Proactive improvement of logistics service providers as driver of customer loyalty

Purpose – The purpose of this paper is to provide a differentiated view of relationship‐specific proactive improvement of logistics service providers (LSPs) that distinguishes between the cost and performance and the effect that these two dimensions of innovation have on three distinct customer loyalty dimensions (retention, extension, and referrals). Design/methodology/approach – A confirmatory empirical study was conducted based on social exchange theory and customer value theory. The survey responses from 298 firms were analysed using structural equation modelling and multi‐group analysis to test for direct effects and moderation. Findings – Both dimensions of relationship‐specific proactive improvement by LSPs (cost and performance) are strong drivers of all three customer loyalty dimensions and, thus, are important to customer relationship management and relevant areas to be considered within innovation management. The effect on customer loyalty is moderated by the dynamism of the customer's market. Proactive cost improvements are more important under high dynamism, while proactive performance improvements, contrary to initial assumptions, are more important when dynamism is low. Research limitations/implications – Future studies should analyse other cultural settings, differentiate between functional and relationship value provided, consider other services, investigate how LSPs can facilitate proactive improvement and improve innovation management, and explore how customers can foster proactive improvement. Practical implications – The currently low level of proactive improvement should be increased if LSPs want to enhance customer loyalty. In doing so, LSPs ought to consider the dynamism of their customers' markets. Originality/value – The paper is the first to provide a differentiated view on the role of relationship‐specific proactive innovation that distinguishes between cost and performance improvements and illustrates their effects on three distinct customer loyalty dimensions.