Outsourcing or self-operation? Strategy selection for manufacturers’ logistics-oriented servitization

Logistics-oriented servitization serves as a vital strategy for manufacturers to reduce logistics costs and enhance supply chain resilience. In this process, third-party logistics providers (3PLPs) and the government play important roles as collaborative partners and sources of subsidy incentives, respectively. Recognizing that manufacturer, 3PLP, and government engage in a dynamic game based on learning and imitation in real-world settings, this study employs an evolutionary game model to investigate the optimal long-term strategies (OLS) of the three game agents under different boundary conditions, thereby overcoming the limitations of the perfect rationality assumption in classical game theory. This study discusses two distinct strategy choices for each agent and incorporates a setting where manufacturers and 3PLPs share logistics-oriented servitization revenue, reflecting the deep embeddedness of 3PLPs within the manufacturer’s supply chain. It is concluded that first, when 3PLP has adapted collaboration strategy, manufacturer’s OLS depends solely on: (a) difference in logistics capability between outsourcing and self-operation strategies; (b) logistics resources deployment cost. Second, 3PLP’s non-collaboration strategy consistently drives manufacturer toward self-operation strategy, regardless of government’s subsidy availability. Third, government’s OLS depends primarily on difference in social income between subsidy and non-subsidy strategies and the subsidy to the manufacturer. This study contributes to the servitization literature by elucidating the long-term dynamic game mechanism for logistics-oriented servetization and provides strategic guidance for avoiding suboptimal short-term decision.