Proprietary Information Networks and the Scope of the Firm:
the Case of International Courier and Small Package Services in Japan
Tetsuo Wada*
Institute for Posts and Telecommunications Policy
Ministry of Posts and Telecommunications
1-6-19 Azabudai, Minatoku
Tokyo 106-8798 Japan
wada@haas.berkeley.edu
Jack A. Nickerson
John M. Olin School of Business
Washington University in St. Louis
Campus Box 1133
One Brookings Drive
St. Louis, MO 63130-4899
nickerson@wuolin.wustl.edu
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Presented at the 6th Conference on Postal and Delivery Economics
Montreux, Switzerland, June 17-20, 1998
* Please direct correspondence to Tetsuo Wada. The authors would like thank Sid Chib for comments and assistance that greatly improved the paper. Additionally, the authors wish to thank Yuzo Fujimoto for research assistance.
Abstract
This paper empirically tests the determinants of vertical integration in the Japanese international courier and small package (IC&SP) industry, based on a transaction cost economics (TCE) theory. Probit analyses utilizing 995 individual parcels shipped from Japan through 14 IC&SP carriers support the proposition that vertical integration in each transportation segment (i.e., domestic trucking, international air, and foreign trucking) is in response to specific investments in proprietary information networks used to track parcels in real-time. The analyses also imply that vertical integration offers a time-saving coordination advantage over spot market contract for the transportation of documents, which are lighter in weight, larger in number, and typically more time sensitive than small packages and other air freight.
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1. Introduction
2. International courier and small package service in Japan
3. Prior literature
4. Hypothesis
5. Data and econometric method
6. Results and Discussion
7. Conclusion
MB>Bibliography
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Table 1: JAFA IC&SP Subgroup Member Firms
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Airborne Express Japan, Inc.*
BAX Global Japan K.K.*
DHL Japan, Inc.*
Emery Air Freight Japan Corp.
Federal Express Japan K.K.*
TNT Express Worldwide (Japan) Inc.*
UPS Yamato Co., Ltd.*
Fukuyama Transporting Co., Ltd.*
Hankyu Express International Co. Ltd.*
Japan Schenker Co. Ltd.*
JNE Corporation
Keihin Air Service
Kintetsu World Express. Inc.
"K" Line Air Service, Ltd.
Maruzen Air Express International Ltd.
Nippon Courier Service Co., Ltd.*
Nippon Express Co., Ltd.*
Nishi-Nippon Railroad, Co. Ltd.
Nissin - Nissin Air Cargo Co., Ltd.*
Onboard Courier Express Inc.
Overseas Courier Service Co. ,Ltd.*
Pegasus Parcel Service Co., Ltd.
Proco Air Service Inc.
Seino Transportation Ltd.
Tokyu Air Cargo Co. Ltd.
World Courier K.K.
Yusen Air & Sea Service Co., Ltd.*
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*Firms with asterisk provided us package-level data, or for which
we collect data by test package or from shippers.
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Table 2: Descriptive Statistics* | | Variable | Mean | Std Dev | Min. | Max. | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
1 | DomTrk | 0.728 | 0.445 | 0 | 1 | |
2 | IntAir | 0.407 | 0.492 | 0 | 1 | 0.332 | |
3 | ForTrk | 0.673 | 0.469 | 0 | 1 | -0.115 | 0.401 | |
4 | kDomTrk | 4.111 | 2.518 | 0 | 7 | 0.361 | 0.604 | 0.229 | |
5 | kIntAir | 4.428 | 2.106 | 0 | 8 | -0.478 | 0.133 | 0.327 | 0.373 | |
6 | kForTrk | 5.089 | 2.186 | 0 | 7 | -0.029 | 0.445 | 0.435 | 0.668 | 0.602 | |
7 | Doc | 0.682 | 0.466 | 0 | 1 | 0.060 | 0.305 | 0.304 | 0.293 | 0.169 | 0.478 | |
8 | JCities | 0.928 | 0.258 | 0<.TD> | 1 | -0.099 | 0.209 | 0.231 | 0.071 | 0.141 | 0.263 | 0.261 |
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9 | FinCities | 0.623 | 0.485 | 0 | 1 | -0.074 | -0.082 | 0.082 | -0.112 | -0.071 | -0.083 | 0.044 | 0.141 | |
10 | MarkSize | 0.109 | 0.079 | 0.001 | 0.198 | -0.119 | -0.005 | 0.112 | -0.076 | 0.026 | -0.007 | 0.009 | 0.048 | 0.379 |
*Correlations greater than 0.071 are significant at the 0.05 level: N = 742 |
Table 3: Probit Results |
| Control Variables | Control and Independent Variables |
| DomTrk | IntAir | ForTrk | DomTrk | IntAir | ForTrk |
C | 0.973 ** | -1.044** | -0.318** | 0.385** | -1.274** | -1.153 ** |
kDomTrk | | 0.213** | |
kIntAir | | | 0.062** | |
kForTrk | | | 0.203** |
Doc | 0.709** | 1.210** | 0.902** | 0.378** | 1.156 ** | 0.572** |
JCities | -1.032** | | -1.000** | |
FinCities | | -0.328** | 0.071 | | -0.319** | 0.139 |
MarkSize | | 0.531 | 0.996 | | 0.399 | 0.836 |
LogLikelihood | -540.85 | -493.46 | -488.27 | -469.34 | -488.87 | -449.33 |
Correctly predicted | 67.7% | 68.7% | 69.0% | 72.3% | 64.0% | 69.4% |
R2 | 0.062 | 0.169 | 0.090 | 0.201 | 0.147 | 0.157 |
N | 903 | 902 | 822 | 896 | 893 | 815 |
**99% one-tail confidence interval.
Package-level Survey
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Variable | Questions |
kDomTrk |
Q1 Whether not the package has been picked up
Q2 Name of the pick-up driver
Q3 Time of pick-up
Q4 Place of pick-up
Q5 Whether or not the package arrives at the local terminal
Q6 Time of local terminal arrival
Q7 Name of local terminal
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Customs Clearance Information |
Q8 Whether or not customs are cleared
Q9 The time of customs clearance
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kIntAir |
Q10 Whether or not the package was loaded onto an airplane
Q11 The loading time
Q12 Whether or not the airplane departed
Q13 The departure time
Q14 The city the airplane departed from
Q15 The cities that the package visits during the airline transit
Q16 Whether or not the airplane landed at the destination airport
Q17 Time of arrival
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Customs Clearance Information
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Q18 Whether or not customs in the destination country has been cleared
Q19 The time of customs clearance
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kForTrk
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Q20 Whether or not the delivery truck departed from the local terminal
Q21 The time the delivery truck departed from the local terminal
Q22 Name of the local delivery terminal
Q23 Whether or not the parcel has been delivered
Q24 Time of delivery
Q25 Location of delivery
Q26 Name of receipt
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