Reverse Logistics in Micro Businesses : An Exploratory Study

Abstract

There has been growth in managing supply chain processes for enhancing both economic and environmental benefits. Consequently, new dimensions in the supply chain have been added, with one of them being reverse logistics. Reverse logistics deals with the backward flow of goods which help firms to recover and reinstate discarded products, helping firms to realise their economic and environmental initiatives. Reverse logistics has now become a matter of strategic importance, helping to bring sustainable competitive advantage to the firm. This study recognises the inclination of the current research in reverse logistics to focus on larger firms. Hence, this research explores how smaller businesses, specifically micro enterprises, pursue reverse logistics to understand the related capabilities they have, and also to understand the way they address/perceive the related costs; this has the potential to contribute towards the development of the reverse logistics concept in micro firms. The two theoretical lenses of Resource Based View and Transaction Cost Economics are employed, both of which have the potential to explain the capabilities and the cost situation, respectively. An exploratory case study methodology is employed, and research is made on six micro retail firms. A semi-structured interview is used as the primary data collection method, supported by participant observation. The findings indicate that micro businesses may not possess all the relevant capabilities but pursue reverse logistics in their own unique way which, however, needs further development and refinement. The findings also suggest that micro businesses have developed the capabilities for reverse logistics, they however are not aware of all the benefits they can achieve through this capability. The findings also show that various cost facets prevail in the reverse logistics cost situation of the studied businesses. Not having a clear understanding of the various cost situation has again prohibited these businesses from making an optimal cost decision. This thesis realises the need to study the related capabilities and costs in the micro business context. As being small and resource constrained in nature, a phenomenon like reverse logistics – which is resource intense – can be a challenging aspect to pursue for these businesses. The study contributes to knowledge in both the reverse logistics and micro business research fields, by recognising key gaps within the related combined literature, critiquing current theory, and developing new and unique theoretical perspectives.