingthecorrecttermto

employinthescenarioor2)onlythreecharacterIncoterms®withoutprovidingdetailed

operationaldefinitions.

Thisrandomassignmenttoaquestionnairewasimportanttomaximizeinternal

validityandminimizegroupdifferences(Webster&Sell,2007;Huangetal.,2008;

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Thomas2013).Asrespondentsself-reportedIncoterms®training,norandom

assignmentwasrequiredonthisbasis.Therefore,fourtreatmentcellsresultedfromthe

2(Trained:Yes,No)x2(operationaldefinitionsfullyspelledoutorIncoterms®used)

experimentaldesign.The“trained”treatmentdifferentiatedbetweenthosetrainedand

thoseuntrained.The“operationaldefinitionsfullyspelledoutorIncoterms®used”

treatmentidentifiedwhetherthreecharacterIncoterms®orafulloperationaldefinition

withinagivenscenariocouldprovidebetterresults.

Withinthequestionnaire,abriefintroductiononceagaindescribedthestudy

anditsimportance.Initially,demographicinformationwasrequested,suchassex,age

range,role,yearsofexperience,etc.Participantsthenreadasetofinstructions

followedbyscenarios.Eachdependentvariablehadanassociatedscenario.The

participantsrespondedtoeachscenario.Thismethodassumesthattheparticipants

projectthemselvesintothescenarioandprovideanswersastheywouldnormally

respondinreallifeworksituations(Fisher,1993;Chandyetal.,2003;Antiaetal.,2006;

Thomasetal.,2010;Thomas,2013),basedupontheirownbehaviorsandvalues(Mick

etal.,1992;Thomasetal.,2010),andthetotalityoftheirentirecareerexperienceas

opposedtojusttheircurrentjobsandcompanies(Thomasetal.,2010).Thestructured

projectivetechniquehasbeenshowntosuccessfullyprovidemanagerialattitudeand

corporatestrategyinsights(Fisher,1993;Chandyetal.,2003;Antiaetal.,2006;Thomas,

etal.,2010).Thisresearchinstrument,thestructuredprojectivetechnique,hasbeen

showntobereliable,valid,andtrustworthy(Ramseyetal.,2006;Thomasetal.,2010).

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Withinexperimentaldesigns,writtenscenariosarewidelyusedtooperationalize

independentvariables(Scheer&Stern,1992;Pillingetal.,1994;Dabholkar&Baggozi,

2002;Thomasetal.,2010;Thomas,2013).Writtenscenariobasedmanipulationsare

notreadingcomprehensiontestsbutratherverydescriptivepassages,administeringthe

participantwiththeexperimentaltreatmentcondition(Thomasetal.,2010).For

example,theword“risk”didnotappearinthewrittenscenarios.Termssuchas“likely

tohavedamage”forashipment“notincontrolof”wereusedinstead.

3.3.3Pretest.

Experiencedbuyersandsellerswithinthelarge,internationalcompanyaswellas

academicsubjectmatterexpertsreviewedthescenariobasedquestionnaireand

evaluateditsfacevalidity,readability,andrealism.Theexperimentalmanipulation

treatmentswerealsochecked.Revisions,werecompletediterativelyuntilthefinal

questionnairewasdeemedsuitableforreleasetothesample.

3.3.4InstrumentsandMeasures.

Theelementsofinformedconsent(45CFR46.116)werepresentwithinthe

questionnaire(U.S.DepartmentofHealth&HumanServices2010).Participantsreada

briefintroductiondescribingthepurposeofthestudyanditsimportance,includingthe

potentialbenefitstotheindividual,corporation,orothers.Participantswerereminded

thattheirparticipationwasvoluntaryandwereprovidedwiththeconditionsof

participation,includingtherighttorefuseorwithdrawwithoutpenalty.Confidentiality

protectionsfortheindividualswereprovidedviatheweb-basedquestionnaire.Since

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thisstudywassentviaaninternalemail,participantswereremindedthattheir

responseswereanonymousandtheirindividualresultswouldnotbesharedwiththe

corporation.Noforeseeablerisks/discomfortstotheindividualortheircompensation

plansweretobeexpected.Lastly,contactinformationwasprovidedforquestions

regardingthestudy,participants’rights,andincaseofinjury.Study3wasassigned

projectnumber885996-3bytheUniversityofMissouri-St.LouisInstitutionalReview

Board(IRB)andwasapprovedunderexemptioncategory#2.

Theintroductionwasfollowedbyrequestsfordemographicinformation,suchas

sex,agerange,jobrole,andyearsofexperience.Next,participantswereaskedifthey

hadreceivedIncoterms®training,andifso,thetimingofthistraining.Participantsthen

readasetofinstructionsfollowedbyfivehypotheticalscenariosdesignedtoexplore

theirunderstandingoftheappropriateuseofIncoterms®.Theparticipantswereasked

torespondtothescenariobasedonhowtheywouldreactifthescenariowerereal.The

questionnairewascompiledafterStudy2toallowStudy3tobeinformedby

informationidentifiedinStudy2,andhence,allowingproperlyderivedhypothesestobe

tested.

3.3.5DataAnalysis.

First,descriptivestatisticswerecompiledtosummarizethedemographic

informationprovidedbytheparticipants.Second,asrespondents’participationwas

voluntary,twonon-responsebiastestswereperformedtoascertainthe

representativenessofrespondentsoftheunderlyingpopulationofquestionnaire

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recipients.Thefirsttestexploresthedemographicsimilarityofthosewhoresponded

beforeandafterareminderemail,andthesecondtestexploresthedemographic

similarityofthosewhoprovidedfulloronlypartialresponsestothequestionnaire.The

demographicinformationwascomparedofthesetwopartitioningofrespondentsusing

simplet-tests.

Next,toexploretheeffectsofIncoterms®training,providingoperational

definitions(whenusingIncoterms®),andthepresenceofbothfactorsonreducing

inappropriateIncoterms®applicationonindividualscenariosexaminedbythe

questionnaire,fivebinarylogisticregressionmodelswereformulatedandestimated.

Eachlogisticregressionmodelemploysasitsdependentvariableabinarycategorization

ofwhethertherespondentcorrectlyansweredthatscenario’squestion(yesorno).The

independentvariablesthataffecttheprobabilityofarespondentcorrectlyanswering

thequestionarethreecategoricalvariablesassociatedwitheachrespondent:(1)has

therespondentbeentrainedinIncoterms®usageornot;(2)weretheoperational

definitionsassociatedwiththeIncoterms®providedinthescenarioresponsesornot;

and(3)isthereaninteractionvariableindicatingthattherespondentisbothtrainedin

Incoterms®usageandtheoperationaldefinitionswasprovidedtotherespondentwhen

answeringthequestion.Thisanalyticalapproachisappropriatewhenmodeling

questionresponsesasbinarycategoricalvariables(Robertset.al,1987).

ToexploretheeffectsofIncoterms®training,providingoperationaldefinitions

whenusingIncoterms®,andthepossibleinteractionofbothonreducinginappropriate

Incoterms®applicationacrossallthescenariosexaminedbythequestionnaire,an

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ordinallogisticregressionmodelwasformulatedandestimated.Theordinallogistic

regressionmodelemploysasitsdependentvariablethecorrectnumberofresponsesto

allfivescenarioquestionsbyeachrespondent(0,1,2,3,4,or5).Thiscategorical

variablehasanaturalrankordermakinganordinallogisticregressionmodelagood

candidatetoevaluatetheeffectsofIncoterms®trainingandprovidingoperational

definitionsinreducinginappropriateuseofIncoterms®.Theindependentvariablesthat

affecttheprobabilityofarespondentcorrectlychoosingacrosscategoricalvariablesare

threecategoricalvariablesassociatedwitheachrespondent:(1)hastherespondent

beentrainedinIncoterms®usageornot;(2)weretheoperationaldefinitionsassociated

withtheIncoterms®providedinthescenarioresponsesornot;and(3)istherean

interactionvariableindicatingthattherespondentisbothtrainedinIncoterms®usage

andtheoperationaldefinitionswereprovidedtotherespondentwhenansweringthe

question.Thisanalyticalapproachisappropriatewheneverthedependentvariableina

regressionisqualitativeandusedtoexplainchoicesinvolvingmultiplecategorical

variablesinnaturalrankorder(Becker&Kennedy,1992;Greene,2000;Burnset.al,

2013).

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CHAPTER4

DATAANALYSISANDRESULTS

4.1STUDYONE:PILOTCASESTUDY(QUALITATIVERESEARCHFINDINGS)

Study1isanexploratorycasestudyfocusingononeglobalcorporation,

employingover100,000peopleandoperatinginmultiplemarketsinapproximately100

countries.First,thestudyutilizedactualcorporatedatatoobservetheglobal

corporation’schallengeswithnegotiatingandcommunicatinglogisticsmanagement

responsibilities,especiallythoseinvolvingshippingtermssuchasIncoterms®.Further,it

identifiedthemisuseofIncoterms®usingrealcorporatedata,fromwhichitalso

uncoveredexamplesoftheconsequencesofmisuse.Lastly,Study1explainedthe

outcomesofthismisuse.

Toexplorethedyadicagreementsonlogisticsmanagementresponsibilities,a

dataextractfromSAP,whichisthecorporation’senterprise-resourcesystem(ERP)in

theU.S.,wasconductedusingoneyearofsalesandpurchasingdata.WithinSAP,two

Incoterms®fieldsexistforsalesandpurchaseorders:IncotermsField1containsadrop-

downlistoftwo-to-three-charactershippingterms,andIncotermsField2isafree-form

textfield.TheTables4.1and4.2belowdescribethefrequency,percent,cumulative

frequency,andcumulativepercentforIncoterms®Field1ofcustomerandsupplier

masterdata.“Blank”indicatesnothingpresentinField1.

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Table4.1CustomerUsage

Customer Usage

Incoterms® Field 1 Frequency Percent Cumulative Frequency Cumulative Percent

Blank 89 0.06% 89 0.06%

CC 1036 0.65% 1125 0.70%

CFR 142 0.09% 1267 0.79%

CIF 278 0.17% 1545 0.97%

CIP 301 0.19% 1846 1.16%

CPT 922 0.58% 2768 1.73%

DAF 41 0.03% 2809 1.76%

DAP 185 0.12% 2994 1.87%

DDP 1526 0.96% 4520 2.83%

DDU 368 0.23% 4888 3.06%

EXW 97145 60.83% 102033 63.89%

FAS 12 0.01% 102045 63.90%

FCA 25571 16.01% 127616 79.91%

FOB 24590 15.40% 152206 95.31%

NON 11 0.01% 152217 95.32%

PA 4091 2.56% 156308 97.88%

PC 3387 2.12% 159695 100.00%

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Table4.2SupplierUsage

Supplier Usage


CC 3004 11.55% 3004 11.55%

CFR 63 0.24% 3067 11.79%

CIF 26 0.10% 3093 11.89%

CIP 14 0.05% 3107 11.95%

CPT 268 1.03% 3375 12.98%

DAF 4 0.02% 3379 12.99%

DAP 373 1.43% 3752 14.43%

DAT 2 0.01% 3754 14.44%

DDP 128 0.49% 3882 14.93%

DDU 19 0.07% 3901 15.00%

DES 6 0.02% 3907 15.02%

EXW 8623 33.16% 12530 48.18%

FAS 2 0.01% 12532 48.19%

FCA 1056 4.06% 13588 52.25%

FOB 9475 36.43% 23063 88.68%

NON 771 2.96% 23834 91.65%

PA 884 3.40% 24718 95.05%

PC 1288 4.95% 26006 100.00%

Itisalsointerestingtoviewthecombinedcustomerandsupplierusage.Thisis

showninTable4.3.

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Table4.3CombinedUsage(CustomerandSupplier)

Combined Usage (Customer and Supplier)


Blank 89 0.05% 89 0.05%

CC 4040 2.18% 4129 2.22%

CFR 205 0.11% 4334 2.33%

CIF 304 0.16% 4638 2.50%

CIP 315 0.17% 4953 2.67%

CPT 1190 0.64% 6143 3.31%

DAF 45 0.02% 6188 3.33%

DAT 2 0.00% 6190 3.33%

DAP 558 0.30% 6748 3.63%

DDP 1654 0.89% 8402 4.52%

DDU 387 0.21% 8789 4.73%

DES 6 0.00% 8795 4.74%

EXW 105768 56.96% 114563 61.69%

FAS 14 0.01% 114577 61.70%

FCA 26627 14.34% 141204 76.04%

FOB 34065 18.34% 175269 94.38%

NON 782 0.42% 176051 94.80%

PA 4975 2.68% 181026 97.48%

PC 4675 2.52% 185701 100.00%

FromthisinitialexploratorylookatactualIncoterms®usage,itisclearthat

Incoterms®2010rulesareoverwhelminglyused(91.92%)bythecorporation’s

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practitionersforsalesandpurchases.AfurtherbreakdownbyIncoterms®rulesis

presentedinTable4.4.

Table4.4FrequencyofIncoterms®2010Use

Incoterms® Frequency Percent

CFR 205 0.11%

CIF 304 0.16%

CIP 315 0.17%

CPT 1190 0.64%

DAT 2 0.00%

DAP 558 0.30%

DDP 1654 0.89%

EXW 105768 56.96%

FAS 14 0.01%

FCA 26627 14.34%

FOB 34065 18.34%

Total 170702 91.92%

Onthesurface,theIncoterms®usageappearssubstantial.However,acloser

examinationofthecombinedusagetablesuggestssomeoftheproblemsassociated

withIncoterms®.First,threeUCCshippingtermacronyms(FOB,FASandCIF)overlap

withIncoterms®2010rules(LegalInformationInstitute,2015).Itisnotclearinthedata

whethertheIncoterms®ruleortheUCCshippingtermisintendedtoapplybutis

mistakenlyenteredintheIncoterms®field.TheICCsuggestsspecifyingtheIncoterms®

versions,suchasIncoterms®2010,toaddressthisexactsituation(ICC,2010).Dueto

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SAP’sstructureandcharacterlimitations,specifyingtheIncoterms®version(e.g.

Incoterms®2010)inField2isgenerallynotpossiblewhenalsospecifyingthenamed

placeorport.Additionally,SAPdoesnotbydefaultspecifytheIncoterms®ruleversion.

Second,threeearlierIncoterms®rules(DAF,DES,andDDU)arestillinuse.These

Incoterms®2000ruleshavebeenreplacedintheIncoterms®2010rules.Table4.5

presentsthefrequencyofuseoftheseterms.WhilepreviousIncoterms®rulesversions

maybeused,whendoingso,theversionshouldbespecified(ICC,2010)and,inthis

exampledata,applicableversionsarenotspecifiedanywhere.

Table4.5FrequencyofuseofIncoterms®2000,DAF,DES,andDDU

Incoterms® Frequency Percent

DAF 45 0.02%

DES 6 0.00%

DDU 387 0.21%

Total 438 0.24%

Third,othershippingterms(i.e.non-Incoterms®)arebeingused7.84%ofthe

time.Table4.6providesdetailsofothershippingtermusage.

Table4.6FrequencyofOtherShippingTermUse

Other Shipping Terms Frequency Percent

Blank 89 0.05%

CC 4040 2.18%

NON 782 0.42%

PA 4975 2.68%

PC 4675 2.52%

Total 14561 7.84%

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Interestingly,noneofthefourothershippingtermsareUCCshippingterms

(LegalInformationInstitute,2015).Infact,theyappeartobecreatedwithinthe

corporation.

Fourth,uponfurtherexaminationofthedifferenttextualdatainIncotermsField

2,whicharetoonumeroustousefullyshowinatable,consistencyandclarityisnot

present.TheICCsuggeststhatifyouuseIncoterms®rulesinacontract,youshoulddo

sobyclearlyspecifyingtheIncoterms®rule,followedbythenamedplaceorport,and

thenspecifyingtheIncoterms®versions,suchasIncoterms®2010(ICC,2010).This

suggestedapproachisnotevidentwithinthiscorporatedatasample.Furthermore,the

ICChighlyrecommendsthattheplaceofportbespecifiedaspreciselyaspossible(ICC,

2010).Onceagain,thiscorporatedatasampledoesnothaveclearandpreciseplacesor

portsnamed.

Lastly,basedupontheIncoterms®ruleused,thecorporationusessome

Incoterms®three-characterterms,butwithdifferentmeaningscomparedtothose

statedbytheICC.Forexample,EXWisusedfor33.16%ofpurchases.EXWrepresents

theleastobligationsthatasellermayagreeto,asthesellerisnotresponsibleforexport

formalitiesorloadingtheoncomingvehicle.However,perthecorporation(andits

freightpaymentdata),thebuyerdoesexpectthesellertoloadtheoncomingvehicle

andclearforexport,ifapplicable.ThisisanFCAIncoterms®rule.Conversely,sellersuse

EXWin60.83%ofsales.Withthisterm,thebuyerisexpectedtoarrangetheloadingof

themeansoftransportandclearexport,whereapplicable.However,duetoliabilityand

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insurancerisk,thecorporationwillnotallowcustomerstobringtheirownforkliftor

craneontocorporatepropertytoloadthevehicle.Furthermore,duetoUnitesStates

exportobligations,thecorporationmaystillberequiredtoarrangeexportformalities,

andthisconflictswiththeIncoterms®EXWruleused.Onceagain,thisisanFCA

Incoterms®rule.

Duetothefiveproblemsidentifiedinthecorporatedatasample,buyerand

sellermiscommunicationseemslikely.Toinvestigatefurther,first-handaccountsofthe

consequencesofproblematicIncoterms®usagehavebeenprovidedbythecorporation.

Thesearebrieflydescribedbelow.

AcorporatelocationinSt.Louis,Missouri,U.S.A.placedapurchaseorderfroma

supplierinEurope.ThestatedIncoterm®onthepurchaseorderwas“FCASt.Louis.”The

corporatelocationinSt.Louiswasperplexedthatoncethematerialwasreadytoship,

thesupplierinsistedthattheywouldonlytakecareofexportformalitiespertheFCASt.

Louisagreement.Thebuyermaintainedthatthesuppliershouldberesponsiblefor

shipmenttothelocationinSt.Louis.Afterfurtherinvestigation,thesupplierinEurope

wasfoundtobeinSt.Louis,France!Consequently,thematerialwasshippedlateand

neededtobeexpeditedviaairshipment,whichcostthecorporationsignificantlymore

money.Thus,thebuyerpaidtoomuchforthematerialduetocommunication

breakdownoverIncoterms®interpretations.

AcorporatelocationintheU.S.repairedacustomer’sunitintheU.S.and

shippeditbacktothecustomerinMexicousingDDP(delivereddutypaid),whichisthe

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maximumobligationforsellersrequiringthemtoberesponsibleforbothexportand

importcustomsformalitiesandduties.However,whentherepairedunitarrivedin

Mexico,itwashaltedbyMexicanCustomsagents.TheU.S.locationwasunableto

arrangeimportintoMexicobecausetheydidnothaveawaytoimportandpayduty.

Thishaltedtransportoftherepairedunit,whichwasalreadylate.Afterseveralweeksof

backandforthdiscussions,thecustomereventuallyagreedtoimporttheitem

themselves,andtheIncoterms®werechangedtoDAP(deliveredatplace).However,

thissubstantiallyaffectedthecustomer-sellerrelationship.

AU.S.localbusinessunitCategoryTeamLeaderadvisedthattheirbusinessunit

“standardlyusedEx-Worksasterms;eventhoughthesupplierisloadingforthem.”This

CategoryTeamLeaderwasunawarethatEXWdoesnotrequirethesellertoloadthe

collectingvehicleorcleargoodsforexport,whereapplicable.ThisU.S.localbusiness

unitwasunwillingtochangeIncoterms®rulesevenafterlearningofthedifferenceswith

FCA.ThisputtheU.S.localbusinessunitatriskofextraloadingcosts,exportcustoms

clearancedelays,orshipmentdelaysduetoadditional,unanticipatedshipping

requirements,suchasexportpackaging.ThissupportsStapletonetal.(2014a)

suggestingthattradersare“creaturesofhabit”andmanytimesrepeatedlymakethe

sameIncoterms®usageerrorsleadingtopreventablerisk.

Finally,Study1helpedtoidentifyotherconsequencesofmisuse.First,the

outcomeofinsuranceclaimsisdiscussed.Next,thecomplicationsoftheIncoterms®

ruleCIFareprovided.Lastly,twoexamplesofCIFcomplicationsareprovided.

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Insurancecosts,risks,andresponsibilitiesarecriticaltotheoperationsofthis

globalcorporation.Manyofthecorporation’slargevaluesalesandpurchasesareatrisk

oflossuntilfinaldelivery.However,only2%oftheirsalescontractsclearlystate

insurabilityrequirements.Inmanycases,thecorporationnotesthatthechoiceof

Incoterms®,especiallyCIF,isdrivenbypaymenttermsandcustomsitems.Insurance,

andperhapsevenrisk,maynotbeconsidered.Thismakessalesorpurchaseorder

articles,suchasIncoterms®,increasinglyimportant.Inmanycases,logistics

managementpersonnelorothersknowledgeableaboutlogisticsmanagementriskare

notconsultedorinvolvedinthesalesprocess.Thesameoccurswiththepurchaseof

materialfromsuppliers;logisticsmanagementpersonnelarenotinvolvedorconsulted.

Duetotheabove,andotherfactorsexploredinStudy2,theriskexposureofthe

globalcorporation,alongwiththatofitsinsurer,haveincreasedinrecentyears.The

corporationhasseenannualinsuranceclaimpayoutsclimbashighas$13millionU.S.

dollarsinrecentyears,andthesearepaidonlyforclaimsthatexceedahighdeductible

threshold.Whenannualinsuranceclaimspaidorreservedexceedannualinsurance

premiumspaid,thereisalossratioover100%,andthisputsthecorporationatriskfor

increasedinsurancepremiumsinsubsequentyearsaddingtothecorporation’scost.

Insurancecompaniescannotsustainaconsecutivelossratioover100%.Anythingthat

canhelpreduceriskwillbenefitthefirm.Claimsbelowthehighdeductiblethreshold

aregenerallyabsorbedbylocalbusinessunits,andtheseclaimsareestimatedtobeat

leastthree-foldofactualinsuranceclaims.

105

Asmentionedabove,formanysalesandpurchasestheriskoflossisextended

untilfinalportofdeliveryordestination.ThisriskincreaseswhentheIncoterms®rule

CIFisused.BeyondtheformerlymentionedinappropriateuseofCIFforcontainerized

transport,CIFisrathervaguestatingthatthegoodsshouldbedeliveredinthemanner

customaryattheport,sothiscanvarysubstantiallyfromporttoport.Thisvagueness

canexposethecorporationtounintendedrisk.Further,CIFisfurthercomplicatedfrom

theportofdeliverytothepointoffinaldestination,astherearecircumstanceswhere

theremaynotbeinsurancecoverageduringtheinlandtransportsegment(e.g.portof

deliverytofinaldestination)tofinaldestination,ifthenamedplaceisbeyondtheport

ofdestination.WhiletheIncoterms®ruleCIFstatesthenamedportofdestination,

sometimesthisisignored,andthefinaldestinationisnamedinstead.Fortheportof

deliverytofinaldestinationleg,thecorporationhasnoinfluenceonriskcontrolduring

thattransportportion.Whiletheportofdeliveryhandlingisofgraveconcern,sotoois

thetransportationbeyondtheportuntilfinaldestination.Thisisevenmorecomplicated

withprojectcargo,asthegoodsmayawaitultimatedispositionatfinaldestinationfor

daystomonths.Additionally,thecorporationnotesthatthecertificateofinsurance

requiredforCIFhasheldupshipments,especiallywhenthecargoissubjecttofinancing

orsupportedbyaletterofcredit.Acquiringacertificateofinsurancetakestime,andit

isessentiallyalegaltenderthat,whichwhenpresentedtothelocalclaimsagentofthe

insurer,canbeconvertedintocash.

ThecorporationprovidedexamplesofCIFcomplications.Oneexampleisa

situationwherecargofelloffadrayagetruckduringterminalhandlingattheportof

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delivery.Thecontractbetweenthecorporationandbuyerdidnotclearlydetailwhere

therisktransferredfromthecorporationtothecustomerattheportofdelivery.As

mentionedabove,thesetransferscanvaryfromporttoport.Ultimately,the

corporationaccommodatedthecustomer,sothelosswasabsorbedbythecorporation.

AsecondexamplerelatestoashipmentfromtheU.S.toHaitithatwassoldtoanagent

viatheIncoterms®ofCIFPortauPrince.PertheIncoterms®ruleofCIF,thecorporation

providedevidenceofinsuranceviacertificateofinsurance.Thelargesaleitemshipped

inAugust,anditwasdestinedtoarrivewithin5weeks.However,inOctober,the

corporationwasnotifiedbytheagentthattheitemhadbeendamaged.Asurveyorwas

sent,andthesurveyorreportedthatitappearedaforklifthaddamagedtheitem.After

numerousattemptstosecuremoreinformation,thecorporationeventuallycontacted

theharbormastertorequestthecaptain’slogregardingoffloaddataandconditions.

Eventually,aftermanyweeksofresearchandreviewofthecaptain’slog,PortauPrince

dock-workersadmittedtodamagingtheitemviaforklift.Oncetheitemwasoffloaded

fromthevessel,thedock-workershadmoveditmultipletimescausingthedamage.The

investigationwascostlyandabsorbedmanyweeksoftimeofnumerouscorporate

personnel.Theuseofanother,moreappropriateIncoterms®rulecouldhaveavoided

thiscostbyclearlyspecifyingthepointoftransferofriskorinsurabilitytoapointwhere

thecorporationhadmorecontrol,ratherthanatapointwherethecorporationhadno

control,suchasataforeignport.

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4.1.2DiscussionofthePilotCaseStudy

ThepilotcasestudyforStudy1providesapreliminarylookataglobal

corporation’schallengesinnegotiatingandcommunicatinglogisticsmanagement

responsibilities,especiallythoseinvolvingshippingtermssuchasIncoterms®,usingreal

corporatedata.Asshown,Incoterms®areusedandlikelymisusedinobserved

transactions,andexamplesofmisuseareprovidedbythecorporation.Consequencesof

useandmisusearedetailed,whichincludeincreasedinsuranceclaimsandpremiums

andunintendedcomplicationsassociatedwithCIFusage.Twospecificexamplesofthe

misuseofCIFareidentifiedanddiscussed.ThecomplicationsofCIFmisusagearenewto

theliterature,addingtoitemstoexploreandinvestigateinStudies2and3.

Thecorporation,duringvariousknowledge-mappingefforts,observedthe

internallackofsufficientIncoterms®knowledge.Toaddresstheproblem,the

corporationhasbeenworkingtoincreaseIncoterms®knowledgethroughinternalweb-

basedtraining.Inaddition,internalIncoterms®expertshaveemergedasreference

resourcesforthoseseekingclarityoradvice.Furthermore,theirinternalenterprise-

resourcesystem(ERP),SAP,usedtoinitiatepurchaseordersisbeingupdatedtoallow

only“true”Incoterms®rules.

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4.2STUDYTWO:MULTIPLECASESTUDIES(QUALITATIVERESEARCHFINDINGS)

4.2.1Introduction

Study2hasconductedmultiplequalitativecasestudiesthatexplorehowbuyer-

sellerdyadsnegotiateandcommunicatelogisticsmanagementdecisionsandthe

communicationerrorsthatoccurwithinbuyer-sellerdyads.Caseshavebeendrawn

fromapurposefulsampleofdyadswhereatleastonememberisassociatedwithan

anonymouslarge,internationalcorporationoperatinginmultipleindustrialmarkets.

Interviewswithmembersofselecteddyadshavebeenconductedandrepresentthe

casestudies.SelecteddyadsinvolveU.S.andnon-U.S.dyads,U.S.toU.S.dyads,and

non-U.S.tonon-U.S.dyadstoprovideatrueglobalandculturalperspectivefrom

samplesinNorthAmerica,Asia,andEurope.Ultimately,14individualshavebeen

interviewedinStudy2from12cases.

Followinggroundedtheoryguidelines(Glaser&Strauss,1967,2008;Strauss&

Corbin,1990,1998;Corbin&Strauss,2008),thisstudyhasutilizedpurposiveand

theoreticalsamplingtoselectthe14participantsinthetwelveinterviews.Purposive

samplingistheselectionofspecificindividualsorsettingsbelievedtohaveknowledge

orexperiencerelevanttothephenomenaunderinvestigation(Thomas,2013).Seven

buyersandtwosellerswithintheanonymouslarge,internationalcorporationinthe

industrialmarkethavebeenselectedasinitialsubjectsmostlikelytohaveknowledgeof

thephenomena.Therefore,ninepurposefulparticipantshavebeenselectedthrough

theresearcher’sknowledgeofthecorporation.Subsequentparticipantswereselected

109

viatheoreticalsampling.Theoreticalsamplingiscollectingdatatoexploitopportunities

tocultivateconcepts(Corbin&Strauss,2008;Thomas,2013).Ninesampled

participants,manyofthosechosenbytheresearcher,directedtheresearchertoother

individualslikelytohaveknowledgeoftheconceptsofinterest.Throughtheoretical

sampling,theoreticalsaturationcanbeachieved(Mello,2006;Williams,2014).

4.2.2DataCollection

Anin-depthsemi-structuredinterviewguidewasusedtoensurefocusofthe

researcherandparticipantsonthefourresearchquestions.Thecontentofthein-depth

semi-structuredinterviewguideisderivedfrominformationavailablefromthe

literaturereviewandtheresearcher’sknowledgeofthephenomena.Whenanin-depth

semi-structuredinterviewguideisused,conversationscoulddeviatewithopenand

flexiblediscoursethatallowsparticipantstosteerconversationswithintopicareas.The

interviewguideispresentedinAppendixII–StudyTwoIn-DepthSemi-Structured

InterviewGuide.Participantshavebeenencouragedtodrawoneitherrecentoratypical

experiencesintopicareasandwereprovidedacopyofthestructuredquestionswellin

advanceoftheinterviewallowingthemsomepreparationtimetoreflectonrelevant

experiences.

Thein-depthsemi-structuredinterviewguidefacilitatedthecodingof

intervieweeresponses.Mentorreviews,expertreviews,andapilotinterviewwereused

toverifytheinterviewguideforcompletenessandtoalleviateanypotentialissueswith

usingtheinterviewguide.Thementorreviewsconsistedofthisdissertationcommittee

110

reviewingandprovidingfeedbackontheinterviewguide.Similarly,expertreviewsfrom

withintheanonymouslarge,internationalcorporationoperatinginmultipleindustrial

marketshavebeenconducted.Onefinalpilotinterviewwasusedtofurtherfine-tune

thein-depthsemi-structuredinterviewguide.Thisiterativeprocesshasresultedinthe

finalin-depthsemi-structuredinterviewguidefoundinAppendixII.

4.2.3Sample

Atotalof12interviewswith14participantshasbeencompletedviatelephone

andrecordedwitheachparticipant’spermission.Theinterviewslastedbetween42and

84minutes.Usingtheaudiorecording,allinterviewshavebeentranscribedverbatimto

enablefurtheranalysis.Transcriptionhasresultedin158pagesofinterviewsplus36

pagesofinterviewernotes.Table4.7describestheparticipantsanddyads.Asshownin

Table4.7,sevenindividualsrepresentthe“buyer”inadyad,andsevenindividuals

representthe“seller.”Bothsidesoffourtruebuyer-sellerdyadshaveparticipated,

whilefourparticipantswhoseopposingdyadicpartnerswerenotavailablehavealso

beeninterviewed.Participants’yearsofexperiencerangedfromaminimumof9years

toamaximumof41yearswithanaverageof19yearsofexperience.Mostparticipants

statedthattheynegotiatedlogisticsdecisionsonaglobalbasis,whileonlyone

participantnegotiatedlocally,andoneothernegotiatedregionally.Thelevelof

negotiationsvariedbyparticipantwithagoodmixofstrategic,strategic/transactional,

andtransactionallogisticsdecisions.Thisrepresentedwelltherangeofallnegotiation

levelswithinthefocalorganization.Allparticipantshadnegotiatedlogistics

111

arrangementsforgoodsusedinmanufacturingproductionwithanannualspend/sales

pernegotiationrangingfrom$125,000to$600,000,000USD.

Table4.7-ParticipantandDyadTable

*Opposingdyadnotavailable

**Unknown/wouldnotdisclose

4.2.4DataCodingandAnalysis.

NVivoforMac©wasusedtofacilitatequalitativedatacodingandanalysis.The

researcherhasbeencarefultoproceedconsistentlywithgroundedtheoryguidelines

112

(Glaser&Strauss,1967,2008;Strauss&Corbin,1990,1998;Corbin&Strauss,2008;

Thomas,2013).Theprocessflowchart,Figure4.1,describesthemajoractivities

involvedinthedatacodingandanalysis.ThenumbersinFigure4.1indicatetheactual

numberofitemsprocessedineachstep.

Figure4.1ProcessFlowfromInterviewtoDiscussion

EachinterviewwastranscribedandimportedintoNVivoforMac©asacase.

Demographicinformation,suchasyearsofexperience,internalorexternaltofocalfirm,

andbuyer/sellerdyadhavebeenappendedtoeachcase.Initially,thirtyinformational

nodeswerecreatedcorrespondingtointervieweeresponsestothequestionsandsub-

questionscontainedinthestructuredinterviews.Thesenodeshavebeenanalyzedand

combinedtorepresenttheultimateresearchquestions,orcategories,thatemergefrom

thecasestudies.Tofirstfamiliarizetheresearcherwiththecases,awordfrequency

querywasrunonallthecases,andthenawordcloud,availableinAppendixIII–Word

CloudBeforeCoding,wascreated.WithinNVivoforMac,eachcasehasbeenthen

examinedmultipletimestofacilitateafullunderstandingofthedataineachcase.

Participants’responsestoeachquestion,whichcouldbeindividualwords,sentences,or

paragraphs,havebeencodedtoappropriatenodes,whichrepresenttheinitial

categoriesorthemesoftheresearch.Thisinitialcodingfromcasestonodesfollowed

theinterviewguidequestionsfoundinAppendixII.Tables4.8and4.9presentthe

Interview12

Trascription12

Case12

CodingCasestoNodes30

NodetoNodeCoding10

Category10

ResearchQuestion/Other

Categories4/4

113

codingfromcasestonodesinmoredetail.InTable4.8,thelargerboxesindicate

multiple-partquestionsmappedtomultiplenodes.InTable4.9,thecellentriessignify

thenumberofresponsesfromeachcase(words,sentences,orparagraphs)recordedfor

eachnode(questionorpartofaquestion).Followingthisinitialcoding,asecondword

frequencyquerywasrunfromjustthenodes,andthenanotherwordcloud,whichis

availableinAppendixIV–WordCloudAfterCoding,wascreated.TheresultofAppendix

IV–WordCloudAfterCodingindicatesmorerefinementcomparedtoAppendixIII–

WordCloudBeforeCoding.

Table4.8-CasetoNodeCodingTable

114

Table4.9-CasetoNodeCodingTable

WithinNVivoforMac©,nodalresponsesacrossthecaseswerethenexamined

tofullyunderstandtherelationshipbetweentheinformationcontainedintheindividual

115

nodesandtheoriginalresearchquestions(asgroupsorcategoriesofnodes).Further

codingforwords,sentences,orparagraphswasconductedtoidentifyrelationships

betweenexistingnodalcategoriestoidentifyemergentcategoriesnotpreviously

identifiedintheoriginalresearchquestions.Thefollowingtwotables,NodetoCategory

CodingTable4.10andNodetoCategoryCodingTable4.11,presenttheresultsofthe

subsequentre-codingsfromtheoriginalnodestothefinalsetofcategoriesidentifiedin

thedata.IntheNodetoCategoryCodingTable4.10,largerboxesindicatemore

complexcategories,andintheNodetoCategoryCodingTable4.11,cellentriessignify

thenumberofresponsesinnodesmappedtoeachfinalcategory.Additionally,thefirst

rowoftheNodetoCategoryCodingTable4.11showstherelationshipofthefinal

categoriestothefouroriginalresearchquestionsandtheemergentcategories.

Followingthisinitialcoding,anotherwordfrequencyquerywasrunfromjustthenodes,

andthenawordcloud,whichisavailableinAppendixV–WordCloudAfterNodeto

CategoryCoding,wascreated.TheresultofAppendixV–WordCloudAfterNodeto

CategoryindicatesmorerefinementcomparedtoAppendixIV–WordCloudAfter

Coding.

Table4.10-NodetoCategoryCodingTable

116

Table4.11-NodetoCategoryCodingTable

R1=Howdobuyer-sellerdyadsnegotiatelogisticsmanagementdecisions?R2=Howdobuyer-sellerdyadscommunicatelogisticsmanagementdecisions?R3=Whydologisticsmanagementdecisioncommunicationerrorsoccurbetweenbuyer-sellerdyads?R4=Whatcanimprovethequalityofbuyer-sellerdyads’communicationoflogisticsmanagementdecisions?Other=OthercategoriesdiscoveredDemographic=Demographicinformation

ThefollowingsampleprocessFigure4.2presentsthedetailsofanexampleof

themappingfromtheoriginal30nodesineachinterviewtothefinalcategoryof

researchquestionR4,“Whatcanimprovethequalityofbuyer-sellerdyads’

communicationoflogisticsmanagementdecisions?”

117

Figure4.2-SampleProcess

Theanalyticalprocessdescribedaboveisconsistentwiththeconstant

comparativemethodinwhichtheresearcherconstantlymovesbackandforthbetween

datacoding,analysis,andwithin/betweentranscriptslookingatdatafornewproperties

andtheoreticalcategories(Strauss&Corbin,1990,1998;Pappu&Mundy,2002;

Thomas,2013).

4.2.5TheoreticalSaturation

AsposedbyWilliams(2014),“akeyquestioningroundedtheoryresearchis:

Howwilltheresearcherknowwhentheresearchiscomplete?”Followinggrounded

theoryguidelines(Glaser&Strauss,1967,2008;Strauss&Corbin,1990,1998;Goulding,

2002;Mello,2006;Corbin&Strauss,2008;Thomas,2013;Williams,2014),data

collectioncontinuesuntiltheresearcherdeterminesthattheoreticalsaturationhas

beenmet.Theoreticalsaturationisreachedwhennonewinformationisobtainedfrom

asubsequentinterview(Goulding,2002;Thomas,2013;Williams,2014).Asnoted

furtherbyWilliams(2014),CorbinandStrauss(2008)andMello(2006),theoretical

saturationariseswhenthreecircumstancesareachieved:“a)noneworrelevantdata

seemtoemerge,b)thecategoryiswelldevelopedintermsofitspropertiesand

dimensiondemonstratingvariation,andc)therelationshipsamongcategoriesarewell

establishedandvalidated”(p.92-93).

Interview#2 Transcription#2

NVivoforMACCase#2

CodetoQuestion9&

14node

CodetoImprove

Qualitynode

DiscussImproveQualitycategory

118

PerGlaser(1978),asillustratedbyWilliams(2014),theresearchershouldtake

theresearchasfarasnecessarytoreachsaturationandnotcometoclosuretooearlyto

reachtheoreticalcompleteness.Goulding(2002)pointsout,asdemonstratedby

Williams(2014),thatnospecificrulesexisttopointhowlongaresearchershould

continuedatacollectionotherthantoachievedatasaturation,whichindicatesthatthe

datasampleencompassesthewidestandmostdiversifiedrangeofinformation

possible.This“saturation”occursthroughmaximizeddifferencesamongcasesunder

research(Glaser&Strauss,1967;Mello,2006;Williams,2014).Therefore,theoretical

saturationresultsincorevariableemergence,categoricalpropertiesidentification,and

clarificationofcategoricalrelationshipsandhence,behavioralexplanationsofthe

phenomenon(Mello,2006;Williams,2014).

PerMcCracken(1988),asnotedbyThomas(2013),theoreticalsaturationmay

generallybereachedinlessthaneightinterviews.Aftercompletingeightinterviews,

thisresearcherdeterminedthattheinvestigationhadreachedtheoreticalsaturation.

However,fouradditionalinterviewswerecompletedtoconfirmthattheoretical

saturationhadbeenachieved.Nonewdata,categories,variations,orrelationships

emergedintheadditionalinterviews.Thisincreasedconfidenceinthefindingof

theoreticalsaturation.Therelationshipsamongthecategorieswerewellestablished,

andwerevalidatedbytheadditionalsetoffourcases.

119

4.2.6ResearchTrustworthiness

AsnotedbyWilliams(2014),“itisnecessarytouseacceptedcriteriatoassess

therigorandtrustworthinessoftheresearch.”Asmentionedearlier,theassessorsof

quantitativeresearchrigor(internalvalidity,reliability,objectivity,andexternalvalidity)

aredifferentfromtheevaluationcriteriaforqualitativeresearch,especiallygrounded

theoryqualitativeresearch(Thomas,2013).Followingtheworksofotherresearchers

(Hirschman,1986;Lincoln&Guba,1985;andStrauss&Corbin,1990;Flint&Mentzer,

2000;Flintetal.,2002),Thomas(2013)developedanddefinedninecriteriafor

groundedtheorytrustworthinesspresentedinTable4.12withadiscussionofthe

applicationofthecriteriatoevaluatethetrustworthinessofthisresearch.

120

Table4.12ResearchTrustworthiness

TrustworthinessCriteria

Definition AppliedinthisStudy

Credibility Extenttowhichresultsappeartobeacceptablerepresentationsofthedata

Interviewswereconductedwithcontinueddataanalysis

Mentorreview,expertreview,andpilotinterviewwereusedtoverifyinterviewguide

Transferability Extenttowhichthefindingsmaytransfertoothercontexts

Usedtheoreticalsamplingtechniques

Avarietyofinternalandexternalbuyersandsuppliersfromdifferentindustries,firmsizes,andyearsofexperiencewereused

Dependability Extenttowhichfindingsareuniquetotimeandplace;thestabilityoftheexplanations

Participantsdiscussedrecentaswellaspreviousexperiences.Someexperiencesoccurredmanyyearsprior.

Internalandexternalbuyersandsupplierswererepresented

Confirmability Extenttowhichinterpretationsaretheresultoftheparticipantsandphenomenonandnottoresearcherbias

Mentorreview,expertreview,andpilotinterviewwereusedtoverifyinterviewguide

Verbatimtranscriptionof158interviewpagesplusadditionalnotes

Integrity

Extenttowhichfindingsaretheresultofmisinformationorevasionbyparticipants

Researcherconductedtheinterviewsinanonthreatening,professionalwayfollowingIRBprocedures

Participantsanonymitywasinsured

Fit Extenttowhichfindingsfitsubstantivearea

Addressedinresponsestocredibility,dependability,andconfirmability

Understanding

Extenttowhichtheorymakessensetoparticipants

Threeverificationtypes(mentorreview,peer/expertreview,pilot)wereusedfortheinterviewguide

Findingssummarywaspresentedtoparticipantsallowingthemtodetermineinterpretationrealism

Generality

Comprehensivenessofconstructandtheorydevelopment

Interviewlengthvariedbetween42and84minutesindicatingthattheyallowedtheemergencepertinenttothephenomenonineachinterview

Bothbuyerandsellerdyadswereinterviewed

Control

Extenttowhichaspectsofthetheorycanbeinfluenced

Participantshadsomedegreeofcontrolovervariablesthatleadtothetheory

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4.2.7DiscussionofQualitativeStudyTwoResults

Study2involvedemploying12qualitativecasestudiestoexplorethefollowing

fourresearchquestions:

• Howdobuyer-sellerdyadsnegotiatelogisticsmanagementdecisions?

• Howdobuyer-sellerdyadscommunicatelogisticsmanagementdecisions?

• Whydologisticsmanagementdecisioncommunicationerrorsoccurwithin

buyer-sellerdyads,andwhataretheconsequencesoftheseerrors?

• Whatcanimprovethequalityofbuyer-sellerdyadscommunicationoflogistics

managementdecisions?

Allfourofthefindingsfromtheanalysisofthecasestudiesaswellasemergentand

relatedtheoreticalconceptsuncoveredintheanalysisarediscussedbelow.Itis

importanttonotethatthedata,categories,andrelationshipsthatemergedwere

consistentacrosscasespecificparameterssuchasbuyer-seller,dyad,internalor

externaltofocalfirm,yearsofexperience,dollarresponsibility,negotiationlevel,and

scope.

4.2.7.1Howdobuyer-sellerdyadsnegotiatelogisticsmanagementdecisions?

GeneralNegotiationProcess.Participantsindicatedbroadfrequenciesof

negotiationwiththeirdyadiccounterpartsthatrangedfromweekly,monthly,and

quarterlytoannuallyorless.Negotiationfrequencyappearslinkedtothetypeoflogistic

negotiation,suchastransactionalnegotiations,newcontract/frameagreement

negotiations,orrenewalofcontract/frameagreementnegotiations.Frameagreements

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refertocontractsthatprovideageneralagreementontermsandconditions

(framework)thatallowstheflexibilitytoaddfurthernegotiationresultslater

throughouttheframeagreementvalidityperiod.Forexample,morefrequent

negotiationswerecitedbyindividualsusingonlypurchaseordersalongwithtermsand

conditionstonegotiatetransactions.Thiscontrastswithparticipantswhonegotiate

yearlyforcontract/frameagreementrenewals,wheretheirprimaryfocusispriceas

opposedtotermsandconditions,whichwerepreviouslyagreedtointheirprior

agreements.Fornegotiatingnewcontract/frameagreements,participantsgenerally

citedtheuseofa“template”providedbyeithertheircompanyortheoppositepartyto

guidethenegotiations.Atleastonebuyerstatedthataninformalpricingagreement

wasusedwithsomesuppliersduringandafternegotiations.However,eventhosewith

contract/frameagreementsstatedthatnewproductsorlogisticneedsarisingduringthe

lifecycleofthecontract/frameagreementrequirenegotiations,astheymayfalloutside

ofexistingagreements.Fortheseinstances,participantsaddeditemsasanaddendum

totheagreements.Beyondpartprice,whichiswhatmostparticipantsfocusedon,

participantsnotedthattheyalsonegotiatepaymentterms,currency,warranty,and

Incoterms®.ForbothpaymenttermsandIncoterms®,mostbuyersreferencedastrong

pushbytheircompanytotargettheminimumnumberofpaymentdays,suchasnet90

days,andpreferenceofspecificIncoterms®,suchasEXW,FCA,FOB,DAP,orDDP.

Allparticipantswereaskedtodescribearecent,typicalnegotiationprocess.

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Figure4.3portraysthefour-stagenegotiationprocessforcontractsdescribedinthe

cases.Acriticalobservationisthatallcasesdescribedusingprimarilyemailto

communicateandhence,negotiatewiththeiropposingparty.Verylittlein-personor

verbalcommunicationwasmentioned.In-personmeetingsappearlinkedto“verylarge”

negotiationswheremanyroundsofnegotiatingoccur.

Figure4.3-NegotiationProcess

Whenabuyerinadyadwasasked,whatisincludedintherequestforquote

(RFQ),thebuyerstated:

So,let'ssee,you'regoingtohaveaprice.You'regoingtohavealeadtimeinthere.It'sprettymuchatotalcostanalysis,andthereisatemplatethatweuseforthetotalcostanalysis.So,ifthereisgoingtobetransportation--we'regoingtolookatprice,quality,leadtime,andon-timedelivery.ButintheinitialquotingandRFQ,wewouldhaveleadtime,ifthere'saminimumorderquantity.There

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willbealogisticscomponent.Therewillalsobecomparingthecosttodoanassessmentandqualifythesupplieriftheyarenew.It'slookingatsizingandbackgroundinformation,sothereisafinancialanalysis.

Morespecifically,whenthebuyerinitiatesanRFQ,notonlydoestheRFQ

includearequestforpricesoftheproductionitems,italsoincludesproposedtermsand

conditionsfromthepurchaser’sperspective.Mostparticipantsnamedpaymentterms

andIncoterms®astypicaltermstheyrequireorprefer.Otheritemsortermsmentioned

included:technicaldetails,SupplierCodeofConduct,supplierqualification

questionnaire,lead-time,quality,warranty,letterofcredit,consignmentstock,supply

chainfinancingprogram,andkeyperformanceindicators(KPI),suchason-timedelivery.

Inotherwords,buyerstendedtooutlinetheirfulltermsandconditionsrequests,not

onlytheirpricerequest,intheinitialRFQphase.Theserequestswerethenreviewedby

thesellers,whoeitheraccepted,proposedalternativeterms,orprovidedadditional

terms.Asmentionedbyseveralbuyers,theRFQinformationisusedtoinformatotal

costofownershipanalysisthatisemployedtocompareoptionsofferedbysellers.

Bothbuyersandsellersmentionedapropensitytoformalizeagreementswitha

contractorframeagreement.Oneexperiencedbuyerexplained:

Ifeelourculturewithinthecompanyismorepro--infavorofcontractsthanitwas10-15yearsago.Well,really20years.So,ifyoutalkaboutsomebody'sbeenaroundawhile,aveteranorwhateveryouwanttocallme,that'sbeenaroundawhile,Ilookbackintheearly'90s,andthere'salotofwhatIwouldcallhandshakeagreements,whereasnowIthinkthegeneralcultureismorecontract-driven.

Thereafter,ordersaretransactedonpurchaseorders.

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NegotiationProcessforTransportation.Asshownintheprocessflowdiagramin

theprevioussection,negotiationfortermsandcostsoftransportationstartsintheRFQ

stagewithback-and-forthcommunicationthereafter.Onebuyerparticipantstatedit

best:

ItstartsintheRFQprocesswheretheyidentifytheircostfortransportationandhowthey'lldoit.Itypicallywillgivethepreferredtermsthatmycompanywilluse,andhere'sourcarriers,butIwillalsoaskthemfortheirpricing,andwhotheyusejusttomakesurethatwe'recompetitive.But,itusuallystartsatthepricing,andthenfromthere,itreallyiscoveredwhenwegettotheagreementstage.It'sprettymuchalreadydefinedintheagreement.

Thebuyerwentontomention:

SomycompanyintheGSA(meaningglobalsupplyagreement)hasasetofpreferredfreightterms,andalsoIknowwhattheIncoterms®isthatwetypicallyuse,butthenthereiscertainlyboilerplatelanguagethatisinourtemplatethatwewilltypicallytrytogetapprovedwiththesupplier.Hopefully,ifit'sasmallersupplier,usuallytheydon'thavetoomanyissueswithourtermsandconditionsinouragreementlanguage.Ifitisalarger,thatiswherewegetintoalotmorebackandforth.

Thebuyerelaborated:

Sotypically,whatI'lldoisI'llspecifythepreferredIncoterms®andthewaytoprovideit.So,IwillspecifythatIwouldliketohaveeverythingquotedinFCA.AndIcanalreadycalculatebecausewehaveafreightcalculator,soIcandeterminewhatourcost'sgoingtobeforthatfreight,butIwillaskthemtoquotethefreightbasedonthoseIncoterms®.Insomecases,I'llfindthesupplierdoesn'twanttouse,say,anFCAortheIncotermswe’vedefined,sotherefore,theywanttoputinExWorks,ortypicallyit'sExWorks.Thatbecomesalittlemorechallengingbecausenowyou'vegottosomewhatequatetheirpricequotedbacktotheFCA.So,thepreferenceisthateveryonequotesperFCAsoyouhaveagoodbenchmarkofprice-to-price.

Whenaskedtoclarifyfurther:

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I'mspecificallysayingthatI'mlookingatthecostofthetransportit'saseparateelementintheagreementthatwelookat.So,itisaseparatecostitem.So,no,it'sspecificallycomparingpriceoftransportbetweenthesuppliers,andgiventheirdistancethat'sgoingtoadjust.So,it'sakeyelementinthetotalcost,orthedeliveredcostfortheproduct.

Anotherbuyerclearlyindicated,“Normally,whenwestartthesourcingprocess,wewere

lettingsupplierknowwhatkindofIncoterms®.”Adifferentbuyerspecified:

LikeIsaid,ifthere'snotanagreementalreadyinplace,andImightinsomeinstanceswhenIknowthecostfortransportationwillbesignificantbecausetheproductisbigorbecauseit'sheavy,thenIwillmaybegobackandaskthesupplier,"Okay,soifIweretoaskyoutotakethetransportationwhatwouldbeyournewpricing?"Andthenhe'llcomebackwithaprice,andthenI'llevaluatewhetherornotit'smoretomyadvantagetotakeonthetransportationorleaveitwiththesupplier.Butagain,you'llhaveothersubjectivefactorsthatcomeintoplace.IfIwantthefullcontroloverit,thenImightjustsay,"Okay,no,Iprefertotakeonthetransportation,"andtakeiteventhoughitmightbemoreexpensivethanifthesuppliertakesit.

Asdescribedbytheparticipants,thebuyersgenerallystateeithertheirpreferred

Incoterms®oraskformultiplealternativesavailablefromthesuppliers.Multiple

alternativesareusedbythebuyertosupportatotalcostofownership(TCO)analysis.

Onebuyerexplaineditthisway:

YeahbutIguesswearecomparinglikeifwehavesomethingthatwouldbeshipped,let'ssay,inEuropefromonecountrytoanother,sowe'rejustcomparingourowntransportationcostsversussuppliers'transportationcosts.So,wedojustlikeaprice-to-pricecomparisonforthatsectiontransportation.butweliketheTCOisactuallydoneforthetotalcostlikethepriceofthegoodwiththetransportation,ifthere'sanydutyonthatinventory,andsoon,andpaymentterms,andthisisall.Butifwe'rejustcomparingfreightcosttofreightcost,wedoourowncostandthencompareittothesupplier'scost.Andthenwedecideifwewilltaketheresponsibilityofthetransportationdependingonthesecosts.

Whenasked,“Whatifyoucomparesuppliersfromdifferentareas?”thebuyerreplied:

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Thatwouldbe,Iguess,thesamething.Butthatwouldbe--theTCOwillactuallydrivethefinalcost.So,ifit'sdifferentfromadifferentcountry,thenitwillgiveus--wecouldinsomecasessay,"Okay,thissupplyisfromthatcountry.Transportationcostslookprettyhigh.Maybewecanjustlookatourinternalcoststoseeifwecouldgetsomemorebenefit."Andthenwe'lldothefinalTCOtocompareonesuppliertoanother.

Incontrast,asellerinadyadcommentedonTCO:

Thesebuyersarelookingto--they'restartingtocomparetransportationcost.So,it'snotuncommonwiththefewcustomersthatIhaveforthemtoaskmetoquoteaproductthatcangivethemmultipleoptionsfortheirshippingterms.Andthat'squiteproblematicforme.Itaddsalotmoreworkto--ormoreefforttowhatI'mdoing.

Theseller’sresponsesalsosupportedthecommentsbythebuyersindyads.Oneseller,

whostateditbest,explainstheseller’sperspective:

Well,withmostofthecustomers,theyagreewhatIproposeinmyquote.Fromexperience,Iknowmycustomers,andIknow,okay,theyusuallyacceptEx-Works,forexample.Theycanacceptmydeliverytime.They'renotnegotiatingtherebecausetheyknowus.So,usually,ifhetalksaboutpricing,thenheusuallyacceptsalltherest.

Thesellercontinued:

Sometimes,ofcourse,hedoesn'twanttohaveanEx-Worksstate,buthewantsFreeonBoard,orevendelivered,andthen,again,Ipickupthephoneandsay,"Well,okay,youcanhavetheFreeonBoardordelivered,butthenI'mgoingtoraisemyprice,"whichtheyusuallyunderstand,ofcourse.

Anothersellerindicated,“Inofferstage,orwhenheplacestheorder,onceitisconfirmed

whichIncoterms®hewants,thenthere'snofurthernegotiation,”whileathirdseller

commented:

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Usuallyit'sonthefrontend.Solet'sjustsayabrand-newcustomercomestometoday,sendsmeaquoterequest."Hey,IgotyournamefromJoeBlowoveratXYZcompany.Okay,here'smyproject.Here'swhatitis,Isubmitpricingthatsays,"Hey,ourpricingisFOBourdock."Whichmeans,hey,you'refiguringouthowtogetitfrommydocktoyourdockatyourexpense.Theycomebacktomeandsay,"Hey,canyouincludefreight?"thenweincludefreight.Iftheysay,"Hey,everythinggoingforward,pleaseincludefreight,"thenweincludethefreight.Iftheysay,"Hey,letmeknowwhenthepartsaredone,we'llarrangetohaveatruckthere,"wedothataswell.It'sreallydeterminedonthefrontend,andthenonceweunderstandwhatthecustomerneeds,andhowtheyoperate,wecontinuetooperatealongthoseterms.

Regardingtransportation,bothbuyersandsellersstatedthattheyconsidernot

onlythecosts,suchastransportandduty,buttheyalsoconsiderthetasksandrisks

associatedwithmovingthegoodsfromsellertobuyer.UsingtheIncoterms®,many

buyersandsellersmentionedthattheycomparethetaskstheyareresponsiblefor

versusthetaskstheotherpartyisresponsibleforintheirnegotiations.Tasksmentioned

includeitemssuchascustomsclearance,documentation,andpackaging.Whenthe

valueofthegoodsishigh,thenbothbuyersandsellersprefertheotherpartytotakeon

theriskduringthetransportation.Onebuyercommented,“Itreallycomesdowntothe

Incotermsandthepassingofrisk.”Asecondbuyerstated:

IwouldsaythatbecausemostofthetimegoodsthatIpurchaseareunderglobalagreements,theinsuranceiscoveredbyourglobalfreightforwarder,soIdonotconsiderthatinmynegotiationsconsideringthatthetransportationiswithus.Ifit'swiththesupplier,mostofthetime--I'mtryingtosee.Itwilldependonthevalueofthegoodtoo,right?Ifit'sjustsomethingthat'snotworthmuch,thenIwon'tbothertothinkaboutriskandinsurance.Ifit'ssomethingthat'sworthalotofmoney,thenyesIwillconsiderit.It'sreallydependingonthevalueofthegoodsalso.

Thebuyercontinued:

Localpurchasesaremorelow-valueitemsIwouldsay.SoIwouldn'treallytakeinconsiderationriskorinsurancebecausethegoodsareoflesservalue.

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Anotherbuyerstated:

BecausedependingontheIncotermthatwe'llbeusing,customclearanceanddocumentationwilleitherfalloneitherthesellerorthebuyer.SointhesensewhereIagreedtoanIncoterm®,it'stakenintoconsideration.Sometimesifweknowthatsomethingisveryurgentorthatthetransportationistimesensitive,thenwemightseekon--itmightinfluencemynegotiationinthesensethatI’llwanttotakeonthetransportationtohaveabettercontroloverit.Sointhatsenseitwillinfluence.

Restatingthiscomment,buyersmaysometimeprefertouseanIncoterms®rule

thatallowsthemtohandletransportationtoprovidemorecontrolandvisibilityover

deliveryanditsassociatedcosts.ThissupportsKumar(2010),whosuggestsswitching

fromFOBtoFCAIncoterms®toreducefreightcoststhataregeneratedbycloserport

routings,duetobuyer’sandnotseller’spreferenceofport,andreductionindutytothe

buyer.

Asellercommented:

Thebuyer.So,IknowthatwithFCAnotunloadedtoafirstUSdestination,thereissomecostsassociatedwithusandrisksoftransportingthegoodsfromourfactorytothatlocation.So,that'ssomethingthatwe'reawareof.

4.2.7.2Howdobuyer-sellerdyadscommunicatelogisticsmanagementdecisions?

Asmentionedearlierinthegeneralnegotiationprocesssection,buyersand

sellersindyadsprimarilyuseemailtocommunicatewiththeiropposingparty.Within

theseemailcommunications,allparticipantsmentionedIncoterms®rules,orwhatthey

thoughtwereIncoterms®rules(e.g.UCCtermsofsale),andtheirthreecharacter

acronyms,asthemethodwithintheemailcommunicationstorepresentoptionsand

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choicesregardingtheassignmentsoflogisticsresponsibilities.Thiswasthesameforall

negotiationstypes.Onebuyercommented:

TheIncoterms®areclearwhenwesendoutthepurchaseorder.Inthepurchaseorder,it'swrittenourIncoterms®,andhewillconfirmtheacknowledgmentwiththesameIncoterms®.Ifit'ssamething,thenwekeepit,andwearethinkingaboutthatit'sclear.Andiftheacknowledgmentiswrong,sowehavetocheckitwiththesupplierwhyhewon'tadoptourIncoterms®.Butafterreceivingtheacknowledgmentinforthewholetransportation,it'sclearwhohastopay.

Threeotherbuyershadsimilarcomments:

1. Butit'sactuallyagreedduringnegotiationandthenwejuststateitonthefinalagreementwhatwouldbetheIncoterms®.---Basically,wejustuseIncoterms®.

2. TheIncoterms®isprettycomprehensiveonwhodoeswhat,when,how,why,blah,blah,blah.Itanswersallthat,sono.Typically,onceyouagreeontheIncoterms®,it'sprettyclearwho'sdoingwhat.

3. Whenyoutalkabouttransportation,theIncoterms®arethebigdeal.Communicationofablackandwhiteagreementonthatisthebigdeal.Andfromthere,you'vegottobeabletomanageit,monitorit,whatever.

Sellersprovidedsimilarcomments.Onesellerstated,“[..]everybodystickstothe

Incoterms®.Thisisaglobalstandardfortransportation.”Anothersellerrationalized:

Exactly,we'reverystrictlyworkingtotheIncoterms®2010.Basically,we'reobeyingtotherulesthatmakesiteasybecausethey'retheworldwidetermsandeverythingissolvedinthatbasically.

ThisuseofIncoterms®placesaveryheavyrelianceonboththebuyer’sand

seller’sunderstandingsofIncoterms®rules.Otherwise,communicationerrorscan

occur.Onebuyerdescribedthis,“Ifit'ssaysCPT,thenthereisanIncoterms®thatguides

that.IdonotspelloutwhatCPTmeans.”Anotherbuyercommented:

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WiththeIncoterms®mainly,ifyoudoitwell,thereshouldbelittleroomformiscommunicationunlessthesupplierdoesn'tunderstandtheIncotermterminology.

Sellerscommentedsimilarly.Onesellerexplained,“Yeah.Ithinkthisoneshould

beverycleartofollowtheIncoterms®.”Thesellercontinuedtotalkaboutlistingout

detailsinthecustomeragreement:

Ithinkno,evenfromthecontractperspective.Nomoredetailslefttoexplainwhat'saFOB,what'sresponsibilitiesthatyouneedtotake.Yeah,Incoterms®thesuppliersalsounderstandveryclear.

Anothersellerstated,“ImeantheIncoterms®theybasicallystateeverything.There's

nothingbetteryoucouldreallyuse.”

AtleastonebuyerrecognizedthatIncoterms®rulesarenottobeconfusedwith

theUniformCommercialCode(UCC)1951shippinganddeliverytermsthatareprimarily

usedwithinNorthAmerica,especiallytheUnitedStates(LegalInformationInstitute,

2015;Bergami,2011;Bergami,2012).TheCanadian-basedbuyerexplained:

Iwouldsayitdependsonthesupplier.Ifit'saninternationalsupplierwho'susedtosupplyingglobally,thenIncoterms®mostofthetimeissufficientforbothpartiestohaveagoodunderstandingofwhatitimplicates.ButoftenlocalorU.S.suppliersarelessfamiliarwiththeseinternationalIncoterms®andyouhavetogointothespecificationsandsay,"Okay,I'dliketochangeforIncoterm®such-and-such,henceyouwillberesponsiblefordeliveryuptothispoint,"etcetera,etcetera.So,itreallydependsonthefluencyofthesupplierintermsofIncoterm®knowledge.BecauseintheU.S.,youhadthisprevious-Idon'tknowwhatsystemtheycalledit-buttheFOBterminologyandthelessinternationalterminology.Sosometimesyou'llgetrequestsforquotationsthatindicateFOBsuch-and-such,butweprefertousetheinternationalstandardoftheIncoterms®.So,notallsuppliersarefluentintermsofthoseterminologies.So,itwilldepend.IfIseethatthesupplierisnotgettingwhatI'masking,I'llhavetospellitoutforhim.Otherwise,iftheyagreetomyIncoterm®,FCAforinstance,orDDPwouldbemoreto--DAP

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wouldbemoretomyadvantage.Andifhesaysyes,thenmycomprehensionisthatheunderstandsoratleastlookedituptomakesurethatheunderstandswhatI'maskingfor.Otherwise,Iguesshe'stightwiththelegalimplicationsofit.

4.2.7.3Whydoerrorsinlogisticsmanagementdecisioncommunicationoccurwithin

buyer-sellerdyads,andwhataretheconsequencesoftheseerrors?

ItbecameapparentthatathoroughunderstandingofallIncoterms®rules

aspectsisexceedinglyuncommon.Forexample,asellermistakenlycommentedthat

Incoterms®donotclarifyinsurance,sotheynegotiatethisseparately:

Andofcourse,apartfromtheIncoterms®theotherthingisinsurance.Incoterms®don'tcoverinsurance,soeachcustomerthatweselltohastobeinsuredbyourcreditinsurancecompany.Iftheydon'tgetinsurancethenwedon'tdothetransportation,weratherinsistforthiscustomerto,forinstance,payinadvanceandtakecareofthetransportationthemselves.Thiscompletelytakestheriskoutofourbusinessbecausewe'redealing[witha]productthat’squiteexpensive.Inordertominimizetherisk,thenthisisthebestwaytodo.Butit'squiterareIthink.90%ofourcustomersarefullyinsuredonthequitehighvalues.

Whenaskedifownershipofgoods,whichisalsoreferredtoastitletransfer,is

consideredduringtransport,theresponsesvaried.Onesellerremarked:

ThisshouldbecoveredagainwiththeIncoterms®.Normally,ifitisExWorks,weconsiderthatthetitleofthe-howyousay-theownershipofthematerialchangeswhenweloadonthetruck.So,whenthemachineexitsfromhere,theowneristhecustomer,becausenormallywithExWorks,wedon'tdonothing.So,it'sthecustomerorganizingthetransportationandsoon.WhilewithDAP,thecustomerbecameowneronlywhenthemachineisdischargedathissite.Thentherearesomesituationinthemiddle,likethecashagainstdocuments.---So,inthiscase,weare--thetitlepassedfromustothecustomerwhenthecustomerpaysthebank,andthebankgivesthedocumentstothecustomer.Andthecustomerscantransferthemachinetothefinalsite.Sonormally,wefollowtheIncoterm,mostlyforthepassageofownershiponthematerial.

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Anothersellerstated:

Wellyeah,thatreallydependsontheIncoterms®thatarebeingused.TheIncoterms®basicallymakeclearwhohasownershiporwhohasthetitleofthegoodsduringthetransport.

Abuyercommented:

ItisintheGSA.Alotoftimesitdoesgetdiscussed.Ofcourse,thepreferenceisthatwedon'ttaketitleuntilit'sdelivered.Alotoftimesthat'snotthecase.Bestcasewouldbethat--ormaybe,worstcase,butI'llsayitisbestcase.Bestcaseisthatthetitleandtransferisatthepointthatweactuallypickupthegoods,andthatmainlywilltakeplaceifwe'reusingourauthorizedtransportprovidersbecausethat'showwenegotiateitintheagreement.

Asecondbuyerexplained:

Typically,whilethat'sakeyelementinIncoterms®,rightorwrong,typicallynotreally.Andthat'sprobablyamistake.AndwhenIsayamistake,I'mtalkingamistakeonmypart.Butalotofmypeerswithinthecompany,Ikindofwonderhowmuchthey'reconsideringit,too.Idon'tthinkIorwedoagoodjobontrulyconsideringtheIncoterm,thedeals,andhowitdealswiththeownership.Sono,Idon'tthinkIdo.

Thevariedresponsesrelatingtotransferoftitleorownershipindicatea

misunderstandingofIncoterms®rules.Incoterms®donotindicatetransferoftitleor

ownership(LegalInformationInstitute,2015;Bergami,2012).

Furtherincreasingthelikelihoodofcommunicationerrorsandaspresented

earlier,soleuseofIncoterms®placesaveryheavyrelianceonboththebuyer’sand

seller’sunderstandingsofIncoterms®rules.Otherwise,communicationerrorscan

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occur.BuyersandsellersdonotoperationallydefineIncoterms®ruleswhile

communicatingwiththeotherparty.Theyexpectthattheotherpartyfullyunderstands

theIncoterms®rule.SomeinthestudyalsorecognizedthatIncoterms®rulesarenotto

beconfusedwiththeUniformCommercialCode(UCC)1951shippinganddeliveryterms

thatareprimarilyusedwithinNorthAmerica,especiallytheUnitedStates(Legal

InformationInstitute2015,Bergami2011,Bergami2012).

Buildingonpaststudies(Stapleton&Saulnier,2001;Bergami,2011,2012,2013;

Glitz,2011;Malfliet,2011;Ramberg,2011;Stapleton,2014;Stapletonetal.,2014a,

2014b),Study2hasattemptedtoextendandvalidateexistingresearchon

communicationerrorsbetweenbuyersandsellers.Thecasestudieshaveprovided

extensiveexamplesofcommunicationerrorsandotherinterestingaspectsofthebuyer-

sellerrelationshipasrelatedtodecisionsaboutcommunicatinglogisticsmanagement.

Bothbuyersandsellersprovidedexamplesofcommunicationerrors.Onebuyer

notedtwoexamplesofcommunicationerrorsrelatedtotheIncoterms®rulesusedwith

aseller.Thebuyerbrieflyexplainedthefirstexample,whereaftermanysuccessful

repeatpurchases,thesellerraisedanissueaboutcustomsclearanceresponsibility:

Wehadissueswithwhowasresponsibleforthecustomsclearance.Anditmayhavebeenacasetheydidn'twanttodoitanymore.Eventhoughtheyhadbeendoingit.

Thesecondexamplecontainedanunclear“nameplaceofdestination”relatedtothe

Incoterms®ruleusedwithaseller:

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AndthentheotherexamplewasthatwehadaplacewheretheyactuallyclosedtheirU.S.warehousing.Sonow,itputadditionalstrainontransportationcostandwhatnot.Becauseweneededtolookat,youknow,bringinginhalforfullcontainerloads.Andthenalso,wewereresponsiblefortheinventoryandtheshipmenttothelocationfromaninternational.

Thefirstexampleerrorresultedfromunclearcustomsclearanceresponsibilities,

andthesecondexampleerrorwascausedbynotspecifyingthepurchaseorigin,which

usedtobeaU.S.warehouse,andresultedinpurelydomestictransportation.Thebuyer

continuedtoexplainthatbothexamplescostsubstantialadditionalmonies.

Itwasanunfavorablechange,andthenthenegotiationswasreallyaroundhowdoweminimizethat.Inbothcases,itwasanadditionalcostorrisktothecompany.Inonecase,itwasaninventorycarryingcostrisk.Yeah,inbothcases,butthenegotiationreallywastotrytominimizetheimpact.

Aselleralsoindicatedthatdeliverylocationscanbeproblematic.

IfItakeTurkey,foranexample,wherewehaveonecustomerentity,it'sagoodexampletousethiscustomeractually.Wherewehaveonecustomerfactory,whowanttheirmaterialstobedeliveredtoawarehouse,whichisclosetotheirfactory.Butthisissomethingthatwascommunicatedwrongfromcustomeratfirst.Whenwegottherightinformation,then,ofcourse.Unfortunately,asitis,amistakehappenedhere.So,thenextdeliveryagainwentdirectlytothecustomer,sothatwasjustbasicmiscommunication,butsolvedveryfast.

Thesellercontinued:

Well,it'squitesimple.Whenwestartedthisbusiness,wereceivedthepurchaseorder.Thepurchaseorderhadadeliveryaddressonit.So,it'sastandardpurchaseorderwithadeliveryaddress,whichwastheaddressofthecustomerfacility.Thisistheinformationthatweusedtoshipoutthisshipmenttothefacility.Untilwegotanoticefromtheentitysaying,"Hey,wereceivedthetruck,butthistruckshouldn'thavebeenhere,"buthowshouldweknow?Wethengottheinformationthatnextshipmentpleasetothisandthiswarehouse,whichdidn'tactuallyhappen,whichwasalsoamiscommunicationwithinourcompanywherethe

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customerservicebasicallystatedthenewaddress,butthelogistics,whichisadifferentdepartment,howdoyousay,didgettheinformation,butviaemail.

Theselleradded:

Weweren't,atthatpoint-thisisaboutthreeyearsago-wedidn'thavethesystem.WewereworkingwithSAP.Wedidn'thavethesystemsetuptohaveaninterfacebetweencustomerserviceandlogistics,soalotwasdonethroughemailwhenitcametodeliveryaddressesandsoon.Thingsliketerms,andquantities,deliverynotes,invoices,andstuff.That'scommunicatedbySAP,butatthattimeaddressesweren't.Thiswasarequestbyemail,whichbasicallywasn'treadbythepersonwhoreceivedit.So,itwentwrongasecondtime.Butfromthatpointon-becauseitdidgowrong-itdidn'tcausetoomuchangeroranything.Itwasjustabasicmistake,butfromthatpointonitwashandledinadifferentpriority,andsincetwoyears,wehaveacompleteinterfacebetweenlogisticsandsalesandcustomerservice.So,allinformationisbeingtransferredonetoone.Andofcourse,italwaysdependswhat'swrittenonthePO.That'stheinformationthat'smostrelevantforus.

OneotherbuyerofferedanexamplethatcausedissueswithaNorthAmerica

FreeTradeAgreement(NAFTA)qualifiedshipmentthatshouldhavebeenusinganFCA

Incoterms®rule,butinstead,theorderindicatedtheEXWIncoterms®rule.

Ibelieve,duringnegotiation,theIncotermswasFCAbutonthePO,IthinkitwasstatedExWorks.Ibelieve--I'mnot100%sureofthat,butthisiswhatIremember.Ibelievethatwaswhereitledthemiscommunication,Ithinkitwas,betweenthecontractadministratorandthebuyersthatweprobablydidnotmakesurethateverythingwasclear.Andevenfromthesupplierside,theyshouldhaveusedthecontractIncoterms®inthatcasebuttheyusedaPO.

Thebuyercontinued:

LikeIsaid,itwassomethingthatwedidnot,thatweoverlookedthisdetailforsurebackthen,andIthinkitwasbackin2013,somethinglikethator,Ican'trecallexactlythetime,butthisisnotimportant.Ithinkthethingwasthatweshouldhavevalidatedthatinformationupfrontbefore.Becausenowweknowthatfor

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any--sincealsothatitwasinvolvingthefreetrade.Iguessit'salsofrombothsidesIbelievebecausesupplierisalso--theyhaveexperienceofshippingtoU.S.Ithinktheycouldhavecaughtthatalsobefore,butwecannotrelyonsuppliersonthis.Weshouldupfrontdotherightthingatthebeginning.So,wedefinitelymissedonthisexample.WedidnotdefinetherightIncoterms®atthebeginning.

Thebuyeradded:

Ishouldsaythatthenthemistakewassigningonthecontractside.ButnowweknowthatweshouldneveruseExWork,andIthinkitwasmaybealessonlearned.

WiththeEXWIncoterms®rule,thesupplierdidnotneedtocleargoodsfor

exportandhence,thesupplierdidnotfeelobligedtoprovideaNAFTAform,which

wouldhavesavedthebuyer’scompanyfrompayingimportduty.Thisresultedin$8,500

dutypershipmentonaproductthatshippedweekly.

AnotherbuyerlocatedinP.R.Chinaprovidedanexamplewherebothinternal

andexternalmiscommunicationwaspresent:

EvenfromUnitedStates,somepeople,really,theycannotunderstandwhat'smeaningofDAP.Eveniftwoweeksago,wehavesignedallthecontractsalready,thefinancecontrollersuddenlysaid,"…wecannotacceptDAP.YouhavetodotheDDP."Thisiseventhelastminute.Ithinkthisisveryinteresting.Formyunderstanding,aswementioned,whenwestartthisprojectwithsuppliers,wehavetoteachthem,trainthem,oreducatethemtogivethemexplanationofwhatisdefinitionofeachkindofIncoterms®,sosuppliercanunderstandwhatkindoftaskstheyneedtotake,whatkindofresponsibilitytheyneedtotake,especiallyforthecustomerrelated.ButsometimesfromtheU.S.side,it'scrazy."Oh,I'msorry,wecannotuseDAP."Thingslikethat.Soforsure,wehavethiskindofmiscommunication.Frombuyerside,becauseU.S.isimportedcountry,sofromcustomerunderstanding,youshouldhaveonecustomerspecialistwhocanleadthiskindofcommunicationstoavoidanymisunderstanding.So,fromsupplierside,sure,wecanhelpthemtounderstandthis.

Thebuyercontinuedtoexplainthat:

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So,U.S.mostly(sources)goodscomefromlow-costcountrylikeChina,India,andothercountries.So,sometimeswhenweusethoseIncoterms®,sometimestheytellme,"WeneedthegoodswithFOBbehindit."Itmeansthattheydon'tunderstandthedefinitionoftheIncoterms®.Ithinkthisisachallengeforus,butfromthisglobalarea,theycanunderstandverywell.Butmaybefortheotherfunctionalitydepartmentlikelogistics,likefinance,likeother,theymaynotsoclearabouttheseterms,whatreallyisthedefinitionshouldhave.Whowillbechargedthecustomsrelatedcost?Whowillbechargedthetransportation,inlandtransportation?Orthingslikethat.So,westillneedtotakesometimetogetsupport…internally.Hecanunderstandandsupportit.Hecansendouttogetsomeadvice.Next,DDP,wecannotdothatbecauseChinesesupplierhasnolegalentityintheU.S.,right?So,theycannotdoDDP.So,Ithinkthere'sonlyonesolution--oneoption,DAP,starttodothat.Soafterthat,Ithinkeverybodycanbeagreewhatwediscussed.Stillneedsometime.

Thebuyercontinuedtopointout,“Miscommunicationisthatwe'llbeleadingtomis-

operationIthink.”Anadditionalbuyerprovidedamiscommunicationexample:

WehadpartscominginfromanIndiasupplier,anditwasn'tcleartothemifFCAimplicatedcustomsclearance.So,whenthegoodswereabouttoleave,wehadtohavesomeback-and-forthdiscussionsontryingtofigureoutwhowasresponsibleforwhatbecauseitwasn'tcleartothemoffthebat.Sobasically,weendeduppayingafeeforthemtotakeonsomeresponsibilitiesthatwehadunderstoodtobepartoftheirresponsibilityattheoutset.Butitwasaminimalfee,soitendedoutokay,Iguess.Haditbeenmoreimportant,thenImightnothavehadthesameresponse[chuckles].Disagreementsondeliverypoints,sometimesitmightnotbeclearifagoodiscomingfromoverseas.Itsdeliverypointis--you'vegotlotsofdeliverypointsatsaytheportatMontrealratherthandoordelivery,soitmighthappenwhereyouhaveadisagreement--well,notadisagreementbutunclearwhetherwhoisresponsiblefortakingonthelastportionofporttodoor.Sothen,again,whathappensinthoseinstancesisthatthere'scommunicationbecausethenthefreightforwarderwillaskquestionsandthenthesupplierandthebuyerwillhavetochatagaintoestablish,"Okay,sohowdowegetthisproductnowtothefinaldestination?"So,youreadjustontheway.Ifmiscommunicationhappenedattheoutset,youjusthavetodealwithitasitgoesalong.

Aselleralsocommentedonmiscommunication:

Therearetasksassociatedwithexportinggoodsthataren'tcoveredbytheseIncoterms.AndIguessanexampleofthosemightbelikecontainerizationfees,or

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stuffingcharges,loadingcharges,thesekindsofthings.Andifit'sacustomerthatwehaven'talreadyestablishedaroutineoranormalpayment,abunchoftransactionsinarowwheresomethingdidn'tcomeup,thesecustomersmightconsiderthesefeestobesomethingthatmycompanyisresponsiblefor.Andthroughtheyears,whatI'vedoneischangemytemplateforaquotationtoincludefurtherclarificationonwho'sresponsibleforwhat,forthosethingsthataren'texclusivelyclarified,Iguess,injustthethree-letterIncotermsintermsofshipment.

Thesellercontinued:

Inthosecases,wheresomebodyknowsenoughaboutIncotermstosay,"Well,youquotedusCIF,butthisshufflingfeeorcontainerizationfeeisn'texclusivelydescribedinyourquotation."Aconcessionmightbemadeonmysidetoensurethatthatdoesn'tescalatetosomethingbiggerbecauseit'salessonlearnedthing,Iguess,formealongtheway.Sonow,ImakesurethatinmyquotationwhereIputtheseshippingterms,itdoesn'tjustsayFCAnotunloadedfirstU.S.destination,thenthere'sanothertwoorthreelinesbehinditthatclarifysomeofthoseotherchargesandwho'sresponsibleforwhat.

Thesellernotedthatfeescanadd$150to$300pershipment.Interestingly,this

examplealsoindicatesacommunicationerror,asIncoterms®rulesdoaddressthecosts

thatthesellerreferredto.Anothersellerexplainedageneralmiscommunication

example:

TheIncoterms®,theythoughtit'snotEx-Works,it'sFOB,andthentheyclaim,"Well,butyouknow,inmycountry,it'salwaysbeenlikethat."Thenyoutrytosellittohim,ofcourse,sohehastopaymore,butinmostcases,theywanttosticktotheirpricingtheyissuedtheorderfor,becauseheclaim,"Because…it’sbeenapprovedbymanagement.Icannotaskformoremoney,blah,blah,blah."Whathappensthen,wejusttrytogetthemoneyforthenextorder,sowemakeakindofhiddensurplusonthenextordertocompensatethelossofthelastone--ornottheloss,butthehigherexpendituresonourside.---ItisIncoterms,whichhe'llalsohavetochange.BecausehecannotmisinterpretanFCAterm.Thisisthesameforeverybody.Buthe'sgoingtoaskforanotherterm.

Thesellercontinued:

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Yeah,probablybecausethebuyerdidnotpayenoughattention.Hewasfocusing,"IstheproductthecorrectproductoristhepricingwhatIneed?"Thenheprobablydoesn'tpaytoomuchattentionontheIncoterms,uptothepointwherewetellhim,"Well,it'sready.Youcanpickitup."Andhegoes,"Whoa,whatdoyoumeanbypickingup?Youhavetodeliver."So,itcanhappen,thenyoustartagain.

Anothersellerprovided:

Normallywhathappensis,asIsaidwiththeMiddleEast,theproblemisthatsometimes,wedon'texporttheirpartsaccordingtoAeroMed,andthenthecustomerclaimthathewantstohavethisdeclarationtoskipthedutypayments.So,thisis,Ithink,thecasethathappensmoreregularly,notalwaysduetous,butbecausesometimestheypromisetogettogetthiscertificate,youmustorderthepartswiththesamecertificatestothesupplier.Butifthecustomerasksforaveryrapiddelivery,soveryquick,tohavethepartsinaveryshorttime,weneedtodeliverfromourwarehouse,andinthiscase,wecannotapplytheAeroMed.Andsometimes,thesearegreyarea,becausemaybeweareincontactwiththeirtechnicalguy,andthenthepurchaseisadifferentguy.So,thetechnicalguyneedsthepartsreallyveryfast,butthepurchasingisnotaligned,andsothiscreatessomemistakes.

Whenaskedifthiscommunicationerrorcosttheircompanymoney,theresponsewas:

Yes,becauseifwehavetomakeadiscountinordertosolvenotperfectsituationwithmoney.

Abuyeralsoindicatedanexampleoffreightforwardererror:

Theywillreceivethepapersheetsfromthesupplier,andtheywilldotheirownairwaybill,andtheywillwritedown,maybeIdon'tknow,anExWorks,anditwouldbeDAPorwhatever,thenwehavetocheckitbeforewegivetheokayfortheimport,andthenwehavetoclarifywiththesupplierwhyhechangedit.Oritcouldbethefaultintheforwarder.

Thebuyercontinued:

Mostofthetimewegobacktotheforwarderandtellthemitcan'tbebecausethepapersheetsfromthesupplierarecorrect,buttheforwarderhasmissed,orhastyposinthesystem.Mostofthetimetheproblemisbytheforwarderteam.

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Inthiscase,thebuyerindicated:

It'sreallythefaultoftheprovider,soit'sokay.So,wehavetodiscusswithourprovider,orweknowthatthenexttimewewon'thavethisprovider;werecommendanotherone.That'stheonlythingwheretheimpactis,thatwechooseanotherforwarder.

Participantswerealsoaskedabouttheimpactofmiscommunicationrelatedto

transportation.Abuyerstated,“Yes,definitely,maybeimpacttherelationshipwith

supplier.Absolutely.”Anotherbuyersupportedthisfurther:

Clearly.Clearly.Clearly.Miscommunicationofanysortisgoingtoaffectarelationship.So,itnotonlybehoovesyou,itbehoovestheotherpartytomakesurethateverythingisironedoutasmuchasitcanbeupfront.Andifyousoundlikeyou'rekeyingoffattransport,andthenfine.Butthatstatementappliestoeveryelementofit.Youdon'twanttobe,afterthefact,saying,"Hey,Ithoughtweagreedtonet90."Weeitherdidorwedidn't.What'sthecontractsay?

Thatbuyercontinued,“AnytimeIhavetocarryextrainventory,orIhavetospendmore

time,orthebuyerhastospendmoretimemanagingthedaytoday,that'smoney.”A

thirdbuyercommented:

Well,again,thisiswherewe'llnegotiate.IfIsayforinstance,"Well,yourquotesaidthisIncoterms®,soitwasunderstoodtobedeliveryatdoor,"andthesuppliersays,"Well,weonlyfigureditwasuptoport,"anditwasn'tclearlystatedattheoutset,oritwasandthenthesuppliersaid,"Well,weunderstooditonlytobeatport,"andit'sclearlystatedattheoutsetthatit'stodoordelivery,thenhe'lltakeontheextracostforwhateverhedidn'tcostintohistransportationfees.So,itdepends.Sometimesitwill,sometimesitwon't.Again,itreopensthedoorforanegotiation.

Stillanotherbuyerindicatedthatmiscommunicationaffectedtherelationship,andthus,

thebuyerkeptextrainventory,soitalsoaffectedcost.

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Butdiditaffectmyfuturerelationship?Yes.DiditaffecthowmuchriskIwaswillingtocarryforthatsupplier?Inotherwords,ifItrustthatsupplierimplicitly,Imayonlykeeptwoweeksonthefloor.Ifhe'sscaringthedaylightsoutofme,Imaykeepsixweeksonthefloor.AndifIcan'tcommunicateproperlyonthatpackagingelementofthetransport,thenthatcouldleadmemoretocarryingextrainventory.Therefore,I'mdealingwiththeriskfactor.

Aselleralsonotedthatmiscommunicationcosttheircompanymoney.

Sometimes,wetrytonegotiate.Inthiscase,wegivehimadiscounttryingtocovertheduty.So,whenheisasking,wetriedtosolvetheprobleminhisway,andattheend,wearestillingoodrelations.

Finally,abuyerexplainedthelastingeffectsofmiscommunication:

Asabuyer,yousortofcategorizeyoursuppliersaseithermature,lessmature,reliable-maybeIshouldusethatterm-reliable,lessreliable,andyoulearntoknowthem,andyouknowthatsomesuppliersaresolid.TheyunderstandtheIncoterms®,theyunderstandyourneedsandwillbeproactive.You'vegotothersupplierswhereyoualwayshavetogivethemdirectionandalwaysinformthemandfollowthemclosely.So,whenthereismiscommunication,yousortofhaveatendencytoclassifytheminalessreliableclass.Youtrytoputeverythingattheoutsetveryclear.Maybefromlackofproactiveness?Theydidn'taskthequestionsattheoutsettomakesureeverythingwasclear.Iknowthatonmyendwhenyou'relookingtopurchasesomething,youwantitintime,right?So,IdoeverythingIcantomakesurethateverythingisclearoffthebat.That'swhyIwassayingIsortofevaluatethesupplier'sfluencyintermsofIncoterms®,andifIgetthefeelingthathe'snotclearlyunderstandingwhatI'maskingfor,thenIwillgointothenitty-grittyandsay,"Okay,soI'mexpectingyoutotakeresponsibilityforthis.I'mexpectingyoutotakethecostofthis,andjusttomakesure,Idoexpectthatyouwilltakeonport-to-doorportionofthetransportation."So,ifthereismiscommunication,eventhoughattheoutset,Idideverythingonmyendtomakesurethateverythingisclear,thenitwillimpactinthesensethatokay,nexttimewhenIdopurchasefromthissupplierIwillgoevenfurtherlengthstomakesurethateverythingisclear.Iwillcallhim.I'llmakesurethatwhateverwentwrongthefirsttime,Imakesurethatitwon'thappenagainbytellinghim,"Okay,soonpreviousoccasionsthishappened.So,whatwillbedonethistimesothatitdoesn'thappenagain?"

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Buyersandsellersalsoindicatedthatmiscommunicationcostthem“time.”One

buyercommentedthatthis“time”costthecompanymoney.

OuroriginalplanwouldbestartedtheconsignmentprogramfromSeptember.Okay?ButnowwehavetochangeourscheduletoNovember.Sostillhavetwomonths’delay.So,thesetwomonths,Ithink,meansmoney,right?

Anotherbuyerremarkedthattimenotonlyimpactscosts,butitcanalsotranslateto

theircompany’sreputationwiththeircustomer:

Ofcourse,itcanimpactthedelivery.Forsure,wecanhavedelaysintheshipmentthatcanalsoimpactproduction.So,ifwehavemiscommunicationthenitcouldhaveamajorimpactintheproduction.That'scost,butthat'salso--ifwearelateingettingmaterials,thenwecanbelateinthedeliveryandimpactingourreputationaswell.So,thatcouldhavealsoabigimpact.

Asellercommented:

Well,yeah,ifyouhaveamisunderstandingoramiscommunicationrelatedtoIncoterms®,thenyou'regoingtodelaythematerial.Becausewetellthecustomer,"Okay,it'sreadyforpick-up,"butthenyouhavetonegotiateagain,wehavetotellthem,"Well,that'snottheway.Wehavetopreparenewpapersandyou'regoingtodelayit."So,attheend,thecomponentisnotbeingdeliveredaspromised.

Thesellercontinued:

Andhavingpurchaseordersthatclearlyidentifywhothecustomer'snominatedfreightforwardersareinadvanceofwhenthePOsprocessoratinitialsubmittalalsohelpsinthatbecauseitdoesn't--Itoldyou,thethingwevalueiswe'reabletoshipthegoodsearly.Well,ifIacceptaPOfromacustomerthatsaystheyagreedtoFCAterms,buttheydon'tidentifywhothatforwarderis--andsometimesIcanstillgetstuckwithgoodssittingonourdockandnotbeingabletomoveafterthey'recompletedfinishedgoods.

Thesameselleradded:

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AndwhatIfindsometimesisthatbuyersdon'thavenominatedforwardersthattheytrustortheyhavearelationshipwiththatalreadyisestablished.So,whattheyendupdoingisweprocesstheorder,andtheyaskusforweightsanddimensionsofthegoodsbeforethey'rereadytoship.Icangivethemsomeroughestimatesforwhattheywouldbe,butwedon'tweigh--theproductthatwehave,wedon'talreadyknowwhattheweightandthedimensionofitisgoingtobebeforeit'spacked.So,whathappenssometimesisthey'llwaituntilwegivethemtheweightsanddimensionsofgoodsandtellthemit'sreadytogooutandstarttryingtonegotiatewithfreightforwardersforthebestpricetogettheproductthere.Andsometimes,thatcanlastweeks.

Anothersellermadesimilarcomments:

SomeoftheaccountmanagersthatIseearemore--andtheseguyschangeprettyfrequently,butIfindsomeofthemoreresponsibleoneswill--uponacceptinganorderandprocessingit,whentheysendtheorderacknowledgment,ifforwarderisn'tidentified,they'lladdanotetotheiremailcommunicationwiththeOA-orderacknowledgment-backtothebuyerthat,"Withintwoweeks,itisreadytoship.Weneedtoknowwhoitissowecansendittoyousoitleavesontime."AndI'vehadcasesinthepastwherethathasn'tbeenclarified,andthebuyer'sexpectingsomethingtohappenthatdoesn'thappen.

Thesamesellercontinuedbysaying:

Iguessthisgoesbacktooneofyourearlierquestionswhereyouaskedaboutifthere'sanythingthataffectstherelationshipwiththebuyer.I'vehadcustomerinThailandgetprettyupsetatmebecausethey'venominatedtheirfreightforwarderandidentifiedtouswhotheywere,buttheydidn'tgiveusanycontactinformationforthem.So,whenthegoodsareready,wegobacktothebuyerandsay,"Hey,thisisready.Tellyourforwardertocomeandgetit."Orwemightnotevensaythat.Wemightjustsay,"Hey,thesearereadytobepickedup.Wheredoyouwantustoshipit?

Thatsellerfurtherbellowedaboutbuyers:

Andtheydon'tunderstandthattheirresponsibilityistotakethatinformationandsendittotheirfreightforwarderandsay,"Hereitis.Gogetit."Theythinkthat--Idon'tknow.Inmyopinion,theythinkthatbecausetheywriteDHL,there'sone

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personforDHLthatwecangoandtell,andthatpersonwillknowexactlywhattheirresponsibilitiesare,andthey'llcomegetthegoods,andeverythingwillshipontime.Andsometimes,thatdoesn'thappen.Thegoodsendupsittinghereforalongperiodoftime.Andtheythinkthatwe'relatewiththegoodsbecausetheyhaven'tshipped,andwe'relateintoproduction,wheninfact,thegoodswerereadyontime,buttheyneverleftbecausecertainactionsdidn’toccurinatimelyfashion.

Anothersellerexplainedaboutcoordinationwithboththeircustomerandfreight

forwarder:

Also,wecoordinatethetransportationtimebecauseanotherimportantthingisthatthecustomerhastopaytheVAT.Andifthecustomerisnotprepared,wecanlosetimeatthecustomsbecausewhenwetransfertheproductfromoursitetothefinal…..Whenthetruckarrivestothecustoms,youhavetopaytheVATtogettheimportation,togettothecustomclearance.Andinthepast,whathappenedisthatwelostdaysbecausethecustomerwasnotpayingtheVAT.

Itisapparentthatparticipantsplacedheavyimportanceonthebuyer-seller

relationshipaswellasonprice.Asellernotedthat:

Well,itistherelationship,becausethebrandname….isverywell-knownintheworld,andtheyassociatethiswithquality.So,thecustomerrelationistoppriority,ofcourse.

Abuyerindicated,“Relationshipwithsupplier,bothshouldbeveryimportant.”Another

buyerindicatedthatbothpriceandrelationshipareimportant:

Frombuyers'side,costisveryimportant.Butsometimeswestillneedtosupportfromsupplier.So,relationshipsstillveryimportantaswell.Icansayboth.

Inasimilarway,anotherbuyercommented:

Ithinktomethatthey'rebothimportant,therelationshipandthecost,butIthink--well,definitelywithastrategicandevenwithahighbuyfrom,atleastfrommid-

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range,let'ssay,Ithinkit’sreallyimportanttofigureouthowtokeepbothofyouinbusiness.Inotherwords,makebothofyourbusinesses--howcanyoumakebothofyourbusinessessustainandgrowanddowellandnotkilltheotherguy?

Anotherbuyerasserted,“Ifeelstronglythatbothareimportant.”Asellercommented

that:

It'savariableofboth.Themostimportantthingis,ofcourse,therelationship.Becauseifyouwantareliable,safebusiness,alotisbasedontrust.So,you'vegottotrusteachother.Youhavetocommunicateveryopenly.Ifitgetstooopen,we'resigningNDAs…SowehaveNDAs…inplace,sothecommunicationisveryopen.Ifthere'squestionsconcerningourprocessesandsoon,it'sjusttrust,isbasicallythemainthing.And,ofcourse,secondthingisprice.Therecanbealotoftrust,butifthepriceistoohigh,it'snotgoingtowork.So,it'sgottobetrust,understandingonamutualbase,Iwouldsay.

Anothersellerremarked:

Idothinktherelationshipsareimpactedsomewhat,butthere--witheachproblem,there'sanopportunitytoevengetcloser.Somaybethemiscommunicationresultedinaninitialnegativefeelingbythecustomer.Butifwe'reabletoworkthroughthatprobleminawaythatleavesthemnotupset,it’sanopportunitytobringuscloser.

Athirdsellercommented:

Becauseagoodrelationshipcanbringusfurtherordersfromthesamecustomersandacustomercansuggesttoothercompaniestocometoustopurchase.Andofcourse,alsothecost.Ifwearecompetitive,ithelpsustoconcludemoreorders.Andso,alltheseaspectsareveryimportantduringandafterthenegotiationsforus.

Afourthselleralsoremarked,“Therelationshipsareimportantallthetime.That'squite

clear.Thecosts,exactlythesame.”

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Itisalsonotedthatforone-timesales,therelationshipisnotasimportant.A

buyerstated,“Ifit'saone-timesupplier,therelationshipisn'tthatsignificant.”Similarly,

anotherbuyercommented,“Honestly,whenwebuyonceinthesupplier,soit'sthecost

relianceforme.”

4.2.8Othercategoriesdiscovered

Fourunanticipatedcategoriesoftheoryhaveemergedfromanalyzingthecases

inStudy2.Theuncoveringofthesefindingsisadirectconsequenceofthechoiceto

employsemi-structuredinterviewsinthisexploratoryresearch.Thefourcategories

relatedtologisticsnegotiationsarediscussedindetailbelow.

4.2.8.1Sellersfocusonsale,notexecution

Ithasbeenobservedthatsellersindyadsoftenhaveastrongfocusonthe

completionofthesaleitselfandnotnecessarilyontheexecutionoftheorder.This

lesserfocusonorderexecutionincludesthelogisticsmanagementactivitiesassociated

withcompletingthetransactions.Onesellerremarkedregardingorderexecution:

Yeah,sothisisnotonmytable.Yougoastepfurthernow-whenevertheyhavequestionsaboutpackaging--whatisit?Thebilloflading,orwhatever,it'snotonmyplateanymore.

Later,thesellerreiterated:

Youhavetounderstand,I'masalesguy.Idon'treallycarewhathappens[chuckles]afterIsell.That’sbasicallythepoint.IcarethatthecustomerwillbehappyafterIsoldit,but,really,theprocessingbetween,thisisanotherdepartment.

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Anothersellercommentedonsalefocus:

Well,firstofall,successisgettingtheorder.Increasingoursalesisthebiggestsuccessoncewegettheorder.Thesecondsuccessis,ofcourse,gettingthemostprofitoutofit.So,donotbuyitforlessthanthecustomeriswillingtopay.Forthis,youhavetoknowthemarketandthecustomer.

Athirdsellermadesimilarcomments:

Ithink,tome,successmeansfirstofallthatImadethesale.Secondofall,Ipridemyselfingettingpremiumpricingforsellingaproduct.Notjusttheproduct,butthevaluethatweoffertothecustomer.Ithinkthatallowsmetogetapremiumonthepricesthatperhapsotherguysareshowingthesameproductfor.So,Ireallytrytosellatahigherpricethanwhatanybodyelseisdoingandatthesametimehavingacustomerthat'shappywiththetransaction.Totalsales,totalannualsalesgetsalotofattentionatthisfactorysometimesthatIworkat.

Afourthsellerindicated:

Well,ofcourse,weknowthatthenegotiatingactivityhasbeensuccessfulwhenwegetthePOfromthecustomerandespeciallywhenwegetthePOafterthefirstquotation.So,whenthecustomeracceptsthefirstpriceandthefirstpriceisalsothelastpricewithoutanydiscountrequired.So,inthatcase,weknowthatnegotiationhasbeenverysuccessfulbecausewehaveallthecommercialmarginswehavecalculated.And,yes,it'salsosuccessfulwhenwegetthePOinaveryshorttime.

Afifthselleralsocommented,“That'sthe--successlookslikeanemailoranallocation

letter….Togetinthecontract.”Thisstrongsalesfocusalsorelatestothenextdiscovered

arearegardinglogisticsnegotiations,whichisrevenuerecognition.

4.2.8.2RevenueRecognition

Sellersseektorecognizetherevenueasquicklyaspossibleanddesiretocontrol

processestofacilitatethis.Onesellerstated:

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Theyalsolikeforustogettheproductoutoffsiteasquicklyaspossibleandmoving.SoifI'mquotingexworks,allI'mreallydoingis,whentheproduct'sready,becausetheseareinternationalshipments,insteadofaskingthemwhotheirfreightforwarderisandthentellingthatfreightforwarder,"Hey,thisisready.Comegetit,"usingFCAnotunloadedtoafirstUSdestinationallowsusto,whentheproduct'sready,chooseacarrierofourchoice,putitonatruck,andtakeittothatlocation.Andwedon't--wecanrealizetherevenuesoonerthatwayratherthansometimeswaitingforweeksforsomeonetocomeandgetsomethingthat'ssittingonourdock.Soifwewanttohaveanychanceofhavingaforecastthat'sreasonablycorrect,wewanttobeabletogetthatoutthedoorandmovingasquicklyaspossible--deliveringtoapoint,aportorapoint,withintheU.S.allowsyoutomovetothatpoint-that'syourfreedom-andrecognizerevenuefromthecompany'sperspectivemuchearlier.

Anothersellercommented:

Sometimes.Now,whatwestarttoexpect,thisisintermsofturnover,thecompanyconsider--butthesebecauseofIthinkthisweeksarelowthattheturnoverismadewhenthemachineleavesthesite.So,whenthemachineisshipped,weconsiderthemachinelikecompletelysoldandnotanymoreintheinventory.

Similarly,abuyermentioned:

Moreforoutboundtransportationintermsofrevenuerecognition.Ifrevenuerecognitioncantakeplaceatsayourplantorwhetheritcantakeplacedelivered….canmakeabigdifference.

4.2.8.3Expeditedfreight

Anotherarearelatedtologisticsnegotiationshasemergedwithinthecases.

Buyer-sellernegotiationsandagreementsgenerallyaddressnormaloperationsand,

hence,normallogisticsmanagementoperations(i.e.notexpeditedfreight).However,

eventshappenduringoperationsthatwarranttheuseofexpeditedfreightwhichmay

notbespecificallyaddressedinnegotiations.Abuyerastutelystated:

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I'mjusttryingtothinkifthere'saquestionofairfreightversusocean,andwhathappensif--sotheremaybesituationswhere--andalotoftimeswewilldocumentthis-whathappenswhenwedohavetoexpediteaproduct?Dowestillfollowthesametermsandconditions,orgivennowwe'reexpeditingdoesthatimmediatelygotoABBaspickingupthefullfee,orisitthedifferenceofwhattheywouldhavepickedupversustheexpeditefee?So,thatmaybesomethingelsethatcomesupandthatisnotsomethingthat'sspelledintheagreement.Typically,theagreementishandlinghere'swhat'shappeninginthecaseofstandardbusiness..….TypicallywhatI'veseenisit'snota,okay,we'llpayoverwhatyouwouldhavepaid.It'susually,ifyou'reexpediting,you'repickingupthewholetab.

Thebuyerfurthercommentedonhowtherelationshipwiththeselleraffectsthese

expeditedsituations:

Itis,becauseifyou'vegottherelationshipit'sa,"Okay,I'lldothisasafavorforyou,andwe'lljustkindof--"whatitusuallycomesdowntoiswhereyouhavetheexceptionsthatkindofgooutsideoftheagreement,istryingtogetthesupplier,eventhoughweaskedyoutoexpedite,yeah,we'regoingtofollowtheagreement.So,thenitmaycomeupthatherunsintoasituationwhere,"Hey,wegotalatedeliveryonapart.I'mgoingtobelate."Itmaybeasituationinthat,"Hey,wecanadjustourmanufacturingtimetoaccommodatewhereyoudon'thavetoexpediteit."Andthatalwayshappensbetterwhereyou'vegotagoodrelationship.Ifit'smoreofanadversarial,it'sgoingtobe,"No.Putitintheair."So,itistheflexibilityonbothsidesofthepartiesworkingtogether.

4.2.8.4FCAvs.EXWIncoterms®

Thefinalcategoryrelatedtologisticsnegotiationsuncoveredinthecasestudies

wasthefrequencyinwhichtheIncoterms®rule,EXW,wasincorrectlyutilizedin

situationswheretheappropriateIncoterms®rulewasFCA.EXWrepresentstheleast

obligationsthatasellermayagreeto,asthesellerisnotresponsibleforexport

formalitiesorloadingtheoncomingvehicle.Duetosomecountries’exportobligations,

eventhoughEXWisnegotiated,thesellermaystillberequiredtoarrangeexport

formalities,whichcouldconflictwiththeEXWIncoterms®rule.Study2hasfounda

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clearexampleofEXWmisuseoverthepreferredFCAIncoterms®rule.Abuyerprovided

anexamplethatcausedissueswithaNorthAmericaFreeTradeAgreement(NAFTA)

qualifiedshipmentthatshouldhavebeenusinganFCAIncoterms®rulebutinstead,the

orderindicatedtheEXWIncoterms®rule.WiththeEXWIncoterms®rule,thesupplier

didnotneedtocleargoodsforexportandhence,thesupplierfeltnoobligationto

provideaNAFTAform,whichwouldhavesavedthebuyer’scompanyfrompaying

importduty.Thisresultedin$8,500dutypershipmentonaproductthatshipped

weekly.

4.2.9Whatcanimprovethequalityofbuyer-sellerdyadscommunicationoflogistics

managementdecisions?

WhilethepurposeofStudy2isprimarilytoexplorethefirstthreeresearch

questions,ithasalsoexploredwhatactionsorchangesinlogisticsnegotiations

processesmightimprovethequalitycommunicationoflogisticsmanagementdecisions

inbuyer-sellerdyads.Participantsweredirectlyaskedtheiropinionsonwhatcould

improvebuyer-sellercommunicationoflogisticsmanagementdecisions.Theresponses

indicatedthatthethreecharacterIncoterms®acronymsshouldbeusedwhenever

appropriateincommunicatinglogisticsdecisions;moreover,fullyspecifyingoperational

definitionsoftherelevantIncoterms®ruleswouldbehelpfulinclarifyingtheobligations

anddutiesofthepartiesinvolved.Abuyerexplained:

NotrelyingsolelysometimesontheIncotermbutmakingsurethattheotherpartyhasthesameunderstandingoftheIncotermasyoudocouldhaveavoidedsomeofthesemiscommunications.Whatelse?Perhapsstatingattheoutsetalsowhenyourequestaquotewhatyourexpectationsare.Thatcouldhelpaswell.

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Thebuyercontinued:

Iwouldusetheinternational--well,liketheIncotermguideandwouldbasicallyaddressownership,risk,andcost.Ithinkthosearethethreemaincomponents,andmakesuretoexplicitlysay,"Okay,somyunderstandingisthatyourresponsibilitystartshereandendsthere.Yourcostsstarthereorendthere,andyourtasksstarthereandendthere.”Sobasically,IwouldchopitdownbasedonthedefinitionoftheIncotermtomakesurethattheotherpersonunderstandsclearly.

Anotherbuyercommented:

Imean,theonethingis,ifyouhaveanannualcontractyoucanputalldetailsintothatcontracttomakethingsclearfromthebeginning,andyouhavetosticktothem.Ifyousticktothem,thereisnomiscommunication.Thenit'sallquiteclear.Becausealotofthethings,especiallyconcerningtransportareimplementedintheIncoterms®.So,ifyou'reworkingthroughIncoterms,youdon'thavemiscommunicationbecauseyouknowhowit'sworking.You'vegotalltheoldissuescovered.Youcanneverexcludethatsomething,liketheexamplebefore,deliveryaddressesmiscommunicated.

AthirdbuyercommentedthatnotonlyareIncoterms®usedinthecontract,butthese

Incoterms®areexplainedindetail,andthenhereflectedbystating:

Ithinkthebestwayistoprovideexamplesintheagreement,andthat'sonethingthatI'vechangedinhowIdoit,soit'snotjustputtingthewordsintheagreement,butthenhavinganexamplesothatit'sclearlyspelledout.AndIthinkthat'sagreatcommunicationfortheusinglocationsaswell.Becausesometimesonepersoncanreaditandinterpretitonewayandanotherpersoncaninterpretitadifferentway,butanexamplewillclearlydefinehere'swhatthemeaningisofthewording.

Otherparticipantsmadebroadstatementsabouttheeffectsofimproving

Incoterms®understandingoncommunicatinglogisticsdecisions.Thisindicatesa

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perceptionthatthecounterpartyinthedyaddoesnotfullyunderstandIncoterms®

rules.Onebuyersimplystated,“JustabetterunderstandingofIncoterms®.”Another

buyermentioned,“Lessonlearned.Askforpicturesofhowyou'regoingtopackageit.

"Canyougivemeexamplesofwhatyoushippedtoday,usingthatpackaging?"Aseller

commented,“Training,education,Ithinkthey'reimportantforbothparties.”Theseller

continuedbysaying,“EveryoneshouldunderstandtheIncoterms®…Thisisourbasefor

anydiscussionornegotiations.Otherwisewillbeconfusionormisunderstanding,

miscommunication.”Anothersellerstated:

Idefinitelythinkaneducationortrainingofnotjustthesellers,butalsoourbuyersonwho'sresponsibleforwhatwhenspecific--I'llbehonest,notalotofpeopleunderstandIncoterms®inthisbusinessanyways.AndwhenIsaythat,I'mreferringtothebuyersthemselves.Theydon'tknow,evenwithinmyowncompany.….Andperhapsevenanexplanationofwho'sresponsibleforwhatintheIncotermssectionratherthanrelyingonsomeonetoknoworgobackandfindoutwho'sresponsibleforwhatwhenspecifictermsareusedinthesalewouldhelp.

ThesestatementssupportthecommentsofYao-HuaandThoen(2000)thatthe

negotiationprocessbetweenbuyerandsellertodeterminetheoptimalIncoterms®isa

potentialbarrierininternationaltrade,“becauseitrequiresanexpertknowledgeabout

Incotermsthatmostsmall-andmedium-sizedcompaniescannotafford”(p.391).

Extendingthisbelieffurther,itappearsthatlargecorporationsarealsochallengedin

theirIncoterms®usage.ThisfindingsupportsStapletonetal.(2014a),whosuggested

thatshippersmightuseless-than-optimalIncoterms®strategiescreatedthroughalack

ofknowledgeofvulnerabilitiesandsloppyimplementations.Bergami(2012)expressesa

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similarnotionthat“therearesignificantproblemsingettingtraderstochangefromthe

establishedroutinestomoreappropriateandcorrectuseofIncoterms”(p.37).

Ofallparticipants,onlyonebuyerandonesellerstatedthattheyhavespecified

alllogisticsrelatedtaskswiththeirsupplierorcustomerinnegotiations.Thebuyer

commented:

IwillifIfeelthatthesupplierisnotfluentintheterminology,andthenI'llexplicitlyspellitoutifI'maskingclarificationstotheirproposal.I'llsay,"Okay,soIunderstandthatthisandthisandthisisincluded.Isthatyourunderstandingofit?"Andthenwe'llgofromthere.

Thebuyercontinued:

Inthatsense,no.Idon'tknow,thisisjustapersonalpreference,butratherthanusingtheirterminology,I'lltrytogetthemtoacceptminebysaying,"Okay,couldyouconsiderratherthanFOB,forinstance,anFCA?"AndthenIwouldsay,"Thisimplicatesthis,this,this,andthis."Andthenthey'lleitherrespondyesornoandsometimesthey'llbereluctant,andthenwe'llhavetotrytofigureoutawaytoworditsothatthey'reinagreementwithit.Generally,that'sthestartingpointandwe'llworditoutandtrytoreachacommonagreement.

Thesellerstated:

Okay,intermsoftask,yes,intermsoftask,wesharewiththecustomer.Forinstance,wesay,"Okay.Wemakethepackaging.Weputthepartsonthetruck.Wecoordinatethetruckortheairorship.Stillyoursite.Youhavetobringthecratesfromthetruck.Youhavetounpackthecrates.Wethenhavetotransferthepartsinthefinalroom.Weneedtoinstall."Sothisissomethingwedo.Sowe,withthecustomer,weagree,step-by-stepforthedifferenttasks.

Twosuggestionstoimprovethequalityofbuyer-sellerdyad’scommunicationof

logisticsmanagementdecisionshasemergedinthecasestudyinterviews.First,there

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existsaperceptionthattheotherdyadicpartnerdoesnotfullyunderstandIncoterms®

rules.Second,participantssuggestedthatlistingoutthefullimplicationsofthese

Incoterms®rules,theoperationaldefinitions,mightreducethelikelihoodof

miscommunicationsoccurring.BothsuggestionsledtohypothesestestedinStudy3.

4.2.10HypothesesforStudyThree

Baseduponexistingliterature,thecasestudyresults,andtheresearcher’s

knowledge,threetestablehypotheseshavebeendevelopedanddiscussed.The

hypothesesare:





application.




Hypothesis1wassuggestedbytheStudy2results.Manybuyersandsellers

offeredthattheyfeltaneedfortheopposingdyadicpartnertoreceiveIncoterms®

training.Forexample,abuyersuggestedthatotherscouldobtain,“justabetter

understandingofIncoterms®.”SupportforHypothesis2wasalsofoundintheresultsof

Study2.TheresponsesinStudy2indicatethatthespecifieddefinitionsofthese

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Incoterms®rules,whicharetheoperationaldefinitions,shouldbeemployedin

communicationsconcerninglogisticsdecisions.Severalcasessuggestedthatincluding

operationaldefinitionsisabestpracticetoprovidecleardyadicbuyer-seller

communicationoflogisticsmanagementdecisions.Hypothesis3,“providingfully

specifiedandexplicitIncoterms®definitionsandIncoterms®trainingleadstoafurther

decreaseincommunicationerrorsevidencedbyafurtherreductionininappropriate

Incoterms®application”testedtheeffectsofthecombinationofbothIncoterms®

trainingandprovidingoperationaldefinitions.

4.3STUDYTHREE:QUANTITATIVERESEARCHFINDINGS–TESTINGHYPOTHESES

4.3.1ExperimentalDesign

Study3experimentallytestedthehypothesesdevelopedinStudy2:





application.




Theexperimentaldesigninvolvedthecompletionofaquestionnaireregardingthe

useofIncoterms®infivehypotheticalscenariosdrawnfromapurposefulsampleof

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buyersandsellersinthehostcompany.Thequestionnaireisdescribedindetailin

Section4.3.2.Questionnairerespondentswerepartitionedintofourdifferenttreatment

groups:(respondentswhoself-identifiedthattheyweretrainedintheuseof

Incoterms®:YesorNo)x(respondentswhoreceivedaquestionnairewithcandidate

responseswithoperationaldefinitionsfullyspecifiedandtheIncoterms®acronymor

respondentswhoreceivedaquestionnairewithcandidateresponseswithonlythe

Incoterms®acronym).Thebinary“trained”variabledifferentiatesbetweenthose

trainedandthoseuntrained.The“operationaldefinitionsfullyspecifiedwithIncoterms®

acronyms”or“onlyIncoterms®acronymsused”binaryvariabledifferentiatesbetween

thosetwocircumstances.Theexperimentaldesignpermitsfullytestingthethree

hypothesesusingthenumberoftotalcorrectresponsestothequestionsasa

dependentvariable.

4.3.2Questionnaire

Thequestionnairecomplieswiththerequirementsofinformedconsent(45CFR

46.116)forresearchinvolvinghumansubjects(U.S.DepartmentofHealth&Human

Services2010).ThequestionnairewasbuiltviaQualtrics®softwareinauniversity

account.Participantsfirstreadabriefintroductiondescribingthepurposeofthestudy

anditsimportance,includingthepotentialbenefitstotheindividual,corporation,and

others.Participantswerethenremindedthattheirparticipationwasvoluntaryandwere

providedtheconditionsoftheirparticipation,includingtheirrighttorefuseorwithdraw

atanytimewithoutpenalty.Confidentialityprotectionsfortheindividualswere

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presentedviatheweb-basedquestionnaire.Sincethequestionnairewasdeliveredvia

aninternalemail,participantswereremindedthattheirresponseswouldbeanonymous

andtheirindividualresultswouldnotbesharedwiththecorporation.Noforeseeable

risksordiscomfortstotheindividualorcompensationplanwereexpected.Lastly,

contactinformationwasprovidedforrespondent’squestionsregardingthestudy,

participants’rights,andincaseofinjury.Study3wasassignedProjectNumber885996-

3bytheUniversityofMissouri-St.LouisInstitutionalReviewBoard(IRB)andapproved

underexemptionCategory#2.

Followingtheintroductoryinformation,aseriesoffourquestionsrequested

demographicinformationincludingsex,agerange,jobrole,andyearsofexperience.A

fifthquestionaskedparticipantsiftheyhadreceivedIncoterms®trainingeither

internallybythecompanyorexternally.Thisquestionsegregatedparticipantsintoone

oftwotrainedtreatments:YesorNo.Finally,iftherespondentwastrainedin

Incoterms®,asixthquestionaskedhowrecentlythatIncoterms®traininghadoccurred.

Participantsthenreadasetofdirectionsandwereaskedtoprojectthemselves

intoafictitiouscorporation,YZZInc.,whichwasdescribedasalarge,international

manufacturingcorporationthatsuppliesproductstointernationalindustrialmarkets

andpurchasesitemsgloballyforuseinitsproduction.Theparticipantswereaskedto

respondtoeachoffivescenariosrequiringthemtoidentifytheappropriateIncoterms®

foruseinthescenariobaseduponhowtheywouldreactifthescenariowasreal.They

weregivenfivecandidateIncoterms®rulestoselecttheappropriaterulefromineach

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scenario.Thismethodofquestioningassumesthattheparticipantsimaginethemselves

ineachscenarioandprovideanswersastheywouldnormallyrespondinreal-lifework

situations(Fisher,1993;Chandyetal.,2003;Antiaetal.,2006;Thomasetal.,2010;

Thomas,2013),basedupontheirownbehaviorsandvalues(Micketal.,1992;Thomas

etal.,2010)andthetotalityoftheirentirecareerexperienceasopposedtojusttheir

currentjobandcompany(Thomasetal.,2010).Thestructuredprojectivetechniquehas

beenshowntosuccessfullyprovidemanagerialattitudeandcorporatestrategyinsights

(Fisher,1993;Chandyetal.,2003;Antiaetal.,2006;Thomasetal.,2010).Thiskindof

researchinstrumenthasbeenshowntobereliable,valid,andtrustworthy(Ramseyet

al.,2006;Thomasetal.,2010).

Afterreadingthedirections,participantswererandomlyassignedtooneoftwo

questionnaireformats:1)Scenarioswithbothoperationaldefinitionsfullyspecifiedand

Incoterms®acronymsusedor2)identicalscenarioswithonlytheIncoterms®acronyms

supplied.Theparticipantswereprovidedtheirfivescenariosinarandomizedorder.

EachscenariorequiredtheparticipanttoidentifythecorrectIncoterm®toemployin

thesituationdescribedfromfivecandidateIncoterms®andhadonlyonecorrect

response.Thefivescenariosweredevelopedusingacombinationofissuesidentifiedin

theliterature(e.g.Stapletonetal.,2014a)andtheresultsfromStudies1and2.Thefull

questionnaireforStudy3canbefoundinAppendixVI.Thecorrectresponsesareinbold

text.

Scenario1exploresonecommonerrorfoundintheliterature:incorrectseaand

inlandwaterwayIncoterms®applicationsforcontainerizedtransport.Thisisidentified

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amongthesixcommonusageerrorsthatStapletonetal.(2014a)noted.Thecase

studiesalsofoundthisbehavior.Someexamplesareprovidedhere.Forinstance,a

sellertalkedaboutlistingoutthedetailsofFOBinthecustomeragreement:

Ithinkno,evenfromthecontractperspective.Nomoredetailslefttoexplainwhat'saFOB,what'sresponsibilitiesthatyouneedtotake.Yeah,Incoterms®thesuppliersalsounderstandveryclear.

Anothersellerreferenced“FOBourdock”inhiscomments:

Usuallyit'sonthefrontend.So,let'sjustsayabrandnewcustomercomestometoday,sendsmeaquoterequest."Hey,IgotyournamefromJoeBlowoveratXYZcompany.Okay,here'smyproject.Here'swhatitis,Isubmitpricingthatsays,"Hey,ourpricingisFOBourdock."Whichmeans,hey,you'refiguringouthowtogetitfrommydocktoyourdockatyourexpense.

EvenonebuyercomplainedabouttheincorrectFOBusagebehavior:

So,U.S.mostly(sources)goodscomefromlow-costcountrylikeChina,India,andothercountries.So,sometimeswhenweusethoseIncoterms®,sometimestheytellme,"…weneedthegoodswithFOBbehindit."Itmeansthattheydon'tunderstandthedefinitionoftheIncoterms®.

CIFusagewasalsofound.Forexample,onesellerstates:

Inthosecases,wheresomebodyknowsenoughaboutIncotermstosay,"Well,youquotedusCIF,butthisshufflingfeeorcontainerizationfeeisn'texclusivelydescribedinyourquotation."

Inaddition,Study1foundthatthecorporationhadexperiencedtwoexamplesof

CIFcomplications.OneexamplewasprovidedforashipmentfromtheU.S.toHaitithat

wassoldtoanagentviatheIncoterms®ofCIFPortauPrince.Thesecondexamplewasa

situationwherecargofelloffadrayagetruckduringterminalhandlingattheportof

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delivery.Itwasclarifiedwiththeparticipantsthatproductiongoodsdoindeedshipvia

anoceancontainer,asopposedtobreak-bulk.

Scenario2exploresthecorrectusageofFOBappliedasanIncoterms®ruleas

opposedtoaUCCtermofsale.ExamplesofinappropriateuseofFOBhavebeen

identifiedinStudies1and2.Forexample,withinStudy2,oneCanada-basedbuyer

explicitlycommentedthatIncoterms®rulesarenottobeconfusedwiththeUniform

CommercialCode(UCC)1951shippinganddeliveryterms.TheCanada-basedbuyer

stated:

ButoftenlocalorU.S.suppliersarelessfamiliarwiththeseinternationalIncoterms®,andyouhavetogointothespecificationsandsay,"Okay,I'dliketochangeforIncoterm®such-and-such.Hence,youwillberesponsiblefordeliveryuptothispoint,"etcetera,etcetera.So,itreallydependsonthefluencyofthesupplierintermsofIncoterm®knowledge.BecauseintheU.S.,youhadthisprevious-Idon'tknowwhatsystemtheycalledit-buttheFOBterminologyandthelessinternationalterminology.So,sometimesyou'llgetrequestsforquotationsthatindicateFOBsuch-and-such,butweprefertousetheinternationalstandardoftheIncoterms®,sonotallsuppliersarefluentintermsofthoseterminologies,soitwilldepend.IfIseethatthesupplierisnotgettingwhatI'masking,I'llhavetospellitoutforhim.Otherwise,iftheyagreetomyIncoterm®,FCAforinstance,orDDPwouldbemoreto--DAPwouldbemoretomyadvantage.Andifhesaysyes,thenmycomprehensionisthatheunderstandsoratleastlookedituptomakesurethatheunderstandswhatI'maskingfor.Otherwise,Iguesshe'stightwiththelegalimplicationsofit.

Inaddition,Study1alsoidentifiedextensiveincorrectuseofFOB.

Scenario3explorescorrectspecificationofageographicplacewithIncoterms®.

WithinthesixcommonusageerrorsdescribedbyStapletonetal.(2014a),Incoterms®

ruleswerefoundtobeusedwithoutclearlyspecifyingageographicplace.Thiscontrasts

withtheICCrecommendationthattheplaceofportbespecifiedaspreciselyaspossible

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(ICC,2010).Study2hasidentifiedanexamplefromabuyerrelatedtoanunclear“name

place,”whichprovedproblematicaftertheseller’sU.S.warehousewasclosed.Thiscost

thebuyersubstantialmoniescomparedtotheU.S.warehousearrangementthatwas

closertothebuyer’slocation.

Onesellerindicatedthatspecifyingaclear,geographicplacecanalsobe

problematic.ThesellerreferencedcustomersinTurkeywhoindicatedtheirfactoryas

thenameddeliveryplace,whereasthebuyerwanteddeliverytoanearbywarehouse.In

addition,Study1alsofoundthatthecorporatedatasamplefrequentlydidnothavea

clearorpreciseplaceorportnamedwhenrequired.Additionally,acorporatelocation

used“FCASt.Louis”Incoterms®onapurchaseordertoasupplierinSt.Louis,Franceas

opposedtoSt.Louis,Missouri,andthiscausedconfusion,extrashippingtime,and

ultimately,increasedbuyercost.AlsowithinStudy1,andduetoSAPR/3’sstructureand

characterlimitations,specifyingtheIncoterms®version(e.g.Incoterms®2010)inthe

Incoterms(s)Field2isgenerallyimpossiblewhenalsospecifyingthenamedplaceor

port.

Scenario4explorestheneedtospecifythecorrectIncoterms®version(i.e.

Incoterms®2010,2000).ThisisalsoidentifiedbyStapletonetal.(2014a)inthesix

commonusageerrorsas“notadoptingtorecentIncoterms®ruleversion,suchas

Incoterms®2000/2010.”Study1hasfoundthatSAPR/3doesnotbydefaultspecifythe

Incoterms®ruleversionnordoesSAPR/3allowenoughcharacterstoallowbotha

locationandIncoterms®version.Study1hasalsofoundthatthreeearlierIncoterms®

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rules(DAF,DES,andDDU)arestillbeingused.TheseIncoterms®2000ruleshavebeen

replacedintheIncoterms®2010rules.WhilepreviousIncoterms®ruleversionsmaybe

used,theversionshouldbespecifiedwhendoingso(ICC,2010).IntheStudy1data,

applicableversionswerefrequentlynotspecified.

Lastly,Scenario5exploresFCAbeingcorrectlyappliedrelativetoEXW.Support

forexploringthisscenarioisobservedinbothStudies1and2.EXWrepresentsthe

minimalobligationsthatasellermayagreeto,asthesellerisnotresponsibleforexport

formalitiesorloadingtheoncomingvehicle.Duetosomecountries’exportobligations,

eventhoughEXWisused,thesellermaystillberequiredtoarrangeexportformalities,

conflictingwiththeEXWIncoterms®rule.WithinStudy1,EXWisusedfor33.16%of

purchases.However,perthecorporation(anditsfreightpaymentdata),thebuyerdoes

expectthesellertoloadtheoncomingvehicleorclearforexport,ifapplicable.This

requiresanFCAIncoterms®rule.Conversely,sellersuseEXWin60.83%ofsales.With

thisterm,thebuyershouldarrangeloadingthemeansoftransportandclearexport,

whereapplicable.However,duetoliabilityandinsurancerisk,thecorporationwillnot

allowcustomerstobringtheirownforkliftorcraneontocorporatepropertytoloadthe

vehicle.Study1hasalsofoundthataU.S.localbusinessunitCategoryTeamLeader

advisedthattheirbusinessunit“standardlyusedEx-Worksasterms,eventhoughthe

supplierisloadingforthem.”Study2hasalsofoundaclearexampleofEXWuseover

thepreferredFCAIncoterms®rule.Abuyerprovidedanexamplethatcausedissueswith

aNAFTAqualifiedshipmentthatshouldhaveusedanFCAIncoterms®rule,butinstead,

theorderindicatedtheEXWIncoterms®rule.WiththeEXWIncoterms®rule,the

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supplierdidnotneedtocleargoodsforexportandhence,thesupplierfeltnoobligation

toprovideaNAFTAform,whichwouldhavesavedthebuyer’scompanyfrompaying

importduty.Thisresultedin$8,500dutypershipmentonaproductthatshipped

weekly.

4.3.3QuestionnairePretest

Experiencedbuyersandsellerswithinthelarge,internationalcompanyaswellas

academicsubjectmatterexpertsreviewedearlyversionsofthescenariobased

questionnaireandevaluateditsfacevalidity,readability,andrealism.Theexperimental

treatmentswerechecked.Revisionswerecompletediterativelyuntilthefinal

questionnairewasjudgedsuitableforreleasetothesample.

4.3.4QuestionnaireSample

Withinbuyer-sellerrelationshipresearch,theuseofreal-lifeparticipantshas

beenverylimited(Mestdagh&Buelens,2003)where“only5%ofstudiesusepracticing

managersasparticipants,”whichtheystatefurtheris“notexactlygoodnews.”This

studyhassurveyedpracticingmanagerparticipantswithinalarge,international

corporationoperatinginmanyindustrialmarkets.Therefore,theinvitedparticipants

werewhollywithinthissinglelarge,internationalcorporation.Thecorporationagreed

toprovidewide-rangingaccesstomanagersforthisresearchstudy.Buyers,whowere

primarilypartofthecorporation’ssupplychainmanagementfunction,andsellers,who

werepartofthecorporation’ssales,marketing,andcustomerservicefunctions,were

bothpurposefullysampled.Inaddition,duetoStudy2identifyingtheroleofIncoterms®

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inrevenuerecognition,accountingandfinanceprofessionalswerepurposefully

sampled.Theanonymouslarge,internationalcorporationhadinternallyconducted

Incoterms®trainingthroughtheirinternaltraininguniversity,grouptrainingsessions,

andexternaltrainings.Trainedanduntrainedindividualswerebothpurposefully

sampled.

Theanonymouslarge,internationalcorporationprovidedanemaildistribution

listof2,397practicingmanagerswithinthesupplychainmanagement,sales,marketing,

customerservice,accounting,andfinancefunctions.Thesemanagerswereemaileda

linktothesurveysiteandaskedtorespondwithinatwo-weekperiod.Areminderemail

wassenttothedistributionlistoneweekbeforetheresponsedeadline.Intotal,912

practicingmanagersrespondedatleastinparttotheemailedquestionnaire.However,

only823respondedtoallthedemographicsquestions,andonly617fullycompletedthe

questionnaire.Thismadetheresponserate25.74%(617fullresponses÷2,397

emailed).Table4.13presentsthefrequenciesofresponsestoeachdemographic

question.Onlyrespondentswhoanswered“Yes”toIncoterms®trainingwereasked

whenthattraininghadoccurred.Figure4.4presentsamapofthegeographiclocations

ofrespondentstothequestionnaireindicatingthatrespondentsweredistributedacross

theglobe.Selectedsummarystatisticshavebeencompiledfromthedemographic

questionsforrespondentgender,agerange,jobrole,workexperienceyears,

Incoterms®trainingandwhenIncoterms®trainingoccurredarepresentedinTables

4.14through4.19.TheValidrowsindicatethefrequenciesofeachpossibleresponseto

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thequestionsandtheMissingrowsindicatethenumberofrespondentsfromthe912

practicingmanagerswhodidnotcompleteeachdemographicquestion.

Table4.13–DemographicFrequencies

Gender Age JobRoleWork

ExperienceIncotermsTraining WhenTrained

N Valid 842 839 828 828 823 660

Missing 70 73 84 84 89 252

Figure4.4–MapofRespondents

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Table4.14–GenderFrequencyTable

Frequency PercentValid

PercentCumulativePercent

Valid Male 462 50.7 54.9 54.9

Female 360 39.5 42.8 97.6

NotIdentified 20 2.2 2.4 100.0

Total 842 92.3 100.0

Missing System 70 7.7

Total 912 100.0

Table4.15–AgeFrequencyTable



Valid 18to24 16 1.8 1.9 1.9

25to34 257 28.2 30.6 32.5

35to44 247 27.1 29.4 62.0

45to54 196 21.5 23.4 85.3

55to64 94 10.3 11.2 96.5

65orolder 10 1.1 1.2 97.7

Notidentified 19 2.1 2.3 100.0

Total 839 92.0 100.0


Total 912 100.0

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Table4.16–JobRoleFrequencyTable



Valid SalesorMarketing 155 17.0 18.7 18.7

SupplyChain 562 61.6 67.9 86.6

FinanceorAccounting 111 12.2 13.4 100.0

Total 828 90.8 100.0


Total 912 100.0

Table4.17–WorkExperienceFrequencyTable



Valid 1to5 117 12.8 14.1 14.1

6to10 176 19.3 21.3 35.4

11to15 147 16.1 17.8 53.1

16to20 112 12.3 13.5 66.7

21to25 92 10.1 11.1 77.8

26to30 82 9.0 9.9 87.7

30ormore 95 10.4 11.5 99.2

Notidentified 7 .8 .8 100.0

Total 828 90.8 100.0


Total 912 100.0

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Table4.18–Incoterms®TrainingFrequencyTable



Valid Yes 663 72.7 80.6 80.6

No 160 17.5 19.4 100.0

Total 823 90.2 100.0


Total 912 100.0

Table4.19–WhenIncoterms®TrainedFrequencyTable



Valid 0to6months 114 12.5 17.3 17.3

7monthsto1year 154 16.9 23.3 40.6

1to1.5years 112 12.3 17.0 57.6

1.5to2years 77 8.4 11.7 69.2

2yearsormore 203 22.3 30.8 100.0

Total 660 72.4 100.0


Total 912 100.0

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4.3.5Analysis

4.3.5.1NonresponseBias

TheQualtrics®questionnaireoutputwasimportedintoIBM’sSPSSversion24for

MACforallstatisticalanalyses.Astherespondentstothequestionnairewereself-

determined,thepossibilityofnon-responsebiasintheresults(therespondentsarenot

representativeoftheunderlyingpopulation)wasanalyzedviatwomethods:1)

comparingthedemographiccharacteristicsofrespondentsbeforeandafterthe

reminderemailwassent;and2)comparingthedemographicsofrespondentswhofully

completedthesurveytorespondentswhostartedthesurveybutdidnotfullycomplete

it.Bothanalysesaredescribedindetailinthefollowingtwosections.Forauseful

discussionofnon-responsebiasanditseffectsseeGrovesandPeytcheva(2008).

4.3.5.2BeforeandAfterReminderDemographicComparisons

Thefirstmethodusedtoanalyzethepossibilityofnon-responsebiaswasto

comparethedemographicdataofrespondentswhorespondedquicklytotheinitial

emailtothedemographicdataofthosewhorespondedafterthereminderemailwas

sent.Significantdifferencesinthedemographicdataofearlyversuslateresponders

couldbeindicativeofasystematicdifferenceinthepropensityofsurveyrecipientsto

participateinthesurvey.

Therespondent’sgenderidentificationbeforeandaftertheemailreminderwas

sentiscrosstabulatedinTable4.20.AreminderNoindicatesthattheresponsewas

recordedpriortothereminderemail,andaYesindicatestheresponsewasrecorded

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afterthereminderemail.Asshownbythechi-squaretestsinTable4.20,thereisno

significantdifferenceatthe0.05levelbetweenmale,female,andnotidentified

respondentsbeforeandafterthereminderemail.

Table4.20–CrossTabulationofGenderandCaseReminder

Crosstab

Gender

TotalMale Female NotIdentifiedReminder No Count 266 195 12 473

ExpectedCount 259.5 202.2 11.2 473.0Yes Count 196 165 8 369

ExpectedCount 202.5 157.8 8.8 369.0Total Count 462 360 20 842

ExpectedCount 462.0 360.0 20.0 842.0

Chi-SquareTests

Value df AsymptoticSignificance(2-sided)PearsonChi-Square 1.077a 2 .584LikelihoodRatio 1.077 2 .584Linear-by-LinearAssociation .528 1 .467

NofValidCases 842 a.0cells(.0%)haveexpectedcountlessthan5.Theminimumexpectedcountis8.76.

Therespondent’sageresponsesbeforeandafterthereminderemailwassent

arecrosstabulatedinTable4.21.Thechi-squaretestsinTable4.21alsoindicatethat

thereisnosignificantdifferenceatthe0.05levelbetweenagecategoriesof

respondentsbeforeandafterthereminderemail.

172

Table4.21–CrossTabulationofAgeandReminder

Crosstab

Age Total18to24

25to34

35to44

45to54

55to64

65orolder

Notidentified

Reminder No Count 8 147 142 107 55 2 9 470ExpectedCount

9.0 144.0 138.4 109.8 52.7 5.6 10.6 470.0

Yes Count 8 110 105 89 39 8 10 369ExpectedCount

7.0 113.0 108.6 86.2 41.3 4.4 8.4 369.0

Total Count 16 257 247 196 94 10 19 839ExpectedCount

16.0 257.0 247.0 196.0 94.0 10.0 19.0 839.0

Chi-SquareTests

Value dfAsymptoticSignificance

(2-sided)PearsonChi-Square 6.839a 6 .336LikelihoodRatio 7.020 6 .319Linear-by-LinearAssociation .902 1 .342

NofValidCases 839 a.1cells(7.1%)haveexpectedcountlessthan5.Theminimumexpectedcountis4.40.

Therespondent’sjobroleresponsesbeforeandafterthereminderemailwas

sentarecrosstabulatedinTable4.22.Table4.22showsthechi-squaretestsfor

differencesinrespondent’sjobrolebeforeandafterthereminderemailindicatethat

thereisasignificantdifferenceatthe0.05levelbetweenthejobrolesofrespondents

whorespondedbeforeandafterthereminderemail.ExaminingTable4.22reveals

significantdifferencesintheexpectedandactualnumberofFinanceorAccountingjob

rolerespondentsbeforeandafterthereminderemail.Accordingtoofficialsofthe

anonymouslarge,internationalcorporation,thisdifferenceinresponsepropensityover

timeofthisjobfunctionisexplainable.TheworkloadoftheFinanceorAccountingjob

173

roleiscyclicalwiththegreatestworkloadsoccurringattheveryendandbeginningof

eachmonth.Theinitialquestionnairewassentoutduringaperiodwhentheseroles

werebusier,whereasthereminderemailwassenttowardsthemiddleofthemonth,

whenFinanceorAccountingwaslessbusy.Sales,Marketing,andSupplyChainworkis

moreevenlyloadedwithaslightpeakatmonthorquarterendtopushshipmentof

orders.

Table4.22–CrossTabulationofJobRoleandReminder

Crosstab

JobRole TotalSalesor

MarketingSupplyChain

FinanceorAccounting

Reminder No Count 96 324 46 466ExpectedCount 87.2 316.3 62.5 466.0

Yes Count 59 238 65 362ExpectedCount 67.8 245.7 48.5 362.0

Total Count 155 562 111 828ExpectedCount 155.0 562.0 111.0 828.0

Chi-SquareTests


(2-sided)PearsonChi-Square 12.377a 2 .002LikelihoodRatio 12.301 2 .002Linear-by-LinearAssociation 9.805 1 .002


InTable4.23,therangeofrespondent’syearsofworkexperienceresponsesis

crosstabulatedbeforeandafterthereminderemailwassent.Asshownbythechi-

174

squaretestsinTable4.23,thereisnosignificantdifferenceatthe0.05levelbetween

thevariousworkexperiencerangesforrespondentsbeforeandafterthereminder

email.

Table4.23–CrossTabulationofWorkExperienceReminder

Crosstab

WorkExperience Total

1to56to10

11to15

16to20

21to25

26to30

30ormore

Notidentified

Reminder No Count 54 109 89 64 44 49 54 3 466

ExpectedCount

65.8 99.1 82.7 63.0 51.8 46.1 53.5 3.9 466.0

Yes Count 63 67 58 48 48 33 41 4 362

ExpectedCount

51.2 76.9 64.3 49.0 40.2 35.9 41.5 3.1 362.0

Total Count 117 176 147 112 92 82 95 7 828

ExpectedCount

117.0 176.0 147.0 112.0 92.0 82.0 95.0 7.0 828.0

Chi-SquareTests




InTable4.24,therespondentsreceivingIncoterms®trainingiscrosstabulated

175

withbeforeandaftersendingthereminderemail.Thechi-squaretestinTable4.24

indicatesthatthereisnosignificantdifferenceatthe0.05leveloftherespondents

beforeandafterthereminderemailwithrespecttothosereceivingIncoterms®training.

Table4.24–CrossTabulationofIncotermsTrainingandReminder

Crosstab

IncotermsTraining TotalYes No

Reminder No Count 375 89 464ExpectedCount 373.8 90.2 464.0

Yes Count 288 71 359ExpectedCount 289.2 69.8 359.0

Total Count 663 160 823ExpectedCount 663.0 160.0 823.0

Chi-SquareTests

Value df

AsymptoticSignificance(2-sided)

ExactSig.(2-sided)

ExactSig.(1-sided)

PearsonChi-Square .046a 1 .830 ContinuityCorrectionb .016 1 .900 LikelihoodRatio .046 1 .830 Fisher'sExactTest .859 .449Linear-by-LinearAssociation

.046 1 .830

NofValidCases 823 a.0cells(.0%)haveexpectedcountlessthan5.Theminimumexpectedcountis69.79.b.Computedonlyfora2x2table

Baseduponthecrosstabulationsandchi-squaretestsfordifferencesinthe

demographiccharacteristicsofearlyandlateresponders,itdoesnotappearthatthere

issignificantnon-responsebiaswithrespecttothesetests.ThedifferencesinFinanceor

176

Accountingjobrolepropensitytorespondbeforeandafterthereminderemailare

readilyunderstood.

4.3.5.3Fullquestionnaireresponsesversusnotfullycompleteddemographiccomparisons

Thesecondmethodusedtoanalyzethepossibilityofnon-responsebiaswasto

comparethedemographicinformationofrespondentswhofullyrespondedtothe

surveyansweringallquestionswiththosewhodidnotfullyrespondbutratherprovided

onlyincompleteresponsestothefullsetofquestions.Thismethodexploresthe

possibilitythatrespondentsfullycompletingtheentirequestionnairemightdifferfrom

respondentswhodidnot.Table4.25showsthenumberofvalidandmissingresponses

comparedtothetotal912(n)responsesoneachofthefivedemographicquestions.

Table4.25–CaseProcessingFinished

CaseProcessingSummary

CasesValid Missing Total

N Percent N Percent N PercentFinished*Gender 842 92.3% 70 7.7% 912 100.0%Finished*Age 839 92.0% 73 8.0% 912 100.0%Finished*JobRole 828 90.8% 84 9.2% 912 100.0%Finished*WorkExperience

828 90.8% 84 9.2% 912 100.0%

Finished*IncotermsTraining

823 90.2% 89 9.8% 912 100.0%

Therespondents’genderandwhethertherespondentfullyfinishedthe

questionnairearecrosstabulatedinTable4.26.AFinishedNoindicatesthatthe

respondentendedthequestionnaireatsomepointpriortorespondingtotheirverylast

177

scenarioafterrespondingtothegenderquestion,andaFinishedYesindicatesthatthe

respondentfullycompletedthequestionnaire.Asshownbythechi-squaretestsinTable

4.26,thereisnosignificantdifferenceatthe0.05levelbetweenmale,female,andnot

identifiedrespondentswhodidordidnotfullycompletethequestionnaire.

Table4.26–CrossTabulationofGenderwithFinishedtheQuestionnaire

Crosstab

Gender

TotalMale Female NotIdentifiedFinished No Count 125 93 7 225

ExpectedCount 123.5 96.2 5.3 225.0Yes Count 337 267 13 617

ExpectedCount 338.5 263.8 14.7 617.0Total Count 462 360 20 842

ExpectedCount 462.0 360.0 20.0 842.0

Chi-SquareTests


(2-sided)PearsonChi-Square .871a 2 .647LikelihoodRatio .834 2 .659Linear-by-LinearAssociation .000 1 .987


Therespondent’sageandwhethertherespondentfullyfinishedthequestionnaire

arecrosstabulatedinTable4.27.Thechi-squaretestsinTable4.27indicatethatthereis

nosignificantdifferenceatthe0.05levelbetweenagecategoriesofrespondentswho

didordidnotfullyfinishthequestionnaireafterrespondingtotheagequestion.

178

Table4.27–CrossTabulationofAgewithFinishedtheQuestionnaire

Crosstab

Age Total18to24

25to34

35to44

45to54

55to64

65orolder

Not

identified Finished No Count 9 65 63 46 27 4 8 222

Expected

Count

4.2 68.0 65.4 51.9 24.9 2.6 5.0 222.0

Yes Count 7 192 184 150 67 6 11 617Expected

Count

11.8 189.0 181.6 144.1 69.1 7.4 14.0 617.0

Total Count 16 257 247 196 94 10 19 839Expected

Count

16.0 257.0 247.0 196.0 94.0 10.0 19.0 839.0

Chi-SquareTests




Therespondent’sjobroleandwhethertherespondentfullyfinishedthe

questionnairearecrosstabulatedinTable4.28.Thechi-squaretestsinTable4.28

indicatethatatthe0.05level,thereisnosignificantdifferenceacrossjobcategoriesfor

respondentswhodidordidnotfullyfinishthequestionnaire.

179

Table4.28–CrossTabulationofJobRolewithFinishedtheQuestionnaire

Crosstab

JobRole

TotalSalesor

Marketing SupplyChainFinanceorAccounting

Finished No Count 41 140 30 211ExpectedCount

39.5 143.2 28.3 211.0

Yes Count 114 422 81 617ExpectedCount

115.5 418.8 82.7 617.0

Total Count 155 562 111 828ExpectedCount

155.0 562.0 111.0 828.0

Chi-SquareTests


(2-sided)Chi-Square .313a 2 .855

LikelihoodRatio .311 2 .856

Linear-by-LinearAssociation .001 1 .976

NofValidCases 828

a. 0cells(.0%)haveexpectedcountlessthan5.Theminimumexpectedcountis28.29.

InTable4.29,therespondents’yearsofworkexperiencearecrosstabulated

withwhethertherespondentfullyfinishedthequestionnaire.Asshownbythechi-

squaretestsinTable4.29,thereisnosignificantdifferenceatthe0.05levelbetween

thevariousworkexperiencerangesforrespondentsandwhethertherespondentfully

180

finishedthequestionnaire.

Table4.29–CrossTabulationofWorkExperiencewithFinishedtheQuestionnaire

Crosstab

WorkExperience Total

1to5 6to10

11to

15

16to

20

21to

25

26to

30

30or

more

Not

identified Finished No Count 35 45 41 23 19 15 29 4 211

Expected

Count

29.8 44.9 37.5 28.5 23.4 20.9 24.2 1.8 211.0

Yes Count 82 131 106 89 73 67 66 3 617

Expected

Count

87.2 131.1 109.5 83.5 68.6 61.1 70.8 5.2 617.0

Total Count 117 176 147 112 92 82 95 7 828

Expected

Count

117.0 176.0 147.0 112.0 92.0 82.0 95.0 7.0 828.0

Chi-SquareTests



NofValidCases 828 a. 1cells(6.3%)haveexpectedcountlessthan5.Theminimumexpectedcountis

1.78.

InTable4.30,whetherrespondentsreceivedIncoterms®trainingiscross

tabulatedwithwhethertherespondentfullycompletedthequestionnaire.Thechi-

squaretestspresentedinTable4.30doindicatethatthereisasignificantdifference

betweenrespondentswhoreceivedIncoterms®trainingornotandtheirpropensitiesto

fullyfinishthequestionnairewithIncoterms®trainedrespondentsmorelikelytofully

181

completethequestionnaire.Respondentswhoarepresentedwithtopicsthattheyare

unfamiliarwith(notIncoterms®trainedrespondents)maybemorelikelytoabandon

thequestionnaireinprogress.Alternatively,ifrespondentsbelievethattheyaremore

knowledgeableaboutasubject(Incoterms®trainedrespondents),theymaybemore

likelytofullyrespondtoallscenarios.Therefore,itappearsthatthesampleof

respondentswhofullyrespondedtoallfivescenarioquestionsmayoverrepresent

Incoterms®trainedrespondentsrelativetonon-trainedrespondentsandtheresultsof

theanalysisregardingtheeffectsofIncoterms®trainingshouldbeviewedconsidering

thispossibleoverrepresentation.

182

Table4.30–CrossTabulationofIncotermsTrainedwithRespondentsWhoFinishedtheQuestionnaire

Crosstab

IncotermsTraining

TotalYes NoFinished No Count 145 61 206

ExpectedCount 166.0 40.0 206.0

Yes Count 518 99 617ExpectedCount 497.0 120.0 617.0

Total Count 663 160 823ExpectedCount 663.0 160.0 823.0

Chi-SquareTests

Value df

AsymptoticSignificance(2-sided)

ExactSig.(2-sided)

ExactSig.(1-sided)

PearsonChi-Square 18.148a 1 .000 ContinuityCorrectionb 17.293 1 .000 LikelihoodRatio 16.961 1 .000 Fisher'sExactTest .000 .000Linear-by-LinearAssociation

18.126 1 .000

NofValidCases 823 a.0cells(.0%)haveexpectedcountlessthan5.Theminimumexpectedcountis40.05.b. Computedonlyfora2x2table

Baseduponthecrosstabulationsandchi-squaretestsforfullandpartial

responsestothequestionnaire,itdoesnotappearthereisanon-responsebiasexcept

forthepossibleoverrepresentationofIncoterms®trainedrespondentswithrespectto

fullycompletingallquestionsinthequestionnaire.

183

4.3.5.4QuestionnaireResponseAnalysis–ByScenario

Inthissection,therespondent’sanswerstoeachofthefive-scenario’squestionare

analyzed.Table4.31providesselectedstatisticsonthetotalnumberofthefive

scenarioscorrectlyrespondedto.Table4.31indicatesthat708respondentsanswered

atleastoneofthefivescenario-basedquestionswithanaverageof1.58questions

answeredcorrectlybytherespondents.

Table4.31–NumberofScenarioQuestionsRespondedtowithCorrectAnswer

NMinimumCorrect

MaximumCorrect

MeanCorrect

Std.DeviationCorrect

RespondedtoaQuestion

708 0 5 1.58 1.123

Table4.32presentsthenumberofresponsestoeachscenariobasedquestion.

Table4.32–ValidResponsesbyScenarioQuestion

Scenario1Question

Scenario2Question

Scenario3Question

Scenario4Question

Scenario5Question

Number 648 652 660 642 655

184

Table4.33presentsmoredetailedinformationonthefrequencyofthetotal

numberofcorrectresponsessuppliedbythe708respondentswhoansweredatleast

onescenariobasedquestion.Only0.3%correctlyrespondedtoallfivescenario

questions,5.2%correctlyrespondedtofourofthequestions,and14.5%correctly

respondedtothreequestions.Thismeansthat79.9%ofallrespondentscorrectly

answeredtwoorfewerscenarioquestions.Thisveryhighpercentageofrespondents

answeringtwoorfewerscenarioquestionscorrectlyindicatesasignificantdeficiencyof

Incoterms®knowledgeandappropriateuseamongthesamplerespondents.

Table4.33–FrequencyofTotalNumberofCorrectResponses

Frequency Percent CumulativePercent

Total

Correct

Responses

0 134 18.9 18.9

1 211 29.8 48.7

2 221 31.2 79.9

3 103 14.5 94.5

4 37 5.2 99.7

5 2 .3 100.0

Total 708 100.0 100.0


whenusingIncoterms®,andthepresenceofbothvariablesonreducinginappropriate

Incoterms®applicationontheindividualscenariosexaminedbythequestionnaire,five

binarylogisticregressionmodelsareformulatedandestimated.Eachlogisticregression

modelemploysasitsdependentvariableabinarycategorizationofwhetherthe

respondentcorrectlyansweredthatscenario’squestion(YesorNo)fromthefive

185

candidateresponses.Theindependentvariablesthataffecttheprobabilityofa

respondentcorrectlyansweringthequestionarethreecategoricalvariablesassociated

witheachrespondent:(1)istherespondentIncoterms®trainedornot;(2)arethe

OperationaldefinitionsassociatedwiththeIncoterms®providedinthescenario

responsesprovidedtotherespondentornot;and(3)isthereaninteractionvariable

thatindicatesthattherespondentisBothIncoterms®trainedandtheoperational

definitionsareprovidedtotherespondentwhenansweringeachquestion.This

analyticalapproachisappropriatewhenmodelingquestionresponsesasbinary

categoricalvariables(Robertset.al,1987).

Thebinarylogisticregressionmodelcanbeexpressedas:

𝜌 = 𝑒%&'()(&*+)+&*,),&…

1 +𝑒%&*()(&*+)+&*,),&…

Where:

p=theprobabilityofcorrectresponsetothequestion,

e=thebaseofthenaturallogarithms(approximately2.72),

a=aconstantterm,

b1,b2,b3=theestimatedcoefficientsofthepredictorvariables,

x1=1ifIncoterms®trained,0otherwise,

x2=1ifOperationaldefinitionsprovided,0otherwise,and

x3=1ifBothIncoterms®trainedandoperationaldefinitionsprovided,0

otherwise.

186

Someimportantconsequencesandassumptionsofabinarylogisticregressionmodel

are:

• Itdoesnotassumealinearrelationshipbetweenthedependentand

independentvariables;

• Thedependentvariableisoneoftwomutuallyexclusiveandexhaustive

categories;and

• Relativelylargersamplesareneededcomparedtoalinearregressionbecause

usingmaximumlikelihoodestimationforcoefficientsrequireslargesamples.

Thefollowingfivesectionsexploretheresultsofestimatingalogisticregressionfor

surveyrespondentstocorrectlyanswereachofthefivequestionsassociatedwiththe

experimentalscenarios.

4.3.5.5ScenarioOneDescriptiveStatistics

Inthissection,descriptivestatisticsandthebinarylogisticsregressionresultsfor

Scenario1arereviewed.Scenario1examinesrespondents’knowledgeregardinga

commonerroridentifiedintheliterature:incorrectapplicationofseaandinland

waterwayIncoterms®.ThedescriptivestatisticsinTable4.34showthenumberand

percentagesofcorrectandincorrectresponses,whereNoindicatesanincorrect

responseandYesindicatesacorrectresponse.Only23.9%ofrespondentscorrectly

answeredthequestionassociatedwithScenario1.

187

Table4.34–ResponsetoScenarioOneQuestion

Frequency Percent

Correct No 493 76.1

Yes 155 23.9

Total 648 100.0

AsshownbyboththeCoxandSnellR-SquareandNagelkerkeR-Squarestatistics

displayedinTable4.35,thereisaveryweakrelationshipbetweenthepredictor

variables(Incoterms®trained,Operationaldefinitionsprovided,Both)andthe

dependentvariable,correctlyansweringScenario1.

Table4.35–ModelSummary

Model Cox&SnellRSquare NagelkerkeRSquare

AllVariables .020 .030

AsdescribedinTable4.36noneofthethreepredictors(Incoterms®trained,

Operationaldefinitionsprovided,Both)appeartosignificantlyaffect(atthe0.05

significancelevel)whetherrespondentswillorwillnotanswerthequestionassociated

withScenario1correctly.However,itdoesappearthatIncoterms®training,providing

operationaldefinitions,andtheinteractiveeffectofbothhavepositiveeffectson

answeringthescenariocorrectly.Providingoperationaldefinitionshasthelargest

impact.

188

Table4.36–EstimationResultsofAnsweringQuestion1Correctly

VariablesintheEquation

B S.E. Wald df Sig. Exp(B) IncotermsTrained .011 .381 .001 1 .978 1.011OperationalDefinitionsProvided

.506 .469 1.162 1 .281 1.658

Both .186 .512 .132 1 .717 1.204Constant -1.504 .350 18.509 1 .000 .222

4.3.5.6ScenarioTwoDescriptiveStatistics

Inthissection,descriptivestatisticsandthebinarylogisticsregressionresultsfor

Scenario2arereviewed.Scenario2addressestheusageofFOBappliedasan

Incoterms®ruleasopposedtoaUCCtermofsale.ThedescriptivestatisticsinTable4.37

showthenumberandpercentagesofcorrectandincorrectresponses,whereNo

indicatesanincorrectresponseandYesindicatesacorrectresponse.Only37.3%of

respondentscorrectlyansweredthequestionassociatedwithScenario2.

Table4.37–ResponsetoScenario2Question

Frequency Percent

Correct No 409 62.7

Yes 243 37.3

Total 652 100.0





189


Model Cox&SnellRSquare NagelkerkeRSquareAllVariables .017 .023

AsdescribedinTable4.39,noneofthethreepredictors(Incoterms®trained,

Operationaldefinitionsprovided,Both)appearsignificantlyaffects(atthe0.05

significancelevel)whetherrespondentswillorwillnotanswerthequestionassociated

withScenario2correctly.However,itdoesappearthatIncoterms®training,providing

operationaldefinitions,andtheinteractiveeffectofbothhavepositiveeffectson

answeringthescenariocorrectly.Providingoperationaldefinitionshasthelargest

impact.



B S.E. Wald df Sig. Exp(B)IncotermsTrained .099 .316 .099 1 .753 1.104OperationalDefinitionsProvided

.334 .410 .667 1 .414 1.397

Both .218 .447 .239 1 .625 1.244Constant -.856 .290 8.735 1 .003 .425

4.3.5.7ScenarioThreeDescriptiveStatistics

Scenario3examinesrespondents’knowledgeregardingspecifyingageographic

placewhenusingIncoterms®.OneofthesixcommonerrorsofIncoterms®ruleusage

identifiedbyStapletonetal.(2014a)wasnotclearlyspecifyingageographicplace.The

descriptivestatisticsinTable4.40showthenumberandpercentagesofcorrectand

190

incorrectresponses,whereNoindicatesanincorrectresponseandYesindicatesa

correctresponse.Only22.7%ofrespondentscorrectlyansweredthequestion

associatedwithScenario3.

Table4.40-ResponsetoScenario3Question

Frequency Percent

Correct No 510 77.3

Yes 150 22.7

Total 660 100.0







AsdescribedinTable4.42,thepredictors(Incoterms®trainedandBoth)donot

appeartohavesignificanteffects(atthe0.05significancelevel)onwhether

respondentswillorwillnotanswerthequestionassociatedwithScenario3correctly.

However,itdoesappearthatprovidingoperationaldefinitionssignificantlyincreases

thelikelihoodthatarespondentcorrectlyanswersthequestion.Further,providing

both,trainingandoperationaldefinitions,doesappeartofurtherincreasethelikelihood

thatarespondentcorrectlyanswersthequestionalthoughthiseffectisnotsignificant.

191


VariablesintheEquation B S.E. Wald df Sig. Exp(B)IncotermsTrained .281 .435 .419 1 .517 1.325OperationalDefinitionsProvided

1.099 .508 4.669 1 .031 3.000

Both -.237 .550 .186 1 .666 .789Constant -1.946 .404 23.193 1 .000 .143a.Variable(s)enteredonstep1:IncotermsTraining,OperationalDefinitions,OpDef&

Trained.4.3.5.8ScenarioFourDescriptiveStatistics

Scenario4exploresrespondents’knowledgeregardingappropriateapplication

oftheversionofIncoterms®(i.e.Incoterms®2010,Incoterms®2000)beingspecified.

ThedescriptivestatisticsinTable4.43showthenumberandpercentagesofcorrectand

incorrectresponses,whereNoindicatesanincorrectresponseandYesindicatesa

correctresponse.Only27.3%ofrespondentscorrectlyansweredthequestion

associatedwithScenario4.


Frequency Percent

Correct No 393 43.1

Yes 249 27.3

Total 642 70.4




192


Table4.44-ModelSummary

Model Cox&SnellRSquare NagelkerkeRSquare

AllVariables .044 .059

AsdescribedinTable4.45,thepredictors(Incoterms®trained,Operational,

Both)appeartohaveinsignificanteffects(atthe0.05significancelevel)onwhether

respondentswillorwillnotanswerthequestionassociatedwithScenario4correctly.

However,itdoesappearthatprovidingoperationaldefinitionsinthisscenariodecreases

thelikelihoodthatarespondentwillcorrectlyanswerthequestion.Thismaybethe

resultofrespondents’lackofawarenessofdifferencesbetweenIncoterms®version

rules,suchasDDUbeingreplacedinIncoterms®2010rules.



B S.E. Wald df Sig. Exp(B)IncotermsTrained .391 .300 1.702 1 .192 1.479OperationalDefinitionsProvided

-.773 .430 3.236 1 .072 .462

OpDefProvided&Trained

-.083 .467 .031 1 .860 .921

Constant -.405 .275 2.170 1 .141 .667a.Variable(s)enteredonstep1:IncotermsTraining,OperationalDefinitions,OpDef&Trained.

4.3.5.9ScenarioFiveDescriptiveStatistics

Scenario5examinestheapplicationofIncoterms®ruleFCAbeingcorrectly

193

appliedrelativetoEXW.ThedescriptivestatisticsinTable4.46showthenumberand

percentagesofcorrectandincorrectresponses,whereNoindicatesanincorrect

responseandYesindicatesacorrectresponse.Ofrespondents,49.3%correctly

answeredthequestionassociatedwithScenario5.


Frequency Percent

Correct No 332 50.7

Yes 323 49.3

Total 655 100.0







AsdescribedinTable4.48,neitherofthepredictors(Operationaldefinitions

providedandBoth)appeartohavesignificanteffects(atthe0.05significancelevel)on

whetherrespondentswillorwillnotanswerthequestionassociatedwithScenario5

correctly.However,itdoesappearthatprovidingIncoterms®trainingsignificantly

increasesthelikelihoodthatarespondentwillcorrectlyanswerthequestion.

194



B S.E. Wald df Sig. Exp(B)IncotermsTrained 1.349 .341 15.668 1 .000 3.852OperationalDefinitionsProvided

.623 .427 2.131 1 .144 1.865

Both -.855 .460 3.459 1 .063 .425Constant -1.124 .319 12.394 1 .000 .325a.Variable(s)enteredonstep1:IncotermsTraining,OperationalDefinitions,OpDef&Trained.

Tosummarizetheoverallfindingsofthequestionbyquestionbinarylogistics

regressionmodels,eachrespondent’sabilitytocorrectlyanswerthequestions

associatedwitheachscenariorangedfrom22.7%to49.3%ofrespondents,andthisis

showninTable4.49.Acrossallscenarios,themodelsgenerallyshowaweakrelationship

betweenthepredictorvariables(Incoterms®trained,Operationaldefinitionsprovided,

Both)andthedependentvariable,correctlyansweringthescenarioquestion.The

modelsgenerallydonotexplainmuchofthevariationsobservedinresponsesorthe

probabilitytopredictcorrectresponses.

195

Table4.49–ResponsetoAllScenarioQuestions

Frequency PercentQ1Correct No 493 76.1

Yes 155 23.9Q2Correct No 409 62.7

Yes 243 37.3Q3Correct No 510 77.3

Yes 150 22.7Q4Correct No 393 43.1

Yes 249 27.3Q5Correct No 332 50.7

Yes 323 49.3

4.3.5.10QuestionnaireResponseAnalysis–Overall


whenusingIncoterms®,andthepossibleinteractionofbothonreducinginappropriate

Incoterms®applicationacrossallthescenariosexaminedbythequestionnaire,an

orderedlogisticregressionmodelisformulatedandestimated.Theordinallogistic

regressionmodelemploysasitsdependentvariablethecorrectnumberofresponsesto

allfivescenarioquestionsofeachrespondent(0,1,2,3,4,or5).Thiscategorical

variablehasanaturalrankordermakinganordinallogisticregressionmodelagood

candidatetoevaluatetheeffectsofIncoterms®trainingandprovidingoperational

definitionsinreducinginappropriateuseofIncoterms®.Theindependentvariablesthat

affecttheprobabilityofarespondentcorrectlychoosingacrosscategoricalvariablesare

threecategoricalvariablesassociatedwitheachrespondent:(1)istherespondent

Incoterms®trainedornot;(2)aretheOperationaldefinitionsassociatedwiththe

Incoterms®providedinthecandidatescenarioresponsesornot;and(3)istherean

196

interactionvariableindicatingthattherespondentisBothIncoterms®trainedandthe

operationaldefinitionsareprovidedtotherespondentwhenansweringeachquestion.

Thisanalyticalapproachisappropriatewheneverthedependentvariableinaregression

iscategoricalandusedtoexplainchoicesinvolvingmultiplecategoricalvariablesin

naturalrankorder(Becker&Kennedy,1992;Greene,2000;Burnset.al,2013).

Theordinallogisticregressionmaybeexpressedas:

𝑦∗ = 𝛽3 + 𝛽( ∗ 𝑥1 + 𝛽+ ∗ 𝑥2 + 𝛽, ∗ 𝑥3 + 𝜖 where:

𝑦∗representslatent(unobserved)Incoterms®rulesknowledgeand

Yisthenumberofquestionsansweredcorrectlywith;

𝑌 = 0𝑖𝑓𝑦∗ ≤ 𝛿3,

𝑌 = 1𝑖𝑓𝛿3 < 𝑦∗ ≤ 𝛿(,

𝑌 = 2𝑖𝑓𝛿( < 𝑦∗ ≤ 𝛿+,

𝑌=3𝑖𝑓δ+<y∗≤δ,,

𝑌 = 4𝑖𝑓𝛿, < 𝑦∗ ≤ 𝛿B,

𝑌 = 5𝑖𝑓 > 𝛿B,

Wheretheδcoefficientsaretermedthresholdparameters,

β0,β1,β2,andβ3aretermedlocationparameters,

𝜖~𝑙𝑜𝑔𝑖𝑡(0, 𝜎+),and

x1=1ifIncoterms®trained,0otherwise,

x2=1ifOperationaldefinitionsprovided,0otherwise,and

x3=1ifBothIncoterms®trainedandOperationaldefinitions,0otherwise.

197

Someimportantassumptionsandconsequencesofanordinallogisticregressionmodel

are:

• Thedependentvariableisordinal;

• Independentvariablesarecontinuous,ordinal,orcategorical;

• Thereisnosignificantmulticollinearity;and

• Theassumptionofproportionaloddsisappropriate.

• Toidentifythemodelformaximumlikelihoodestimationitisassumedthat𝛿3=0

and𝜎+=1.

Summarystatisticsfromthemaximumlikelihoodestimationoftheordered

logisticregressionmodelinIBMSPSS24areshowninTable4.50.TheOperational

definitionsprovidedtreatmentwaspresentedto48.6%ofvalidrespondents.Incoterms®

trainingwaspresentfor82.8%ofvalidrespondents.Bothoperationaldefinitionsand

Incoterms®trainingwaspresentfor40.1%ofvalidrespondents.Therewere708

respondentsusedintheestimationofthemodel.

198

Table4.50–CaseProcessingSummary

N MarginalPercentageTotalCorrectQuestions 0 134 18.9%

1 211 29.8%2 221 31.2%3 103 14.5%4 37 5.2%5 2 0.3%

OperationalDefinitions No 364 51.4%Yes 344 48.6%

IncotermsTraining Yes 586 82.8%No 122 17.2%

OpDef&Trained No 424 59.9%Yes 284 40.1%

Valid 708 100.0%

Asevidencedbythesignificantchangein-2LogLikelihood,Table4.51illustrates

thatthemodeldoesasignificantlybetterjobofpredictingthetotalnumberof

questionsrespondedtobyeachapplicantthandoesamodelwithnoexplanatory

variables(theinterceptonlymodel).

Table4.51–ModelFitting

Model -2LogLikelihood Chi-Square df Sig.InterceptOnly 98.161

Final 79.120 19.042 3 .000Linkfunction:Logit.

Table4.52providesthePearsonandDeviancegoodness-of-fittestsofthe

estimatedmodeloverprofilesoftheindependentvariableswithneitherindicating

significantdifferencesbetweentheobservedandexpectednumberofoutcomes.

199

Table4.52–Goodness-of-Fit

Chi-Square df Sig.

Pearson 4.131 12 .981

Deviance 3.981 12 .984

Linkfunction:Logit.

Table4.53showstheCoxandSnell,Nagelkerke,andMcFaddenpseudoR-square

valuesforthemodel.Theselowvaluesindicatethatthemodelexplainsonlyavery

smallproportionofthevarianceofthedependentvariable.

Table4.53–PseudoR-Square

CoxandSnell .027

Nagelkerke .028McFadden .009Linkfunction:Logit.

Table4.54displaysthemaximumlikelihoodparameterestimatesofthemodel.

Table4.54suggeststhatallthethresholdcoefficientestimatesofthemodelformulation

aresignificant.Themostsignificantexplanatoryvariableindeterminingtheunderlying

Incoterms®knowledgelatentvariable(andthetotalnumberofcorrectlyanswered

questionsinthesurvey)isthattherespondentisIncoterms®trainedwithanestimateof

0.914whichissignificantlydifferentfromzeroatthe0.000level.Providingoperational

definitionsalsoappearstoimproveunderlyingIncoterms®knowledgebutnot

significantly.Theinteractionterm,Both,associatedwithprovidingbothoperational

definitionsandIncoterms®traininghasanegativevalueandisnotsignificant,

200

suggestingthatprovidingbothoperationaldefinitionsandIncoterms®traininghasa

negativeinteractionimpactontheunderlyingIncoterms®knowledge.

Table4.54–ParameterEstimates

Estimate Std.Error Wald df Sig.Threshold [TotalCorrect=0] -.649 .235 7.621 1 .006

[TotalCorrect=1] .786 .236 11.138 1 .001[TotalCorrect=2] 2.242 .247 82.272 1 .000[TotalCorrect=3] 3.709 .283 171.517 1 .000[TotalCorrect=4] 6.735 .745 81.788 1 .000

Location OperationalDefinitionsProvided

.425 .328 1.680 1 .195

IncotermsTrained .914 .255 12.891 1 .000Both -.328 .360 .829 1 .362

Table4.55providestheexpectedandobservedcellcountinformationoutput

fromSPSS.Thetableindicatestheobserved,expected,andPearsonresidualacross

Operationaldefinitionsprovided,Incoterms®trained,andtheinteractionterm,Both.

Thisgreatergranularlydescribesthemodel’sabilitytopredictIncoterms®knowledge

application.

201

Table4.55–CellInformation

FrequencyOperationalDefinitions

IncotermsTraining Both

TotalCorrect0 1 2 3 4 5

No Yes No Observed 50 91 99 48 13 1

Expected 52.32 89.04 97.36 45.89 16.50 .89

PearsonResidual

-.352 .248 .202 .339 -.887 .114

No No Observed 22 20 14 3 3 0

Expected 21.29 21.31 13.45 4.47 1.41 .074

PearsonResidual

.191 -.351 .170 -.723 1.356 -.271

Yes Yes Yes Observed 46 81 92 45 19 1

Expected 45.36 80.71 93.71 46.29 17.00 .925

PearsonResidual

.103 .038 -.216 -.208 .500 .078

No No Observed 16 19 16 7 2 0Expected 15.28 20.08 16.25 6.22 2.06 .11PearsonResidual

.212 -.295 -.072 .330 -.041 -.330

Linkfunction:Logit.

Table4.56presentsBrant’stestofparallellines.Thetestindicatesthatthenull

hypothesisthatthelocationparametersarethesameacrossresponsecategoriesis

accepted,suggestingthatthemodeldoesnotviolatetheproportionaloddsassumption.

Table4.56–TestofParallelLines

Model -2LogLikelihood Chi-Square df Sig.NullHypothesis 79.120

General 75.138 3.981 12 .984Thenullhypothesisstatesthatthelocationparameters(slopecoefficients)arethesameacrossresponsecategories.Linkfunction:Logit.

202

Toexploretherobustnessoftheorderedlogisticregressionmodel,alternative

specificationshavebeenexamined.Anordinaryleastsquares(OLS)regressionmodel

withthedependentvariablecodedasthetotalnumberofcorrectanswersand

employingthesamesetofexplanatoryvariablesyieldedsimilarresults.Further,an

orderedlogisticsregressionmodelwasestimatedemployingthesamesetof

independentvariablesalongwithallthedemographicvariables,whichyieldedsimilar

resultsrevealingnoneofthedemographicvariablesassignificant.Lastly,theoriginalset

ofthreeexplanatoryvariableswasregressedonpairsoftheremainingtwotoexplore

thepossibleconfoundingeffectsofpotentialmulticollinearity.Asexpected,some

multicollinearitywasclearlypresentbetweentheinteractionvariable,Both,andthe

OperationalDefinitionsProvidedandIncoterms®Trainedvariables.DroppingtheBoth

variablefromtheoriginalorderedlogitmodelequationdoesnotsignificantlyalterthe

findingsoftheoriginalestimationhowever.Theseresultsaddconfidencetothefindings

oftheresultsoftheoriginal,ordinallogisticsregressionmodelemployedinthe

research.

Torecaptheresultsfromtheordinallogisticsregressionmodel,themodel

showssignificant,butsmallimpacttopredictrespondent’sabilitytoapplylatent

Incoterms®applicationknowledge.Incoterms®trainingisshowntobeasignificant

predictor.Incoterms®traininghasimpactonansweringscenarioquestionscorrectly,

andhence,itimprovesarespondent’schancesofmakingfewermistakes.Trainingdoes

makeadifference.Whileprovidingoperationaldefinitionsappearstohavesome

predictiveabilityinthehypothesizeddirection,thestatisticalimpactisnotsignificant.

203

Further,theimpactoncorrectlyrespondingtoindividualquestionsisclearly

differentiatedbysubjectarea.ProvidingoperationaldefinitionsandIncoterms®training

(i.e.Both)doesnotappeartoaddfurthersignificantpredictivevalue.

4.3.6DiscussionofStudyThreeResults.

Study3hasexaminedthreetestablehypothesesregardingIncoterms®

communicationerrorsbasedonaquestionnaireofsupplychainprofessionalsinalarge

multinationalcompany.Questionspecific,binarylogisticsregressionmodelshavebeen

estimatedandexamined.Anordinallogisticregressionmodelhasbeenestimatedand

analyzed.

Non-responsebiasdoesnotappeartobeanimportantissue.Inexaminingthe

differencesinthepropensitiesofearlyandlateresponderswithrespecttodemographic

characteristicsbeforeandafterthereminderemail,itdoesnotappearthatthereis

significantnon-responsebias.Furthermore,baseduponadditionaltestsforfulland

partialresponsestothequestionnaire,itdoesnotappearthereisanon-responsebias

withthepossibleexceptionofIncoterms®trainedrespondentsbeingmorelikelytofully

completethequestionnaire.

Study3hasexperimentallytestedthreehypotheses.Table4.57describesthe

findingsofthethreehypothesistests.

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Table4.57–SummaryTestsofHypotheses

Hypothesis FindingH1:Incoterms®trainingleadstoadecreaseincommunicationerrorsevidencedbyareductionininappropriateIncoterms®application.

Supported

H2:ProvidingfullyspecifiedandexplicitIncoterms®definitionsleadstoadecreaseincommunicationerrorsevidencedbyareductionininappropriateIncoterms®application.

PartiallySupported

H3:ProvidingfullyspecifiedandexplicitIncoterms®definitionsandIncoterms®trainingleadstoafurtherdecreaseincommunicationerrorsevidencedbyafurtherreductionininappropriateIncoterms®application.

NotSupported

Hypothesis1isclearlysupported.Incoterms®trainingisthemostsignificant

explanatoryvariablefoundintheordinallogisticregressionmodel(0.000level)that

correspondstotheunderlyinglatentknowledgetocorrectlyapplyIncoterms®.

Additionally,whenreviewingscenario-by-scenarioquestions,forScenario5,itappears

thatprovidingIncoterms®trainingsignificantlyincreasesthelikelihoodthata

respondentcorrectlyappliesIncoterms®.ForScenarios1-4,Incoterms®trainingalsohas

apositiveimpactoncorrectIncoterms®applicationbutnotatastatisticallysignificant

level.

Hypothesis2ispartiallysupported.Boththeordinallogisticsregressionmodel

andscenario-by-scenariobinarylogisticregressionmodelsshowthatproviding

operationaldefinitionsdoeshavesomepredictiveabilityoncorrectIncoterms®

application,buttheimpactisnotstatisticallysignificant.

Hypothesis3isnotsupported.Boththeordinallogisticsregressionmodeland

scenario-by-scenario,binarylogisticregressionmodelsshowprovidingoperational

definitionsalongwithIncoterms®training(i.e.Both)doesnotappeartoaddsignificant

205

additionalpredictivevalueabovetheirindividualeffects.

TofurtherrecaptheStudy3results,thefourthresearchquestion(Whatcan

improvethequalityofbuyer-sellerdyadscommunicationoflogisticsmanagement

decisions?)isonlypartiallyaddressedbythefindingsofthevalidityofthethree

hypotheses.Ofthefactorstested,thereisnodoubtthatIncoterms®traininghasthe

largestimpactonimprovingthequalityofbuyer-sellerdyads’communicationof

logisticsmanagementdecisions.However,Incoterms®traininghasimpactsoneonlyone

memberofthedyad.Providingoperationaldefinitionswhencommunicatinglogistics

managementdecisionsaffectsbothdyadparticipantsandtherefore,theexperimental

designemployedheremightunderestimatethesignificanceofprovidingoperational

definitionsindyadiccommunications.Thisjointeffectofimprovingdyadic

communicationsmightbeafruitfulareaforfutureresearch

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CHAPTER5

CONTRIBUTIONS,LIMITATIONS,ANDFUTURERESEARCH

Thepurposeofthislastchapteristofirst,discusstheoveralldissertation

contributionsandimplicationsincludingtheresearchandmanagerialimplications.Next,

thelimitationsoftheresearcharediscussed.Futureresearchdirectionsarethen

proposed.Finally,thechapterconcludeswithsummaryremarks.

5.1OVERALLCONTRIBUTIONSANDMANAGERIALIMPLICATIONS

5.1.1OverallContributions

Fundamentally,thisresearchcontributestodetailedknowledgeconcerningthe

processusedandtheroleofIncoterms®inthenegotiationandcommunicationof

logisticsmanagementdecisions.WhileIncoterms®rulesappeartobewidelyusedin

goodstransactionstonegotiateandcommunicatelogisticsdecisions,their

inappropriateusecausesavarietyofissuesincludingunanticipatedcostsandrisksto

participants.Thisresearchhasexploredthisacademicallyunderdevelopedareaandhas

appliedacademicrigortoascertaintheroleofIncoterms®andtheconsequencesof

theirinappropriateuseineffectivesupplychainmanagement.Thesearethe

fundamentalresearchcontributions.

AsdiscussedinChapter1,thisresearchmakessixprimarycontributions.First,

usingmultipleexploratorycasestudiesandacontrolledexperiment,thisenquiryhas

rigorouslyinvestigatedtheusageerrorsdescribedinpriorIncoterms®literature.Before

207

thepresentresearch,onlyanecdotalevidenceregardingIncoterms®usageerrorswere

prevalentintheliterature(Stapletonetal.,2014a).Second,Incoterms®usageerrors

undescribedinexistingliteraturehavebeenidentified,characterized,andempirically

validated.Third,thisin-depthresearchcontributestoanareaofsupplychain

management,theuseofIncoterms®incommunicatinglogisticresponsibilities,which

hadpreviouslyreceivedonlylimitedacademicattention.Whilepractitionerattention

hadalwaysbeenpresent,asshownintheliteraturereview,andwhilesomeacademic

researchdoesexist,thisstudyshedsnewlightontheimportanceofIncoterms®in

communicatinglogisticsdecisionsandthewide-rangingimpactofIncoterms®usage

errors.Fourth,thisstudyexplainshowbuyersandsellersnegotiateandcommunicate

logisticsmanagementresponsibilities.Fifth,incontrastwiththetypicalresearch

paradigmofusingeitheraquantitativeorqualitativeapproach,amixedmethods

approach,athirdresearchparadigm,hasbeenusedtostudythesupplychain

managementtopicofhowdyadicbuyer-sellerrelationshipscommunicatelogistics

managementdecisions.Mixedmethodsresearchisstillasomewhatnovelapproach

withinpurchasing,marketing,andsupplychainliterature,anditiscertainlyanew

approachtoexploringandexplainingtheIncoterm®phenomena.Thisstudyprovidesa

“how-to”guideforconductingthisformofmixedmethodsresearch,whichhasbeen

showntobeanappropriateandpracticalresearchtechniqueforthisinvestigation.

Lastly,thisstudycontributestotheverylimitedresearchthatusesactualpracticing

managersasparticipantsincontrolledexperiments.Participantsinexperimental

negotiationresearcharegenerallyMBAstudents,andtheuseofreal-lifeparticipantsis

208

verylimited(Mestdagh&Buelens,2003).MestdaghandBuelensfoundthatpracticing

managershavebeenincludedasparticipantsinonly5%ofstudies(2003).Theuseof

practicingmanagersaddstotheexternalvalidityoftheresearch.

5.1.2ManagerialImplications

Goodresearchshouldcontributetoboththebodyofknowledgeandultimately

berelevanttoindustrypractitioners.Thisisachievedbyprovidingpracticalmanagerial

applicationsthatmanagerscanusewithintheirfirms.Thisresearchoffersseveral

managerialimplications.

First,firmsandmanagersshouldfocusonhowtheirbuyersandsellersare

makingandcommunicatinglogisticsmanagementdecisions.Bothdecisionsconcerning

logisticsandhowtheyarecommunicatedhaveimplicationsforthefirms’costsand

risks.Processesshouldbeidentifiedandcommunicatedtobothbuyersandsellersthat

enableausefulperspectiveonallparties’costsandriskimplicationsassociatedwith

eachIncoterms®rule.Thisshouldincludehowtoproperlyhandleexpeditedfreight,

whichisoftenunaddressedinnormallogisticsmanagementarrangements.Inaddition,

notonlybuyers,butsellerstoo,shouldhaveforethoughtontheexecutionoflogistics

management.

Second,ofpracticalinteresttofirmsandmanagers,istheunderstandingthat

Incoterms®areoftenusedforrevenuerecognitionpurposes.Thepurposesof

Incoterms®rulesarestatedbytheInternationalChamberofCommerce(ICC).TheICC

indicatesthatIncoterms®rulesdonotdealwiththetransferofownershipofthegoods,

209

andtheydesignatetheresponsibilitiesfortasks,costs,andrisksinvolvedinthedelivery

ofgoodsfromsellerstobuyers(2010).Firmsandmanagersshouldinvestigateand

validatethestatedpurposeoftheIncoterms®rulesversusthoseoftheGenerally

AcceptedAccountingPrinciples(GAAP)andInternationalAccountingStandards(IAS)

guidelinesforrevenuerecognition.

Third,thisresearchclearlyindicatesthatIncoterms®trainingisimportantfor

knowledgeandproperapplicationofIncoterms®rules.Firmsandmanagersshould

considerIncoterms®trainingforbothbuyers,sellers,andotherjobfunctionsthatutilize

Incoterms®.Thetype,style,orfrequencyofIncoterms®trainingshouldbeexamined.It

isimportantthattheacquisitionofdetailedIncoterms®knowledgeisencouragedforall

buyersandsellers.TrainingbecomesevenmoreimportantasIncoterms®ruleversions

change.

Lastly,Incoterms®rulesweredesignedbytheICCtostandardizeB2Bpractice

whencontractingforgoods(ICC,2010).Incoterms®rulesarethetrademarkedproduct

oftheICC,areintendedtoclearlydefinesellerandbuyerobligations,thusreducingthe

parties’legalrisks,andareintendedtobeself-explanatory(ICC,2010).However,along

withthepresentresearch,otherresearchershavefoundsubstantialIncoterms®usage

errors(Stapleton&Saulnier,2001;Reynolds,2010;Bergami,2011;Glitz,2011;Malfliet,

2011;Ramberg,2011;Roos,2011;Bergami,2012;Bergami,2013;Stapleton,2014;

Stapletonetal.,2014a;Stapletonetal.,2014b).ItistimefortheICCtoreevaluatethe

understanding,application,andeffectivenessofIncoterms®2010rules.Perhapsit

wouldproveexpedienttoembracesomeofthemorecommonusageerrorsforfuture

210

ruleversions.

5.2RESEARCHLIMITATIONS

Allresearchmethodshavestrengths,weaknesses,andlimitations(McGrath,

1982).Byconductingamixedmethodsapproach,thisresearchhascombined

qualitative,groundedtheory,casestudyresearchwithabehavioralexperiment.Both

methodshavesomelimitationsregardinggeneralizability.However,theselimitations

suggestfutureresearchopportunities,whichmayoffermoregeneralizableresults.

Study1,Study3,andaportionoftheStudy2casestudieshavebeenconducted

solelywithinonelarge,internationalcorporationoperatinginmanydifferentindustrial

markets.Whilethislarge,internationalcorporationmayberepresentativeofmany

companiesoperatinginglobalindustrialmarkets,confiningthisresearchtoasingle

companylimitsitsgeneralizability.Thislimitationsuggestsfutureresearchdirectionsin

expandingtheinvestigationspresentedheretoothercompaniesandindustries.

Incoterms®training,whetherinternalorexternaltotheparticipatingcompany,

wasself-reportedinthisstudythroughthedemographicquestionsofStudy3.Thetype,

style,andfrequencyofIncoterms®traininghasnotbeenascertained.Therefore,while

Incoterms®traininghasbeenshowntohavethebiggestimpactonimprovingthequality

ofbuyer-sellerdyads’communicationoflogisticsmanagementdecisions,themost

effectivetype,style,orfrequencyofIncoterms®traininghasnotbeeninvestigated.This

isanotherexcellentdirectionforfutureresearch.Itshouldalsobenotedthattheresults

ofprovidingoperationaldefinitionsaffectbothpartiesinthedyad,whileIncoterms

211

trainingaffectsonlyasinglepartyinthedyad(buyerorseller,butnotboth).The

spillovereffectofoperationaldefinitionswasnotmeasuredintheempiricalworkandis

alimitationoftheindividualsurveymethodology.

5.3FUTURERESEARCH

Severalsignificantcontributionsaremadetotheunderstandingofbuyer-seller

relationships,logisticsmanagement,andnegotiationprocesses.Thisresearchidentifies

anddetailstheprocessusedinthenegotiationandcommunicationoflogistics

managementdecisionsbetweenbuyersandsellersintransactionsinvolvingalarge

internationalfirm.WhileIncoterms®rulesappearwidelyusedingoodstransactionsto

communicatelogisticsdecisions,theirinappropriateusecausesavarietyofissues

creatingunanticipatedcostsandrisks.Otheracademicresearchhastouchedonsomeof

theaspectsofthemisuseofIncoterms®rules(Stapleton&Saulnier,1999,2001,2002;

Căruntu&Lăpădusi,2010;Bergami,2011,2012,2013;Glitz,2011;Malfliet,2011;

Ramberg,2011;Stapleton,2014;Stapletonetal.,2014a,2014b),however,thepresent

researchprovidesmultiple,rigorouscasestudiesthatputmanyofthepuzzlepieces

together.Throughthecasestudies,fournewareasofconcernwithrespectto

Incoterms®usehavebeenuncovered:1)Incoterms®areoftenusedforrevenue

recognitionpurposes;2)expeditedfreightisoftenunaddressedinnormallogistics

managementarrangements;3)sellersfocusonthesaleratherthantheexecutionof

logisticsdecisions;and4)errorsoccurintheusageofFCAvs.EXWIncoterms®rules.

Theseissuesinvitefurtherrigorousstudy.

212

ThemostinterestingfutureresearchopportunitieslieintheareaofIncoterms®

training.ThepresentresearchclearlyshowsthatIncoterms®trainingiseffectivein

improvingknowledgeandfortheappropriateapplicationofIncoterms®rules.This

shouldbeofinteresttoacademicsandpractitionersalike.Themosteffectivetype,style,

orfrequencyofIncoterms®trainingiscurrentlyunknown.Literatureandresearchin

trainingcomplextasksshouldbereviewedandappliedtoidentifythebestIncoterms®

trainingapproaches.HolleyandHaynes(2003)andKocketal.(2008)haveprovided

somefoundationfortheexplorationofimprovingteachingmethodsofIncoterms®

rules.ToaddcomplexitytotheeffectiveteachingofIncoterms®,HolleyandHaynes

observedthatIncoterms®rulelearningis“oneofthedullestsessions”inacourse

offering(Holley&Haynes,2003,p.396).Traditionallecture/seminarteaching,including

handouts,casestudymaterial,andquestionandanswersessions,wasnotedasnot

particularlyeffectiveinIncoterms®learning(Holley&Haynes,2003).HolleyandHaynes

(2003)createdandexaminedtheeffectivenessofamulti-mediatoolcalledthe

“INCOTERMSChallenge,”whichprovedtobeamoreeffectivelearningtool.During

web-basedtraining,Kocket.al(2008)appliedathreat,whichinvolvedapictureofa

snakeinstrikingposition,toimproveIncoterms®rulestrainingeffectiveness.

Asopposedtotraining,earlierworkbyTan&Thoen(2000)proposedadifferent

approachtoimprovingIncoterms®ruleapplication.Theycreatedanon-linetool,INCAS,

thatprovidesreal-timeIncoterms®ruleexplanationstoelectroniccommerceusers.This

andotheralternativestotrainingshouldbeexplored.

213

Otherresearchmethods,perhapsevencombinedinmixedmethods,shouldbe

employedtofurtherexplorethephenomenonandvalidateresults.Thefocusshouldbe

onmethodsthatimprovethegeneralizabilityofthisresearch.Furthermore,future

researchshouldexpandtoothercompaniesandindustries.Thespillovereffectof

employingoperationaldefinitionsinnegotiatingandcommunicatinglogistics

managementdecisionsshouldalsobeexplored.Beyondmethodological,company,and

industrylimitations,thisresearchprovidesthefoundationforarichvarietyofpotential

futurestudies.

5.4CONCLUDINGREMARKS

Thenegotiationandcommunicationoflogisticsmanagementdecisionsbetween

buyersandsellersofgoodsiscriticalforeffectivesupplychainmanagement.The

findingsofthepresentresearchdetailtheprocessusedinthenegotiationand

communicationoflogisticsmanagementdecisions.WhileIncoterms®rulesappear

widelyusedingoodstransactionstocommunicatelogisticsdecisions,their

inappropriateusecausesavarietyofissuesincludingunanticipatedcostsandrisks.

Incoterms®trainingisshowntohaveasignificantimpactonimprovingthequalityof

communicationoflogisticsmanagementdecisionswithinbuyer-sellerdyads.Itis

thereforehopedthatthisstudygeneratessubstantialnewresearchandmanagerial

interestinthisarea.AgreaterunderstandingofIncoterms®ruleswillleadtoimproved

communicationbetweenbuyersandsellers,whichwouldinturnproducemorecost-

effectivetransactions.Inaddition,whencraftingthenextversionofIncoterms®rules,

214

theICCisencouragedtoconsiderthisandotherresearchtoreevaluatethe

understanding,application,effectiveness,andtrainingofIncoterms®rules.

215

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APPENDIXI–LITERATUREREVIEW

Literature Review.final.xlsx

ArticleCategories

Article Peer

Review

ed

Explains

Incoterm

s

New

Incoterm

sVe

rsion

Training

Other

ArticleSummary

Bergami,R.,2011.Incoterms2010:commentonthenewrevisionofdeliveryterms.VindobonaJournalofInternationalCommercialLaw&Arbitration(15),pp.159-161. 1 0 1 0 0

NewIncoterms2010takingeffect

Bergami,R.,2012.Incoterms2010:TheNewestRevisionofDeliveryTerms,ActaUniversityBohemMerid15(2),pp.33-40. 0 0 1 0 0


Bergami,R.,2013.ManagingIncoterms2010risks:tensionwithtradeandbankingpractices,InternationalJournalofEconomicsandBusinessResearch6(3),pp.324-338. 1 1 0 0 0

ExplainsIncoterms

Căruntu,C.andLăpădusi,M.,2010.Complexissuesregardingtheroleandimportanceofinternationallycodifiedrulesandincoterms,Petroleum-GasUniversityofPloiestiBulletin,EconomicSciencesSeries62(1),pp.98-110. 0 1 0 0 0

ExplainsIncoterms

Glitz,F.E.,2011.TransferofContractualRiskandINCOTERMS:BriefAnalysisofitsApplicationinBrazil,JournalforInternationalCommercialLaw&Technology(6)2,pp.108-119. 1 0 0 0 1

RiskandIncotermsinBrazil

242

ArticlePeerReviewed

ExplainsIncoterms

NewIncotermsVersion Training Other ArticleSummary

Malfliet,J.,2011.Incoterms2010andthemodeoftransport:howtochoosetherightterm.ManagementChallengesinthe21stCentury:TransportandLogistics:OpportunityforSlovakiaintheEraofKnowledgeEconomy,Proceedings,Bratislava,Slovakia,pp.163-179.

0 1 0 0 0

ExplainsIncoterms2010andhowtochoosetherightterm

Ramberg,J.,2011.INCOTERMS2010.EuropeanJournalofLawReform(13)3-4,p.380-387. 1 0 1 0 0

ExplainsIncoterms2010

Reynolds,F.,2010.Incoterms®ForAmericans®,Toledo,InternationalProjects.,Inc. 0 1 0 0 0

ExplainsIncotermsandUCCterms

Roos,P.,2011.Incoterminology2010:ManualforthepracticaluseofIncoterms®,Rotterdam,NTPublishers.

0 1 0 0 0

BookthatexplainsIncoterms,writtenfromEuropeanperspective

Stapleton,D.M.,2014.Optimizingshippercontracting:thecorrectusageofIncotermsforcontainerized/intermodalfreight,ProductionOperationsManagementSociety(POMS)AnnualConferenceProceedings,Vol.25.PresentedandpublishedinMay2014. 0 1 0 0 0

UsingFCAoverFOB

Stapleton,D.M.,Pande,V.,Ghosh,S.,&Damali,U.,2014a.Refiningshippers’dyadiccost,risk,anddeliveryresponsibilities:theprincipalchangestoIncotermsandatransactioncostfocusforthefuture,JournalofTransportationManagement24(2),pp.7-29. 1 1 0 0 0

Morein-depthexplanationofIncoterms2010includingappropriateapplicationandmisuse

Stapleton,D.M.,Pande,V.,&O’Brien,D.,2014b.EXW,FOBorFCA?ChoosingtheRightIncotermandWhyItMatterstoMaritimeShippers,JournalofTransportationLaw,Logistics&Policy,pp.227-248. 1 1 0 0 0

Morein-depthexplanationofIncoterms2010includingin-depthlookatFCAorEXWinsteadofFOB

243

ArticlePeerReviewed

ExplainsIncoterms


Stapleton,D.M.,Saulnier,V.,1999.Definingdyadiccostandriskininternationaltrade:areviewofINOCTERMS2000withstrategicimplications,JournalofTransportationManagement11(2),pp.24-43. 1 0 1 0 0

In-depthexplanationofIncoterms2000includingstrategicimplications

Stapleton,D.M.,Saulnier,V.,2001.AStudyinShipperContractingRelationships,ISBMResearchNewsletter[Online].Availableat:http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.202.5041&rep=rep1&type=pdf[AccessedJanuary28,2016]. 0 1 0 0 0


Stapleton,D.M.,Saulnier,V.,2002.TermsofSale,Documentation,andLettersofCredit.In:Logistics,1sted.,Bloomberg,D.J.,LeMay,S.&Hanna,J.B.ed.NewJersey,PrenticeHall,pp.296-301. 1 1 0 0 0


"BusinessLine:SeminaronIncoterms",2011,Businessline,.

0 0 0 1 0

Incoterms2010trainingofferedinIndia

"Commonletterofcredit&internationalpaymentmisconceptions",1998,IOMA'sReportonManagingInternationalCredit&Collections,vol.98,no.12,pp.5. 0 1 0 0 0

ExplainsIncoterms

"ECONOMICPOLICY;NEWINCOTERMS2010RULESTAKEEFFECTFROMJANUARY1,2011",2011,Interfax:UkraineBusinessWeekly,. 0 0 1 0 0


"ECONOMICPOLICY;UKRAINIANPRESIDENTCANCELSDECREESONAPPLICATIONOFINCOTERMSRULES",2011,Interfax:UkraineBusinessWeekly,. 0 0 0 0 1

UkrainewantstomakeIncoterms2010mandatoryincontracts

"EconomistswantIncotermsinnationallaw",2010,TradeFinance,.

0 0 0 0 1

GlobalsupporttomakeIncotermspartofnationallegislation

244

ArticlePeerReviewed

ExplainsIncoterms


"ExpertidentifiesbestofIncoterms2000forinternationalcreditpros,"2000,IOMA'sReportonManagingInternationalCredit&Collections,vol.00,no.3,pp.1. 0 0 0 0 1

StatesthatIncotermsdoindicatetransferoftitle

"ICClaunchesIncoterms(R)2010,"2010,TradeFinance.

0 0 1 0 0


"Incoterms-yourkeytosimplifieddistribution,"1983,CanadianTransportation&DistributionManagement,vol.86,no.2,pp.43-46. 0 1 0 0 0

ExplainsIncoterms

"Incoterms2000Descriptions",2004,HealthcarePurchasingNews,vol.28,no.7,pp.82. 0 1 0 0 0

ExplainsIncoterms

"Incotermsandalternativewaysofquotingprices-Clayton",1992,NorthernOntarioBusiness,vol.13,no.1,pp.5. 0 1 0 0 0

ExplainsIncoterms

"Incotermsensuresmoothinternationaldistribution",1983,CanadianTransportation&DistributionManagement,vol.86,no.3,pp.33-35. 0 1 0 0 0

ExplainsIncoterms

"IncotermsTrainingforImport/Export",2012,MaterialHandling&Logistics. 0 0 0 1 0

CompanyofferstrainingonIncoterms2010

"India:Incoterms2000takeseffect",2000,Businessline,pp.1. 0 0 1 0 0


"InternationalCommercialTerms(INCOTERMS)",2005,BatteriesInternational,no.62,pp.24-25. 0 1 0 0 0

ExplainsIncoterms

"InternationalProgramExpandsBreadthofExecutiveEducationatGSCFM",2014,BusinessCredit,vol.116,no.8,pp.10-11.

0 0 0 1 0

DartmouthCollegeexecutive-levelinstructioncoveredtopicssuchasforeignexchange,internationalbusinessethics,sovereignriskandIncoterms.

245

ArticlePeerReviewed

ExplainsIncoterms


"JaguarFreightServices;ImportersDiscoverFinancialAdvantagewithShippingContractTerms",2008,AsiaBusinessNewsweekly,pp.36. 0 0 0 0 1

Incotermsdonotdealwithtransferoftitle

"MarketView:INCOTERMS2010-Whatyouneedtoknow(part2),"2010,TradeFinance. 0 0 1 0 0


"NeweditionofIncoterms2000nowavailable",2000,CreditControl,vol.21,no.3,pp.27. 0 0 1 0 0


"NewIncotermsSetforJanuary1",2010,WorldTrade,WT100,vol.23,no.8,pp.14. 0 0 1 0 0


"SEKOWorldwidetoOffer2ComplimentaryWebinarstoReviewIncoterms2010Rules",2010,ManufacturingClose-Up.

0 0 0 1 0

SEKOWorldwidetoholdfreeIncoterms2010workshops

"Seminarsofferedonnewincoterms",1999,LogisticsManagementandDistributionReport,vol.38,no.9,pp.94. 0 0 1 0 0


"Standardspeakonpointofsale:P.S.Kumarondeterminingwhen'sale'isperformedforthepurposeofAS-9",2004,Businessline,pp.1.CALENDAR2000,,NewYork. 0 1 0 0 0

ExplainsIncoterms

"TheRevisedIncoterms:KeyFeatures",1990,InternationalTradeForum,vol.26,no.2,pp.4. 0 1 0 0 0

ExplainsIncoterms

"Whatint'lcreditexecsneedtoknowaboutIncoterms2000",1999,IOMA'sReportonManagingInternationalCredit&Collections,vol.99,no.12,pp.1. 0 1 0 0 0

ExplainsIncoterms

Barrett,C.2002,"'Ex-works'revisited",TrafficWorld,vol.266,no.11,pp.38. 0 1 0 0 0

Incotermsquestionandanswer

Barrett,C.2005,"Incotermsvs.UniformCommercialCode",TrafficWorld,,pp.1-38. 0 1 0 0 0


246

ArticlePeerReviewed

ExplainsIncoterms


Barrett,C.2006,"Shipper'sLoadandCount",TrafficWorld,pp.1-46.

0 1 0 0 0

Incotermsquestionandanswer.IncorrectlystatesIncotermsindicatetransferoftitle

Barrett,C.2010,DemurrageandDetentionChargesonExportedContainers,NewYork. 0 1 0 0 0


Barrett,C.2010,PayingDemurrageinanEx-WorksSale,NewYork. 0 1 0 0 0


Barrett,C.2013,IncotermsandConditions,NewYork. 0 1 0 0 0


Barron,J.2011,"NewDecade,NewUpgrade:Incoterms2010PicksUpWhereIncoterms2000LeftOff",BusinessCredit,vol.113,no.2,pp.20-22. 0 0 1 0 0


Biederman,D.1998,"Toomuchofnothing",TrafficWorld,vol.255,no.9,pp.39. 0 1 0 0 0

ExplainsEXWIncoterm

Biederman,D.1999,"Getreadyforincoterms2000",TrafficWorld,vol.260,no.2,pp.21. 0 0 1 0 0


Biederman,D.2000,DDPClarified,NewYork. 0 1 0 0 0

ExplainsDDPIncoterm

Blum,J.2011,KnowledgeIsPower,NewYork. 0 0 1 0 0


Bonney,J.2009,TradeTermsSetforRevision,NewYork. 0 0 1 0 0


Brotherston,B.1996,"INCOTERMS:Acreditmanagementminefield-Part1",CreditControl,vol.17,no.2,pp.22. 0 1 0 0 0

ExplainsIncoterms

Brotherston,B.1996,"INCOTERMS:Acreditmanagementminefield--part2",CreditControl,vol.17,no.4,pp.19. 0 1 0 0 0

ExplainsIncoterms

247

ArticlePeerReviewed

ExplainsIncoterms


Burke,M.2013,"StayingAfloat",PropertyCasualty360-NationalUnderwriter. 0 1 0 0 0

ExplainsIncoterms

BusinessEditors/High,T.W.2002,Klatu'sNewStrategyistoLicenseInternationalE-CommerceTool,NewYork. 0 0 0 0 1

Incotermsareconsideredine-commercepricingtool

BusinessEditors/TechnologyWriters2002,Klatu'seComAllowsComputerResellerstoOfferDDP-DeliveredDutyPaid-PricingThroughouttheCaribbean,NewYork. 0 0 0 0 1

Incotermsareconsideredine-commercepricingtool

CHARTERINGASHIP?USETHESEINCOTERMS2000,NewYork.

0 1 0 0 0

ExplainsIncotermstousewhencharteringaship

Coates,R.2012,"NineRulesforLogisticsinChina",TheChinaBusinessReview,vol.39,no.2,pp.13-17. 0 0 0 0 1

NeedtoknowIncotermswhendoinglogisticsinChina

ComingtotermswithIncoterms2014,NewYork.

0 1 0 0 0

"themostmisunderstoodandmisusedelementofaninternationaltransactionisthecorrectapplicationofshippingIncoterms"

COMPANIES&MARKETS;INTRODUCTIONOFINCOTERMS2010RULESINUKRAINENEEDSTOBESETTLEDINLAW,SAYSICCUKRAINE2011,Kiev.

0 0 0 0 1

UkrainecannotacceptgoodsarrivingattheirportsusingIncoterms2010

Dearing,D.2006,"Auniversallanguage",SupplyManagement,vol.11,no.6,pp.37. 0 1 0 0 0

ExplainsIncoterms

Derains,Y.1981,"Incoterms:FacilitatingtheExportProcess",InternationalTradeForum,vol.17,no.3,pp.12. 0 1 0 0 0

ExplainsIncoterms

248

ArticlePeerReviewed

ExplainsIncoterms


Dutton,G.2011,"TheExporter'sHandbook",WorldTrade,WT100,vol.24,no.8,pp.28-31. 0 0 1 0 0


EvolvinglessonsonIncoterms1999,NewYork.

0 0 0 1 0

TalksaboutIncoterms2000trainingsessionspreviouslygiven

Foster,T.A.&Jessen,J.C.1981,"INCOTERMS-TheLanguageofExporting",Chilton'sDistributionforTraffic&TransportationDecisionMakers,vol.80,no.1,pp.36. 0 1 0 0 0

ExplainsIncoterms

Foster,T.A.1990,"TheLanguageofForeignTrade",Chilton'sDistribution,vol.89,no.10,pp.86. 0 1 0 0 0

ExplainsIncoterms

FrankReynolds/TheJOURNALofCOMMERCEONLINE2007,ExportABCs:Incoterms2010,NewYork. 0 0 1 0 0


FrankReynolds/TheJOURNALofCOMMERCEONLINE2007,ExportABCs:UCP600,Pt.3,NewYork. 0 1 0 0 0

ExplainsIncoterms

FrankReynolds/TheJOURNALofCOMMERCEONLINE2008,ExportABCs:Cargoinsurance,NewYork. 0 1 0 0 0

ExplainsIncoterms

FrankReynolds/TheJOURNALofCOMMERCEONLINE2008,ExportABCs:Incotermsrevision,NewYork. 0 0 1 0 0


FrankReynolds/TheJOURNALofCOMMERCEONLINE2009,ExportABCs:CargoInsurance--Part2,NewYork. 0 1 0 0 0

ExplainsIncoterms

FrankReynolds/TheJOURNALofCOMMERCEONLINE2008,ExportABCs:Documentationcontrol,NewYork. 0 1 0 0 0

ExplainsIncoterms

FREUDMANN,A.1999,Definingtermsoftoday'scommerce,NewYork.

0 1 0 0 0

ExplainsIncoterms."BibleofInternationalTrade"

249

ArticlePeerReviewed

ExplainsIncoterms


FREUDMANN,A.1999,Tradersgetabrand-newbible,NewYork.

0 0 1 0 0

NewIncoterms2000takingeffect.'Internationaltradebible'

Gardner,D.2008,AnewchapterinIncoterms,NewYork.

0 0 1 0 0


Giermanski,J.&McGhee,M.2004,"InternationalTrade&Title:Security&TaxConcerns-Part1",StrategicFinance,vol.85,no.8,pp.15-17. 0 1 0 0 0


GlobalSourcingMadeEasier(GiftsandDecorativeAccessories)2004,,Waltham.

0 1 0 0 0

ProperIncotermsuseonCommercialinvoice

Gooley,T.B.2000,"Incoterms2000:Whatthechangesmeantoyou",LogisticsManagementandDistributionReport,vol.39,no.1,pp.49-51. 0 0 1 0 0


GovernmentSopsforSMEsWelcomedbyEntrepreneurs2009,NewYork. 0 0 0 1 0

NewDelphitoofferfreeIncotermstraining

Hamilton,H.K.2002,"Theimportanceofshippingterms",BusinessCredit,vol.104,no.2,pp.68. 0 1 0 0 0

Explainsshippingterms

Harrington,L.H.1991,"NewTradeTermsYouNeedtoKnow",TrafficManagement,vol.30,no.5,pp.61. 0 0 1 0 0


Holley,D.&Haynes,R.2003,"The"INCOTERMS"challenge:Usingmulti-mediatoengagelearners,"Education&Training,vol.45,no.7,pp.392-401.

1 0 0 1 0

NewlearningmethodappliedtoteachingIncoterms,whicharenoteddifficulttolearn

250

ArticlePeerReviewed

ExplainsIncoterms


ICCtocarryoutIncotermsworkshops2010,Karachi.

0 0 0 1 0

ICCPakistantoholdIncoterms2010workshops

ICCupdatesIncotermsInternationalBusiness]2010,NewDelhi.

0 0 1 0 0


ImplicationsofIncoterms20001999,NewYork.

0 0 1 0 0


ImportonFOBbasiscansavemillions:BAFFA2014,Dhaka. 0 0 0 0 1

ChangeIncotermstosavemoney

Incoterms-apointoforder2010,,InstituteofCreditManagementLtd,Stamford.

0 1 0 0 0

ICCUKexplainscommentmisunderstandings

Incoterms20001999,,InstituteofCreditManagementLtd,Stamford.

0 0 1 0 0


Incoterms2000meetsAESDirect1999,NewYork. 0 0 0 1 0

Incoterms2010workshops

Incoterms2010moreprecise,saysBBGovernor2010,Dhaka.

0 0 1 0 0


Incoterms(R)2010comesintoeffectfromJanuary2010,Dhaka. 0 0 1 0 0


Instone,T.1985,"Exporting:GettingtheOfferDocumentRight",IndustrialMarketingDigest,vol.10,no.4,pp.69. 0 1 0 0 0

Explainsshippingterms

Iskander,S.1999,Updatedtradetermspleaseexporters,London(UK). 0 0 1 0 0


Jennifer,B.S.2002,"InternationalTradeStandardsDefineBuyer/SellerResponsibilities",EBN,no.1317,pp.42. 0 1 0 0 0

ExplainsIncoterms

251

ArticlePeerReviewed

ExplainsIncoterms


Jessen,J.C.&Foster,T.A.1982,"AnatomyofanImport",Chilton'sDistributionforTraffic&TransportationDecisionMakers,vol.81,no.10,pp.74. 0 1 0 0 0

ExplainsIncoterms

Juarez,F.1997,"Thefineprint",BusinessMexico,vol.7,no.3,pp.41.

0 0 0 0 1

Import/ExportersinAmericasstillconfusedwithIncoterms

KANGSIEW,L.I.2004,Expert:UseofLCsintradesettlementsnottotallyrisk-free,KualaLumpur. 0 1 0 0 0

ExplainsIncoterms

Kock,N.,Chatelain-Jardon,R.&Carmona,J.2008,"AnExperimentalStudyofSimulatedWeb-BasedThreatsandTheirImpactonKnowledgeCommunicationEffectiveness",IEEETransactionsonProfessionalCommunication,vol.51,no.2,pp.183. 1 0 0 1 0

TrainingdesignforIncoterms

Kumar,S.2010,"LogisticsRoutingFlexibilityandLowerFreightCoststhroughUseofIncoterms,"TransportationJournal,vol.49,no.3,pp.48-56. 1 0 0 0 1

SwitchFOBtoFCAtolowercostsfromChinasupplier.WronguseofFOB

Lane,S.2012,"Incoterms2010:WhatYouReallyNeedtoKnow",BusinessCredit,vol.114,no.6,pp.8-9. 0 0 1 0 0


Leach,P.T.2010,InternationalChamberofCommerceRevisesIncoterms,NewYork. 0 0 1 0 0


Lowe,D.2011,"Incotermsupdate",SupplyManagement,vol.16,no.2,pp.14. 0 0 1 0 0


McGhee,M.&Giermanski,J.2007,"HowSOXandC-TPATImpactGlobalSupplyChainSecurity",StrategicFinance,vol.88,no.10,pp.32-38. 0 1 0 0 0


Moore,P.2012,"Pricingandculture:Makingtheconnection",LogisticsManagement(2002),vol.51,no.2,pp.18. 0 1 0 0 0

Definekeyterms

252

ArticlePeerReviewed

ExplainsIncoterms


Muller,E.J.1992,"YesYouCanExport",Distribution,vol.91,no.10,pp.26. 0 1 0 0 0

IncorrectlyexplainsFOB(UCCterm)

Murray,J.,Jr2003,"Risk,titleandIncoterms",Purchasing,vol.132,no.10,pp.26. 0 1 0 0 0


NationalSeminarSeriestoExplainChangesinB2BShippingAndTradeTerms2005,,NewYork. 0 0 0 1 0

Incoterms2010workshops

Neville,M.K.,J.R.2013,"IncotermsCount",JournalofInternationalTaxation,vol.24,no.6,pp.23-25. 0 1 0 0 0


Oddsandendsatjourney'send1999,NewYork.

0 0 1 0 0


Parry,P.2000,Incoterms;Callfortonnagequalitytobeputonsaleofgoodsagenda,London. 0 0 0 0 1

CriticalofIncoterms2000

Posner,M.1999,Incoterms2000,InstituteofCreditManagementLtd,Stamford. 0 0 1 0 0


Posner,M.2000,GuidetoIncoterms2000,InstituteofCreditManagementLtd,Stamford. 0 1 0 0 0

ExplainsIncoterms

Rees,N.2004,"TransactionTaxManagement:ASeatattheSupplyChainTable",FinancialExecutive,vol.20,no.7,pp.48-49. 0 0 0 0 1

TaxdepartmentnotinvolvedinIncotermsdecisions

Reich,A.2009,InternationalSalesTransactions-ASeriesofSimulatedNegotiationandDraftingExercises,SocialScienceResearchNetwork,Rochester. 0 0 0 0 1

UseIncotermstoreduceriskofdisputes

Reilly,K.2005,"ExportersMustEnsureCoordinationOfIncotermsAndDocumentaryRequirementsForLCPayment",BusinessCredit,vol.107,no.6,pp.70-71. 0 1 0 0 0

ExplainsIncoterms

Reynolds,F.2005,ExportABCs:MoreSOXissues,NewYork. 0 1 0 0 0


Reynolds,F.2005,ExportABCs:Sarbanes-Oxley,NewYork. 0 1 0 0 0


253

ArticlePeerReviewed

ExplainsIncoterms


Reynolds,F.2009,10+2,LaceyActandmore,NewYork.

0 0 1 0 0


Reynolds,F.2010,IncotermsUpdate:RevisionNo.8,NewYork.

0 0 1 0 0


Richer,S.2011,"Balancingglobalpriorities",LogisticsManagement(2002),vol.50,no.1,pp.42-44,46. 0 0 1 0 0


Rosolen,D.2010,"Changeonthemenu",MaterialsManagementandDistribution,vol.55,no.7,pp.13. 0 0 1 0 0


Roszkowski,M.E.2001,"ShippingtermsbasedonIncoterms2000:Astatutoryproposal",UniformCommercialCodeLawJournal,vol.34,no.2,pp.169-200. 0 1 0 0 0

ExplainsIncoterms

Rowe,M.1986,"What'sinaWord?ALotWhenItComestoTradeTerms",ICCBusinessWorld,vol.4,no.3,pp.17. 0 0 1 0 0


Rowe,M.1987,"TheInternationalSalesContract-CentraltoTradeTransactions",InternationalTradeForum,vol.23,no.3,pp.14. 0 1 0 0 0

ExplainsIncoterms

Schwartz,B.M.1998,MastertheexportLexicon,PentonMedia,Inc.,PentonBusinessMedia,Inc,Cleveland. 0 0 1 0 0


SEBLholdsworkshoponforextransactionsandINCOTERMS2010,Dhaka.

0 0 0 1 0

BangladeshtoholdIncoterms2010workshops

SEKOWorldwideOfferingTwoComplimentaryWebinarstoReviewNewIncoterms(R)2010Rules2010,NewYork.

0 0 0 1 0

SEKOWorldwidetoholdfreeIncoterms2010workshops

Shuman,J.2000,"Incoterms2000",BusinessCredit,vol.102,no.7,pp.50. 0 0 1 0 0


254

ArticlePeerReviewed

ExplainsIncoterms


Siviere,C.2014,"WhydoweneedIncoterms?",MaterialsManagementandDistribution,vol.59,no.2,pp.12-13. 0 1 0 0 0


Someinterestingnewreadingtogiveyoualltheanswers1998,NewYork. 0 1 0 0 0

ExplainsIncoterms

Sriro,A.I.1993,"Incoterms-Aquickreference",EastAsianExecutiveReports,vol.15,no.9,pp.21. 0 1 0 0 0

ExplainsIncoterms

Taghizadeh,E.2013,TheImpactofContractofCarriageofGoodsSoldonPassingofRiskinAccordancewithINCOTERMSRules,SocialScienceResearchNetwork,Rochester. 0 1 0 0 0

ExplainsIncoterms

TheJOURNALof,C.O.2003,ExportABCs:WhitherFOBFactory?NewYork.

0 1 0 0 0

"Thesalesterm"FOBFactory"isaboutasAmericanasbaseballandapplepie".FOBusedinUCCandIncoterms

TheJOURNALof,C.O.2005,ExportABCs:UCCshipmentanddeliveryterms,NewYork. 0 1 0 0 0


Thornley,D.2010,Playingbytherules,InstituteofCreditManagementLtd,Stamford. 0 0 1 0 0


Turnbull,L.2006,"Justwhatexactlyissuperior"customerservice"andhowcanlogisticshelpdeliverit?"CanadianTransportationLogistics,vol.109,no.11,pp.78. 0 0 0 0 1

Incotermsaddcomplexity

Vietnam:Firmsurgedtotakeadvantageoftradepacts2013,Bangkok.

0 0 0 0 1

EncourageVietnamimport/exportfirmstotakeadvantageofIncoterms(FOBbuyandCIFsell)

255

ArticlePeerReviewed

ExplainsIncoterms


VIETNAMESELOGISTICSFIRMSURGEDTORAISEKNOWLEDGEOFINCOTERMS2010,Rhodes.

0 0 0 0 1

VietnamwantslogisticsfirmstoincreaseknowledgeofIncoterms2010

Whatareincoterms?2011,London. 0 1 0 0 0ExplainsIncoterms

Whopayswhen?KnowledgeofIncotermsfundamentalfortraders.1999,NewYork. 0 1 0 0 0

ExplainsIncoterms

Yao-Hua,T.&Thoen,W.2000,"INCAS:Alegalexpertsystemforcontracttermsinelectroniccommerce",DecisionSupportSystems,vol.29,no.4,pp.389-411.

1 0 0 0 1

Incotermsimportanttoelectroniccommerce,deviseINCASsystemtohelpsuggestcorrectIncoterms

Zhai,J.2013,"NewTechnologyandMarketingInnovation-BaseonLeadingTradeTermsIntoPricingSystem,"ContemporaryLogistics,no.13,pp.9-13. 0 1 0 0 0


Total 12 69 41 13 19 142 48.59% 28.87% 9.15% 13.38%

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APPENDIXII–STUDYTWOIN-DEPTHSEMI-STRUCTUREDINTERVIEWGUIDE

Begintheinterviewby

• Introducingyourself,• Givingabriefoverviewofthestudy,

o Thisstudylooksatthenegotiationprocessbetweenbuyersandsellers.Specifically,itlooksatthenegotiationprocessrelatedtothetransportation,responsibility,andriskassociatedwithmovinggoodsfromthesellertothebuyer.Itconsidershowthisnegotiationprocessoccurs,howcommunicationhappens,theresults,andanywaystofurtherimprovetheprocess.ThequestionsthatIwillaskrelatetothesenegotiationareas.Thisultimateaimofthisstudyistoshedlightonthesenegotiationareas.Attheend,Iwillaskforcontactatoneofyourbuyers/sellerstoperformhelpwiththestudy.

• Givetheintervieweeassuranceofyourconfidentiality,and• Makesuretheyhavereceivedandsignedtheinformedconsentform.• Offertoprovidethemwitheitheracopyoftheresearchresultsoraresults

presentationiftheyareinterestedinfindingoutwhatwelearnedfromtheresearch.

• Asktheintervieweeiftheyfeelcomfortablewithinterviewprocessasdiscussed.Proceedonlyifintervieweeagrees.

o Ifintervieweeseemsslightlyuncomfortable,donotasktoaudiotapeo Ifintervieweeseemscomfortable,thenaskpermissiontoaudiotape.

1. Togetstarted,pleasesharesomebackgroundinformationaboutyourself.a. Internalorexternaltofocalfirm?b. Title,Division,YearsinCurrentPosition,YearswithCompany,Yearsas

Buyer/SalesPersonc. Forwhatareyoumostlikelytonegotiate?–Goodsforproduction,MRO,

technology,services,specialbuys,etc.d. Baseduponthefollowingscale,howoftendoyounegotiatewithyour

buyers/sellers?i. 1ormoretimesperweekii. 1ormoretimespermonthiii. 1ormoretimesperquarteriv. 1ormoretimesperyearv. Notatall

e. Doyounegotiatelocally(yourlocalcountry),regionallyorglobally?f. Howwouldyoudescribeyournegotiations?

i. Mostlytransactional,1. Ifso,areanypartscoveredbyacontractortermsand

conditions(T&C’s)?

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a. Ifviacontract,whowithinyourorganizationnegotiatesthecontract?

b. IfT&C’s,askforacopyormoredetails.ii. Mostlycoveredbyamutuallyagreeduponcontract(e.g.

renewals),or1. Isastandardcontracttemplateused,or2. Iseachcontractunique?

iii. Mostlynewcontracts?g. Whatdoyoudoifnegotiationsariseforthingsthatfalloutsidethe

contractguidelines?Anexamplemaybeanewproductorpartnotstatedinthecontract.

i. Ifso,canyouprovidesomeexamples?h. What’sthetypicaltotalvalueortotalspendimpactofyournegotiations?i. Howaboutadditionalthingslikefinancialterms,transportationorlogistics

duringthenegotiation?i. Doyousignoffordoessomeoneelse?

2. Pleasethinkaboutarecent,typicalnegotiationthatinvolvedthepurchase/saleofgoods.Pleasestartatthebeginninganddescribeinasmuchdetailaspossiblethetypicalnegotiationprocesswithyourbuyer/sellers.

a. Canyouprovideabriefflowchartorcanwetalkthrougheachstepoftheprocess?

3. Thinkingaboutthatsameexperience,pleasetellmeaboutthenegotiationfortransportingthegoods.

a. Atwhatpointdoyounegotiatefortransportingthegoods?b. Whatfactorsdidyouconsider?c. Whataboutthetasks,suchascustomsclearanceordocumentation,

requiredofyouversusyourbuyer/supplier?d. Howaboutownershipofthegoods(a.k.a.title)duringtransport?

4. Tellmemoreabouttransportationandhowitisdiscussedorcompared?5. Thinkingaboutthatsameexperience,pleasetellmehowyouandthebuyer/seller

communicatetoeachotherthedecisionfortransportinggoods.a. Isthisthesameforeverynegotiation?b. Ifnot,pleasedescribeeachway.

6. Now,pleasethinkaboutallofyournegotiationseitherpersonally,withanotherbuyer/seller,orevenanothercompany.

a. Doanyofthepreviousanswerschange?7. Stillthinkingaboutallnegotiations,andspecificallythetransportationtasks,risks,

orcosts,youdescribedthenegotiationprocessfortransportation.Pleasedescribeinmoredetailanynegotiation(s)wheremiscommunicationoccurredbetweenyourcompanyandthebuyer/seller.Miscommunicationistheoneparty,buyerorseller,thinkingtheagreementbefore,during,oraftertransportationwasdifferent.Forexample,theotherpartythoughttheotherpartywashandlingcustomsclearance,acertainfee,orevendisagreementonpickup/deliverpoint.

258

a. Didthisimpacttherelationshipwiththebuyer/seller?i. Corporateorpersonalrelationship?

b. Diditcostyourcompanymoney?Ifnot,howaboutyourbuyer/seller?c. What’smoreimportanttoyouandyourfirm:therelationship,cost,or

both?d. Anythingelseimportantorimpactedbythemiscommunication?e. Inyouropinion,howcouldhavethismiscommunicationbeenavoided?

8. Doesyourcompanyusethetransportationtasks,risks,orcostsforotherpurposes(examples:revenuerecognition,transportationmanagementsystemorTMS,ownership/inventory,etc.)?

9. Stillthinkingaboutallofyournegotiations,andspecificallythetransportationtasks,risks,orcosts,whatdoyoubelievecouldimprovecommunicationwithyourbuyer/seller?

a. Ifyes,thenprobeonhow.10. Doyoulistoutindetailallofthetransportationtasks,risks,orcoststhatbothyou

andyourbuyer/supplierarerespectivelyresponsiblefor?a. Ifnot,howdoyoucommunicateandtracktheseitems?

11. Whenyouaredonenegotiating,howdoyouknowifyou’vebeensuccessful?Inotherwords,whatdoessuccesslooklike?Forexample,thebesttotalcostofownership,speed,paymentterms,etc.

a. Isthisthesameforyouandyourcompany?12. Howdoestherelationshipyouhavewiththebuyer/sellerimpactyour

negotiations?13. Aretherelationships,costs,both,orsomethingelsemostimportantduringand

afternegotiationswithyourbuyer/seller?14. IsthereanythingthatIhaven’tcoveredthatyoubelieveisimportantduring

buyer/sellernegotiationsfortransportationofgoods?15. IsthereanythingelsethatyouthinkIshouldhaveaskedoryouwouldliketo

share?16. Nowthatwehavegonethroughtheinterview,canyouthinkofandprovidea

contactatoneofyourbuyers/sellerstogothroughasimilarinterview?(Preferinternationalcontactandexternaltofocalfirm).SendingthisviaemailofSkypeisfine.

a. Getfullname,company,email,andphone

Aftertheinterviewisfinished:

• Thanktheintervieweefortheirtimeandhelpwiththisproject.• Askiftheywouldliketoreviewatranscriptoftheinterviewtomakesure

everythingisrepresentedcorrectly.• Askiftheywouldbewillingtoansweranyfollow-upquestionsthatmightcome

upasmoreinterviewstakeplace.

259

APPENDIXIII–WORDCLOUDBEFORECODING

260

APPENDIXIV–WORDCLOUDAFTERCODING

261

APPENDIXV–WORDCLOUDAFTERNODETOCATEGORYCODING

262

APPENDIXVI–STUDYTHREEQUESTIONNAIREIntroduction

YouareinvitedtoparticipateinaresearchstudyconductedbyThomasJ.(T.J.)Schaefer,anABBInc.employee,andDr.DonaldSweeney/Dr.RayMundyfromtheUniversityofMissouri-St.Louis.Thisstudyexaminesmethodstoimprovethequalityofbuyer-sellercommunicationwithrespecttologisticsdecisionsrelatedtothetasks,costs,andrisksassociatedwithtransportinggoods.

Therearenoanticipatedrisksassociatedandnodirectbenefitsforyouparticipatinginthisstudy.Byparticipating,youwillcontributetoknowledgethatmayhavefuturebenefitstoindividuals,corporations,orothersinnegotiatingthetermsofbusiness-to-businesslogisticstransactions.Yourparticipationisthisstudyisvoluntary,andyoumayrefuseorwithdrawyourparticipationatanytimeduringcompletingthequestionnaire.Ifyouhaveanyquestionsorconcernsregardingthisstudy,orifanyproblemsarise,youmaycalltheInvestigator,ThomasJ.Schaefer+1-314-210-1497ortheFacultyAdvisors,Dr.DonaldSweeney+1-314-516-7990orDr.RayMundy+1-314-516-7213.YoumayalsoaskquestionsorstateconcernsregardingyourrightsasaresearchparticipanttotheOfficeofResearchAdministrationattheUniversityofMissouri-St.Louis,at+1-314-516-5897.Byagreeingtoparticipate,youunderstandandagreethatyourdatamaybesharedwithotherresearchersandeducatorsintheformofpresentationsand/orpublications.Inallcases,youridentitywillnotberevealed.

DemographicQuestions:

1)Whatsexdoyouidentifyas?

1)Female2)Male3)Prefernottoidentify

2)Whatisyourage?

1)18to24years2)25to34years3)35to44years4)45to54years5)55to64years6)Age65orolder7)Prefernottoidentify

263

3)Whatjobroledoyoumostcloselyidentifywith?

1)SalesandMarketing,includinggeneralmanagementandprojectmanagement2)SupplyChainManagement,includingbuying,planning,transportation,andoperations3)AccountingandFinance

4)Howmanyyearsofworkexperiencedoyouhave?

1)1to5years2)6to10years3)11to15years4)16to20years5)21to25years6)26to30years7)30yearsormore8)Prefernottoidentify

5)HaveyoureceivedIncoterms®trainingeitherinternallybyyourcompanyorexternally?

1)Yes2)No

6)WhenwasthatIncoterms®training?(IfansweredYestoquestion5)

1)0to6monthsago2)7monthsto1yearago3)1to1.5yearsago4)1.5to2yearsago5)2yearsormore

Afterquestions5/6,respondentwillthenreceiverandomassignmenttoeitherTreatment1or2,andthequestionswillbeassignedinrandomorder.

Directions:

ThefollowingscenariosrepresentinteractionsofYZZInc.withitssuppliersandcustomers.YZZInc.isalarge,internationalmanufacturingcorporationthatsuppliesproductstotheindustrialmarketandpurchasesitemsgloballyforuseinproduction.Youmayassumethatallscenariosaretrustworthyandaccurate.Afterreadingeachscenario,pleaseanswertherelatedquestionbyrespondingwithwhatyoubelieveisthemostappropriateIncotermstoemployinthescenariotoformalizetheagreementwiththesupplierorcustomerrelatedtothelogisticstasks,costs,andrisksassociatedwithtransportinggoods.

264

TREATMENT1:OPERATIONALDEFINITIONSFULLYSPELLEDOUT

Scenario1:YourepresentSalesofYZZInc.,andacustomerfromShanghai,P.R.Chinacontactsyouaboutavailabilityofacomponentthatyousell.Youcheckavailability,and,fortunately,itisreadilyavailableatyourU.S.plant.Youalreadyhaveapre-negotiatedcomponentprice,butyoumustnegotiatethetransportationresponsibilityandcostwiththecustomer,assometimesthecustomerdecidestopickuptheorderfromyourU.S.plant.Afterdiscussions,thecustomerasksforaquotationfromyouwithYZZInc.responsibleforprovidingoceancontainertransportation,includingminimalinsurance,totheShanghai,Yangshanport.Whenyourespondtotherequestforaquote,whatIncoterms®2010ruledoyouuse?

1)“CostandFreight”meansthatthesellerdeliversthegoodsonboardthevesselorprocuresthegoodsalreadysodelivered.Theriskoflossofordamagetothegoodspasseswhenthegoodsareonboardthevessel.Thesellermustcontractforandpaythecostsandfreightnecessarytobringthegoodstothenamedportofdestination.

2)“Cost,InsuranceandFreight”meansthatthesellerdeliversthegoodsonboardthevesselorprocuresthegoodsalreadysodelivered.Theriskoflossofordamagetothegoodspasseswhenthegoodsareonboardthevessel.Thesellermustcontractforandpaythecostsandfreightnecessarytobringthegoodstothenamedportofdestination.Theselleralsocontractsforinsurancecoveragainstthebuyer’sriskoflossofordamagetothegoodsduringthecarriage.ThebuyershouldnotethatunderCIFthesellerisrequiredtoobtaininsuranceonlyonminimumcover.

3)“CarriageandInsurancePaidto”meansthatthesellerdeliversthegoodstothecarrieroranotherpersonnominatedbytheselleratanagreedplace(ifanysuchplaceisagreedbetweenparties)andthatthesellermustcontractforandpaythecostsofcarriagenecessarytobringthegoodstothenamedplaceofdestination.Theselleralsocontractsforinsurancecoveragainstthebuyer’sriskoflossofordamagetothegoodsduringthecarriage.ThebuyershouldnotethatunderCIPthesellerisrequiredtoobtaininsuranceonlyonminimumcover.

4)“CarriagePaidTo”meansthatthesellerdeliversthegoodstothecarrieroranotherpersonnominatedbytheselleratanagreedplace(ifanysuchplaceisagreedbetweenparties)andthatthesellermustcontractforandpaythecostsofcarriagenecessarytobringthegoodstothenamedplaceofdestination.

265

5)“DeliveredDutyPaid”meansthatthesellerdeliversthegoodswhenthegoodsareplacedatthedisposalofthebuyer,clearedforimportonthearrivingmeansoftransportreadyforunloadingatthenamedplaceofdestination.Thesellerbearsallthecostsandrisksinvolvedinbringingthegoodstotheplaceofdestinationandhasanobligationtoclearthegoodsnotonlyforexportbutalsoforimport,topayanydutyforbothexportandimportandtocarryoutallcustomsformalities.

Scenario2:YZZInc.hasfoundanewdomesticsupplier,EchoCompany,forsupplyingacomponentusedinitsmanufacturing.YouareassignedasYZZInc.’sleadnegotiatorwiththeEchoCompany.AfterdiscussionswithYZZInc.management,youagreethatEchoCompanyshoulddeliverthecomponentstotheYZZInc.plant,prepayforthefreightcosts,andhaveallresponsibilitiesarrangingforandassumingtherisksoftransportuntilreachingYZZInc.’splant.WhatIncoterms®2010ruledoyouuse?


2)“CarriagePaidTo”meansthatthesellerdeliversthegoodstothecarrieroranotherpersonnominatedbytheselleratanagreedplace(ifanysuchplaceisagreedbetweenparties)andthatthesellermustcontractforandpaythecostsofcarriagenecessarytobringthegoodstothenamedplaceofdestination.

3)“DeliveredatPlace”meansthatthesellerdeliverswhenthegoodsareplacedatthedisposalofthebuyeronthearrivingmeansoftransportreadyforunloadingatthenamedplaceofdestination.Thesellerbearsallrisksinvolvedinbringingthegoodstothenamedplace.

4)“DeliveredDutyPaid”meansthatthesellerdeliversthegoodswhenthegoodsareplacedatthedisposalofthebuyer,clearedforimportonthearrivingmeansoftransportreadyforunloadingatthenamedplaceofdestination.Thesellerbearsallthecostsandrisksinvolvedinbringingthegoodstotheplaceofdestinationandhasanobligationtoclearthegoodsnotonlyforexportbutalsoforimport,topayanydutyforbothexportandimportandtocarryoutallcustomsformalities.

5)“FreeonBoard”meansthatthesellerdeliversthegoodsonboardthevesselnominatedbythebuyeratthenamedportofshipmentorprocuresthegoodsalready

266

sodelivered.Theriskoflossofordamagetothegoodspasseswhenthegoodsareonboardthevessel,andthebuyerbearsallcostsfromthatmomentonwards.

Scenario3:YZZInc.hassupplier,RHCPInc.,inSaintLouisforacriticalcomponentusedinoneitsmostprofitableproductlines.YouaretheCommodityManagernegotiatingacontractrenewal.Duetothecriticalnatureofthecomponent,youdecidethatyoushouldcontrolalltransportationtoimprovecontrolandvisibility,butyoustillexpectthesuppliertohandleexportcustomsclearance.WhatIncoterms®2010ruleshouldyouuse?

1)“FreeCarrier”meansthatthesellerdeliversthegoodstothecarrieroranotherpersonnominatedbythebuyerattheseller’spremisesinSaintLouis.Thepartiesarewelladvisedtospecifyasclearlyaspossiblethepointwithinthenamedplaceofdelivery,astheriskpassestothebuyeratthatpoint.ThisisinaccordancewithIncoterms®2010rules.

2)“ExWorks”meansthatthesellerdeliverswhenitplacesthegoodsatthedisposalofthebuyerattheseller’spremisesinSaintLouis.Thesellerdoesnotneedtoloadthegoodsonanycollectingvehicle,nordoesitneedtoclearthegoodsforexport,wheresuchclearanceisapplicable.ThisisinaccordancewithIncoterms®2010rules.

3)“FreeCarrier”meansthatthesellerdeliversthegoodstothecarrieroranotherpersonnominatedbythebuyerattheseller’spremises,RHCPInc.,inSaintLouis.Thepartiesarewelladvisedtospecifyasclearlyaspossiblethepointwithinthenamedplaceofdelivery,astheriskpassestothebuyeratthatpoint.ThisisinaccordancewithIncoterms®2010rules.

4)“ExWorks”meansthatthesellerdeliverswhenitplacesthegoodsatthedisposalofthebuyerattheseller’spremises,RHCPInc.,inSaintLouis.Thesellerdoesnotneedtoloadthegoodsonanycollectingvehicle,nordoesitneedtoclearthegoodsforexport,wheresuchclearanceisapplicable.ThisisinaccordancewithIncoterms®2010rules.

5)“FreeCarrier”meansthatthesellerdeliversthegoodstothecarrieroranotherpersonnominatedbythebuyerattheseller’spremises,RHCPInc.,inSaintLouis,France.Thepartiesarewelladvisedtospecifyasclearlyaspossiblethepointwithinthenamedplaceofdelivery,astheriskpassestothebuyeratthatpoint.ThisisinaccordancewithIncoterms®2010rules.

267

Scenario4:YZZInc.’sNorthAmericaregionhascontractedwithasupplier,SquareOneInc.,locatedinGermanythathasmuchlargertransportationvolume,andhence,bettertransportationpricing.Becauseofthis,bothpartieshaveagreedthatSquareOneInc.shouldhandledeliverytoYZZInc.’sdistributioncenterinMemphis,Tennesseeandtransportationrisk,butthatYYZInc.willhandleimportduty.Youarethelastreviewerandapproverofthesupplyagreementcontract.WhatfullIncoterms®ruledoyouexpectlistedinthecontract?

1)“CarriagePaidTo”meansthatthesellerdeliversthegoodstothecarrieroranotherpersonnominatedbytheselleratanagreedplace(ifanysuchplaceisagreedbetweenparties)andthatthesellermustcontractforandpaythecostsofcarriagenecessarytobringthegoodstothenamedplaceofdestination,whichisYYZInc.486YYZBlvd.Memphis,Tennessee38119USA.

2)“DeliveredatPlace”meansthatthesellerdeliverswhenthegoodsareplacedatthedisposalofthebuyeronthearrivingmeansoftransportreadyforunloadingatthenamedplaceofdestination,whichisYYZInc.inMemphis,Tennessee.Thesellerbearsallrisksinvolvedinbringingthegoodstothenamedplace.ThisisinaccordancewithIncoterms®2010rules.

3)“DeliveredDutyPaid”meansthatthesellerdeliversthegoodswhenthegoodsareplacedatthedisposalofthebuyer,clearedforimportonthearrivingmeansoftransportreadyforunloadingatthenamedplaceofdestination,whichisYYZInc.486YYZBlvd.Memphis,Tennessee38119USA.Thesellerbearsallthecostsandrisksinvolvedinbringingthegoodstotheplaceofdestinationandhasanobligationtoclearthegoodsnotonlyforexportbutalsoforimport,topayanydutyforbothexportandimportandtocarryoutallcustomsformalities.

4)“DeliveredDutyUnpaid”meansthesellerdeliversthegoodstothebuyer,notclearedforimport,andnotunloadedfromanyarrivingmeansoftransportatthenamedplaceofdestination,whichisYYZInc.inMemphis,Tennessee.Thesellerhastobearthecostsandrisksinvolvedinbringingthegoodsthereto,otherthan,whereapplicable,anydutyforimportinthecountryofdestination.Suchdutyhastobebornebythebuyeraswellasanycostsandriskscausedbyhisfailuretoclearthegoodsforimportintime.ThisisinaccordancewithIncoterms®2010rules.

5)“FreeonBoard”meansthatthesellerdeliversthegoodsonboardthevesselnominatedbythebuyeratthenamedportofshipment,whichisYYZInc.486YYZBlvd.

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Memphis,Tennessee38119USA.Theriskoflossofordamagetothegoodspasseswhenthegoodsareonboardthevessel,andthebuyerbearsallcostsfromthatmomentonwards.

Scenario5:YouareinSalesforYZZInc.Oneofyourbestcustomers,OrangeBlossomPower,hasdecidedthattheywouldliketopickuptheirordersdirectlyfromtheYZZInc.plant,andhence,handlealltasks,costs,andrisksassociatedwithtransportation.However,OrangeBlossomPowerstillexpectsYZZInc.toloadthepurchasedgoodsintothecollectingvehicleofOrangeBlossomPower’stransportationcarrier.WhatIncoterms®2010ruleshouldyouagreeto?


2)“DeliveredatTerminal”meansthatthesellerdeliverswhenthegoods,onceunloadedfromthearrivingmeansoftransport,areplacedatthedisposalofthebuyeratanamedterminalatthenamedportorplaceofdestination.“Terminal”includesaplace,whethercoveredornot,suchasaquay,warehouse,containeryardorroad,railoraircargoterminal.Thesellerbearsallrisksinvolvedinbringingthegoodstoandunloadingthemattheterminalatthenamedportorplaceofdestination.

3)“ExWorks”meansthatthesellerdeliverswhenitplacesthegoodsatthedisposalofthebuyerattheseller’spremisesoratanothernamedplace(i.e.works,factory,warehouse,etc.).Thesellerdoesnotneedtoloadthegoodsonanycollectingvehicle,nordoesitneedtoclearthegoodsforexport,wheresuchclearanceisapplicable.

4)“FreeCarrier”meansthatthesellerdeliversthegoodstothecarrieroranotherpersonnominatedbythebuyerattheseller’spremisesoranothernamedplace.Thepartiesarewelladvisedtospecifyasclearlyaspossiblethepointwithinthenamedplaceofdelivery,astheriskpassestothebuyeratthatpoint.

5)“FreeonBoard”meansthatthesellerdeliversthegoodsonboardthevesselnominatedbythebuyeratthenamedportofshipmentorprocuresthegoodsalreadysodelivered.Theriskoflossofordamagetothegoodspasseswhenthegoodsareonboardthevessel,andthebuyerbearsallcostsfromthatmomentonwards.

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TREATMENT2:INCOTERMS®USED

Scenario1:YourepresentSalesofYZZInc.,andacustomerfromShanghai,P.R.Chinacontactsyouaboutavailabilityofacomponentthatyousell.Youcheckavailability,and,fortunately,itisreadilyavailableatyourU.S.plant.Youalreadyhaveapre-negotiatedcomponentprice,butyoumustnegotiatethetransportationresponsibilityandcostwiththecustomerassometimesthecustomerdecidestopickuptheorderfromyourU.S.plant.Afterdiscussions,thecustomerasksforaquotationfromyouwithYZZInc.responsibleforprovidingoceancontainertransportation,includingminimalinsurance,totheShanghai,Yangshanport.Whenyourespondtotherequestforaquote,whatIncoterms®2010ruledoyouuse?

1)CFR 2)CIF 3)CIP 4)CPT 5)DDP

Scenario2:YZZInc.hasfoundanewdomesticsupplier,EchoCompany,forsupplyingacomponentusedinitsmanufacturing.YouareassignedasYZZInc.’sleadnegotiatorwiththeEchoCompany.AfterdiscussionswithYZZInc.management,youagreethatEchoCompanyshoulddeliverthecomponentstotheYZZInc.plant,prepayforthefreightcosts,andhaveallresponsibilitiesarrangingforandassumingtherisksoftransportuntilreachingYZZInc.’splant.WhatIncoterms®2010ruledoyouuse?

1)CFR 2)CPT 3)DAP4)DDP 5)FOB

Scenario3:YZZInc.hassupplier,RHCPInc.,inSaintLouisforacriticalcomponentusedinoneitsmostprofitableproductlines.YouaretheCommodityManagernegotiatingacontractrenewal.Duetothecriticalnatureofthecomponent,youdecidethatyoushouldcontrolalltransportationtoimprovecontrolandvisibility,butyoustillexpectthesuppliertohandleexportcustomsclearance.WhatIncoterms®2010ruleshouldyouuse?

1)FCASaintLouisIncoterms®2010 2)EXW SaintLouisIncoterms®2010 3)FCARHCPInc.SaintLouisIncoterms®20104)EXW RHCPInc.SaintLouisIncoterms®20105)FCARHCPInc.SaintLouis,FranceIncoterms®2010

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Scenario4:YZZInc.’sNorthAmericaregionhascontractedwithasupplier,SquareOneInc.,locatedinGermanythathasmuchlargertransportationvolume,andhence,bettertransportationpricing.Becauseofthis,bothpartieshaveagreedthatSquareOneInc.shouldhandledeliverytoYZZInc.’sdistributioncenterinMemphis,Tennesseeandtransportationrisk,butthatYYZInc.willhandleimportduty.Youarethelastreviewerandapproverofthesupplyagreementcontract.WhatfullIncoterms®ruledoyouexpectlistedinthecontract?

1)CPTYYZInc.486YYZBlvd.Memphis,Tennessee38119USA 2)DAPYYZInc.Memphis,TennesseeIncoterms®20103)DDP YYZInc.486YYZBlvd.Memphis,Tennessee38119USA4)DDUYYZInc.Memphis,TennesseeIncoterms®20105)FOB YYZInc.486YYZBlvd.Memphis,Tennessee38119USA

Scenario5:YouareinSalesforYZZInc.Oneofyourbestcustomers,OrangeBlossomPower,hasdecidedthattheywouldliketopickuptheirordersdirectlyfromtheYZZInc.plant,andhence,handlealltasks,costs,andrisksassociatedwithtransportation.However,OrangeBlossomPowerstillexpectsYZZInc.toloadthepurchasedgoodsintothecollectingvehicleofOrangeBlossomPower’stransportationcarrier.WhatIncoterms®2010ruleshouldyouagreeto?

1)CFR 2)DAT 3)EXW 4)FCA5)FOB

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