Operating Performance Effects of Service Quality and Environmental Sustainability Capabilities in Logistics

Resource allocation decisions in the areas of service quality and environmental sustainability can be challenging because ex ante it is difficult to assess the potential performance benefits of such investments. This study investigates the operating performance implications of service quality and environmental sustainability in the context of logistics. Specifically, using the resource‐based view of the firm as the theoretical framework, we examine future operating performance of firms that won service quality and environmental sustainability awards in logistics between 2004 and 2013. Awardees include firms that are logistics service providers and firms that operate in other industries; in all cases, these awards recognize firms’ logistics capabilities. Our results reveal that firms’ service quality and environmental sustainability capabilities, as recognized by winning awards in the respective categories, are associated with improved operating performance during the 3‐year post‐award period. Additionally, the performance benefits associated with service quality awards are greater than those associated with environmental sustainability awards. Our analysis further shows that whereas environmental sustainability relates to better future operating performance by enhancing only sales growth, service quality is positively associated with enhanced sales growth as well as cost efficiency. Finally, our results also indicate that positive operating performance implications of these awards are not contingent on the industry competitive intensity or innovative intensity. Implications for research and practice are discussed.