Impact of BPO Outsourcing on Competitiveness in Logistics: Application of Structural Equation Modeling (SEM)

Purpose & Research Gap: While Business Process Outsourcing (BPO) is widely studied, there is a lack of empirical research analyzing its specific impact on competitiveness within the logistics sector of emerging markets. This study addresses the gap regarding how BPO transitions from a cost-saving tool to a strategic expertise-driven model. Methodology: Data were collected from 132 logistics companies in Croatia. Structural Equation Modeling (SEM) was applied to test the hypotheses and mediation effects, as it allows for a robust analysis of complex causal relationships between latent constructs. Key Findings: SEM results reveal that BPO engagement alone does not guarantee competitiveness. The primary finding indicates that the expertise of BPO providers and strategic partnerships exert a significantly stronger positive effect on operational efficiency and market differentiation than simple cost reduction. Contribution: The paper contributes to the literature by redefining BPO as a strategic driver of innovation rather than a mere cost-cutting measure, providing logistics managers with evidence-based insights for knowledge-oriented outsourcing.