Reverse logistics and financial performance in a developing country context: the moderating role of analytics capability

Abstract

Purpose – This paper aims to examine the financial outcome of reverse logistics among firms in a developing country. The authors draw on the organizational information processing theory to propose that analytics capability moderates the relationship between reverse logistics and financial performance. Design/methodology/approach – The authors collected firm-level survey data from 200 manufacturing firms in Ghana, a developing country in sub-Saharan Africa. Partial least squares structural equations modeling is used to examine the proposed relationships, and the moderating effects are further probed using Hayes PROCESS. Findings – The empirical results show that reverse logistics is negatively related to financial performance. However, analytics capability attenuates this negative relationship, such that firms with high analytics capability obtain a positive relationship between reverse logistics and financial performance. Practical implications – Firms in developing countries should combine their reverse logistics strategies with developing analytics capabilities that help minimize uncertainties and increase the efficient collection and use of information to reduce the cost of reverse logistics. Originality/value – This paper examines how reverse logistics relates to financial performance in low-resource contexts. Beyond the novelty of the context, it explores the information processing needs of reverse logistics systems and provides empirical data to support analytics capability. This has yet to be considered in prior studies.