cost structure research paper

• Open access
• Published: 16 September 2021

Implementation of strategic cost management in manufacturing companies: overcoming costs stickiness and increasing corporate sustainability

• Mohammad Mahdi Rounaghi   ORCID: orcid.org/0000-0002-9640-678X 1 ,
• Hajer Jarrar 2 &
• Leo-Paul Dana 3  

Future Business Journal volume  7 , Article number:  31 ( 2021 ) Cite this article

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In today's competitive world, three factors: price, quality and time have critical roles in the success of the companies to achieve success in the competition. For this purpose, the companies have to also adapt themselves to changes in technology and environment. Strategic cost management is the best way to improve the sustainable management models in the manufacturing companies. Strategic cost management has solved many of the problems and shortcomings of traditional accounting system and by accurate determination of costs, their proper allocation to products and elimination of waste, tries to create value for shareholders by using continuous improvement. The objective of this paper was to develop a management model called strategic cost management that reduced costs stickiness and increased corporate sustainability. Using strategic cost management approach can create competitive advantage for the companies, because it provides accurate cost price information so that the users can easily understand the information. The aim of the paper by introducing strategic cost management was to contribute toward accurate pricing, which could result in the increased profitability and competitiveness of the manufacturing companies in a highly competitive global market and at a market‐based price. Also, due to the growing competition among companies in providing high quality products with reasonable prices, a precise system of measurement of the cost of the product is necessary.

Introduction

In recent years, economic analysis in the planning process and in the monitoring process of the production process shows that three factors: price, quality and time have critical roles in the success of the companies to achieve success in the competition. The world faces the problem of integration between sustained business functions. The sustainability data are not sufficiently integrated. To solve this problem, organizations need information systems to facilitate their sustainability initiatives [ 1 , 2 ]. Also, businesses and academics worldwide agree regarding the benefits of sustainable development (SD). Improving reputation and branding and increasing revenues by reducing costs are the primary strategic objectives of any entity [ 3 , 4 ]. In this paper, we introduce the strategic cost management approach that helps manufacturing companies for overcoming the costs stickiness and monitoring the life cycle of products and it introduces integrated sustainable development system for manufacturing companies.

Strategic cost management is a process connecting financial management, cost management and strategic management. It involves cost optimization and financial resources preparation which are needed to achieve desired strategic market position in cost effective manner. The importance of managing costs and aligning them with the business strategy of an entity is critical especially in the midst of challenging economic times faced by businesses today. Traditionally companies have been under pressure to cut cost in the short-term without really thinking about sustainable change, impact on the people and integration with the overall business strategy. In the current business environment of increased global competition, new markets, increasing regulation and changing demographics, successful companies are changing their approach to cost structuring and control.

Over the last decade, research in management accounting has challenged the fundamental assumption that cost behavior is symmetric for activity increases and decreases. Cost behavior is an important issue in cost accounting and management accounting, as it widely affects decision-making processes. Moreover, several techniques generally used by managerial accountants and financial analysts depend mainly on cost behavior, such as conventional ABC, cost estimation and cost-volume-profit analysis. Quality management (QM) has been widely viewed as a management paradigm that enables firms to gain a competitive. Therefore, overcoming on cost stickiness is a critical issue for mangers of manufacturing companies. Also, understanding cost behavior is an essential element of cost and management accounting [ 5 – 8 ].

Cost stickiness, also referred to as asymmetric cost behavior, is a well-documented result of managerial discretion underlying the development of corporate cost compared to changes in firm activity. Managers’ decisions to maintain the resource allocations due to product market competition can be costly, especially during periods of sales decreases. Under the traditional model of cost behavior, costs are assumed to be either fixed or move proportionately and symmetrically with sales changes. The traditional model of cost behavior distinguishes between fixed and variable costs and posits a proportional relation between variable costs and underlying activity levels. Understanding sticky cost behavior is important and has direct benefits for the economy as it provides useful information to managers making decisions on cost control and to external stakeholders (e.g., financial analysts) assessing firm performance. As the global economy integrates and competes, strengthening cost management and operational efficiency becomes increasingly important to firms’ survival and development [ 9 – 14 ].

Cost management is an important part of business management in the manufacturing industry. The degree of cost management implementation is a comprehensive index to measure the level of enterprise management. In particular, firms with limited access to capital have higher costs of securing external financing during the capacity expansion periods, which increases the upward adjustment costs. When activity decreases, firms with limited access to capital may suffer more decrease in the present value of revenue generated by a marginal capacity, as these firms have higher opportunity cost of capital and thus higher discount rates compared to firms with better access to capital. Therefore, we hypothesize that limited access to capital not only reduces contemporary capacity expansions associated with sales increases, but also weakens the degree of cost stickiness when sales decrease [ 15 , 16 ].

On the other hand, cost management is an important part of business management in the manufacturing industry. The degree of cost management implementation is a comprehensive index to measure the level of enterprise management. From investors’ perspective, investors depend on the published financial statements prepared by the management that are based on available information regarding the determinants of cost behavior. From financial analysts’ perspective, predicting cost behavior is an essential part of earnings prediction [ 16 – 18 ].

In many production firms, it is common practice to financially reward managers for firm performance improvement. For decades, firms have devoted to improving the speed and efficiency of material and information flows in the supply chain, acknowledging the importance of time-based competitive advantage in the dynamic business environment. As one of the key factors in decision-making process, the evolution of product price passes critical information. Managing costs by utilizing resources effectively is regarded as fundamental to success in today's competitive environment. Cost behavior as “sticky” if costs increase more for activity increases than they decrease for an equivalent activity decrease. Sticky behavior is the result of decisions made by managers when activity decreases. When activity drops, the manager must decide whether to (a) maintain committed resources and bear the cost of unutilized capacity at least in the short-term or (b) immediately reduce committed resources and incur potentially large retrenching costs in the current period and, if activity increases in the future, incur further costs to replace resources. Traditional accounting cost models assume that fixed costs are independent of the level of activity and variable costs change proportionately with changes in the level of activity. In the common traditional model of the behavior of costs, which is generally accepted in accounting literature, costs are usually divided into two categories of fixed and variable ones in terms of changes in activity level: fixed occupants are variable. Most management accounting texts assume that unit variable costs are linear and proportional to changes in activity and that fixed costs are fixed. The proportionality and symmetry between costs and activity implies that a 1% increase in activity results in a 1% increase in costs, and a 1% decrease in activity results in a 1% decrease in costs. Stickiness might also be conditioned by existing capacity [ 5 , 19 – 26 ].

Notions of cost behavior are a key element in management accounting [ 27 ]. There are two main views about the existence of expense stickiness: rational decision-making and motivational. The rational decision-making view treats expense stickiness as a consequence of management rationally choosing between alternatives after comprehensively weighting costs and benefits. The second view is motivation-based and relates expense stickiness to managerial incentives, suggesting that managers are not expected to behave as if they were in an ideal world. Among their dysfunctional behavior, perks and earnings management reflecting different contracting stimulations are often observed [ 28 ].

Planning and control are of the important tasks of management. Cost related information that managers need them to perform these tasks may be received from classified information reflected in the financial statements. The required information in this regard cannot be easily extracted from the financial statements [ 29 ]. A business entity expenses can show different behaviors suitable to the level of activity. In traditional cost model it is often assumed that administration, general and selling costs varies according to activity level. However, recent experimental studies have revealed evidence that shows that administration, general and selling costs behave asymmetrically [ 30 ]. An asymmetric behavior is a behavior in which cost increase more rapidly. In other words, the reduction in costs at the time of declining sales is lower than when the cost increases at the time of the same level of sales. This cost behavior is called cost stickiness. Expanding researches show that economic factors such as increase in assets and uncertainty about the future can have an impact on the asymmetric behavior of cost.

Costs stickiness

Cost behavior is defined as cost reaction in response to changes in activity level. Managers who understand how costs behave, have better circumstances for predicting spending trends in various operational positions. This position allows them to plan their activities and thus plan their operating revenues better. The traditional view related to costs indicates that changes in costs have a proper relationship with increased and decreased activity level. However, recent researches about costs behaviors indicate costs stickiness. Thus the degree of increase in costs level as a result of increase in activity level is higher than the degree of reduction in costs level as a result of decrease in activity level.

According to the idea of Anderson et al. [ 31 ], there are many reasons for costs stickiness. Some of these reasons include natural reluctance to lay off employees when downsizing, firm costs and the need for time to approve a reduction in the volume of activity and management decisions for maintaining used resources which could be the result of individual consideration and leads to imposing cost to the firm. By determining the stickiness of cost, the company owners can analyze whether managers incur costs to the firm or not [ 32 ].

Managers of manufacturing companies must consider the relationship of costs with income and the effect of income changes on the costs rate when planning and budgeting the company activities for predicting the future costs and thus offer a more comprehensive budget [ 33 ]. The ultimate goal of any business unit is maximizing profits and consequently, an increase in equity. Management of each profit-oriented enterprise tries to gain maximum benefit and efficiency from using the fewest resources and one of the simplest ways to reduce consumption of resources is cost control. But this requires complete knowledge of how costs behave and the factors influencing the behavior of the cost. One of the items that should be considered in the analysis of cost behavior is the phenomenon of cost stickiness. The public and dominant view is that with declining sales, costs should also be changed accordingly. But in fact, it does not happen [ 34 ].

Today, increasing competition in domestic and international markets has forced managers to better understand their cost structure and become aware of cost orientations means how the costs change. The meaning of cost orientation is a model according which costs react to changes in activity level [ 35 ]. Therefore, it is suggested that managers calculate their costs stickiness and consider all aspects of this important issue in their decisions. Orientation or the concept of cost stickiness gives a great help to investors and shareholders. Because in companies with strong stickiness, by reduced selling, costs will change more than the time when selling increases and this will be considered as a weakness of management by the investors and shareholders; while one of the main reasons of cost stickiness is bearing the current costs to avoid more losses in the future and or more profit in the future and it depends on management decisions [ 36 ].

Review of literature

Sustainable development refers to an economic, environmental and social development that meets the needs of the present and does not prevent future generations from fulfilling their needs. In manufacturing companies, collaboration between supply chain members is important for the sustainability and competitive advantage of a supply chain. The collaborative activities in a supply chain include various joint activities for cost reduction, research and development (R&D), product development, manufacturing, marketing, distribution, and service. The commitment of companies to corporate sustainability has been frequently discussed in theory and practice. Such a commitment to corporate sustainability demands a strategic approach to ensure that corporate sustainability is an integrated part of the business strategy and processes. Also, the effective adoption of continuously developing new technologies is a critical determinant of organizational competitiveness [ 37 – 41 ].

For the first time [ 5 ] tested the hypothesis that costs are sticky and approved the presence of stickiness in the costs behavior. They established a model with administration, general and sales costs as a function of sales, and found that costs increase by an average of 55% in response to a 1% increase in net income, but decrease only by 35% against 1% reduced income. In other words, a 1% increase in net sales, costs increase by 55% but by 1% decrease in net sales, costs decrease only by 35%. Due to the lack of public information about costs related drivers, they used data of administration, general and sales costs and net income of sales for the analysis of cost stickiness, and stated that they can analyze the behavior of administration, general and sales costs based on sales net income because sales volume stimulates many parts of this cost. Subramaniam and Weidenmier Watson [ 25 ] tested the presence of behavior of stickiness in the cost price of goods sold, and the results showed a positive relationship. They also tested the effect of different economic conditions, such as rates of GDP and the different characteristics of companies, such as total assets and number of employees of companies on costs stickiness. Their results showed that in periods of economic growth, the severity of stickiness is more and in the periods that income decrease happened in its previous periods, severity of stickiness decreases. Also, by increasing the ratio of total assets to sales and an increase in the number of personnel of companies, severity of cost stickiness increases. Stickiness of sales and distribution and general and administration costs has been studied in another study by Anderson et al. [ 31 ]. The main hypothesis of this study is public sale and administration costs. After collecting data related to cost of general sales and administration and sales revenue costs of 7629 American companies in a 20-year period (1979–1998), the relationship between costs and sales was examined by multi-varibale regression relationship. The results of this study did not confirm the main hypothesis of the research and announce the general sale and administration costs of companies in the statistical population of the research, sticky.

The results obtained by Weiss [ 18 ] from a sample of 2520 out of 44,931 industrial companies from 1986 to 2005 show the issue that the sticky behavior of costs increased the accuracy of analysts in predicting revenue in total, considering the fact that prediction horizon and especial effects of industry have put this analysis under control. With regard to the classification of costs into sticky and non-sticky costs, the results of Weiss's research [ 18 ] show that the accuracy of analysts in forecasting revenues for firms with sticky cost behavior is on average 25 percent less than that of people who analyze for companies with non-sticky cost behavior. Obviously, the behavior of cost has a considerable influence on the accuracy of analysts' prediction.

In Kordestani and Mortazavi, research [ 30 ], the power of profit prediction was compared with other models by the model based on variability and stickiness of cost. The study showed that the accuracy of prediction of the model based on the variability of costs and stickiness of cost is significantly higher than the other models. In several domestic researches, stickiness of various costs has been studied. According to the results of Ghaemi and Nematollahi's research, the cost price of the sold goods and selling and distribution and general and administration costs are sticky. Another study from the same researcher showed that overhead costs are sticky, but the costs of raw materials, direct wages and financial costs are not sticky.

In other study, Khani and Shafiei [ 42 ] examined cost stickiness and its relationship with sales and the results of their research indicate an undeniable relationship between the amount of sales and company earnings with the level of company's costs. Although their findings indicate that costs do not increase in proportion to profit increase, but there is a significant relationship between them.

In other study, Banker et al. [ 43 ] examined the relationship between uncertainty and sticky behavior of cost. By examining administration, general and sales costs, number of employees and their working hours, they evaluated cost stickiness. The results indicate the presence of cost stickiness in the sample under investigation. Sepasi et al. [ 44 ] examined the characteristics of management behavior toward costs stickiness. Their studied a sample consisting 14,568 year-company and examined administration, general and sales costs for the years 1992–2011. The results showed behavioral changes in managers about cost stickiness so that the occurrence of cost stickiness phenomenon increases the confidence of managers.

Management of strategy and strategic cost management

Effective strategic management, plays an important role in the success of the company or organization. Increase in competition in the international arena, new technologies and changes in business processes, caused management to become more dynamic and important than before. Managers should always have a competitive attitude and for this purpose the company's competitive strategy is essential. Strategic attitude leads the manager to anticipate changes and products and their production process will be designed based on anticipated changes in demand and customer's needs. In this situation, flexibility is important.

In developed countries, most organizations use data of cost management. But the extent of their reliance on this information depends on the nature of the competitive strategy of the company. Many companies compete on the basis of the provision of goods and services at the lowest cost price. Some companies compete on the basis of being a leader in production and offering superior and differentiated products. The role of cost management is supporting corporate strategy by providing the information through which one can be successful in products development and their marketing. For achieving corporate sustainability, we suggest to use the instruments of strategic cost management in manufacturing companies . Today, managers use strategic cost management tools to accomplish strategies and achieve main success producer factors.

Instruments of strategic cost management are as below:

The most common system that used in many companies is activity-based costing system. Activity-based costing system which is specifies the resources consumed by each activity during the relevant period; and thus the cost of each activity is precisely calculated. Then the aggregated costs of any activity are assigned to the considered product or customer, depending on the product consumption or the customer use of that activity [ 45 ]. The other instrument is bench-marking. Bench-marking is a process that the companies try to choose the best practice as of the right activity in comparison with the leading companies, then given the success-builder factors, the company processes are improved to the level of performance of its competitors or even reach to a better level. For identification of internal and external failure factors in the companies, we suggest to use total quality management technique. Total quality management a new concept that emphasizes on precise measurement of the costs and identification of internal and external failure factors, through which a way to lower production (lean production) by continuous improvement in company processes is created [ 46 ].

For finding the precise systems of measurement of the cost, in-time production system and kaizen costing are useful tools for manufacturing companies. In-time production system is a system based on the volume of demand. In this system, a piece of product will be purchased or produced only when a sign of its consumer is received. This prevents the accumulation of inventory in workstations. Among the main objectives of this system we can mention improvement of quality and increase in productivity with an emphasis on the kaizen concept. Kaizen costing is a managerial technique through which managers and employees of the company become committed to perform continuous improvement program in the quality and other key factors of success. In the path of continuous improvement, the processes are re-engineered and non-value activities in the manufacturing process are removed or left behind [ 47 ].

The other instruments are target costing and value engineering. In target costing method, the costs are determined according to the product price. It means that first the companies determine the product selling prices, by analyzes of the market and then according to their expected profit, determine the cost price of the product. In other words, goal-oriented costing system is profit planning and cost management system that in that base it was the price, and the essential emphasis is on customers. Goal-oriented costing system focuses on the design stage and requires the participation of all specialized units [ 48 ]. Value engineering is suggested with the aim of examination of all activities of a project, from the formation of the first thought to the design and implementation and then setting up and utilization, is known as one of the most efficient and the most important economic methods in the field of engineering activities [ 49 ]. The purpose of value engineering is eliminating or modifying any factor that leads to the imposition of unnecessary costs, without hurting the core and essential functions of the system. Value engineering is the continuous improvement of design and implementation and it is not merely a program to reduce costs, but is a way to maximize the value of designs [ 50 ].

Implementation stages of strategic cost management

Implementation stages of strategic cost management include value chain analysis, strategic situation analysis and analysis of structural and administrative costs drivers.

Analysis of the value chain

Value chain analysis is an instrument for strategic analysis that helps companies to better understand the competitive advantage. Value chain analysis focuses on the whole value chain of the product from design to production and after-sales service. The basic concept of analysis is that by a thorough examination of each of the activities in the value chain, one can reveal the activities that the companies have the highest or lowest success in them from competition perspective, and plan accordingly.

Analysis of strategic situation

At this stage, the company determines its potential and current competitive advantage by examining valued activities and cost drivers which have been specified in the previous stage. Companies which have competitive strategy of cost leadership are strongly trying to reduce their costs to the level of cost of cost leadership. Cost leadership focuses on cost reduction only as far as it makes sure that it is the leader in price and the holder of the lowest cost in the market. Reduction of costs is usually done by increasing productivity in the production process, distribution or general and administrative expenses. In this management strategy, maintaining stability is a priority and the company is not looking for innovation and risk-taking, but is looking for offering products and services at competitive prices. In contrast, competitive strategy of differentiation, allows the companies to raise the price of products higher than that of their competitors and without significant reduction in costs, have high profitability. These companies, by creating differentiation between the products and creating new features, make customers willing to pay a reasonable price as a result of this differentiation. Using the product differentiation strategy, one can reduce the intensity of competition and no threat of product substitution happens for the manufacturer, because all customers become loyal to the brand of the product [ 51 , 52 , 53 ].

Analysis of drivers of structural and executory cost

Strategic Analysis of cost drivers helps companies in improvement of their competitive situation. Drivers of structural and executory cost are used to facilitate operational and strategic decision-making.

Driver of structural cost, has strategic nature because it includes programs and decisions which have long-term effects. In this regard, the following items are necessary to be noted:

Scale: For example, a retail company shall determine the number of new stores it opens during the year in order to achieve the strategic goals and competitive success.

Technology: New technologies can significantly reduce the company costs. For example, some manufacturing companies in developed countries use computer technology to show number of products that their customers use (especially large retailers), so that whenever the customers run out of the inventory in the warehouse, they send for them quickly.

Complexity of products: companies that produce a high variety of products, have high cost of planning and management of production and also high distribution costs and after-sales service. Such companies usually use activity-based costing to determine the degree of profitability of their products.

Administrative cost drivers, are the factors that companies can manage them in the short term through operational decisions to reduce costs. These factors include:

Work commitment: work commitment causes reduction in costs. The companies in which there is a strong correlation between the employees, can significantly reduce their operating costs.

Design of Production process: the sequence arrangement of equipment and the frequency of processes lead to accelerating the production process in the company. Production technology innovations can significantly reduce costs.

Relationships with suppliers of raw materials of the company: the companies can reduce their costs significantly through agreements with suppliers of raw materials on quality, delivery time and other characteristics of their required raw materials.

Conclusions

Today, sustainability emphasizes various aspects of the organization in economic, social and environmental terms, so the importance of this issue is very important for current and future generations. Most companies have come to the conclusion that in order to improve the efficiency and effectiveness of production sustainability, they need to monitor, measure and control the characteristics of sustainable production. Therefore, measuring the sustainability of production has become an important issue in production and operations.

The purpose of this paper is to design a model for achieving a sustainable development index in order to integrate the economic, social and environmental performance data of manufacturing industries. By understanding the limitations and shortages of resources, the approach of the manufacturing companies includes the acquisition of new production mechanisms and technologies. To achieve newer and more innovative technologies tailored to their production processes in order to reduce production costs and increase their market share, these companies have conducted costly research. One way to deal with a shortage of resource for companies is reduce their costs. Companies regardless of sizes and operational scales must take economic opportunities into account in the long run, limiting opportunities, and incorporating innovative solutions, sustainable development, and positive social and environmental impact into their business activities.

Small-business owners face an ongoing challenge in trying to balance the need to serve customers and meet long-term business objectives while at the same time controlling the cost of doing business. A strategic cost management strategy in which cost decisions are made according to the value they add to both the business and the customer is often the most effective strategy a small business can adopt. Good financial decisions come from an effective cost management strategy designed to maximize value and minimize both initial and ongoing costs. Although a great many of a business’s cost-based decisions involve purchasing, pricing and inventory management, it’s also important for every small-business owner to consider costs involved inside the business.

In a competitive world, paying attention to cost management to reduce costs and increase customer satisfaction are priorities. Today, noting the proper role of the choosing quality and quantity of production factors, choosing between user processes or capital in the production process and selection of appropriate technology, in determining the cost price and producing products that meet the price reasonable in accordance with the customer' purchasing power appear more than before.

Providing the required information of cost management is possible only by establishing a modern system of management accounting including the design and use of various management accounting tools within the organization. Among these tools, there are activity-based costing, target costing, Kaizen costing, product life cycle costing. Strategic cost management is effective by accurate evaluation and identification of costs in the creation of income, profitability and value creation for companies.

By a correct understanding of their competitive situation and by using instruments of cost management, companies can reduce unnecessary costs. Also strategic cost management, by providing more accurate data for the managers, helps them in the short and long-term decision-making to achieve their strategic goals.

Given the importance of understanding the costs for those inside and outside the organization, such as managers, capital market analysts, investors and auditors recommendations for future research are presented as follows:

Examination of the effect of the changes in sales on costs stickiness.

Study of the relationship between management optimism with cost stickiness in various industries.

Examination of the relationship between the cost structure with behavior of each expense.

Availability of data and materials

This paper has no associated data.

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Rounaghi, M.M., Jarrar, H. & Dana, LP. Implementation of strategic cost management in manufacturing companies: overcoming costs stickiness and increasing corporate sustainability. Futur Bus J 7 , 31 (2021). https://doi.org/10.1186/s43093-021-00079-4

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We thank Jeff Abarbanell, Jeremy Bertomeau, Jan Bouwens, Hui Chen, Bart Dierynck, Stephen Hansen, Thomas Hemmer, Bjorn Jorgensen, William Lanen, Peter Letmathe, Richard Mergenthaler, Annelies Renders, Christian Rothmann, Karen Sedatole, K. Sivaramakrishnan, Andrew Stark, Dan Weiss, and participants at the Workshop in Accounting and Economics in Vienna, the GMARS Conference, a workshop at Michigan State University, and the D-CAF Conference in Copenhagen for comments. Sanghyuk Byun and Patrick Ferguson provided valuable research assistance. We are especially grateful to Mark Bagnoli for several helpful discussions and comments. We are responsible for all errors.

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Ramji Balakrishnan , Eva Labro , Naomi S. Soderstrom; Cost Structure and Sticky Costs. Journal of Management Accounting Research 1 December 2014; 26 (2): 91–116. https://doi.org/10.2308/jmar-50831

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Beginning with Anderson, Banker, and Janakiraman (2003) , a rapidly growing body of literature attributes the short-run asymmetric cost response to activity changes (i.e., sticky costs) resulting from short-run managerial choices. In this paper, we are agnostic on the theory of sticky costs. Rather, we focus on empirical tests of cost stickiness. We show that past decisions on cost structure, which determine the magnitude of costs controllable in the short-term, induce non-stationarity in the elasticity of Sales, General, and Administrative costs, affecting the interpretation of estimates from the standard specification used in the literature. We develop suggestions for how future research might control for the effects of cost structure. Empirically, we find that cost structure confounds results usually interpreted as cost stickiness reflecting short-run managerial actions. After adjusting for the effects of fixed costs, we find that the results are unstable across alternate subsamples. Our results provide evidence that long-run cost structure decisions impact our ability to detect short-term cost management decisions.

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Beginning with Anderson, Banker, and Janakiraman (2003), a rapidly growing literature attributes the short-run asymmetric cost response to activity changes (i.e., sticky costs) as resulting from short-run managerial choices. In this paper, we are agnostic on the theory of sticky costs. Rather, we focus on empirical tests of cost stickiness. We show that past decisions on cost structure, which determine the magnitude of costs controllable in the short-term, induce non-stationarity in the elasticity of Sales, General and Administrative costs, affecting the interpretation of estimates from the standard specification used in the literature. We develop suggestions for how future research might control for the effects of cost structure. Empirically, we find that cost structure confounds results usually interpreted as cost stickiness reflecting short-run managerial actions. After adjusting for the effects of fixed costs, we find that the results are unstable across alternate sub-samples. Our results provide evidence that long-run cost structure decisions impact our ability to detect short-term cost management decisions.

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Balakrishnan, R., Labro, E . , and Soderstrom, N. (2014) Cost Structure and Sticky Costs. Journal of Management Accounting Research: Fall 2014 , Vol. 26, No. 2, pp. 91-116.

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Cost behavior in e-commerce firms

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We conduct empirical research on the flexibility of operating costs of e-commerce firms. With an international sample of firms from different European countries, we find that e-commerce firms have a different cost structure than traditional retail firms, with a lower share of labor costs and cost of goods sold, but a higher share of other operating costs. While we find no significant different behavior in cost of goods sold and labor costs between the two types of firms, e-commerce firms are more flexible in adjusting other operating costs than traditional retail firms when activity decreases. Results are robust to different models, estimations methods and samples. The higher flexibility of e-commerce firms relies on other operating costs, but e-commerce creates qualified jobs with higher wages than traditional retail, with no additional exposure to labor uncertainty for employees.

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1 Introduction

E-commerce is the trading or facilitation of trading of products or services using computer networks, such as the internet or online social networks [ 1 ]. It has increased dramatically in recent years, usually as a consequence of strategic business decisions and its perceived advantages over traditional commerce in terms of factors such as economic and information efficiency, coordination, and market impact. According to data from eMarketer, worldwide e-commerce sales increased from US$ 1336 billion in 2014 to US$ 4280 billion in 2020, a 320% increase in 6 years, continuing to climb to a forecasted US$ 6388 billion in 2024, a much greater increase than for traditional commerce. This represents a rise from 7.4% share of total global retail sales in 2015 to 18% in 2020, up to a forecasted 21.8% in 2024 [ 2 ].

We analyze the effects of e-commerce on resource adjustment when activity decreases, in view of the ongoing debate on the economic effects of e-commerce versus traditional business for firms [ 3 , 4 , 5 , 6 , 7 ], employees [ 8 , 9 , 10 ] and consumers [ 11 , 12 , 13 ] (see Appendix 1 for detailed information about this and other literature reviewed in this study). We focus on the economic advantages of e-commerce over traditional business for firms and, more specifically, on the greater flexibility of the former from the point of view of costs. We analyze the comparative flexibility of firms to adjust resources when sales decrease, using the established business research approach of cost stickiness. Firms exhibit asymmetric cost behavior, with certain costs rising more when activity increases than the corresponding decrease when there is a drop in activity. The economic and business literature describes this behavior as cost stickiness.

Despite the increasing importance of e-commerce in the economy, to the best of the authors’ knowledge, there are no empirical studies comparing the economic characteristics and cost behavior of e-commerce firms. More precisely, there is no previous empirical research on the differential asymmetric cost behavior of e-commerce with respect to traditional retail firms. This study contributes to both business and e-commerce research, with an interdisciplinary study in line with following Kauffman and Walden’s claims [ 14 ] to build an integrated basis for managerial understanding of e-commerce.

We use an international sample of European e-commerce and traditional retail firms and find that e-commerce firms have a different cost structure than traditional retail firms, with a lower share of labor costs (LC) and cost of goods sold (CGS), but a higher share of other operating costs (OTHOP). While we find no significant difference in the behavior in terms of the CGS and LC between the two types of firms, e-commerce firms are more flexible in adjusting OTHOP than traditional retail firms when activity decreases. Results are robust to different models, estimations methods, and samples.

The rest of the paper is organized as follows: the next section reviews the literature and formulates hypotheses; next, we formulate a model, describe the sample, and present results, before finishing with a section on conclusions and implications.

2 Literature review and hypotheses development

There is a wealth of business research on e-commerce, usually focusing on commercial, marketing or technical issues related to the logistic efficiency or impact on clients. Kauffman and Walden [ 14 ] provide a review on economics and e-commerce from a variety of disciplines with a focus on information systems. Costs of e-commerce adoption have been studied [ 15 , 16 ]. To the best of the authors’ knowledge, there are almost no empirical studies of the costs and financial performance of e-commerce versus traditional retail trade firms. Koo et al. [ 17 ] compare 67 online with 55 click-and-mortar firms, analyzing the contribution of Porter’s competitive strategies to firm performance. Brynjolfsson et al. [ 12 ] evaluate the consumer surplus generated for consumers by e-commerce with respect to traditional firms. Stylianou et al. [ 18 ] examine prices and costs from pharmaceutical retailers that sell exclusively on the internet compared to retailers with both conventional and internet channels. They collected data from the firms’ websites and found small but significant differences in prices and larger differences in costs. Prices were lower on the internet, but the costs to the consumer were higher. These studies use fragmentary data rather than the complete accounting data of the whole firms used in the study.

Since the seminal study by Anderson et al. [ 19 ], cost stickiness research has usually analyzed selling, general and administrative expenses (SG&A) [ 20 , 21 , 22 , 23 ] and total operating costs (TOP) [ 24 , 25 ]. Few studies have analyzed LC [ 26 , 27 , 28 , 29 ]. Various industries [ 30 ], including international comparisons and settings [ 31 ] or certain specific contexts or industries, have also been analyzed, such as the air transportation industry [ 32 ], manufacturing enterprises [ 33 ], hospitals [ 34 ], therapy clinics [ 35 ], small and medium sized firms [ 27 ], and local public enterprises [ 36 ], among others. However, to the best of the authors’ knowledge, no empirical research has been conducted on the comparative resource adjustment of e-commerce in comparison to traditional retail firms when activity decreases, as can be seen in the Appendix 1 , which summarizes our literature review.

Previous research has identified various factors causing cost stickiness, with the most important being the managers’ inability to adjust resources because they are not flexible enough to react in a timely manner, the deliberate decision to keep resources because they have some expectations or specific interests, and/or the fixity of certain costs influencing the ability to react in the short term [ 24 , 37 , 38 ].

The traditional cost behavior model distinguishes between variable and fixed costs [ 39 ]. Since their inception, economic theory [ 40 , 41 ] and cost accounting [ 42 , p. 222–238] have rebutted the concepts of fixed and variable costs, recognizing that they are controversial concepts. They have also assumed that most costs are conventionally considered variable in the long term and fixed in the short time. More recently, the activity-based costing approach considers that all costs, including overhead costs, are variable [ 43 , p. 239]. Some authors argue that fixed costs are the most variable and rapidly increasing costs [ 44 , p. 225]. According to Cooper and Kaplan [ 45 ], managers erroneously conclude that some costs are fixed because they fail to reduce them. The activity-based costing model stresses the importance of transactions as cost drivers and criticizes the use of volume drivers to allocate costs to products through the traditional cost accounting models [ 46 ]. However, the two models agree to a certain extent, considering that fixed costs increase in the long term. The differences are more based on the emphasis. The activity-based costing model emphasizes the variable nature of overhead costs and the convenience of shifting from volume to transactions as a criteria for allocating costs to products and services [ 47 , 48 ]. According to these authors, the real driver of costs is the complexity that firms have acquired in the long run to fulfill their objectives They also recognize that there is no automatic adjustment of overhead costs when activity decreases. They increase easily, but there are a great deal of rigidity that makes decreasing them difficult. They argue that the variability of overhead costs should be measured in terms of transactions rather than in terms of volume. The proportionality of costs is also called into question [ 34 , 49 ]. However, despite the controversial distinction between the two types of costs, the traditional cost behavior model of and the empirical research on cost stickiness assume that variable costs are proportional to activity and that fixed costs do not change with activity in the short term and within the firms’ relevant range of activity [ 50 , p. 179]. With this approach, variable costs are assumed to display the same pattern and change in both phases of increasing and decreasing activity, and thus do not show sticky behavior, while fixed costs do exhibit sticky behavior.

Therefore, in the case of variable costs, the magnitude of the change depends only on the extent of the change, but not on its direction [ 51 ]. Similarly, the costs of goods sold are recorded automatically in the profit and loss statement, depending on revenues. In the retail trade industry, the costs of goods sold are the goods sold valued at acquisition costs. They are considered variable costs. According to this argument, such costs should not display sticky behavior, or their stickiness should be insignificant. They are related to the units of products or services sold by firms. They appear in the profit and loss statement depending on the units sold, increasing with increasing sales and decreasing similarly when sales decrease. There are no expected differences in the sticky behavior of such variable costs between e-commerce and traditional retail.

Fixed costs are more related to the maintenance of the structure required to keep the firm working. As the characteristics of e-commerce and traditional retail firms are different, the structure of fixed costs and their behavior is expected to differ between the two types of firms. Traditional retail firms rely on physical presence and the use of brick-and-mortar outlets. They offer products to their customers face-to-face in a store that the business owns or rents. Therefore, they need higher investments in fixed assets, as well as expenses related to their depreciation, rent, maintenance, and sustaining their working conditions, such as electricity and heat. They also need a higher number of employees to conduct their sales. In contrast, e-commerce conducts business with fewer employees. The OECD [ 52 , p. 66–67] reports greater revenue per employee in internet businesses than in their traditional counterparts. Falk and Hagsten [ 4 ] find greater labor productivity growth in e-commerce firms across 14 European countries. Like traditional retail, e-commerce requires a lot of unqualified employment, but its core business is based on qualified work. However, in both cases, as its activities are less dependent on physical locations, e-commerce firms may more easily outsource certain tasks and/or use non-standard employment, or even hire employees in countries or locations with cheap wages and low social security contributions or labor protection. Firms’ sales in these locations may be tiny, but the employees hired in these locations may work in other countries where sales are high but may have less favorable labor jurisdictions from the point of view of the firms’ costs. The International Labor Organization [ 53 ] reports an increasing use of non-standard employment, which is particularly significant in e-commerce firms. Some authors [ 54 , 55 ] stress that e-commerce exacerbates the usual monitoring problems for tax and labor authorities. Therefore, they are more flexible not only in terms of contracting employees in the most favorable labor locations and using them to work in other locations, but also for adjusting human resources needs to fluctuations in demand.

In most business dimensions, flexibility is a distinctive feature of e-commerce. Saini and Johnson [ 56 ] identify a significant relationship between firm flexibility and e-commerce performance. Speed of change, real-time pricing, customer interactions, and the low cost of distributing product information are important advantages and characteristics of e-commerce firms, among others [ 57 ]. E-commerce is knowledge-intensive and technology-based, creating new value through the increased number and variety of information, services, and products available to the customer. E-commerce relies more on intangibles and technological investments, which are more exposed to obsolescence, shorter lifetime periods and, consequently, higher depreciation rates. Their businesses probably require greater coordination of a wide range of activities conducted in different places, such as promotion, customer enquiries and delivery. It also requires constant innovation, the development of information systems and their integration into daily operations [ 5 ]. According to these authors, the important benefits of e-business include efficient information/knowledge sharing and data analysis, as well as working without any distance limitations. Organizational innovation and the automation of the company’s activities are also crucial features of this type of business. Their specific business model makes e-commerce firms more flexible than traditional firms. There are abundant flexibilities that come with electronic commerce [ 58 ]. Bieńkowska and Sikorski [ 59 ] argue that flexibility for applying organizational solutions, adapting to unforeseen changes, and using and reassigning resources pragmatically to adapt to changing circumstances is a key feature of e-commerce, which is required and determined by its dynamic environment. As a consequence, e-commerce firms are more prepared to adapt flexibly to changing circumstances, including a drop in activity, as well as getting rid of unused resources, if necessary.

We therefore formulate the following hypotheses:

There are no differences in variable cost behavior between e-commerce and traditional retail firms.

Fixed costs are less sticky in e-commerce firms than in traditional retail firms.

3 Model development

Based on previous studies [ 21 , 26 , 28 , 29 , 30 , 60 ], we formulate the following model to explain cost behavior:

where each observation refers to firm i in year t , β , \(\gamma\) and \(\delta\) are the parameters to be estimated, and ε is the error term, ∆log OP is the log-change in operating costs (OP), ∆log REV is the log-change in revenues, and D is a dummy indicating that revenues decrease with respect to the previous year. ECOM is our experimental variable, a dummy indicating with value one (and zero otherwise) that a given firm is coded as retail trade via the internet. CONTROLS are various control variables likely to influence LC stickiness, which have also been used in previous studies. The Appendix 2 gives a list and full description of these and all other variables.

Different OP measures are used. More precisely, we use CGS, indicating the value (at acquisition cost) of merchandise sold, with similar behavior to variable costs. We also use LC and OTHOP, with similar behavior to fixed costs, as well as considering TOP.

As mentioned, we include control variables commonly used in previous research, such as employee intensity ( EMPINT ), asset intensity ( ASSINT ), return on assets ( ROA ), indebtedness ( DEBTTA ), successive revenue decreases ( DSUC ), loss in prior year ( LOSPRY ), and dummies for firms ( FIRM ) years ( YEAR ) and countries ( COUNTRY ). The definition and calculation of these variables is shown in the Appendix 2 .

We selected the retail trade sector because it is the only industry that distinguishes between firms selling through both traditional and e-commerce channels, in the most important and common industry statistical classifications, such as the Statistical Classification of Economic Activities in the European Union, also known as the NACE (the French title Nomenclature générale des Activités économiques dans les Communautés Européennes ). The NACE code 47 (retail except of motor vehicles and motorcycles) distinguishes between firms classified as retail trade via internet (NACE code 4791) and traditional retail firms (the remaining codes in NACE code 47).

We downloaded all the available data for firms in the European AMADEUS database for the last ten years when we started the study (2010 to 2019), in the two-digit industry code 47. AMADEUS contains comprehensive information on around 21 million companies over ten years across both Western and Eastern Europe. Despite this huge number of firms, there are only 411,295 active firms with a known industrial activity code in our subscription to the database, which are the biggest firms in the different European countries.

The first download contained 210,888 firm-year observations. Table 1 shows sample details, including sample construction. A total of 158 observations with no firm identification were discarded. As is usual in empirical research on cost stickiness, to clean the sample from the exceptional effects of mergers, acquisitions and other extraordinary operations, we dropped 92,571 observations with revenue changes of 50%, either upward or downward. To prevent any likely bias from mistakes in the database, we additionally dropped 1695 observations with negative revenues or total operating costs. Considering the necessary lags and information in all our independent variables and total operating costs, our final sample consists of 83,266 firm-year observations (see Panel A in Table 1 ). However, fewer observations are available for the estimations with the different types of operating costs, as shown in the estimations displayed in Tables 4, 5, 6, 7, and 8.

We code as e-commerce any firms with NACE code 4791, and we consider all remaining firms as traditional brick-and-mortar firms. Panel B in Table 1 displays observations by year, distinguishing between e-commerce and traditional retail firms, with a total of 3445 firm-year observations for the former, a total of 4.1% of all firm-year observations in our sample, compared to the corresponding number of 79,821 in the case of traditional firms.

Panel C in Table 1 shows the number of observations by country. The highest numbers belong to firms in the biggest European countries, such as Italy, France, the United Kingdom, Russia and Spain, but Germany is underrepresented in the sample, contributing with a lower number of observations than Sweden, Belgium and Portugal.

As is common in empirical research on business, in order to avoid biased results due to influential cases, we winsorize all continuous variables at 0.5% in each tail. Table 2 displays descriptive statistics for dependent and independent variables, as well as other sample characteristics. In accordance with worldwide trends, as mentioned in the introduction, the revenues of e-commerce firms grow more than traditional firms over the period studied (see Panel B). Consequently, their costs also grow more (see Panel A). They need fewer employees and less investment in assets and, therefore, their ratios of employee and asset intensity are lower, but the difference is non-significant at p  < 0.1 in the case of asset intensity. Surprisingly, e-commerce firms are more indebted, probably because they grow more and have higher financing needs. Their profitability is lower, probably because of their higher financial expenses and growth orientation. In accordance with previous data, there is a significant association between traditional commerce (versus e-commerce) and decreasing sales in the current year and in two successive years. Moreover, the share of e-commerce firms’ observations with losses in the previous year is higher than the corresponding figure for traditional firms. Panel B in Table 1 shows these data.

Panel C in Table 1 shows additional interesting characteristics. E-commerce firms have bigger revenues and lower number of employees, and pay considerably higher wages per employee, probably because they rely more on qualified work and need less unqualified work to perform their operations. This is in line with Steinfield et al. [ 61 ], who found greater labor cost efficiencies in e-commerce in case studies in the Netherlands. The share of fixed assets is lower and also the share of depreciation costs over total operating costs. Their cost structure is different from the cost structure of traditional firms. The cost of goods sold is lower because they probably have lower acquisition costs and a more favorable product mix. Labor costs are almost 10% (1–11.26/12.42) lower on average, which is much less than the considerably lower average number of employees, at 41% (1–261.4/444.8) less than traditional retail firms. Finally, the share of other operating costs is higher because they require more coordination, support activities and research and development.

Table 3 shows Pearson correlations between the independent variables. Correlations between non-interaction variables are low (the highest value is −0.458 between DSUC and ∆log REV ), but there are some high and significant correlations between interaction variables (not displayed for the sake of simplicity), as is frequent in samples with such variables. The highest value is 0.804 between D ∙∆log REV and D ∙∆log REV DEBTTA . The highest variance inflation factors are 8.5 and 5.2 for these variables, respectively, which fall within the accepted thresholds of 5 and 10, respectively [ 62 , p. 76, and 63 , p. 409], that some authors consider indications of moderate or serious collinearity problems. As the condition index is 10.9, well below the thresholds of 15 or 30, conventionally considered to be associated with collinearity concerns or serious collinearity concerns respectively [ 64 , 65 ], collinearity is not considered likely to affect estimations.

Given the panel data structure of our data and the Hausmann tests, we run fixed-effects estimations. Dummies for firms are not displayed for the sake of simplicity. As some interesting industry effects are omitted for collinearity in fixed-effects estimations, we also run industry-year interactions with firm fixed effects and random effects controlling for dummies for industry. The Breusch-Pagan/Cook-Weisberg for heteroskedasticity and modified Wald test for groupwise heteroskedasticity indicate that our models display heteroskedasticity in most cases and, consequently, we perform estimations with robust standard errors.

Table 4 shows estimations for a reduced model of operating costs depending on ∆log REV and the interaction variable D ‧∆log REV . As expected, there is sticky behavior in TOTOP, LC and OTHOP, particularly in the two latter costs. For example, focusing on Column (1) in this table, total operating costs increased 0.955% per 1% increase in revenues, but they decreased slightly less, 0.9267% (0.955–0.0283) when revenues decreased by 1%. The sticky behavior is more pronounced for LC and OTHOP, with significant β 2 coefficients of −0.099 and −0.114 at p  < 0.01, respectively. However, CGS displays anti-sticky behavior, decreasing more when revenues decrease than they increase in the increasing trajectory: a significant (but only at p  < 0.1) positive β 2 coefficient of 0.0186. This may be explained by a changing product mix and/or the application of lower acquisition costs by suppliers in periods of decreasing activity, although that drop in sales may produce higher damaged and obsolete goods than the increase in sales, which would require inventory write-downs and, consequently, a lower decrease in costs.

Table 5 shows the results of the estimations of the full model formulated in Eq. ( 1 ). Dummies for firms and years are not shown for the sake of simplicity. All estimations show significant goodness-of-fit with R-squared overall ranging from 0.1977 to 0.8917 for other and total operating costs, respectively. There is no significant relationship (at p  < 0.1) between our experimental variable ( D ‧∆log REV ‧ ECOM ) and TOTOP, CGS and LC, thus indicating that there are no significant differences between e-commerce and traditional retail firms in the sticky behavior of costs of goods sold and labor costs. In contrast, β 3 is positive and significant (at p  < 0.01) for OTHOP, indicating that e-commerce firms are more flexible than traditional firms in adjusting other operating costs when activity decreases. Under such circumstances, they react with higher reductions to these costs and, therefore, with less sticky behavior. Consequently, these results provide support for H1, but only limited support for H2. This hypothesis is supported for OTHOP, but not for LC.

The dummy variable ECOM is removed from the regressions because of collinearity, given that panel data estimations with fixed effects remove all variables that do not change their value for individual firms over the different periods. Most control variables display the expected result. All operating costs increase less in more profitable and indebted firms, as well as in periods of losses in previous years (see the standalone variables ROA , DEBTTA and LOSPRY ). Moreover, results with the interaction variables confirm expectations about higher sticky behavior in all costs for higher asset intensity, while indebtedness and sales decrease in successive years are associated with less stickiness, also as expected, in two out of four columns. The coefficient of the interaction variable with employee intensity surprisingly displays opposite signs: negative and significant in Column (2), and positive and significant in Columns (3) and (4). The moderating effect of employee intensity on the sticky behavior of labor costs (Column (3)) can be explained in terms of the more urgent need to cut labor costs in firms with higher employee intensity.

Given that our sample includes a much larger number of traditional retail firms compared to e-commerce firms, results with the full sample might be biased by this unbalanced number of observations. Accounting and business research use propensity scores as a matching procedure to remove concerns about endogeneity affecting results [ 66 , 67 ]. We therefore use the propensity score method to produce a matched sample with a similar number of observations and characteristics in the two subsamples. For all countries with e-commerce observations and data on total operating costs, we run logistic regressions in which the dependent variable ECOM depends on size, measured as total assets, and the independent standalone variables in Eq.  1 , EMPLINT , ASSINT , ROA , DEBTTA , LOSPRY and DSUC , to obtain a one-to-one sample and avoiding firms being matched more than once. Despite differences in the results with the propensity score-matched sample for control variables, they are essentially the same with respect to our variable of interest, D ‧∆log REV ‧ ECOM , as can be seen in Table 6 . According to these results, e-commerce business does not significantly influence the asymmetric behavior of CGS and LC (see Columns (2) and (3)), but the positive significant sign of the interaction variable D ‧∆log REV ‧ ECOM in Column (4) indicates that e-commerce firms are more flexible in cutting OTHOP when activity decreases. Therefore, once again, our results support H1, and H2 is again supported by our results for OTHOP, but not for LC. ECOM is again removed for collinearity.

To avoid concerns about cross-sectional correlation, we perform Fama–MacBeth estimations. The results, shown in Table 7 , provide reinforced results for our experimental variable. While there are no significant coefficients for CGS and LC for the whole and propensity-matched samples (see Columns 1, 2, 4 and 5), the coefficient is positive and significant for OTHOP in both samples (see Columns (3) and (6)). As the Fama–MacBeth procedure performs cross-section estimations by year, the dummy variable is now not removed because of collinearity.

Fixed-effects estimation does not allow us to control for country, given that the necessary dummies used are excluded for collinearity. To rule out any possibility that specific country characteristics would distort our results, we perform fixed-effects estimations, including interaction variables with dummies for year and country, and results (not tabulated) are similar for our experimental variable in the full and propensity score-matched samples: significant positive coefficient for OTHOP (at p  < 0.01 and p  < 0.1 for the full and matched sample, respectively) and non-significant coefficients for CGS and LC, with the exception of a negative and significant (at p  < 0.1) coefficient for CGS in the matched sample. We additionally run random-effects estimations, adding dummies for countries at Eq.  1 and, again, results (not tabulated for simplicity) are similar with respect to our variable of interest: non-significant (at p  < 0.1) coefficients for CGS and LC in all samples, and significant positive coefficients for OTHOP in the full and matched sample (at p  < 0.01 and p  < 0.1 respectively).

Some of the few empirical studies on LC stickiness attribute the asymmetric LC behavior to hiring and firing costs mandated by the employment protection legislation (EPL). Banker et al. [ 68 ] find that costs associated with firing workers, measured through the OECD indicators of EPL, are associated with cost stickiness. Golden et al. [ 69 ] find that the share of skilled labor is associated with greater operating cost asymmetry, and assume that this is caused by the higher costs of firing, searching and selection of skilled versus non-skilled employees. Dierynck et al. [ 26 ] find differences between the LC behavior of blue- and white-collar employees, which they attribute to the differences in their dismissal costs. Prabowo et al. [ 29 ] find a positive relationship between stringent labor dismissal and LC stickiness, also using OECD country-level indicators of labor dismissal.

Addressing these previous concerns, in order to relieve endogeneity issues due to omitted variables, which may bias our results for LC, we conduct additional analyses including variables about different types of employees and country level of employment protection. We approach these through LC per employee ( LCNEMPL ) and the available EPL scores of the different countries and years on the OECD website, Footnote 1 variable EPL . Higher EPL values mean more stringent labor laws and, therefore, higher levels of protection and lower levels of firm flexibility. We include these standalone variables, and the corresponding interactions to assess their specific influence in LC stickiness ( D ‧∆log REV ‧ LCNEMPL and D ‧∆log REV ‧ EPL ), and the influence of e-commerce in this specific stickiness ( D ‧∆log REV ‧ LCNEMPL ‧ ECOM and D ‧∆log REV ‧ EPL ‧ ECOM ).

Table 8 shows the results of the corresponding estimations for the whole and propensity score-matched samples. The number of observations is slightly lower than in previous tables because of the lack of EPL scores for some countries and years. The coefficients of the standalone variables display positive and significant signs for LCNEMPL in all cases and negative signs for EPL , and significant for the full sample. The negative coefficients of the interaction variables D ‧∆log REV ‧ LCNEMPL and D ‧∆log REV ‧ EPL are also negative in all cases, as expected and in line with previous studies (higher stickiness for highest salaries and for more protective labor legislations), but significant only for the full sample. The important point for the purpose of our study is that e-commerce does not significantly affect the stickiness of labor costs, neither controlling for these factors nor moderating or stressing the sticky influence of these factors. Again, our results fail to provide support for H2 when the dependent variable is LC .

As mentioned, the descriptive statistics in Table 2 reveal that traditional retail firms bear lower labor costs per employee. These employees are exposed to higher risk of being dismissed, because the costs associated with firing are lower. Consequently, the labor cost stickiness of traditional firms should be higher. The similar pattern exhibited by e-commerce and traditional firms in our results may be indirect evidence of a different relationship influenced by e-commerce, but hindered by these biased characteristics in our sample. To rule out this possibility, we split the sample into labor costs per employee above and below the median and, once again, the results (not tabulated for the purposes of simplicity) provide no significant signs for the coefficients of our experimental variable, reinforcing the previous results indicating no influence of e-commerce in the asymmetric behavior of labor costs.

6 Discussion and conclusions

This study analyzes the relationship between e-commerce and asymmetric cost behavior, using an international sample of European retail firms. We find no specific influence of e-commerce on CGS, as hypothesized in H1, given that they are automatically recorded in the profit and loss statement, independently of the type of business. They display slightly anti-sticky behavior, probably caused by a different product mix or lower acquisition costs in periods of decreasing sales. However, we find no differences in the asymmetric cost behavior between e-commerce and traditional retail firms.

Our results show empirical evidence of more flexible OTHOP behavior in e-commerce firms than in traditional retail firms. The former apply greater cuts in OTHOP than traditional firms do when activity decreases. Along the same lines, e-commerce firms seem to be more capable of adjusting resources in unfavorable conditions, which is probably part of a wider ability to adapt to new circumstances. E-commerce is a recent form of business that, in its inception, is knowledge based. The internet environment in which e-commerce is conducted is fully involved in recording and generating information. It is agile in producing information on business development and requiring urgent feedback and responses. It is also technology based. The obsolescence risks involved in terms of technology requirements and business setting are more demanding in e-commerce than in traditional business. Altogether, this generates a more dynamic pace to adapt to new circumstances, which, in turn, accelerates the speed of pragmatic resource adjustment. Our empirical evidence suggests more flexible use of other operational resources in e-commerce than in traditional firms. E-commerce is not only a different business model, but also a more flexible way of doing business, that adds greater economic efficiency.

We find no empirical evidence of differences in the asymmetric behavior of LC. Contrary to expectations, e-commerce firms do not exhibit higher cuts in labor costs when activity decreases than traditional retail firms.

These results are robust to different estimation methods and additional analyses. They persistently show that e-commerce is a more flexible and efficient model of doing business that creates higher quality and better paid employment, which are well-known advantages of e-commerce. However, e-commerce does not affect employment stability. There is no difference in the flexibility of LC adjustment when activity decreases. There is no disadvantage of e-commerce on the side of employment precariousness. Our results do not provide evidence that e-commerce produces more negative effects for workers and employees than traditional business. The higher flexibility of e-commerce firms is based on the pool of other operating costs, which account for a substantially higher share of total operating costs in e-commerce firms in comparison to traditional retail firms. In this respect, e-commerce provides overall positive synergies to the economy and society. It creates qualified jobs with higher wages than traditional retail, and with no additional exposure to uncertainty for employees.

Previous research has distinguished advantages of brick and mortar with respect to e-commerce in many fundamental business aspects, which we have not analyzed in this study. Some authors find that e-commerce heightens the trend of precarious work, placing stress on labor control and triggering the loss of labor rights [ 9 , 70 , 71 , 72 ] (see Panel B in the Appendix 1 ). Other studies find higher tax avoidance behavior of e-commerce than traditional retail firms [ 7 , 73 ]. The environmental implications of e-commerce and traditional retail is controversial and the optimal balance of advantages and drawbacks of both retail channels depends on some contextual factors and cost conditions [ 74 , 75 , 76 ]. Moreover, Zhang et al. [ 77 ] report the following advantages of traditional retail for consumers: quality guarantee of goods, real shopping experiences such as the fitting service, exchange and return services, buy and get instantly, and problem avoidance during delivery. Therefore, despite the more flexible behavior of some operating costs in e-commerce firms, the brick-and-mortar stores have their own advantages and cannot be completely displaced. The traditional retail is viable and advantageous under certain conditions, and dual channel is a plausible and optimal alternative in many cases.

The technological characteristics of e-commerce and the fact that it does not depend on physical presence generate a favorable opportunity for the use of non-standard forms of employment, and for applying more LC cuts and discretionary dismissals. However, our empirical evidence suggests that e-commerce does not apply these adverse labor practices for employees. Other possible detrimental effects of e-commerce, such as for example for consumers and the environment have not been analyzed in this study, and they may deserve future analyses.

Our results have implications for scholars studying cost behavior and resource management of electronic commerce, as to the authors’ knowledge it is the first to analyze the comparative resource adjustment behavior of electronic commerce versus traditional businesses. It is also of interest for practitioners, to whom it offers an assessment, grounded in empirical evidence from a big and wide sample, on the potential advantages of converting their business form traditional to e-commerce. It is also of interest for employees assessing the potential drawbacks and advantages of working in the digital versus traditional economy.

We have analyzed costs as they are registered by e-commerce firms in their accounting records, but there might be more non-standard employment recorded as non-labor costs in e-commerce than in traditional firms, which may bias our results. The topic requires future in-depth analysis of labor cost behavior and the different constituents of other operating costs in e-commerce businesses. Moreover, there is no available information on the percentage of sales performed via internet in retail firms. Most traditional retail firms also sell via the internet, but we assess the flexibility of e-commerce through a rough distinction between firms selling exclusively via the internet and other firms, which usually sell both, via internet and brick-and-mortar stores. This is an additional limitation of our research. It would be useful to perform further research using the more refined measure of the percentage of retail sales via the internet, a data that to our knowledge it is not available at firm level for a sample big enough to perform the analysis.

See https://www.oecd.org/employment/emp/oecdindicatorsofemploymentprotection.htm for data and http://www.oecd.org/employment/emp/38940931.pdf for details on the methodology and aggregated scores.

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Argilés-Bosch, J.M., Garcia-Blandón, J. & Ravenda, D. Cost behavior in e-commerce firms. Electron Commer Res 23 , 2101–2134 (2023). https://doi.org/10.1007/s10660-021-09528-2

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Supply chain cost research: a bibliometric mapping perspective

Benchmarking: An International Journal

ISSN : 1463-5771

Article publication date: 7 September 2020

Issue publication date: 29 March 2021

The purpose of this paper is to review the literature on logistics and supply chain costs to provide an analysis of sources of publication, citations and authorship using bibliometric analysis techniques (VOSviewer and CitNetExplorer tools).

Design/methodology/approach

A review of 756 articles published during the period 2014 to 2019 referenced in the Scopus database was performed. The review was limited to articles published in English and directly related to logistics and supply chain costs.

The research identified more than 2,000 authors representing more than 5,000 keywords and 10,000 references from a total of 155 journals investigated. A critical synthesis of the resulting data revealed several insights about various aspects of studies in this field. For instance, the review identified a scarcity of academic publications in three key areas, namely “supply chain,” “optimization” and “transportation”, which are concepts focused on the total supply chain.

Originality/value

This research highlights important areas of attention for both researchers and practitioners considering costs associated with logistics and supply chain operations and strategies. The results can also help identify thematic areas, journals and topics for future research. The paper identifies and proposes research areas to contribute to the literature when challenges to investigating logistics and supply chain costs are discussed.

• Supply chain
• Bibliometric analysis
• CitNetExplorer

Ramos, E. , Dien, S. , Gonzales, A. , Chavez, M. and Hazen, B. (2021), "Supply chain cost research: a bibliometric mapping perspective", Benchmarking: An International Journal , Vol. 28 No. 3, pp. 1083-1100. https://doi.org/10.1108/BIJ-02-2020-0079

Emerald Publishing Limited

Copyright © 2020, Edgar Ramos, Steven Dien, Abel Gonzales, Melissa Chavez and Ben Hazen

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

1. Introduction

Supply chain management (SCM) is considered as the coordination of material, information and financial flows within internal and external aspects of a firm's operations, in the different processes involved in adding value to the end customer ( Pettersson and Segerstedt, 2013 ; Prajogo et al. , 2016 ). Most organisations want their supply chain to be profitable, i.e. they want profits or costs to go hand in hand with the uncertainty of demand ( Mangal and Gupta, 2015 ). Also, managing the total cost of sourcing, manufacturing, delivery and logistics of products is a key element in providing a competitive advantage ( Whicker et al. , 2009 ). A simulation study revealed valuable managerial insights regarding how demand and cost uncertainty affects the profits, the risks as well as the global outsourcing and quick-production decisions of supply chain firms under competition ( Liu and Nagurney, 2013 ). Also, companies are considering aspects such as economic management to integrate sustainability into their SCM. Even though a chain can only be formed when a win–win situation and profitability maximisation for all members is established, is difficult since some benefits of joining the chain are difficult to quantify in monetary terms ( Chiadamrong and Wajcharapornjinda, 2012 ). Usually, the risks with a low probability of occurrence are the ones that lead to high costs ( Alsobhi et al. , 2018 ). It is crucial to know the risks presented in SCM, and these risks can be defined as any factors that result in interruptions in the flow of materials, information and funds in a supply chain that result in undesirable consequences and vulnerability ( Vishnu et al. , 2019 ). Weskamp et al. (2018) highlighted various risks, including the risk of increasing the costs involved, since many companies aiming to propose strategies that increase the chances of success also significantly increase their costs. There are four common cost categories applied to logistics cost structure such as transportation, cargo handling, warehousing, inventory and logistics administration that must be taken into account for calculation ( Rybakov, 2017 ).

Several authors have investigated cost-related issues in the supply chain. For instance, Seuring and Muller (2008) stated that possible cost reductions had increased attention on implementation, legislative and environmental problems. Chen and Notteboom (2014) discussed the importance of value-added logistics services in cost terms to the supply chain. Hafezalkotob and Khalili-Damghani (2015) sought to minimise logistic costs and maximise service level in a three-echelon multi-product supply chain. Lihua Chen et al. (2018) developed a cost-based decision model is presented for determining integrated decisions involving capacity management and delivery performance. Hu et al. (2019) determined who should invest in reducing cost in a supply chain consisting of one manufacturer and one retailer. Hames et al. (2019) analysed reverse logistics by calculating the costs of all specific activities in advance. Also, in recent years academics have addressed specific issues such as risk management ( Vishnu et al. , 2019 ), resiliency ( Datta, 2016 ) and supplier management ( Xiao et al. , 2020 ). The studies mentioned above provide relevant information on costs through structured theories and their classification for future research topics.

In recent years additional analyses have been used to help identify the various emerging areas of research, bibliometric and network analyses are examples of it ( Ferreira et al. , 2014 ). The bibliometrics analysis is a meta-analytical research tool ( Saha et al. , 2020 ). Bibliometric analysis related to supply chain costs will provide an overview in this area from the field of library and information science ( Merigó and Yang, 2017 ). It often utilises information system tools to conduct a comprehensive search of relevant articles that appear in multiple databases and quantitative methods ( Wang et al. , 2017 ). Besides, it is considered that citations and co-citation analysis can provide objectively quantitative data and can be presented visually ( Shiau and Dwivedi, 2013 ).

reviews the literature on logistics costs and SCM;

provides a complete overview of the field through the use of bibliometric and network analysis techniques; through the evaluation of 286 articles published in the last five years through the identification of main authors, countries and key research topics;

retrieves and compares the most influential works based on quotes and page ranks.

In this investigation, bibliometric information system tools were used to review the publications in logistics and SCM thoroughly. The results of this study provide additional information on the most influential journals, authors, interrelations, keywords and thematic trends according to the information found in papers in this field ( Ferreira et al. , 2014 ; Merigó and Yang, 2017 ; Ozkose and Gencer, 2017 ). In addition, it provides established and emerging research areas that encourage academics to complement and expand research on total cost, logistics costs and SCM ( Whicker et al. , 2009 ).

The first section reviews the literature on logistics costs in SCM. Then the second section presents the research methodology. The third section presents an exhaustive analysis using rigorous bibliometric tools, which is followed by a discussion of the results. The final section presents the conclusions, limitations and future research directions.

2. Literature review on logistics costs and SCM

This section analyses logistics costs and their relation to SCM followed by details of the tools utilised for the analysis.

2.1 Approaches to logistics costs

Voordijk (2010) referred to the logistics costs of a supply chain as those involved in the management and storage of inventories, transportation and those incurred for physical distribution. Logistics costs are the result of the process that begins with the supply of the raw material and ends with the delivery of the product(s) to the customer, and this involves the main logistics operations such as supply, physical conversion and distribution ( Rybakov, 2017 ). Silva et al. (2014) also included an after-sales service into logistics costs. However, Havenga (2010) stated that logistics costs comprise only the cost of transportation, storage management and administration. Weiyi and Luming (2009) posited that logistics costs explicitly cover acquisition, transportation, delivery, purchase, volume and packaging costs while implicit costs cover maintenance of the inventories, opportunity, interests, service goods and the additional cost of the logistics services for an erroneous logistics operation. Jena and Seth (2016) separated cost into controllable (performance efficiency, planning transportation, the effectiveness of predicting the demand, information exchange within an organisation) and non-controllable factors (macroeconomic factors such as oil prices).

Table 1 showcases the different appliances of logistics costs in the industry, including measuring and managing them.

It is important to understand that a process structure of a company defines the cost structure, too; this cost structure defines a set of cost elements of an optimisation model ( Ilin and Anisiforov, 2014 ). While taking into consideration that better logistics service entails higher logistics costs, Jeffery et al. (2008) developed an approach for determining inventory levels that result in a minimum cost customer service level. Hafezalkotob and Khalili-Damghani (2015) conclude that the most significant indicators of logistics service are: order cycle time and order fill rate.

2.2 Helpful tools for logistics costs management

Specific tools have been developed to improve the visibility of logistics costs focused on three different aspects: cost, customer and product. To improve the accuracy of cost analysis in a supply chain, Chiadamrong and Wajcharapornjinda (2012) introduced a cost-reducing activity that they termed activity-based costing (ABC). ABC seeks to improve the monitoring of costs for individual products or customers ( Bastl et al. , 2010 ; Christopher and Holweg, 2011 ; Silva et al. , 2014 ). It consists of a two-step procedure; first resource costs are allocated to activities and then costs are allocated to cost objects by cost drivers ( Hofmann and Bosshard, 2017 ). Selection of the activity cost drivers (namely, transaction, duration and intensity drivers) reflects a subjective trade-off between accuracy and the cost of measurement ( Somapa et al. , 2012 ). Besides, ABC can be used in the place of traditional methods, since it can provide better logistic management than the others ( Pettersson and Segerstedt, 2013 ). The traditional accounting system is function-oriented and not process-oriented, with cost captured at a level of aggregation too high with more difficulties to identify the right cost ( Hofmann and Bosshard, 2017 ).

2.3 Logistics costs and SCM

The key to success and to stay competitive in today's global marketplace is to reduce the total cost to its lowest level and to eliminate waste in all units of a company ( Manzouri et al. , 2014 ). Logistics are considered an essential channel of customer satisfaction, cost-effectiveness and optimum utilisation of resource in an organisation ( Mangla et al. , 2017 ). Also, it is beneficial for organisations to have a set of efficient tools to reduce costs and waste, to provide an effective service for customer demand and to understand their system behaviour ( Carvalho et al. , 2017 ; Singh and Pandey, 2019 ).

Since logistics costs must have a direct relationship with other cost categories, they must be managed following the precepts of integrated logistics, globally observing the economic performance of the organisation and complying with the level of service established for customers. Chiadamrong and Wajcharapornjinda (2012) classified costs and proposed a model to quantify them throughout the supply chain in which the coordination of the supply chain must be considered, trust must be built in the chain and order and production variability must be reduced to avoid forecasting errors. Table 2 presents illustrative papers that the impact of costs across the supply chain has been applied through many perspectives.

The great dilemma about the total logistic costs is visibility since the costs incurred in the logistic processes are incorporated in many financial statements, it faces difficulties in identifying costs is the way in which they are classified and enumerated in the balance by the companies ( Silva et al. , 2014 ). These difficulties would lead companies to not being able to quantify the hidden benefits and savings of their supply chains ( Chiadamrong and Wajcharapornjinda, 2012 ). It is essential to develop a system for logistics costs aligned with the demand and inventory management of the supply chain so that it would be helpful in the decision-making process ( Mangal and Kumar Gupta, 2015 ). The processes of measurement, accumulation and appropriation of costs do not have to comply with legal precepts or generally accepted accounting principles ( Ying et al. , 2018 ). Notably, the measurement of logistics costs is essential in improving the management of supply chain costs.

3. Research methodology

One must understand the area of interest on which the study will focus to initiate the investigation. Also, researchers must stay informed through a periodic review of the changes in the research topic, since these vary with the discovery of new technologies and trends for the different branches of the industry. Although it is a time-consuming task, it ensures that the researcher does not miss any new development, while also helping to identify weaknesses and future opportunities in the field of supply chain costs ( González-Benito et al. , 2013 ).

Structured reviews of the literature should be carried out ideally through a process of defining appropriate keywords, searching for relevant texts and completing the analysis. Figure 1 provides a general description of the literature review describing its steps, objectives, adopted methods, tools and software used.

As part of the methodological review, it was considered convenient to use the Scopus database as it offers a global vision of research knowledge with intelligent tools to segment, evaluate and select articles according to search criteria relevant to the topic. Besides, it has a complete database that covers various publishers such as Elsevier, Springer, InderScience, Taylor & Francis, Emerald and IEEE, among others.

The period considered was from 2014 to 2019, and it was ensured that the title and summary contained the main keywords “logistics costs” and “supply chain”. Besides, using Boolean operators, secondary keywords such as “optimization” and “transportation” were included. The authors excluded any article written with similar ideas, but that did not directly address the perspective of logistics costs or supply chain costs, such as “biofuels”, “bioenergy”, “bioproducts”, etc. The results of the initial search for articles about logistics costs in the supply chain for the period 2014–2019 yielded 1,815 articles, of which 202 articles (11.2%) were related to “optimization” and 162 (8.93%) were related to “transportation” (see Table 1 ).

Relationships between the main and secondary keywords, the only articles that were taken into consideration were the ones in their final version published in academic journals and written in the English language (see Table 2 ).

A detailed inspection of the 1,815 articles yielded by the initial search (see Table 1 ) articles revealed the duplication of some articles in the counts. Duplication happened due to common keywords between two or more search iterations such as “optimization” with “logistics costs and supply chain” and “transportation” with “logistics costs and supply chain”, among others. Also, it was noted that the number of publications reflected against the main author was also replicated in the co-authors' publication count.

Therefore, the results of the search were further refined to extract unique articles and thus avoid redundancies or duplications. Also, more limitations were established in the search queries to limit results to articles with the exact keywords and to incorporate the considerations mentioned above for Table 2 . The results of this refined search are shown in Table 3 .

3.1 Analysis of statistical data

Once the database was segmented (see Table 3 ), a statistical analysis of the 756 articles obtained was carried out to identify trends, journals, authors and the years in which they were published (2014–2019). Figure 2 shows the distribution of articles by the year and by journal throughout the study period. The publication year analysis of all the articles shows that the Journal of Cleaner Production had the largest number of articles (33), representing 4% of the total. However, other journals were also influential on a minor degree, including the International Journal of Production Economics (29), Computers and Industrial Engineering (25), the International Journal of Production Research (24) and the European Journal of Operational Research (20).

An analysis of each author contribution concerning the articles they were involved with is provided in Figure 3 since it is valuable to evaluate their importance. W. Liu had the most articles published on the subject (eight), followed by M. Jaber, D. Connor and V. Lukinskiy (six each). It should be noted that, for this analysis, the minimum number of articles per author considered was three.

3.2 Bibliometric analysis

This study used the software tools VOSviewer ( Van Eck and Waltman, 2010 ) and CitNetExplorer ( Van Eck and Waltman, 2017 ) for the bibliometric analysis (citation and co-citation analysis). Both tools are packages of analysis and visualisation software that help to reveal important finding on a topic and its evolution.

The authors collected and analysed data from the main collection of Scopus and collected all articles from academic journals that were published between 2014 and 2019 and that contained the search terms “logistics costs”, “supply chain”, “optimisation”, “transportation” and “bibliometric analysis” in any of the keyword, title or summary fields. As stated, the sample was limited to articles published in English, in the final form, in academic journals. The search yielded 756 articles, representing more than 2,000 authors, more than 5,000 keywords and more than 10,000 references. Figure 4 shows the relationship between the “keywords” based on the number of references they share. In contrast, Figure 5 shows the relationship between journals (but as a density display rather than a network).

Figure 6 presents a timeline of the publication citations network from 2014 to 2019, where each circle represents a publication and each colour a group of publications. It also shows the relationship between publications that cover the same topic. Although Figure 4 uses the same database, Figure 6 shows how authors' different publications have been cited over time.

4. Results and discussion

Thanks to the analysis carried out using the VOSviewer and CitNetExplorer bibliometric tools, it was possible to obtain keywords that were considered relevant to finding the most pertinent information for the present investigation. In the case of keywords, the type of analysis was co-occurrence, where the unit of analysis was “all keywords” and the quantitative method was “full counting”. Table 4 shows the main 11 keywords (out of a total of 148) and their occurrences.

It was also possible to obtain the leading journals where the most significant number of publications relevant to the present research is concentrated. Here, the type of analysis used was co-citation, where the unit of analysis was “cited sources” and the quantitative method was “full counting”. The leading 15 journals (out of a total of 155) and their respective citations are shown in Table 5 .

Concerning the authors who had greater participation in the research regarding the number of co-citations, the type of analysis performed was “co-authorship”, where the unit of analysis was “authors” and the quantitative method was “full counting.” Table 6 shows the relevance of the ten authors with the highest number of citations that have contributed to the research (see Tables 7 and 8 for additional details).

4.1 Implications for research

The findings showcase the different dimensions related to supply chain cost, revealing new field studies in the subject and their connection to logistics and supply chain cost. The bibliometric analysis presents the principal authors, context and journals that are critical to the state-of-art understanding around the discussed topic.

This bibliometric paper enables researches to identify research areas to be recognized within the one structure and connections regarding the cost in the supply chain, transportation and optimization, for example. In terms of research, this structure, before mentioned in the bibliometric analysis, determines the scope of the study and identify some gaps in cost supply chain studies.

This investigation could be used in future research to understand the key supply chain cost metrics and other operational supply chain management themes and identify potential operational processes where the total cost supply chain needs to be measured from a supply chain perspective or across different disciplines.

4.2 Implications for practice

The present study indicates that organizations face the challenge of quantifying supply chain cost–benefit and improving the visibility of logistics cost. The results of the bibliometric analysis indicate that supply chain cost is primarily related to “optimization” and “transportation.” Hence, management strategies have to focus on identifying supply chain cost-efficiency across those fields.

This investigation reveals the cost supply chain areas, topics and the connections that are critical for managing in the supply chain and shows the relations and potential consequences for the managers. That is, this study supports managers' assessment of costs by mentioning the ABC costing to improve and monitor the costs for individual products or customers. Besides, it offers the empirical foundation through previous studies on logistics cost and supply chain.

Finally, the study attempts to show the structure and understanding of the concept of supply chain costs, which can help guide practitioners to develop and implement supply chain strategies to reduce total costs and minimize waste in the supply chain. Consequently, the understanding of key factors for managing the supply chain costs regarding optimization and transportation areas of their businesses will help when making critical cost–benefit decisions to gain positive results at the company and supply chain level.

4.3 Limitations

There are some study limitations important to mention. One of the primary limitations is related to the selected database. Since only Scopus was used, other published materials available elsewhere might have been missed. Different types of publications, such as proceedings papers, books and theses were not investigated to contribute to this bibliometric study. Also, the clustering that resulted from the co-citation analysis will only bring out the most common elements and enhance some ideas and concepts, other useful or essential publications may have been ignored. There is additional knowledge that could be gained from other dimensions of analysis, such as co-occurrence analysis or bibliographic coupling; however, these analyses were not central to this study, and thus reporting these results would be of limited value.

5. Conclusions

A wide range of crucial data has been detailed and utilised, based on the analysis of publications and citations, using statistical analysis and bibliometric mapping. The current state of research has been evaluated by examining the methods, areas, level of research and the design of the same with contributions, main theories and tools/software ( Zhang et al. , 2013 ). Also, a critical synthesis of the resulting data has revealed impressive knowledge about various aspects of the study, as explained below.

5.1 Research knowledge on “optimisation” and “transportation” in the supply chain

The initial statistical data on the search results related to logistics costs, after refinement and the use of Boolean operators, yielded 756 complete articles related to optimisation and transportation in the supply chain (see Table 3 ). Besides, the research clearly shows that the concepts of optimisation (202 articles) and transport (162 articles) are very influential since together they add up to 364 articles, which represents almost half of the database (48.14%).

5.2 Publications in journals and citations

The analysis of the main articles in logistics costs in the supply chain research indicates that the more significant number of citations were published in five esteemed journals, the Journal of Cleaner Production and the International Journal of Production Economics , followed by Computers and Industrial Engineering , the International Journal of Production Research and the European Journal of Operational Research . It should be noted that these journals accounted for 131 articles, which represents 17.32% of the total.

5.3 Analysis of the influence of authors and citations

It was observed from the bibliometric analysis that authors such as Weihua Liu (eight papers) from the University of Taijin, China and Shawn Brown (six papers) from the Technological University of Montreal, Canada, have contributed the most articles on logistics costs in the supply chain.

In the case of optimisation studies, authors such as Nidhal Rezg (four papers) from the University of Lorraine, and Eric Ballot (three papers) from the Scientific Management Centre, both in France, had most articles with a high number of citations. In the case of transport studies based on the logistics costs approach, Mohamad Jaber from the University of Ryerson in Toronto, Canada, had the most papers (five) related to the subject. In contrast, Cathy Macharis from Brussels University, Belgium, had four. Reputable database repositories such as Scopus provide enough resources of quality publications in various thematic areas to provide researchers and professionals with online access to the existing body of knowledge. Bibliometric studies are a useful method to understand and explore the status and quality of work done by previous researchers through the analysis of publications and citations, which provides a comprehensive overview.

This paper will help researchers and practitioners dealing with supply chain strategies to perceive the scarcity of academic research and publications in the three key areas, namely “supply chain”, “optimisation” and “transportation”, which are concepts focused on the total supply chain. The results of this bibliometric analysis can also help identify thematic areas, journals and topics to aid the exploration of new opportunities for future research. This study is, however, limited in the way the research method was structured; the results can also be viewed from multiple perspectives.

The inclusion of additional keywords in the search criteria could generate a broader range of articles; however, this would require more sophisticated or innovative bibliometric and network tools. This study utilised VOSviewer and CitNetExplorer software to map the bibliometric statistical results and to generate the most dynamic and understandable overview possible. The illustrated methodology can be used as a guide for developing a reliable supply chain system plan with the lowest possible costs ( Daehy et al. , 2019 ).

Finally, the results of the citation analysis show that coordination is a dominant theme, especially in a research community more oriented to the science of administration. Besides, the results of this study indicate that strategic management accounting practices have a significant positive relationship with the supply chain results and that supply chain results have a significant positive relationship with the profitability of logistics companies ( Meiwanto and Apollo, 2019 ). Citation networks show that there are research flows that are related to empirical problems of collaboration/cooperation in the supply chain or problems of coordination in the formal and analytical supply chain. Importantly, having the capacity to improve the value for the customer and, at the same time, looking for opportunities to reduce costs, opens new frontiers for managing the supply chain.

Steps, objectives, methods, tools and programs/software

Articles per year by journal

Distribution of the papers per author

Keyword matching (elaborated with VOSviewer)

Density visualisation of journals (elaborated with VOSviewer)

Citation network of publications (elaborated with CitNetExplorer)

Representative logistics cost-related articles

Representative cost and supply chain-related articles

Publications in logistics costs on optimisation and transportation in the supply chain

Relationship of journals and their co-citations

Top ten authors: the relationship between author, number of articles, co-citation, country and institution

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Further reading

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