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Industrial Marketing Management
Asymmetric customer–supplier relationship development in Taiwaneseelectronics firms
Chia-Jung Lee a,1, Rhona E. Johnsen b,⁎a Department of Business Innovation and Development, MingDao University, Post Code: 52345, Taiwan, ROCb Audencia School of Management, GREMA: Groupe de Recherche en Management à Audencia, 8 Route de la Jonelière – BP31222, Nantes 44312, France
Article history:Received 5 July 2010Received in revised form 27 April 2011Accepted 12 May 2011Available online 13 October 2011
Keywords:AsymmetryCustomer–supplier relationshipsSmaller supplierLarger customerTaiwanese electronics industry
The purpose of this paper is to analyse the relationship development stages of asymmetric customer–supplierrelationships. The structure of relationships between larger customers and smaller suppliers has been thefocus of a number of studies in IMP (Industrial Marketing and Purchasing Group) research. But, there is a pau-city of research that examines development stages in relationships where a difference in size between theparties exists. The paper links the characteristics of asymmetric customer–supplier relationships and the re-lationship development stages through a literature review. The findings from a set of five in-depth case stud-ies of asymmetric customer–supplier relationships in the Taiwanese electronics industry are presented. Thecase studies involved 50 semi-structured interviews with customer and supplier executives and, in addition,multiple observations of customer–supplier interactions within each case study. Individual and cross-caseanalysis was conducted to examine the links between the characteristics of asymmetric customer–supplierrelationships and relationship development stages. The findings revealed that asymmetric customer–supplierrelationships in the Taiwanese electronics industry were very unbalanced and vulnerable in the exploratorystage of development. In the developing stage relationships were more likely to develop if suppliers and cus-tomers mirrored each other's behaviour and echoed each other's priorities. In the stable stage suppliers andcustomers worked on shared and balanced contributions to the relationship. The paper contributes to the un-derstanding of how smaller suppliers and larger customers can identify and develop key sets of relationshipcharacteristics through the exploratory, developing and stable stages of asymmetric relationship develop-ment from both customer and supplier perspectives.
Since the 1980s asymmetry has been found to have a potentiallydestabilising effect on business relationships (Harrigan, 1988). Rela-tionships are more likely to run smoothly if the capabilities, resourcesand characteristics of the relationship are a good strategic fit and havea certain level of complementarity between the parties involved (Tu,2010). Researchers have highlighted that existing research fails toencapsulate the complex balance of characteristics in customer–supplierrelationships and the corresponding influences on relationship develop-ment (Holmlund, 2004). Understanding the nature and influences ofasymmetric customer–supplier relationships may enable both partiesto have a more transparent vision of their potential within the rela-tionship and on their ability to set development priorities and manageproblems during relationship development (Ford & Saren, 2001).
In the industrial marketing literature, asymmetry has been under-stood in terms of the links between size difference (based on numberof employees of the total organisation) and certain individual relation-ship characteristics (Johnsen & Ford, 2008). For example, a number ofauthors have attempted to understand how characteristics such aspower, commitment, dependence or knowledge may be associatedwith asymmetry in relationships (Gundlach, Achrol, & Mentzer, 1995;Holmlund & Kock, 1996; Söllner, 1998). Following Johnsen and Ford(2008), we define asymmetry as an imbalance in the size and character-istics of a relationship. For example, a supplier may be smaller than itscustomer and have less power, but more trust in the relationship thanits larger counterpart.
Despite existing research on relationship development being well-considered in the literature, asymmetric relationship development is arelatively new area of study and remains less clear (Andersen &Kumar, 2006). Findings from recent studies indicate that the conse-quences of size asymmetry may have positive and negative effectsfor smaller suppliers in relationships with larger customers (Hingley,2005; Johnsen & Ford, 2008). Smaller suppliers may need to decidehow to capitalise on their advantages of size asymmetry by workingmore closely within their larger current customer relationships, or
they may need to develop ways to overcome relationship problems toenable relationships with larger customers to flourish (Hingley, 2005;Johnsen & Ford, 2008).
Most studies to date have sought to understand asymmetry fromonly the perspective of one side of the relationship— either the smallersupplier or the larger customer's viewpoint (Claycomb & Frankwick,2010). However, customer and supplier perceptions may differ widelyin relationships (Claycomb & Frankwick, 2010). Moreover, little re-search to date has captured how asymmetric relationships may changeacross different stages of relationship development (Andersen &Kumar, 2006; Eggert, Ulaga, & Schultz, 2006). In short, there is scopeto expand the existing literature in the domains of asymmetric relation-ships and relationship development to examine the influence of asym-metric relationships on relationship development from both a smallersupplier and a larger customer perspective.
Therefore, this paper contributes to existing research through aninvestigation of the ways in which different characteristics of asym-metric relationships evolve during the stages of customer–supplierrelationship development. We address the following specific researchquestion in this study:
• How do the characteristics of asymmetric customer–supplier relation-ships evolve during the exploratory, developing and stable stages of therelationship?
In the following sections the theoretical and empirical context ofthe paper are established. We focus on an examination of the charac-teristics of asymmetric relationships during the stages of relationshipdevelopment in customer–supplier relationships. The findings fromthe empirical study are discussed and conclusions and conceptualand managerial lessons are presented.
2. Literature review
The purpose of this literature review is to examine asymmetric rela-tionships through a set of relationship characteristics that have beenfound in previous research to have a bearing on thenature of asymmetryin customer–supplier relationships. Following the investigation of asym-metry in relationships, the second part of the literature review identifiesthe relationship development stages that are pertinent to asymmetricrelationships and thus how relationship characteristics may evolve asasymmetric relationships develop. We conclude the literature reviewby presenting a typology to provide a conceptual structure for examin-ing relationship development stages in asymmetric customer–supplierrelationships.
3. Characteristics of asymmetric customer–supplier relationships
In an effort to understand the nature of asymmetric relationshipsand how firms may focus on choices and changes within these rela-tionships, we begin by providing a review of the literature on rela-tionship characteristics which have been the focus of previousresearch on asymmetry in the IMP tradition, and which have beenfound to form a critical set to examine asymmetry in relationships(Hingley, 2005; Johnsen & Ford, 2008; Johnsen, Johnsen, & Lamming,2008). Although other sets of relationship characteristics have beendeveloped, they tend to be less wide-ranging and inclusive. Wefocus on how our chosen set of relationship characteristics may bemanifested in asymmetric relationships between larger customersand smaller suppliers. Previous studies (Hingley, 2005; Johnsen &Ford, 2008; Johnsen, Johnsen, & Lamming, 2008) have shown thatasymmetry needs to be considered at the level of the characteristicsof the customer–supplier relationship to enable firms to better under-stand and manage asymmetric relationships and to make choicesabout where to focus their efforts in building their relationships ormaking changes that will impact on how they are perceived and
valued in asymmetric relationships. Table 1 provides our point of de-parture for definitions, sources and indicators of our chosen set of re-lationship characteristics with which we set out to analyseasymmetry in the larger customer–smaller supplier relationship.
The set of relationship characteristics in Table 1 is identical to thatof Johnsen and Ford (2008), with the addition of trust, which isemphasised in much customer–supplier relationship literature, al-though it only seems to have been explicitly addressed in more recentIMP research (e.g. Andersen & Kumar, 2006; Dyan & Di Benedetto,2010; Huemer, 2004; Keh & Xie, 2009). We chose the Johnsen andFord (2008) typology as it presents a view of multiple relationshipcharacteristics from the perspective of smaller supplier–larger cus-tomer relationships. Other studies have investigated individual rela-tionship characteristics with regard to asymmetry, but none appearto present such a comprehensive analysis of the characteristics of re-lationship asymmetry. This comprehensive view is important for thisresearch as it may enable customers and suppliers to understand thetotality of their relationship's characteristics.
Johnsen and Ford (2008) only investigated the smaller supplier'sview in their study of asymmetry, whereas our study will investigateboth the smaller supplier and larger customer perspectives of their rela-tionship. In addition, we have chosen to add trust to the characteristicsinvestigated by Johnsen and Ford (2008) as this characteristic has animportant impact on the stability and longevity of dyadic relationships(Ford, 1980). It is therefore important to consider trust in investigatingsmaller supplier–larger customer relationships, where instability maybe more prevalent than in relationships where there is more equalityin terms of the size of the firms involved. Few studies to date have ex-plored a wide range of relationship characteristics, so there is a gap inthe literature in this area which we seek to examine.
All the relationship characteristics examined in the following sec-tion are structural in nature and as such they set the conditions forthe relationship context in which larger customers and smaller sup-pliers interact and in which processes such as adaptation and ex-changes of information, knowledge, or finances take place.
3.1. Mutuality
Mutuality describes how the parties demonstrate their interest inthe well being of one another and explains how they seek commongoals or interests (Ford et al., 1986). Mutuality is a key element in cre-ating more equilibrium and equality in relationships. However, creat-ing mutuality may be challenging in asymmetric relationships. Thesmaller party may have limited experience, or may not be permittedto contribute to development goals or strategy (Johnsen & Ford,2008), but is expected to focus largely on implementing decisionsmade by the larger firm in the relationship.
3.2. Particularity
Particularity is the quality of uniqueness possessed by a given in-teraction (Ford et al., 1986). Smaller suppliers often strive to maketheir offering or relationship unique in the eyes of their larger cus-tomer through significant adaptations to the customer's require-ments. Often this requires them to seek ways to give specialtreatment to customers without increasing their costs (Ford et al.,1986). However, a larger customer may attempt to control the devel-opment of a range of smaller suppliers in aspects such as product,technology and process development for the customer's unilateraladvantage (Ford & Saren, 2001), making it difficult for an individualsupplier to distinguish itself in the relationship.
3.3. Cooperation
Firms often cooperate in business relationships in order to gainprofit or information advantages or improved visibility and flexibility
Table 1Definitions of relationship characteristics and indicators.Source: Adapted from Johnsen and Ford (2008).
Characteristic Definitions and sources Indicators
Mutuality Extent to which two actors demonstrate their interest in the well-being of oneanother and how they seek common goals or interests (Ford, Håkansson, &Johanson, 1986).
- What is our level of concern in the well-being of the other party?- Do we pursue common goals or interests?- Are we willing to relinquish individual goals in order to increase the
positive outcomes for other party, and thereby our own well-being(win–win)?
Particularity Direction, uniqueness, commitment in a relationship, when compared to otherrelationships of the companies, or the extent of standardisation/adaptation ofinteraction (Ford et al., 1986).
- What is the extent of dedicated exclusive efforts of one party e.g.production processes or designs of suppliers geared towards ourspecific needs?
- To what extent is the other party committed to us in comparisonwith other relationships in its portfolio?
Cooperation Extent of working together towards a shared aim or direction for the relationship(Ford et al., 1986).
- To what extent is the relationship characterised by co-operativerather than contentious interaction?
Conflict Extent of perceived differences between parties, causing friction and disputes, butalso potential for creativity (Ford et al., 1986).
- What is the extent of disagreement or disputes over e.g.specifications, or nature of orders or agreed designs?
Intensity Extent of contact and resource exchange between firms in a relationship (Rosson& Ford, 1982).
- What is the number of staff or groups involved in relationship?- How frequently do we meet face-to-face?- What is the extent of senior manager involvement in this
relationship?Interpersonalinconsistency
The personal expectations and individual interests influencing interaction and theextent of perceived variation in other actor's approach to interaction betweenindividuals or departments (Ford et al., 1986; Johnsen & Ford, 2008).
- Are there great differences between how individuals ordepartments interact with other party?
- To what extent do we send or receive mixed messages fromdifferent parts of company or different individuals?
Power/dependence Extent to which an actor – implicitly or explicitly – can get another actor to dosomething that they would not otherwise have done. (Dahl, 1961; Hausman &Johnston, 2010). Dependence is the obverse of power as the more dependence ofone party on another the less power the former has within that relationship.(Emerson, 1981; Ford, 1980; Hingley, 2005).
- What is our ability to persuade other party to do something they donot want to do?
- Are we in a position to influence decisions and actions of otherparty?
- What is the proportion of our business with other party?- To what extent are we reliant on other party's technology or
knowledge e.g. where other party's technology or capability isunique or unmatched?
Trust The expectation held by one actor about another that the other responds in apredictable and mutually acceptable manner. Importance of contractual,competence and goodwill trust at different stages of relationship (Sako, 1992;Morgan and Hunt, 1994; Huemer, 2004).
- Are we confident that other party will adhere to the contract?- Are we confident that other party will perform tasks in excess of
agreed terms and conditions?- Are we confident that other party has competence to be able to
(Blankenburg, Eriksson, & Johanson, 1996; Claro & Claro, 2010;Whipple,Lynch, & Nyaga, 2010). However, smaller suppliers are often restrictedto making inputs in areas such as production or logistics, thus limitingtheir potential to contribute more significantly to strategic develop-ments with larger customers (Chen & Chen, 2002). Cooperation inasymmetric relationships may focus largely on the larger customer'sconcerns and the relationship may be destined to last for only as longas superior value accrues in the customer's eyes (Möller and Törrönen,2003).
3.4. Conflict
Conflict may be necessary to keep a relationship dynamic and re-establish the criteria onwhich it can continue (Ford, Gadde, Håkansson,& Snehota, 2003). Lowering the levels of conflict in a customer–supplierrelationship has been found to improve the quality of the relationshipand the trust between the parties (Ren, Oh, & Noh, 2010). Equality ofinput to conflict resolution between customers and suppliers may cre-ate mutually satisfactory outcomes for the relationship (Claycomb &Frankwick, 2010; Mohr & Speckman, 1994). Coping with conflict inthe asymmetric relationship may be problematic for smaller supplierswho hold the weaker position in the relationship and may be wary ofcreating conflicts or voicing concerns to their larger customer for fearof relationship termination (Harrison, 2002).
3.5. Intensity
Relationship intensity is an aggregatemeasure of the level of contactand resource exchange between firms (Rosson & Ford, 1982). Firms donot usually have many ‘high involvement’ interactions at any one time
because of the limited availability of their senior management (Geser,1992). Commitment to increasing the level of intensity may be difficultin asymmetric relationships as the smaller supplier may not have thecritical mass of staff to dedicate to enhancing the relationship. Involve-ment of a large number ofmanagers fromdifferent functions in a dyadicrelationship may increase the complexity of interactions between thefirms, but may also give rise to opportunities for value creation andinnovation in the asymmetric relationship, by drawing on the smallersupplier's agility and dynamism and the larger customer's experienceand leadership (Golfetto & Gibbert, 2006).
3.6. Interpersonal inconsistency
Interpersonal inconsistency concerns the personal expectationsand individual interests influencing interaction (Ford et al., 1986). In-terpersonal inconsistency may result in ambiguity or lack of clarity incommunication and may be aggravated by the variety of firms, unitsor departments involved in a relationship; each with their ownagendas and roles (Alajoutsijärvi, Möller, & Rosenbröijer, 1999;Mitręga & Katrichis, 2010). In asymmetric relationships a smaller sup-plier may find that it is difficult to meet or exchange ideas with largercustomers and that their level of communication is limited and reactive.However, smaller suppliers may learn from interacting with decision-makers and managers in customer firms with varied views, culturesand experiences (Johnsen & Ford, 2008).
3.7. Power and dependence
Power may be defined as an ability to get another person to dosomething that he or she would not otherwise have done (Dahl,
1961), or as a “general capacity for action” (Barnes, 1988, p. 23). Powermay be applied either coercively or cooperatively (Frazier & Antia,1995; Hausman & Johnston, 2010). Coercive power is often seen to re-side in low-involvement or adversarial relationships where strong de-pendencies may exist between the relatively powerless and the morepowerful party (Dwyer, 1980; Ford et al., 2003; Lusch, 1976; Wilkin-son, 1981). Non-coercive power enhances a firm's willingness to co-operate and reduces conflict in relationships (Hausman & Johnston,2010). A strategy based on coercive power is assumed to have the op-posite effect, inducing raised levels of conflict and reducing opportuni-ties to cooperate (Vaaland & Håkansson, 2003). Power in arelationship is not the monopoly of a single company, nor is it uni-di-mensional (Ford et al., 2003).
Dependence is defined as the obverse of power (Emerson, 1981), aspower resides implicitly in another person's dependence (Emerson,1962). Dependence may be considered to be the price that a firm hasto pay for the advantages bestowed upon it by its relationships (Easton,2002). Firms may choose to accept dependence as a trade-off for thebenefits that accrue from a relationship with a strong counterpart. Iffirms are mutually dependent, they may have problems copingwith other relationships, but may manage quite effectively in theircore relationship (Ford et al., 2003). However, if power and dependenceare asymmetrically distributed the relationshipwill not only be difficulttomanage, but the benefits for themore dependentfirmwill be difficultto realise (Easton, 2002).
3.8. Trust
Trust plays a significant role in shaping interaction and long-termrelationship building (Andersen & Kumar, 2006; Dyan & Di Benedetto,2010; Huemer, 2004; Keh & Xie, 2009). Trust grows on the under-standing that both parties benefit from mutual investments and gainmutual satisfaction from the relationship (Selnes, 1998). Trust-buildingmay be particularly difficult in the asymmetric relationship when thesmaller party is unable to contest decisions made by a larger customeror to play a role in moving on from contractual trust to competenceand eventually goodwill trust (Sako, 1992).
Trust may be enhanced by the degree of two-way communicationand emotional involvement between customers and suppliers (Andersen& Kumar, 2006). Trust may make communication, information-sharingand conflict management more open during the relationship develop-ment stages and enable the parties to grow froma focus on contractually-based trust, to competence-based trust to goodwill trust during differentstages of relationship development.
As relationships develop over time it is important to identify howtheir characteristics change or evolve. Little research to date has ex-amined how relationship characteristics can be viewed from a moredynamic perspective by linking them to the stages of relationship de-velopment. We therefore address the issue of relationship develop-ment stages in the next part of the literature review.
4. The relationship development stages in asymmetric customer–supplier relationships
The 1980s saw the beginning of the development of a number offrameworks that tried to capture the complex dynamics of relationshipdevelopment (Dwyer, Schurr, & Oh, 1987; Ford, 1980; Frazier, 1983).These frameworks captured how interaction differed across a range ofrelationship development stages and the role of individuals in the inter-actions at each crucial stage. Ford's (1980) model identified four rela-tionship development stages; the pre-relationship stage, exploratorystage, developing stage and stable stage. The stages of Dwyer et al.'s(1987) model mirror those of Ford's (1980) model, highlighting theawareness, exploration, expansion and commitment phases. However,neither model included dissolution of the relationship which has been
the focus ofmore recent research on relationship development patterns(e.g. Alajoutsijärvi et al., 1999; Havila & Wilkinson, 2002).
Subsequent studies on relationship development have shown thatthe parties involved tended to demonstrate a preference for a long-term orientation (Anderson & Narus, 1990; Wilson, 1995) and werefound tomake efforts to overcomedifficulties and build value in their re-lationships at each stage (Eggert et al., 2006; Wilson & Jantrania, 1994;Zerbini & Castaldo, 2007). Relationships were successful when theparties made mutual efforts to reduce uncertainty (Campbell, 1985).Uncertainty could also be mediated by a good reputation (Larson,1992). Relationships would flourishwhen joint problem-solving and in-terdependencies developed (Anderson & Narus, 1990; Heide & John,1988; 1990). Thus, the focus was on the beneficial nature of social inter-action, collaboration and long-term harmonious relationships betweencustomers and suppliers.
However, relationship development may be fraught with morenegative implications, uncertainties and difficulties (Heide & Stump,1995; Johanson & Mattsson, 1987). In reality, relationship develop-ment could be a less harmonious experience and involve tensions be-tween larger customers and smaller suppliers (El-Ansari & Stern,1972). Asymmetric power displays, conflict resolution, commitmentand satisfaction all play a role in limiting relationship development(Jap & Ganesan, 2000; Zerbini & Castaldo, 2007).
Overall, we conclude that there is much research to date that exam-ines the generic stages of relationship development, but little that re-flects on specific types of relationship with different roles and patternsof behaviour during the relationship development stages. We addressthisweakness in the following section by examining the exploratory, de-veloping and stable stages of relationship development and relatingthem to asymmetric customer–supplier relationships.
4.1. The exploratory stage
Exploration refers to the research and test phase in relational ex-change (Dwyer et al., 1987). Customers may test a smaller supplier'spotential through small orders and negotiation of terms or productspecifications (Claycomb & Frankwick, 2010) or suppliers may ques-tion the commitment of their larger customer to building a trusting,longer-term relationship (Wilson, 1995). Cooperation is a criticalpart of the initiation and expansion phases of relationship develop-ment (Dwyer et al., 1987). In the early stages of a relationship smallersuppliers may be controlled by larger customers as they have yet toestablish their position in the relationship and prove their value. Sup-pliers may offer customers a trial of new offerings or assurances to in-crease the customer's motivation for building the relationship.However, with limited resources and experience, smaller suppliersmay lack the ability to convince a larger customer of their worthand to survive this critical stage of relationship development.
4.2. The developing stage
In the developing stage intensity, mutuality and particularity growin the customer–supplier relationship. Larger customers increasetheir purchases from smaller suppliers and consider longer-term con-tracts (Claycomb & Frankwick, 2010). Cooperation and trust in thecounterpart increases and power becomes increasingly shared acrossdifferent domains of expertise of the two parties (Tu, 2010; Wilson,1995; Wilson & Jantrania, 1994).
Interpersonal inconsistency is reduced in the developing stage, assmaller suppliers become more adept at managing misunderstand-ings and conflicts through experience of working with their largercustomer (Johnsen & Ford, 2008). However, this development doesnot inevitably continue and the relationship may revert to an earlierstage (Bygballe & Harrison, 2003).
If a customer and supplier survive the developing stage, theadvantages of the stable stage may be manifold. When a relationshipis mature the parties can benefit from stability, mutual dedication,more balanced power and established domains of expertise (Ganesan,1994; Rosson & Ford, 1982). However, inertia or lack of initiative maybe evident during the stable stage. Routines and institutionalisationmay mean that the relationship is taken for granted and does notreach its full potential (Ford et al., 2003). In this mature stage both alarger customer and smaller supplier have strongmutuality, particularity,intensity and long-term cooperation, through ongoing experience of oneanother (Ford et al., 2003). Trust, commitment and relationship-specificinvestments have been built in the other party (Claycomb & Frankwick,2010; Ganesan, 1994; Wilson, 1995). This may preclude a customer orsupplier from seeking alternative relationships and focusingmore effortsand resources on maintaining the established relationship.
In the stable stage, particularity is an explicit assurance of relationalcontinuity between the customer and supplier (Dwyer et al., 1987).Trust is important to the stability of the customer–supplier relationshipand mirrors the firms' “mutual importance to each other” (Ford, 1980,p.47). Smaller suppliers focus on developing goodwill trust with theirlarger customers, as the key issue in the stable stage is to maintain therelationship as more important to the customer than that of competingsuppliers (Sako, 1992) and to avoid relationship dissolution. Althoughwe do not examine relationship dissolution per se in our research, itis an important concern during the development of the asymmetriccustomer–supplier relationship, as smaller suppliers may find theirrelationshipswith larger customers to be ended unilaterally, disengagingthem suddenly from a major business partner (Harrison, 2002).High levels of dependence and limited power over the direction ofthe relationship may mean that dissolution has a negative impact onthe supplier's confidence and its ability to forge new relationships — orto harness the residue of its relationship ‘energy’ (Havila & Wilkinson,2002).
4.4. A typology of asymmetric relationship characteristics and developmentstages
Our typology of the relationship development stages in asymmetriccustomer–supplier relationships, outlined in Table 2, is a proposedtheoretical framework derived from the literature review to enableus to empirically investigate relationship development in asymmetriccustomer–supplier relationships.
The typology in Table 2 combines the set of relationship character-istics that were identified in Table 1, with relationship developmentstages to examine how the chosen set of relationship characteristicsmay evolve during these stages. Thus, the typology indicates howeach individual relationship characteristic may be manifested in alarger customer–smaller supplier relationship during the stages ofrelationship development. The typology guides the development ofthe empirical study which is discussed in the next section.
5. Research methodology
5.1. The Taiwanese electronics industry context
The case studies for this research are all set in a Taiwanese electronicsindustry context. Taiwan is a world-class manufacturing centre and hasa leading global market share in many electronics products (Chiger &Karp, 2003; Ministry of Economic Affairs, 2007), with key strengths inall areas of computer manufacturing and component technologies(Chang, 2004).
Most Taiwanese electronics firms are original equipment manufac-turers (OEMs) (Hwang, 2002). The development of relationships withlarger customers is a critical foundation for increased international
competitiveness and growth in small and medium-sized Taiwanesefirms (SMEs) (Hsieh, Yeh, & Chen, 2010; Tsay, 1999). Indeed, there isan increasing interest and emphasis on relationship development issuesin the Taiwanese electronics sector, with a view to understandinghow customer–supplier relationships contribute to Taiwan's economicdevelopment (Carr & Leong, 2000, Hsiao, Purchase, & Rahman,2002).
5.2. Multiple case studies
We adopted a phenomenological perspective to understand howthe characteristics of asymmetric customer–supplier relationshipsevolve during the exploratory, developing and stable stages of a rela-tionship. An abductive approach was adopted, as advocated by Duboisand Gadde (2002), rather than a deductive or inductive approach.Abduction was adopted to reflect the ‘systematic combining’ of reflec-tions on the literature and empirical findings.
Qualitative data collection techniques were the most appropriatemethod for this research to investigate the meaning of phenomena inthe social world, rather than seeking statistical representativeness(Halinen & Törnroos, 2005). Within our chosen approach, meaningfulgeneralisations canbe based on a limited sample of case studies drawingon multiple sources of evidence and a summary of interview responsescan be a reasonable approximation of reality (Dubois & Araujo, 2007).A multiple-case approach aims to derive general conclusions from alimited number of cases and is suitable in situations where only littleis known about the phenomenon (Halinen & Törnroos, 2005), as inthe situation of asymmetric relationship development.
5.3. Case company selection
The five case studies were chosen from the electronics industry inTaiwan. The larger customer–smaller supplier relationships werechosen on the basis of difference in size between the firms in termsof the number of employees of the entire organisation. The unit ofanalysis was the relationship between small and medium-sized elec-tronics suppliers and their larger customers. Each relationship wasaccessed through initial contacts with the small and medium-sizedsuppliers. The suppliers were identified through initial research viacompany databases and an internet search for those fitting the criteriaof independent, privately owned and autonomous small andmedium-sized electronics suppliers. The larger customers of each supplier wereidentified during the first interview with suppliers.
5.4. Data collection
Prior to launching the in-depth case studies, a pilot case study in-volving ten face-to-face interviews across one larger customer–smallersupplier dyad (case A) was conducted. These exploratory open-endedinterviews helped to refine the research questions and the researchers'general understanding of possible relationship development patternsin asymmetric relationships and thereby helped to ensure constructvalidity and reliability. As the respondents were based in Taiwanand the researchers were based in the UK, webcam technology wasused for the pilot interviews.
Four further case studies involving face-to-face, semi-structuredinterviews in Taiwan were included during the main body of data col-lection (cases B–E). In total the five cases involved 50 semi-structuredinterviews with managers and directors from the supplier and cus-tomer firms. Conducting more than one interview in an Asian smallbusiness is difficult (Romano, 1989). However, the 10 interviewsper customer–supplier dyad and the multiple observations per casestudy ensured information-rich data collection and analysis in thisinvestigation. To achieve theoretical saturation, we followed Yin's(2003) approach of choosing cases to fill theoretical categories to ex-tend the emerging theory. Thus, we filled the theoretical categories of
Table 2A typology of asymmetric relationship characteristics and development stages.
Exploratory stage Developing stage Stable stage
Background Customers and suppliers engage in discussion and negotiation.Experience of other party and uncertainty about relationshipcounterparts. Each party learning how to reduce distance betweenthem. Larger customer is director of relationship. Smaller supplierresponds to direction.
Customer and supplier involved in mutual learning. Interaction growing anddeveloping positively. Uncertainty and distance reducing. Supplier plays moresignificant role in relationship as experience of larger customer grows. Customerappreciates unique capabilities of smaller supplier.
Firms are mutually important to each other.Customer–supplier interaction stable and long-term.Other party highly valued as relationship counterpartfor unique contribution to relationship.Smaller supplier's contribution not easily replaceableor imitable. Larger customer supports supplier's learningand growth for mutual benefit.
Mutuality - Goals differ for each party: no strategic alignment - Current goals aligned to achieve profitability for both parties- Partial strategic alignment
- Goals for future developed in tandem- Strategic alignment
Particularity - Limited adaptation of each party- Limited relative commitment to relationship by larger customer
- Concessions made by each party for mutual benefit- Security sought by smaller supplier through commitment to relationship
- Long-term investment, adaptation andcommitment over and above that of otherrelationships
Cooperation - Initial ideas for cooperation explored- Limited information sharing: knowledge of larger customer
creates powerful position
- Joint projects and plans established to achieve improved capabilities for eachparty
- Parties becoming more open with each other, but still guarded
- Long-term projects for enhancement and achievementof capability development e.g. supplier developmentprogramme
- High levels of transparency and information sharingConflict - Conflicts arise through lack of knowledge of other party's
systems, processes and responsibilities:- Destructive conflicts: smaller party has to ‘toe the line’
- Disagreements arise over integration of roles, responsibilities and targets- Partial moves towards joint problem-solving, but larger customer still driving-
force
- Experience of conflict and its resolution enhancedebate and depth of understanding: constructiveconflicts and even contributions to resolution
- Joint problem-solvingIntensity - No commitment to regular interaction between individuals and
teams- Low level operational involvement from larger customer
- Regular pattern of interaction established with clearly defined roles and routine- More functions involved in relationship from larger customer- Middle-management involvement from larger customer
- Friendships and close professional ties underpin long-term interaction
- Multi-interface and director-level involvement fromboth sides
Interpersonalinconsistency
- Different approaches to relationship create inconsistentcommunication
- Smaller supplier's input in communication limited and reactive
- Common approaches to relationship begin to be defined- Communication patterns become established- Smaller supplier takes stronger role and is more proactive
- Larger customer and smaller supplier work to sharedprinciples and patterns for communication
- Behaviour and communication consistent over timeand across functions
Power/dependence - One-sided relationship- Larger customer controls strategic and tactical decisions e.g.
ordering process, quality and prices- Smaller supplier concerned with proving
capability/attractiveness
- Domains of expertise becoming defined and separate- Inter-dependent relationship strategy developing with input from both parties o
own basis of expertise
- Commonly understood and firmly establisheddistribution of power and expertise in different areas
- Inter-dependent relationship strategy establishedbetween larger customer and smaller supplier
Trust - Smaller supplier needs to ensure contractual compliance- Larger customer controls performance through tight measures
- Focus on competence-based trust in defined areas for each party- Smaller supplier's unique capabilities appreciated by customer
- Focus on goodwill trust: helping each other out whennecessary
- Equal commitment from larger customer and smallersupplier to long-term health and growth of relationship
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2 The cases were classified through independent supplier and customer interpreta-tions of the stage of relationship development from initial interviews and from verifi-cation by the researchers during the data analysis. Each customer and supplier dyadindependently confirmed the same stage of relationship development. In each casethe researchers agreed with the interpretations of the customers and suppliers con-cerning the current stage of relationship development.
the three stages of relationship development to extend the emergingtheory on asymmetric relationship development.
As our research question sought to investigate how the characteris-tics of asymmetric customer–supplier relationships evolved duringthe exploratory, developing and stable stages of the relationship,semi-structured interview guides with open-ended questions werea suitable way of seeking to understand each supplier or customer'sindividual experiences and approaches in their relationships (seeAppendix A for an abbreviated generic version of the interviewprotocol).
Each interview lasted approximately one and a half to three hoursand was conducted face-to-face during a visit to the customer or suppli-er's premises by the lead researcher. In addition to the interviews, otherdata collection methods were used, including reviews of company ar-chives and documents, published (government) statistics, reports, mar-keting information and details from the companies' websites, and theInternet. This information was collected to familiarise the researcherswith the case companies' situations and environments. The researchersreviewed on average 5–6 pages of each company's reports, seeking infor-mation on company history, financial information, directors' names andresponsibilities. Government reports were reviewed to seek informationon the electronics industry and the case companies' positions within theindustry. Therefore, the case studies comprised data collection from sev-eral sources within each case.
Table 3 introduces the case companies and presents backgrounddetails on each supplier and customer firm involved in the five casestudies. In addition, details of the number of respondents interviewedand their roles and responsibilities are highlighted in Table 3. Allcompany names are fictitious for reasons of confidentiality, as theinterviews concerned sensitive issues about the firms' relationships.
An initial interviewwas conductedwith a key contact of each compa-ny (smaller supplier first, followed by larger customer) and focused onthe particular context of the firm and its larger customer–smaller suppli-er relationship under investigation. This enabled the researchers to gaininsights into thefirms and their customer and supplier relationship char-acteristics. A relationship map was drawn independently by customersand suppliers to enable key actors involved in the relationship andtheir roles to be identified. A simplified conceptual structure wasshown to each respondent to introduce the idea of relationship develop-ment. This comprised a basic drawing of a relationship development life-cycle. The researchers then proceeded to discuss the respondent'sinterpretation of the current stage of development and the longevityand nature of the customer–supplier relationship. The researcherswere careful in ensuring that the discussion was neutral so that respon-dents did not feel that one relationship stage was viewed as being supe-rior to another. Subsequent interviews examined how the characteristicsof the relationship had evolved and the ways in which larger cus-tomers and smaller suppliers had interacted over the lifetime of therelationship.
The final stage of data collection involved participant observationsofmeetings (Waddington, 1994), as summarised inAppendix B betweenthe larger customers and smaller suppliers across four cases B–E (follow-ing pilot case A). Participant observation was used in this study becauseof the rich level of detail it could provide on the customer–supplierrelationship development experiences and to reveal information thatmight not be articulated during a face-to-face interview.
5.5. Analytical techniques
All the interviews and observations were tape-recorded and tran-scribed from the original recordings with Taiwanese managers andthen translated into English. The interview guides and transcriptswere translated using professional translators from the British Council.Each interview was transcribed from the English version and thenanalysed after the transcription took place. During the analysis thefinal transcripts were read repeatedly and notes were taken by the
researchers (see Table 3 for information on number of pages tran-scribed per case study).
The transcripts were annotated to provide a first level coding(Miles & Huberman, 1994). In addition, contextual factors and emerg-ing themes raised by the respondents were identified. The typology inTable 2 was used as a basis for classifying the data into meaningfulthemes and categories and to start the process of displaying, reducingand interpreting the data. Individual and cross-case analysis was con-ducted by use of role-ordered matrices which summarised the find-ings from each case study. Meta-matrices were constructed for thecross-case analysis (Miles & Huberman, 1994), which provided exter-nal validation of the individual case study findings (Järvensivu andTörnroos, 2010). This process created an aggregated picture of intra-and inter-company interpretations and helped to ensure internalvalidity (Yin, 2003). The findings were triangulated across thedata sources and cross-checked with the transcripts. Quotes werecarefully chosen to demonstrate particular situations, experiences orresponses of the interviewees.
A follow-up meeting was held with the main contact within eachcompany, either face-to-face or by telephone, to validate interpreta-tions and emerging conclusions. Construct validity was assuredthrough a chain of evidence that included note-taking by the re-searchers, gaining feedback on the transcripts from respondents andtelephone or e-mail exchanges with respondents following the inter-views and throughout the analysis stages.
One researcher from Taiwan conducted all the interviews andobservations to ensure a cultural affinity with the respondents andto enable correct interpretations to be drawn. In addition, westrengthened the reliability of the study through inviting commentsfrom other researchers in the field (e.g. at international conferencesand workshops) to ensure the logic of our conclusions.
6. Findings from the empirical study
In this section the findings from the case studies (see Table 4) areused to answer the research question by illustrating the stages ofrelationship development in asymmetric relationships.
6.1. The exploratory stage
Two cases (Cases B and D) were classified as being in the explor-atory stage of their relationship.2 The relationship characteristicsthat were of most importance to the firms during the exploratorystage were mutuality, cooperation, conflict, intensity, interpersonalinconsistency, power/dependence and trust. Particularity was notpart of the set in the exploratory stage as it did not develop impor-tance for firms until the developing stage.
The relationships in cases B and D had a short-term focus withmutuality being centred on agreements for goals related to pricingand quality. Managers were unclear about future relationship goalsand benefits tended to be centred around those for their own firm.There was limited cooperation and suppliers were in a relativelypowerless and dependent position. Suppliers had to focus their effortson being ‘tested’ and gaining approval from their larger customers.Opportunities for cooperating with larger customers were performance-driven and seen as a ‘sweetener’ for suppliers who performed well. Thiscould have a significant impact on the potential for the relationship tocontinue to the next stage. Laptop's Purchasing Manager commented:
Table 3Case company profiles and interview details.
Case A:Supplier ‘Chip’Customer ‘Resistor’
Case B:Supplier ‘Bright Light’Customer ‘Diode’
Case C:Supplier ‘Clean System’
Customer ‘Semiconductor’
Case D:Supplier ‘Cooling’Customer ‘Laptop’
Case E:Supplier ‘Transformer’Customer ‘Power Supply’
Number of Employees andcompany location in Taiwan
Supplier: 100 employees,located in Kaohsiung CityCustomer: 410 employees,located in Kaohsiung City
Supplier: 53 employees,located in Tainan HsienCustomer: 270 employees,located in Hsinchu City
Supplier: 98 employees,located in Kaohsiung HsienCustomer: 19000 employees,located in Kaohsiung City
Supplier: 198 employees,located in Kaohsiung CityCustomer: 2000 employees,located in Taipei
Supplier: 50 employees,located in Kaohsiung CityCustomer: 49000 employeeslocated in Taipei
Activitiesa Supplier ‘Chip’: manufactureof chip resistorsCustomer ‘Resistor’: manufactureof resistors used in informationtechnology industries;uninterruptible power supplies/photoelectronics industry
Supplier ‘Clean System’: manufactureof integrated circuit (IC)semiconductor mould automaticcleaning systemCustomer ‘Semiconductor’:manufacture of integrated circuit(IC) semiconductor, IC packaging,IC test equipment, and variouskinds of integrated circuit
Supplier ‘Cooling’: manufactureof home electronic appliances,and electronic cooling fansfor personal computersCustomer ‘Laptop’: manufactureof tablet personal computers(PCs), liquid crystal display (LCD)PCs, laptops, and informationappliances
Supplier ‘Transformer’:manufacture of transformers,power supplies, and integratedcircuit (IC) boardsCustomer ‘Power Supply’:manufacture of power supplyproducts, opto-electroniccomponents, modules,and systems
Number of pages transcribed for case study interviews 24 pages 28 pages 27 pages 28 pages 26 pages
a All supplier and customer names are fictitious in order to retain confidentiality.
699C.-J.Lee,R.E.Johnsen
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Table 4Summary of findings on asymmetric relationship characteristics and development stages.
Stage of relationship development
Exploratory stage (cases B and D) Developing stage (cases A and C) Stable stage (case E)
Mutuality - Goals focused on low price/reasonable quality(case B)
- Some cooperation on price agreements andcustomer's support for supplier's technologicalsolutions, but common goals/interests not yetestablished (case B)
- Supplier gives up individual product technologygoals to maintain relationship (case D)
- Customer reduces price to maintain relationship(case D).
- Focus on making joint concessions to obtain mutualbenefit and aim for target setting in discussionwith other party (case C)
- Goals and interests revolve around creating jointtargets for prices, technological skills, productquality and good service (case A)
- Investing senior management timeand effort in finding opportunities forworking on common goals (case E)
Particularity - Particularity not yet in focus, relationships treatedsimilarly to others (case B and case D)
- Customer and supplier show growing adaptationsand preference for working together abovealternatives (case A)
- Very secure relationship. Customiseddesigns by supplier for customer addto exclusivity of relationship (case E)
Co-operation Long-term cooperation depends on supplier'sperformance and technological improvementstested/monitored (case B)
- Cooperation in relationship takes priority overindividual profit goals (case A)
- Cooperation based on continued profitability forboth companies (case C)
- Customer and supplier see k opportunitiesand make efforts to sustain their worktogether (case E)
Conflict - Conflicts arise over price negotiation/productspecifications (case D)
- No overt conflicts (case A and case C) - Conflict not an issue (case E)
Intensity - Relationship fairly insecure and distant withlimited staff from either firm involved (case B)
- Relationship more intense with strong and regularcontact across functions and firms (case C)
- Long-term inter-firm friendships supportcontinuation of relationship anddevelopment of exclusivity (case E)
Interpersonalinconsistency
- Communication stifled by irregular meetings andlack of commitment from management (case D)
- Imperative to determine roles andcommunication/meeting patterns for customerand supplier (case B)
- Inconsistency issues resolved by mirroring behaviourand communication by supplier to demonstrateagreement with customer (case A and case C)
- Inconsistency not an issue (case E)
Power/dependence - Perception that supplier contributes more andcustomer gains more from relationship (case B)
- Customer controls orders, product standards andcan dictate final price of products (case B)
- Different views of customer and supplier on whocontributes most and who gains most (case D)
- Supplier controls provision of cheap product price,product design and good product quality/Customercontrols order placement and strategic direction(case A)
- Power fairly evenly balanced; supplier'sstrong design/technological capabilitiescontribute to recognised expertise (case E)
- Company size does not influencerelationship, focus on commondevelopment goals and shared influence(case E)
Trust - Contractual trust — sign contract for everytransaction (case B)
- Customer insists on contracts (case D)
- Supplier A trusts customer's goodwill and Customer Atrusts supplier's production and pricing competence(case A)
- Supplier C trusts customer's goodwill, and Customer Ctrusts supplier's technological competence (case C)
- Goodwill trust between customer andsupplier based on technological expertiseand managerial skills that underpininteraction (case E)
“Good cooperation is beneficial for both companies. Cooling can ob-tain regular order placements from us, and at the same time we canincrease our business. However, long-term cooperation depends onCooling, and Cooling is responsible for our cooperative develop-ments. This is because we are only interested in Cooling continuingto offer us cheap products, better product quality, and delivery ofgoods on time.”
Intensity had not yet built up sufficiently to guarantee any regularcommunication pattern between the smaller suppliers and their largercustomers. Senior-level staff were only involved on a ‘need’ basis andwere not often visible in meetings. Inconsistencies existed betweendepartments in the supplier firms and in exchanges between cus-tomers and suppliers. These often arose from the perception onboth sides of the relationship that the supplier was not performingto the best of its abilities e.g. making frequent mistakes in ordersand product specifications. Suppliers could blame themselves andtake responsibility for problems in order to avoid conflict escalatingwith a large customer:
“The percentage of bad products in our company is high and cus-tomers always complain about this. We know that it is impossibleto achieve zero-defects, but we will try our best to reach thisgoal. The operation strategies of our company are to reduce costs, in-crease profits, and improve the added value of our products.” (ViceManaging Director, Cooling)
Despite these difficulties, the customers were prepared to offsetproblems in the exploratory stage against competitive prices andthe ease of doing business with a smaller supplier. Inconsistencywas resolved in the latter stages of the exploratory stage throughclearer definitions of roles and responsibilities for communicationbeing determined by the customer and supplier.
Power was predominantly in the hands of the customer duringthe exploratory stage and trust was contractually-focused (see quotesbelow from case B). Customers were dominant and distance betweenthe parties wide. However, there was a tentative understanding thatthe relationships could be of longer-term significance and power andtrust issues might be more evenly distributed if the relationshipcontinued:
“We have signed a contract with Diode in every business transaction.Our trust of Diode is based on the contract.” (Managing Director,Bright Light)
“I ask our purchasing department to sign contracts with suppliers everytime wemake a deal. In this way, the company's interests are secured.”(Managing Director, Diode)
The difficulties in trusting the other party were mirrored in con-cerns about lack of commitment from counterparts. The other partycould be considered as selfish, potentially untrustworthy and interested
only in their own benefits. Suppliers could feel coerced without seeingthe benefits or rewards of adapting to a larger customer's demands.
6.2. The developing stage
Overall, two cases (Cases A and C) were classified as being in thedeveloping stage. The relationship characteristics that were most im-portant to the firms in this stage were mutuality, particularity, coop-eration, intensity, interpersonal inconsistency, power/dependenceand trust. Conflict was not a part of the set as it was no longer anissue for customers or suppliers.
The relationships in cases A and C showed greater mutuality thanin the exploratory stage and mutual adaptations increased for thesake of prolonging the relationship. Suppliers tended to give conces-sions on prices and minimum order size to maintain the relationshipwith customers. Customers made concessions on preferred prices anddelivery dates to satisfy suppliers. Although larger customers werestill focused on their own benefits in the developing stage, theywere more likely to take consideration of mutual growth opportuni-ties and weigh the two concerns in balance:
“Even if Chip offers the same price as other suppliers, we always con-sider Chip first. This is because Chip's product quality is similar to thatof other suppliers and we have a long-term relationship.” (PurchasingManager, Resistor)
Customers were more likely to compromise in the developingstage. The responses of the larger customers and smaller suppliersmirrored each other in their communication in this respect, showinghow mutuality, particularity and cooperation developed in paralleland how interpersonal inconsistency was overcome through mirror-ing behaviour, as demonstrated in the following quotes from case C:
“In some cases, Semiconductor gives up insistence on its preferredprice to keep the relationship with us.” (President, Clean System)
“Sometimes Clean System concedes lower prices in order to maintainthe relationship with us”. (Purchasing manager, Semiconductor)
Mirroring behaviour and communication by the supplier thus en-abled the smaller firm to demonstrate commitment and agreementwith its larger customer. More cross-functional interaction was evi-dent during the developing stage, with increasing numbers of man-agers interacting across customer and supplier firms. Smallersuppliers had more input to decisions that would affect their businessand were able to communicate regularly with management at ahigher level in customer firms.
In the developing stage, growing interdependencies were found toexist, but the overall strategic direction still rested with the largercustomer. Trust had developed beyond a contractual basis: supplierstrusted their larger customer's goodwill, whereas the larger customertrusted their smaller supplier's capabilities in product specifications,technology and customer service.
6.3. The stable stage
Several relationships in the study appeared to have long-term po-tential, but Case E was the only one which was classified as being cur-rently in the stable stage. The relationship characteristics important tothe firms during the stable stage were mutuality, particularity, cooper-ation, intensity, power/dependence and trust. Conflict and interperson-al inconsistencywere not part of the stable stage set of characteristics asthese areas had been resolved by the customer and supplier in the ear-lier stages of the relationship.
The capabilities of the smaller supplier were better recognised bycustomers in the stable stage. No dominant organisation took overallcontrol of the strategic direction of the relationship; each party wasrecognised to control different aspects of the relationship. Thus,there was strong mutuality and particularity and more balancedinterdependencies between the larger customers and smaller suppliers.The suppliers took a more forceful and prominent role in managing therelationship. Senior management invested time and effort in findingopportunities for working on common goals. The relationships becamemore relaxed, friendly and sociable. Each party focused on retaining andenhancing the benefits and value of the relationship through furthercooperation.
Neither the customer nor supplier showed significant problems indealing with power and dependence in the stable stage. Companysize differences became less significant as the boundaries betweenpower domains were more clearly identified and understood, as dem-onstrated by the following quotes from case E:
“We have very strong technology. Thus, I do not worry about therelationship with Power Supply.”
In addition, trust had developed to the extent that the relationshipremained exclusive and precluded the development of alternativerelationships.
“Transformer has good product technology and their product quality isstable. We have built an especially friendly relationship. Transformeralways keeps their promise that any types of product sold to PowerSupply will not be sold to other customers.” (ViceManagingDirector,Power Supply)
The stable stage was differentiated from other stages by a focus onidentifying areas for improvement and enhancing the long-term po-tential of the smaller supplier:
“Power Supply's main products are notebook computers and other elec-tronics products with short life cycles. This means we must always im-prove and innovate with our customer, but we have limited financialresources. It is very difficult to offer adequate employee training ourselvesfor the whole staff.” (Managing Director, Transformer)
This focus on the supplier's potential increased the impetus for thesmaller supplier and larger customer to maintain the relationship andto work together to ensure the enduring value of the relationship.
7. Conclusions
This paper set out to examine the characteristics of asymmetriccustomer–supplier relationships during the exploratory, developingand stable stages of relationship development. Previous studies onasymmetric relationships have shown that relationship characteris-tics are important determinants of the nature of asymmetry and pos-sess the potential for suppliers or customers to achieve their desiredoutcomes in their relationships (Hingley, 2005; Johnsen & Ford,2008; Johnsen et al., 2008).
The linking of the full set of characteristics of asymmetry and rela-tionship development stages is a key contribution of this study. Ourcontribution is both conceptual and empirical and encompasses anew typology of the asymmetric relationship development stages,empirical findings on the typology and data from both larger cus-tomers and smaller suppliers.
Our findings have important implications for customers and sup-pliers through focusing on key relationship characteristics at different re-lationship stages. The findings show that the relationship characteristicsin asymmetric relationships vary at each stage of development (explor-atory, developing and stable), and that three distinctive patterns are
each critical for supporting the relationship through the three stages (seeFig. 1).
Fig. 1 is a simplified illustration of our conclusions on the relation-ship development stages in asymmetric relationships. This illustrationshows that in the exploratory stage mutuality, cooperation, conflict, in-tensity, interpersonal inconsistency, power/dependence and trust are ofcritical importance in building the relationship and coping with prob-lems between smaller suppliers and larger customers. In the developingstage mutuality, particularity, cooperation, intensity, interpersonal in-consistency, power/dependence and trust are the focus of larger cus-tomers and smaller suppliers in establishing and managing therelationship, creating the foundations for long-term interactions. Inthe stable stage ensuring the continuation of the relationship dependson maintaining the smaller suppliers' and larger customers' emphasison mutuality, particularity, cooperation, and intensity and dealingwith power/dependence and trust issues. We now draw conclusionson how each of the relationship characteristics is manifested duringthe asymmetric relationship development stages shown in Fig. 1.
Mutuality was essential in creating equilibrium in asymmetric re-lationships (Ford et al., 1986) and was particularly important in theexploratory and developing stages to steer the relationship and de-velop commonly understood priorities. Particularity was an impor-tant issue for both larger customers and smaller suppliers in thedeveloping stage, but it became especially critical for suppliers in en-suring the longevity of their relationships with larger customersthrough the stable stage. Particularity supported suppliers in demon-strating their uniqueness and value to larger customers.
Cooperation was desirable for smaller suppliers in the exploratorystage of asymmetric relationships, but did not become of interest tolarger customers until the developing stage. Overcoming conflictwas important in improving the quality of the relationship and thelong-term trust between the parties (Claycomb & Frankwick, 2010;Mohr & Speckman, 1994; Ren et al., 2010). Conflict was a majorissue for both larger customers and smaller suppliers in the explor-atory stage of the relationship, but once the developing stage hadbeen reached overt conflicts were significantly reduced and in thestable stage they were dissolved completely.
Intensity developed from few customer–supplier interactions with alimited number of lower-level staff in the exploratory stage, to increasedcross-functional and cross-firm involvement in the developing stage. Inthe stable stage senior personnel became more involved (Geser, 1992)and long-term friendships evolved. Interpersonal inconsistency was aconcern predominantly in the exploratory stage. The energy which en-abled the firms to establish shared communication patterns was impor-tant in propelling them to the developing stage of the relationship(Havila & Wilkinson, 2002). The important impetus in the developingstagewas the ability of the larger customer and smaller supplier tomirroreach other's behaviour and echo each other's priorities in their
communications. This created a positive setting for the stable stage inwhich the larger customer and smaller supplier communicated onmore equal terms.
Power could be coercively used in relationships tomanipulate a pos-itive outcome for the stronger party (Frazier & Antia, 1995; Hausman &Johnston, 2010). In the exploratory stage customers appeared to controltheir smaller suppliers and encourage dependence. However, after theexploratory or ‘test’ phase, power was more evenly distributed and de-pendence waned if suppliers were able to demonstrate their value inareas deemed important by customers.
In the exploratory stage contractual trust developed in bothparties (Sako, 1992). However, in the developing stage supplierscould already have developed goodwill trust in customers, whiletrust by customers remained at the competence trust level. Goodwilltrust was evident for both parties in the stable stage. Unevenness oftrust could be destabilising for the asymmetric relationship.
7.1. Theoretical and empirical contributions
Through the conceptual developments of the paper our aim hasbeen to contribute to growing theoretical discussions on the nature ofasymmetric relationships and relationship development stages froman IMP perspective. This research is amongst the first to offer a concep-tual structure linking asymmetric customer–supplier relationship char-acteristics and relationship development stages. The research hascontributed to the field that investigates the nature of asymmetry in re-lationships (e.g. Hingley, 2005; Johnsen& Ford, 2008). The research alsocontributes to understanding power and dependence in relationships,by highlighting the potential for the less powerful smaller supplier tocontribute more actively in relationships with larger customers. Thestable stage of relationship development in asymmetric relationshipsis characterised bymutual advantages for larger customers and smallersuppliers when coercive power is reduced and mutual dependenciesexist (Ganesan, 1994; Hausman& Johnston, 2010). Furthermore, the re-search has contributed to conceptualising the characteristics of dyadicasymmetric relationship development, where previous studies haveoften focused on one or other of the customer or supplier perspectives(Claycomb & Frankwick, 2010; Johnsen & Ford, 2008).
Our literature review highlighted the importance of relationship de-velopment for smaller suppliers in giving access to opportunities and re-sources through linking in long-term relationships with largercustomers. However, research to date has not considered how large cus-tomers and smaller suppliers manage relationship development inasymmetric relationships. To better understand the influence of asym-metric relationships on relationship development, we identified a set ofcustomer–supplier relationship characteristics that define asymmetry:various sets have been developed in past research, but for the purposeof identifying contemporary relationship characteristics we decided to
draw on recent sets developed by Johnsen and Ford (2008) and Johnsenet al. (2008). However, neither of these contributions specified howasymmetric relationship characteristics may develop over time as rela-tionships move from exploratory to developing or stable stages, as wehave done in this study.
7.2. Managerial implications, limitations and avenues of future research
This study has highlighted the importance for smaller suppliers andlarger customers of assessing their development stages in relationships.Firms can use the framework set out in this paper to guide the focus oftheir relationship characteristics at each stage of development. An anal-ysis of their relationship development may enable customers and sup-pliers to achieve a stronger position and a more active role indecisions concerning their future in asymmetric relationships. Further-more, self-awareness and critique concerning their role in asymmetricrelationships may enable firms to make better, more informed choicesabout their wider network of relationships.
We would recommend that managers assess the stage of maturityand characteristics of their customer–supplier relationships to enabletheir desired relationship aims to be achieved, to identify areas offuture relationship improvement or to assess the value of strategiccustomer–supplier relationships in conjunctionwith traditional supplierevaluation methods. The outcomes of such analysis would prove usefulas a basis for discussion between larger customers and smaller suppliersin evaluating and overcoming problem areas in their relationship and insetting relationship development milestones.
Thefindings of this research contribute to informing the developmentof smaller suppliers in relationships with larger customers, offering op-portunities for enhancing the management and growth of their relation-ships with their larger customers and contributing to increasing theirappreciation and value in their larger customers' eyes. Through a betterunderstanding of relationship development and the characteristics ofasymmetric relationships, smaller suppliersmay ensure that they capital-ise ondeveloping critical relationship characteristics to enable the contin-uation of important customer relationships through key growth stages.
The findings offer insights for larger customers on how relationshipswith smaller suppliers may be developed, by identifying key issues forinvolving suppliers and enhancing the relationship at each stage ofdevelopment through a focus on critical relationship characteristics.‘Mirroring behaviour’ is critical in the development of smaller suppliers:larger customers should identify methods for mentoring and develop-ing smaller suppliers beyond traditional methods of supplier assess-ment and evaluation. The involvement of senior managers fromcustomer firms in advisory and mentoring capacities could play amajor role in increasing the momentum and effectiveness of a smallersupplier's development and growth, leading to an improved positionin the customer's supplier portfolio and in a more active and dynamicsupply relationship for the customer.
The empirical findings from this study were drawn from a re-search context that is less well researched in the IMP school, namelyrelationships in a Taiwanese setting. Thus, the research has contribut-ed to knowledge of asymmetric customer–supplier relationships andrelationship development in a Chinese-based culture. This is impor-tant for potential customers and suppliers in understanding the dy-namics of relationship development in the rapidly developingTaiwanese economy. However, limitations of the study concern thenarrow focus on larger customers and smaller suppliers from onecountry and one sector. Furthermore, we focused predominantly onprevious work of the IMP Group for our conceptual basis.
Our qualitative research used five in-depth case studies. Future re-search could use quantitative techniques to examine the concepts dis-cussed in our paper and to conduct similar studies in other countries,sectors and companies. Our study's delineation of the three stages of re-lationship development could be used to explore the links between thedimensions of the stages to longevity and stability in relationships. We
adopted the difference in size between larger customers and smallersuppliers as a proxy for relationship asymmetry. So, our findings relateto relationship development stages in the context of one form of asym-metric relationships, namely that of larger customer and smaller suppli-er. However, further research would be needed to confirm whether ourobservations are unique to this context or whether, for example, largersupplier–smaller customer relationships, or symmetrical relationshipswould demonstrate similar patterns in the relationship developmentstages.
Appendix A. Interview protocol
The questions were designed to be open-ended enabling respon-dents to provide clarification or examples. The specific questions var-ied depending on whether respondents represented customers orsuppliers.
The following is a short, generic version of the interview guidesused.
Respondent, company and relationship context:
• Respondent position and responsibility• Size of organisation in terms of employees and turnover• Major products and markets• Identification and mapping of customer/supplier relationship forinvestigation
• Longevity and nature of the customer/supplier relationship• Identification of customer/supplier actors
Relationship characteristics — experiences of customers/suppliersrelated to characteristics of:
Relationship development experienced by customers/suppliers:
• Identification of relationship stage of customer–supplier relationship• The specific experiences during exploratory, developing andmaturestages
• Examination of relationship characteristics during key stages ofrelationship development
• Attempts to influence the characteristics of the relationship duringkey stages of development
Appendix B. Participant observations
Case B (Bright Light–Diode)
Case B meetings were observed for six one-hour sessions. Thesemeetings involved the purchasing manager and the domestic depart-ment's vice-managing director on the customer side and the market-ing manager and assistant marketing manager on the supplier's side.27 pages of notes transcribed.
Case C (Clean System–Semiconductor)
Case C meetings were observed for three sessions of one and halfhours. These meetings involved the buyer, production manager, pur-chasing manager and president on the customer side and the market-ing manager and the president on the supplier side. 27 pages of notestranscribed.
Case D meetings were observed in four sessions of one and halfhours each. These meetings involved the purchasing manager, thebuyer, the manufacturing director, and R&Dmanager on the customerside and the domestic marketing manager, the domestic sales personand the vice-managing director on the supplier side. 22 pages of notestranscribed.
Case E (Transformer–Power Supply)
Case E meetings were observed during three sessions of 2 h each.Thesemeetings involved thepurchasingmanager, the component qualitycontrol manager, the R&D manager on the customer side and themanaging director and the marketing manager on the supplier side.24 pages of notes transcribed.
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