Abstract

Easy access to equipment and low barriers to entry have led to an intensely competitive truckload industry in which carriers possess little power to increase prices consistent with inflation. Yet, the heterogeneous performance among TL carriers indicates that sustained success in such a hypercompetitive industry is possible. Under the strategic purity framework, this research adopts a multimethod approach by first utilizing panel of financial and operational data composed of 828 firm-quarter observations and finds that the relationship between a popular industry metric—the trailer-to-tractor ratio (T2T)—and performance is convex. Empirical results are further explained by interviews with senior executives and industry analysts. This research contributes to theory and practice by first showing that, consistent with the strategic management literature, strategy-driven heterogeneous configuration of common assets may increase performance. Second, we show that strategic purity allows carriers supernormal financial performance, despite the hypercompetitive environment. Third, as the TL industry becomes increasingly conscious of competitive strategies, our study shows that the T2T can be used as a guide for carriers to align their competitive strategy with asset configuration.

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Additional Information

ISSN
2157-328X
Print ISSN
0041-1612
Pages
pp. 1-34
Launched on MUSE
2017-01-24
Open Access
No
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