Although the utilization of logistics service provider firms is growing exponentially in business-to-business markets, little is known about what enables some of these firms to perform better than others. Building on the resource.-based view of the firm, this research proposes that market orientation and certain employee development practices (service-related training, coaching, and empowerment) influence both employee and organizational performance. The hypotheses are tested using data from 123 large logistics service provider organizations. A multi-survey design was utilized wherein managers as well as the frontline service employees who interact directly with customers represented each organization. The findings suggest that (a) market orientation influences organizational and employee performance, (b) coaching moderates both links, (c) service-related training moderates the link with employee performance only, and (d) empowerment does not moderate either link. (C) 2007 Elsevier Inc. All rights reserved.