Impacts of service buyer management on contractor profitability and satisfaction – a Swedish case study

ABSTRACT

Successful harvesting contractors are crucial for competitive wood supply. This study builds on the assumption that contractor motivation to stay in the forest sector depends not only on success in terms of profitability, but also on satisfaction with the conditions provided by their service buyers. The key characteristics of service buying companies associated with success from both perspectives were identified for a questionnaire sample of 30 contractors working for two Swedish forest owners associations (FOAs). PLS regression was used to analyze responses and to set VIP rankings of relative factor importance for explaining variation in achieved success. The characteristics most important for contractor satisfaction differed from those most important for achieving high operating margins, but a group of common key factors was identified. A framework was developed for sorting factors into three levels of importance when integrating the two perspectives. In general, respondents’ perceptions of FOA performance best explained variation in success for both perspectives, however the contractors’ expectations were also linked to this variation. The two most important factors for contractor success were (a) the FOA provision of a consistent level of year-round capacity utilization, and (b) FOA managers’ helpfulness in solving the problems which typically arise in wood supply operations. The study concludes with identifying important managerial implications based on the results.

KEYWORDS:

• Logging
• entrepreneur
• business relationship
• performance
• success factors

Acknowledgements

The authors would like to thank all responding contractors who took their time to complete questionnaires and gave their acceptance for the performed analyses, and the managers at the forest owners associations Mellanskog and Norrskog who assisted in supplying data needed for the sampling. The author further acknowledges Professor Paul Geladi for his advice concerning interpretations of the results from multivariate statistical analyses.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

The study was financed through the Forest Industrial Research School on Technology (FIRST), with support from the forest owners associations Mellanskog and Norrskog.