Asymmetric customer–supplier relationship development in Taiwanese electronics firms

Industrial Marketing Management 41 (2012) 692–705

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Industrial Marketing Management

Asymmetric customer–supplier relationship development in Taiwanese electronics firms Chia-Jung Lee a, 1, Rhona E. Johnsen b,⁎ a b

Department of Business Innovation and Development, MingDao University, Post Code: 52345, Taiwan, ROC Audencia School of Management, GREMA: Groupe de Recherche en Management à Audencia, 8 Route de la Jonelière – BP31222, Nantes 44312, France

a r t i c l e

i n f o

Article history: Received 5 July 2010 Received in revised form 27 April 2011 Accepted 12 May 2011 Available online 13 October 2011 Keywords: Asymmetry Customer–supplier relationships Smaller supplier Larger customer Taiwanese electronics industry

a b s t r a c t The purpose of this paper is to analyse the relationship development stages of asymmetric customer–supplier relationships. The structure of relationships between larger customers and smaller suppliers has been the focus of a number of studies in IMP (Industrial Marketing and Purchasing Group) research. But, there is a paucity of research that examines development stages in relationships where a difference in size between the parties exists. The paper links the characteristics of asymmetric customer–supplier relationships and the relationship development stages through a literature review. The findings from a set of five in-depth case studies of asymmetric customer–supplier relationships in the Taiwanese electronics industry are presented. The case 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-case analysis was conducted to examine the links between the characteristics of asymmetric customer–supplier relationships and relationship development stages. The findings revealed that asymmetric customer–supplier relationships in the Taiwanese electronics industry were very unbalanced and vulnerable in the exploratory stage of development. In the developing stage relationships were more likely to develop if suppliers and customers mirrored each other's behaviour and echoed each other's priorities. In the stable stage suppliers and customers worked on shared and balanced contributions to the relationship. The paper contributes to the understanding of how smaller suppliers and larger customers can identify and develop key sets of relationship characteristics through the exploratory, developing and stable stages of asymmetric relationship development from both customer and supplier perspectives. © 2011 Elsevier Inc. All rights reserved.

1. Introduction Since the 1980s asymmetry has been found to have a potentially destabilising effect on business relationships (Harrigan, 1988). Relationships are more likely to run smoothly if the capabilities, resources and characteristics of the relationship are a good strategic fit and have a certain level of complementarity between the parties involved (Tu, 2010). Researchers have highlighted that existing research fails to encapsulate the complex balance of characteristics in customer–supplier relationships and the corresponding influences on relationship development (Holmlund, 2004). Understanding the nature and influences of asymmetric customer–supplier relationships may enable both parties to have a more transparent vision of their potential within the relationship and on their ability to set development priorities and manage problems during relationship development (Ford & Saren, 2001).

⁎ Corresponding author. Tel.: + 33 240374605. E-mail addresses: [email protected] (C.-J. Lee), [email protected] (R.E. Johnsen). 1 Tel.: + 886 4 8876660#7520. 0019-8501/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2011.09.017

In the industrial marketing literature, asymmetry has been understood in terms of the links between size difference (based on number of employees of the total organisation) and certain individual relationship characteristics (Johnsen & Ford, 2008). For example, a number of authors have attempted to understand how characteristics such as power, commitment, dependence or knowledge may be associated with 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 characteristics of a relationship. For example, a supplier may be smaller than its customer and have less power, but more trust in the relationship than its larger counterpart. Despite existing research on relationship development being wellconsidered in the literature, asymmetric relationship development is a relatively new area of study and remains less clear (Andersen & Kumar, 2006). Findings from recent studies indicate that the consequences of size asymmetry may have positive and negative effects for smaller suppliers in relationships with larger customers (Hingley, 2005; Johnsen & Ford, 2008). Smaller suppliers may need to decide how to capitalise on their advantages of size asymmetry by working more closely within their larger current customer relationships, or

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they may need to develop ways to overcome relationship problems to enable relationships with larger customers to flourish (Hingley, 2005; Johnsen & Ford, 2008). Most studies to date have sought to understand asymmetry from only the perspective of one side of the relationship — either the smaller supplier or the larger customer's viewpoint (Claycomb & Frankwick, 2010). However, customer and supplier perceptions may differ widely in relationships (Claycomb & Frankwick, 2010). Moreover, little research to date has captured how asymmetric relationships may change across different stages of relationship development (Andersen & Kumar, 2006; Eggert, Ulaga, & Schultz, 2006). In short, there is scope to expand the existing literature in the domains of asymmetric relationships and relationship development to examine the influence of asymmetric relationships on relationship development from both a smaller supplier and a larger customer perspective. Therefore, this paper contributes to existing research through an investigation of the ways in which different characteristics of asymmetric relationships evolve during the stages of customer–supplier relationship development. We address the following specific research question in this study: • How do the characteristics of asymmetric customer–supplier relationships evolve during the exploratory, developing and stable stages of the relationship? In the following sections the theoretical and empirical context of the paper are established. We focus on an examination of the characteristics of asymmetric relationships during the stages of relationship development in customer–supplier relationships. The findings from the empirical study are discussed and conclusions and conceptual and managerial lessons are presented. 2. Literature review The purpose of this literature review is to examine asymmetric relationships through a set of relationship characteristics that have been found in previous research to have a bearing on the nature of asymmetry in customer–supplier relationships. Following the investigation of asymmetry in relationships, the second part of the literature review identifies the relationship development stages that are pertinent to asymmetric relationships and thus how relationship characteristics may evolve as asymmetric relationships develop. We conclude the literature review by presenting a typology to provide a conceptual structure for examining relationship development stages in asymmetric customer–supplier relationships. 3. Characteristics of asymmetric customer–supplier relationships In an effort to understand the nature of asymmetric relationships and how firms may focus on choices and changes within these relationships, we begin by providing a review of the literature on relationship characteristics which have been the focus of previous research on asymmetry in the IMP tradition, and which have been found 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 been developed, they tend to be less wide-ranging and inclusive. We focus on how our chosen set of relationship characteristics may be manifested in asymmetric relationships between larger customers and smaller suppliers. Previous studies (Hingley, 2005; Johnsen & Ford, 2008; Johnsen, Johnsen, & Lamming, 2008) have shown that asymmetry needs to be considered at the level of the characteristics of the customer–supplier relationship to enable firms to better understand and manage asymmetric relationships and to make choices about where to focus their efforts in building their relationships or making changes that will impact on how they are perceived and

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valued in asymmetric relationships. Table 1 provides our point of departure for definitions, sources and indicators of our chosen set of relationship characteristics with which we set out to analyse asymmetry in the larger customer–smaller supplier relationship. The set of relationship characteristics in Table 1 is identical to that of Johnsen and Ford (2008), with the addition of trust, which is emphasised in much customer–supplier relationship literature, although it only seems to have been explicitly addressed in more recent IMP research (e.g. Andersen & Kumar, 2006; Dyan & Di Benedetto, 2010; Huemer, 2004; Keh & Xie, 2009). We chose the Johnsen and Ford (2008) typology as it presents a view of multiple relationship characteristics from the perspective of smaller supplier–larger customer relationships. Other studies have investigated individual relationship characteristics with regard to asymmetry, but none appear to present such a comprehensive analysis of the characteristics of relationship asymmetry. This comprehensive view is important for this research as it may enable customers and suppliers to understand the totality of their relationship's characteristics. Johnsen and Ford (2008) only investigated the smaller supplier's view in their study of asymmetry, whereas our study will investigate both the smaller supplier and larger customer perspectives of their relationship. In addition, we have chosen to add trust to the characteristics investigated by Johnsen and Ford (2008) as this characteristic has an important impact on the stability and longevity of dyadic relationships (Ford, 1980). It is therefore important to consider trust in investigating smaller supplier–larger customer relationships, where instability may be more prevalent than in relationships where there is more equality in terms of the size of the firms involved. Few studies to date have explored a wide range of relationship characteristics, so there is a gap in the literature in this area which we seek to examine. All the relationship characteristics examined in the following section are structural in nature and as such they set the conditions for the relationship context in which larger customers and smaller suppliers interact and in which processes such as adaptation and exchanges of information, knowledge, or finances take place. 3.1. Mutuality Mutuality describes how the parties demonstrate their interest in the well being of one another and explains how they seek common goals or interests (Ford et al., 1986). Mutuality is a key element in creating more equilibrium and equality in relationships. However, creating mutuality may be challenging in asymmetric relationships. The smaller party may have limited experience, or may not be permitted to contribute to development goals or strategy (Johnsen & Ford, 2008), but is expected to focus largely on implementing decisions made by the larger firm in the relationship. 3.2. Particularity Particularity is the quality of uniqueness possessed by a given interaction (Ford et al., 1986). Smaller suppliers often strive to make their offering or relationship unique in the eyes of their larger customer through significant adaptations to the customer's requirements. Often this requires them to seek ways to give special treatment to customers without increasing their costs (Ford et al., 1986). However, a larger customer may attempt to control the development of a range of smaller suppliers in aspects such as product, technology and process development for the customer's unilateral advantage (Ford & Saren, 2001), making it difficult for an individual supplier to distinguish itself in the relationship. 3.3. Cooperation Firms often cooperate in business relationships in order to gain profit or information advantages or improved visibility and flexibility

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Table 1 Definitions 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 one another and how they seek common goals or interests (Ford, Håkansson, & Johanson, 1986).

Particularity

Direction, uniqueness, commitment in a relationship, when compared to other relationships of the companies, or the extent of standardisation/adaptation of interaction (Ford et al., 1986).

Cooperation

Extent of working together towards a shared aim or direction for the relationship (Ford et al., 1986). Extent of perceived differences between parties, causing friction and disputes, but also potential for creativity (Ford et al., 1986). Extent of contact and resource exchange between firms in a relationship (Rosson & Ford, 1982).

- 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)? - What is the extent of dedicated exclusive efforts of one party e.g. production processes or designs of suppliers geared towards our specific needs? - To what extent is the other party committed to us in comparison with other relationships in its portfolio? - To what extent is the relationship characterised by co-operative rather than contentious interaction? - What is the extent of disagreement or disputes over e.g. specifications, or nature of orders or agreed designs? - 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? - Are there great differences between how individuals or departments interact with other party? - To what extent do we send or receive mixed messages from different parts of company or different individuals? - What is our ability to persuade other party to do something they do not want to do? - Are we in a position to influence decisions and actions of other party? - 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 is unique or unmatched? - 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 produce what contract requires?

Conflict Intensity

Interpersonal inconsistency

The personal expectations and individual interests influencing interaction and the extent of perceived variation in other actor's approach to interaction between individuals or departments (Ford et al., 1986; Johnsen & Ford, 2008).

Power/dependence Extent to which an actor – implicitly or explicitly – can get another actor to do something that they would not otherwise have done. (Dahl, 1961; Hausman & Johnston, 2010). Dependence is the obverse of power as the more dependence of one party on another the less power the former has within that relationship. (Emerson, 1981; Ford, 1980; Hingley, 2005).

Trust

The expectation held by one actor about another that the other responds in a predictable and mutually acceptable manner. Importance of contractual, competence and goodwill trust at different stages of relationship (Sako, 1992; Morgan and Hunt, 1994; Huemer, 2004).

(Blankenburg, Eriksson, & Johanson, 1996; Claro & Claro, 2010; Whipple, Lynch, & Nyaga, 2010). However, smaller suppliers are often restricted to making inputs in areas such as production or logistics, thus limiting their potential to contribute more significantly to strategic developments with larger customers (Chen & Chen, 2002). Cooperation in asymmetric relationships may focus largely on the larger customer's concerns and the relationship may be destined to last for only as long as superior value accrues in the customer's eyes (Möller and Törrönen, 2003).

because of the limited availability of their senior management (Geser, 1992). Commitment to increasing the level of intensity may be difficult in asymmetric relationships as the smaller supplier may not have the critical mass of staff to dedicate to enhancing the relationship. Involvement of a large number of managers from different functions in a dyadic relationship may increase the complexity of interactions between the firms, but may also give rise to opportunities for value creation and innovation in the asymmetric relationship, by drawing on the smaller supplier's agility and dynamism and the larger customer's experience and leadership (Golfetto & Gibbert, 2006).

3.4. Conflict 3.6. Interpersonal inconsistency Conflict may be necessary to keep a relationship dynamic and reestablish the criteria on which it can continue (Ford, Gadde, Håkansson, & Snehota, 2003). Lowering the levels of conflict in a customer–supplier relationship has been found to improve the quality of the relationship and the trust between the parties (Ren, Oh, & Noh, 2010). Equality of input to conflict resolution between customers and suppliers may create mutually satisfactory outcomes for the relationship (Claycomb & Frankwick, 2010; Mohr & Speckman, 1994). Coping with conflict in the asymmetric relationship may be problematic for smaller suppliers who hold the weaker position in the relationship and may be wary of creating conflicts or voicing concerns to their larger customer for fear of relationship termination (Harrison, 2002).

Interpersonal inconsistency concerns the personal expectations and individual interests influencing interaction (Ford et al., 1986). Interpersonal inconsistency may result in ambiguity or lack of clarity in communication and may be aggravated by the variety of firms, units or departments involved in a relationship; each with their own agendas and roles (Alajoutsijärvi, Möller, & Rosenbröijer, 1999; Mitręga & Katrichis, 2010). In asymmetric relationships a smaller supplier may find that it is difficult to meet or exchange ideas with larger customers and that their level of communication is limited and reactive. However, smaller suppliers may learn from interacting with decisionmakers and managers in customer firms with varied views, cultures and experiences (Johnsen & Ford, 2008).

3.5. Intensity 3.7. Power and dependence Relationship intensity is an aggregate measure of the level of contact and resource exchange between firms (Rosson & Ford, 1982). Firms do not usually have many ‘high involvement’ interactions at any one time

Power may be defined as an ability to get another person to do something that he or she would not otherwise have done (Dahl,

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1961), or as a “general capacity for action” (Barnes, 1988, p. 23). Power may be applied either coercively or cooperatively (Frazier & Antia, 1995; Hausman & Johnston, 2010). Coercive power is often seen to reside in low-involvement or adversarial relationships where strong dependencies may exist between the relatively powerless and the more powerful party (Dwyer, 1980; Ford et al., 2003; Lusch, 1976; Wilkinson, 1981). Non-coercive power enhances a firm's willingness to cooperate and reduces conflict in relationships (Hausman & Johnston, 2010). A strategy based on coercive power is assumed to have the opposite effect, inducing raised levels of conflict and reducing opportunities to cooperate (Vaaland & Håkansson, 2003). Power in a relationship is not the monopoly of a single company, nor is it uni-dimensional (Ford et al., 2003). Dependence is defined as the obverse of power (Emerson, 1981), as power resides implicitly in another person's dependence (Emerson, 1962). Dependence may be considered to be the price that a firm has to pay for the advantages bestowed upon it by its relationships (Easton, 2002). Firms may choose to accept dependence as a trade-off for the benefits that accrue from a relationship with a strong counterpart. If firms are mutually dependent, they may have problems coping with other relationships, but may manage quite effectively in their core relationship (Ford et al., 2003). However, if power and dependence are asymmetrically distributed the relationship will not only be difficult to manage, but the benefits for the more dependent firm will be difficult to realise (Easton, 2002). 3.8. Trust Trust plays a significant role in shaping interaction and long-term relationship building (Andersen & Kumar, 2006; Dyan & Di Benedetto, 2010; Huemer, 2004; Keh & Xie, 2009). Trust grows on the understanding that both parties benefit from mutual investments and gain mutual satisfaction from the relationship (Selnes, 1998). Trust-building may be particularly difficult in the asymmetric relationship when the smaller party is unable to contest decisions made by a larger customer or to play a role in moving on from contractual trust to competence and eventually goodwill trust (Sako, 1992). Trust may be enhanced by the degree of two-way communication and emotional involvement between customers and suppliers (Andersen & Kumar, 2006). Trust may make communication, information-sharing and conflict management more open during the relationship development stages and enable the parties to grow from a focus on contractuallybased trust, to competence-based trust to goodwill trust during different stages of relationship development. As relationships develop over time it is important to identify how their characteristics change or evolve. Little research to date has examined how relationship characteristics can be viewed from a more dynamic perspective by linking them to the stages of relationship development. We therefore address the issue of relationship development stages in the next part of the literature review.

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the focus of more recent research on relationship development patterns (e.g. Alajoutsijärvi et al., 1999; Havila & Wilkinson, 2002). Subsequent studies on relationship development have shown that the parties involved tended to demonstrate a preference for a longterm orientation (Anderson & Narus, 1990; Wilson, 1995) and were found to make efforts to overcome difficulties and build value in their relationships at each stage (Eggert et al., 2006; Wilson & Jantrania, 1994; Zerbini & Castaldo, 2007). Relationships were successful when the parties made mutual efforts to reduce uncertainty (Campbell, 1985). Uncertainty could also be mediated by a good reputation (Larson, 1992). Relationships would flourish when joint problem-solving and interdependencies developed (Anderson & Narus, 1990; Heide & John, 1988; 1990). Thus, the focus was on the beneficial nature of social interaction, collaboration and long-term harmonious relationships between customers and suppliers. However, relationship development may be fraught with more negative implications, uncertainties and difficulties (Heide & Stump, 1995; Johanson & Mattsson, 1987). In reality, relationship development could be a less harmonious experience and involve tensions between larger customers and smaller suppliers (El-Ansari & Stern, 1972). Asymmetric power displays, conflict resolution, commitment and 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 examines the generic stages of relationship development, but little that reflects on specific types of relationship with different roles and patterns of behaviour during the relationship development stages. We address this weakness in the following section by examining the exploratory, developing and stable stages of relationship development and relating them to asymmetric customer–supplier relationships.

4.1. The exploratory stage Exploration refers to the research and test phase in relational exchange (Dwyer et al., 1987). Customers may test a smaller supplier's potential through small orders and negotiation of terms or product specifications (Claycomb & Frankwick, 2010) or suppliers may question the commitment of their larger customer to building a trusting, longer-term relationship (Wilson, 1995). Cooperation is a critical part of the initiation and expansion phases of relationship development (Dwyer et al., 1987). In the early stages of a relationship smaller suppliers may be controlled by larger customers as they have yet to establish their position in the relationship and prove their value. Suppliers may offer customers a trial of new offerings or assurances to increase the customer's motivation for building the relationship. However, with limited resources and experience, smaller suppliers may lack the ability to convince a larger customer of their worth and to survive this critical stage of relationship development.

4.2. The developing stage 4. The relationship development stages in asymmetric customer– supplier relationships The 1980s saw the beginning of the development of a number of frameworks that tried to capture the complex dynamics of relationship development (Dwyer, Schurr, & Oh, 1987; Ford, 1980; Frazier, 1983). These frameworks captured how interaction differed across a range of relationship development stages and the role of individuals in the interactions at each crucial stage. Ford's (1980) model identified four relationship development stages; the pre-relationship stage, exploratory stage, developing stage and stable stage. The stages of Dwyer et al.'s (1987) model mirror those of Ford's (1980) model, highlighting the awareness, exploration, expansion and commitment phases. However, neither model included dissolution of the relationship which has been

In the developing stage intensity, mutuality and particularity grow in the customer–supplier relationship. Larger customers increase their purchases from smaller suppliers and consider longer-term contracts (Claycomb & Frankwick, 2010). Cooperation and trust in the counterpart increases and power becomes increasingly shared across different domains of expertise of the two parties (Tu, 2010; Wilson, 1995; Wilson & Jantrania, 1994). Interpersonal inconsistency is reduced in the developing stage, as smaller suppliers become more adept at managing misunderstandings and conflicts through experience of working with their larger customer (Johnsen & Ford, 2008). However, this development does not inevitably continue and the relationship may revert to an earlier stage (Bygballe & Harrison, 2003).

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4.3. The stable stage If a customer and supplier survive the developing stage, the advantages of the stable stage may be manifold. When a relationship is 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 may be evident during the stable stage. Routines and institutionalisation may mean that the relationship is taken for granted and does not reach its full potential (Ford et al., 2003). In this mature stage both a larger customer and smaller supplier have strong mutuality, particularity, intensity and long-term cooperation, through ongoing experience of one another (Ford et al., 2003). Trust, commitment and relationship-specific investments have been built in the other party (Claycomb & Frankwick, 2010; Ganesan, 1994; Wilson, 1995). This may preclude a customer or supplier from seeking alternative relationships and focusing more efforts and resources on maintaining the established relationship. In the stable stage, particularity is an explicit assurance of relational continuity between the customer and supplier (Dwyer et al., 1987). Trust is important to the stability of the customer–supplier relationship and mirrors the firms' “mutual importance to each other” (Ford, 1980, p.47). Smaller suppliers focus on developing goodwill trust with their larger customers, as the key issue in the stable stage is to maintain the relationship as more important to the customer than that of competing suppliers (Sako, 1992) and to avoid relationship dissolution. Although we do not examine relationship dissolution per se in our research, it is an important concern during the development of the asymmetric customer–supplier relationship, as smaller suppliers may find their relationships with larger customers to be ended unilaterally, disengaging them suddenly from a major business partner (Harrison, 2002). High levels of dependence and limited power over the direction of the relationship may mean that dissolution has a negative impact on the supplier's confidence and its ability to forge new relationships — or to harness the residue of its relationship ‘energy’ (Havila & Wilkinson, 2002). 4.4. A typology of asymmetric relationship characteristics and development stages Our typology of the relationship development stages in asymmetric customer–supplier relationships, outlined in Table 2, is a proposed theoretical framework derived from the literature review to enable us to empirically investigate relationship development in asymmetric customer–supplier relationships. The typology in Table 2 combines the set of relationship characteristics that were identified in Table 1, with relationship development stages to examine how the chosen set of relationship characteristics may evolve during these stages. Thus, the typology indicates how each individual relationship characteristic may be manifested in a larger customer–smaller supplier relationship during the stages of relationship development. The typology guides the development of the 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 electronics industry context. Taiwan is a world-class manufacturing centre and has a leading global market share in many electronics products (Chiger & Karp, 2003; Ministry of Economic Affairs, 2007), with key strengths in all areas of computer manufacturing and component technologies (Chang, 2004). Most Taiwanese electronics firms are original equipment manufacturers (OEMs) (Hwang, 2002). The development of relationships with larger customers is a critical foundation for increased international

competitiveness and growth in small and medium-sized Taiwanese firms (SMEs) (Hsieh, Yeh, & Chen, 2010; Tsay, 1999). Indeed, there is an increasing interest and emphasis on relationship development issues in the Taiwanese electronics sector, with a view to understanding how customer–supplier relationships contribute to Taiwan's economic development (Carr & Leong, 2000, Hsiao, Purchase, & Rahman, 2002). 5.2. Multiple case studies We adopted a phenomenological perspective to understand how the characteristics of asymmetric customer–supplier relationships evolve during the exploratory, developing and stable stages of a relationship. An abductive approach was adopted, as advocated by Dubois and Gadde (2002), rather than a deductive or inductive approach. Abduction was adopted to reflect the ‘systematic combining’ of reflections on the literature and empirical findings. Qualitative data collection techniques were the most appropriate method for this research to investigate the meaning of phenomena in the social world, rather than seeking statistical representativeness (Halinen & Törnroos, 2005). Within our chosen approach, meaningful generalisations can be based on a limited sample of case studies drawing on multiple sources of evidence and a summary of interview responses can be a reasonable approximation of reality (Dubois & Araujo, 2007). A multiple-case approach aims to derive general conclusions from a limited number of cases and is suitable in situations where only little is known about the phenomenon (Halinen & Törnroos, 2005), as in the situation of asymmetric relationship development. 5.3. Case company selection The five case studies were chosen from the electronics industry in Taiwan. The larger customer–smaller supplier relationships were chosen on the basis of difference in size between the firms in terms of the number of employees of the entire organisation. The unit of analysis was the relationship between small and medium-sized electronics suppliers and their larger customers. Each relationship was accessed through initial contacts with the small and medium-sized suppliers. The suppliers were identified through initial research via company databases and an internet search for those fitting the criteria of independent, privately owned and autonomous small and mediumsized electronics suppliers. The larger customers of each supplier were identified during the first interview with suppliers. 5.4. Data collection Prior to launching the in-depth case studies, a pilot case study involving ten face-to-face interviews across one larger customer–smaller supplier dyad (case A) was conducted. These exploratory open-ended interviews helped to refine the research questions and the researchers' general understanding of possible relationship development patterns in asymmetric relationships and thereby helped to ensure construct validity and reliability. As the respondents were based in Taiwan and the researchers were based in the UK, webcam technology was used for the pilot interviews. Four further case studies involving face-to-face, semi-structured interviews in Taiwan were included during the main body of data collection (cases B–E). In total the five cases involved 50 semi-structured interviews with managers and directors from the supplier and customer firms. Conducting more than one interview in an Asian small business is difficult (Romano, 1989). However, the 10 interviews per customer–supplier dyad and the multiple observations per case study ensured information-rich data collection and analysis in this investigation. To achieve theoretical saturation, we followed Yin's (2003) approach of choosing cases to fill theoretical categories to extend the emerging theory. Thus, we filled the theoretical categories of

Table 2 A typology of asymmetric relationship characteristics and development stages. Developing stage

Customers and suppliers engage in discussion and negotiation. Experience of other party and uncertainty about relationship counterparts. Each party learning how to reduce distance between them. Larger customer is director of relationship. Smaller supplier responds to direction.

Customer and supplier involved in mutual learning. Interaction growing and developing positively. Uncertainty and distance reducing. Supplier plays more significant role in relationship as experience of larger customer grows. Customer appreciates unique capabilities of smaller supplier.

Mutuality

- Goals differ for each party: no strategic alignment

Particularity

- Limited adaptation of each party - Limited relative commitment to relationship by larger customer

-

Cooperation

- Initial ideas for cooperation explored - Limited information sharing: knowledge of larger customer creates powerful position

-

Conflict

- Conflicts arise through lack of knowledge of other party's systems, processes and responsibilities: - Destructive conflicts: smaller party has to ‘toe the line’

-

Intensity

- No commitment to regular interaction between individuals and teams - Low level operational involvement from larger customer

-

Interpersonal inconsistency

- Different approaches to relationship create inconsistent communication - Smaller supplier's input in communication limited and reactive

-

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 Trust - Smaller supplier needs to ensure contractual compliance - Larger customer controls performance through tight measures

-

-

Stable stage

Firms are mutually important to each other. Customer–supplier interaction stable and long-term. Other party highly valued as relationship counterpart for unique contribution to relationship. Smaller supplier's contribution not easily replaceable or imitable. Larger customer supports supplier's learning and growth for mutual benefit. Current goals aligned to achieve profitability for both parties - Goals for future developed in tandem Partial strategic alignment - Strategic alignment Concessions made by each party for mutual benefit - Long-term investment, adaptation and Security sought by smaller supplier through commitment to relationship commitment over and above that of other relationships - Long-term projects for enhancement and achievement Joint projects and plans established to achieve improved capabilities for each of capability development e.g. supplier development party programme Parties becoming more open with each other, but still guarded - High levels of transparency and information sharing - Experience of conflict and its resolution enhance Disagreements arise over integration of roles, responsibilities and targets debate and depth of understanding: constructive Partial moves towards joint problem-solving, but larger customer still drivingconflicts and even contributions to resolution force - Joint problem-solving Regular pattern of interaction established with clearly defined roles and routines - Friendships and close professional ties underpin longterm interaction More functions involved in relationship from larger customer - Multi-interface and director-level involvement from Middle-management involvement from larger customer both sides - Larger customer and smaller supplier work to shared Common approaches to relationship begin to be defined principles and patterns for communication Communication patterns become established - Behaviour and communication consistent over time Smaller supplier takes stronger role and is more proactive and across functions Domains of expertise becoming defined and separate - Commonly understood and firmly established Inter-dependent relationship strategy developing with input from both parties on distribution of power and expertise in different areas own basis of expertise - Inter-dependent relationship strategy established between larger customer and smaller supplier

- Focus on competence-based trust in defined areas for each party - Smaller supplier's unique capabilities appreciated by customer

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Exploratory stage Background

- Focus on goodwill trust: helping each other out when necessary - Equal commitment from larger customer and smaller supplier to long-term health and growth of relationship

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the three stages of relationship development to extend the emerging theory on asymmetric relationship development. As our research question sought to investigate how the characteristics of asymmetric customer–supplier relationships evolved during the exploratory, developing and stable stages of the relationship, semi-structured interview guides with open-ended questions were a suitable way of seeking to understand each supplier or customer's individual experiences and approaches in their relationships (see Appendix A for an abbreviated generic version of the interview protocol). Each interview lasted approximately one and a half to three hours and was conducted face-to-face during a visit to the customer or supplier's premises by the lead researcher. In addition to the interviews, other data collection methods were used, including reviews of company archives and documents, published (government) statistics, reports, marketing information and details from the companies' websites, and the Internet. This information was collected to familiarise the researchers with the case companies' situations and environments. The researchers reviewed on average 5–6 pages of each company's reports, seeking information on company history, financial information, directors' names and responsibilities. Government reports were reviewed to seek information on the electronics industry and the case companies' positions within the industry. Therefore, the case studies comprised data collection from several sources within each case. Table 3 introduces the case companies and presents background details on each supplier and customer firm involved in the five case studies. In addition, details of the number of respondents interviewed and their roles and responsibilities are highlighted in Table 3. All company names are fictitious for reasons of confidentiality, as the interviews concerned sensitive issues about the firms' relationships. An initial interview was conducted with a key contact of each company (smaller supplier first, followed by larger customer) and focused on the particular context of the firm and its larger customer–smaller supplier relationship under investigation. This enabled the researchers to gain insights into the firms and their customer and supplier relationship characteristics. A relationship map was drawn independently by customers and suppliers to enable key actors involved in the relationship and their roles to be identified. A simplified conceptual structure was shown to each respondent to introduce the idea of relationship development. This comprised a basic drawing of a relationship development lifecycle. The researchers then proceeded to discuss the respondent's interpretation of the current stage of development and the longevity and nature of the customer–supplier relationship. The researchers were careful in ensuring that the discussion was neutral so that respondents did not feel that one relationship stage was viewed as being superior to another. Subsequent interviews examined how the characteristics of the relationship had evolved and the ways in which larger customers and smaller suppliers had interacted over the lifetime of the relationship. The final stage of data collection involved participant observations of meetings (Waddington, 1994), as summarised in Appendix B between the larger customers and smaller suppliers across four cases B–E (following pilot case A). Participant observation was used in this study because of the rich level of detail it could provide on the customer–supplier relationship development experiences and to reveal information that might not be articulated during a face-to-face interview. 5.5. Analytical techniques All the interviews and observations were tape-recorded and transcribed from the original recordings with Taiwanese managers and then translated into English. The interview guides and transcripts were translated using professional translators from the British Council. Each interview was transcribed from the English version and then analysed after the transcription took place. During the analysis the final transcripts were read repeatedly and notes were taken by the

researchers (see Table 3 for information on number of pages transcribed per case study). The transcripts were annotated to provide a first level coding (Miles & Huberman, 1994). In addition, contextual factors and emerging themes raised by the respondents were identified. The typology in Table 2 was used as a basis for classifying the data into meaningful themes and categories and to start the process of displaying, reducing and interpreting the data. Individual and cross-case analysis was conducted by use of role-ordered matrices which summarised the findings from each case study. Meta-matrices were constructed for the cross-case analysis (Miles & Huberman, 1994), which provided external validation of the individual case study findings (Järvensivu and Törnroos, 2010). This process created an aggregated picture of intraand inter-company interpretations and helped to ensure internal validity (Yin, 2003). The findings were triangulated across the data sources and cross-checked with the transcripts. Quotes were carefully chosen to demonstrate particular situations, experiences or responses of the interviewees. A follow-up meeting was held with the main contact within each company, either face-to-face or by telephone, to validate interpretations and emerging conclusions. Construct validity was assured through a chain of evidence that included note-taking by the researchers, gaining feedback on the transcripts from respondents and telephone or e-mail exchanges with respondents following the interviews and throughout the analysis stages. One researcher from Taiwan conducted all the interviews and observations to ensure a cultural affinity with the respondents and to enable correct interpretations to be drawn. In addition, we strengthened the reliability of the study through inviting comments from other researchers in the field (e.g. at international conferences and 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) are used to answer the research question by illustrating the stages of relationship development in asymmetric relationships. 6.1. The exploratory stage Two cases (Cases B and D) were classified as being in the exploratory stage of their relationship. 2 The relationship characteristics that were of most importance to the firms during the exploratory stage were mutuality, cooperation, conflict, intensity, interpersonal inconsistency, power/dependence and trust. Particularity was not part of the set in the exploratory stage as it did not develop importance for firms until the developing stage. The relationships in cases B and D had a short-term focus with mutuality being centred on agreements for goals related to pricing and quality. Managers were unclear about future relationship goals and benefits tended to be centred around those for their own firm. There was limited cooperation and suppliers were in a relatively powerless and dependent position. Suppliers had to focus their efforts on being ‘tested’ and gaining approval from their larger customers. Opportunities for cooperating with larger customers were performancedriven and seen as a ‘sweetener’ for suppliers who performed well. This could have a significant impact on the potential for the relationship to continue to the next stage. Laptop's Purchasing Manager commented:

2 The cases were classified through independent supplier and customer interpretations of the stage of relationship development from initial interviews and from verification by the researchers during the data analysis. Each customer and supplier dyad independently confirmed the same stage of relationship development. In each case the researchers agreed with the interpretations of the customers and suppliers concerning the current stage of relationship development.

Table 3 Case company profiles and interview details.

Number of Employees and company location in Taiwan

Number of respondents interviewed Respondent roles

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’

Supplier: 100 employees, located in Kaohsiung City Customer: 410 employees, located in Kaohsiung City Supplier ‘Chip’: manufacture of chip resistors Customer ‘Resistor’: manufacture of resistors used in information technology industries; uninterruptible power supplies/ photoelectronics industry

Supplier: 53 employees, located in Tainan Hsien Customer: 270 employees, located in Hsinchu City Supplier ‘Bright Light’: manufacture of light emitting diodes (LEDs) Customer ‘Diode’: manufacture of semiconductor chips, light emitting diodes (LEDs)

10

10

Supplier: 98 employees, located in Kaohsiung Hsien Customer: 19000 employees, located in Kaohsiung City Supplier ‘Clean System’: manufacture of integrated circuit (IC) semiconductor mould automatic cleaning system Customer ‘Semiconductor’: manufacture of integrated circuit (IC) semiconductor, IC packaging, IC test equipment, and various kinds of integrated circuit 10

Supplier: 198 employees, located in Kaohsiung City Customer: 2000 employees, located in Taipei Supplier ‘Cooling’: manufacture of home electronic appliances, and electronic cooling fans for personal computers Customer ‘Laptop’: manufacture of tablet personal computers (PCs), liquid crystal display (LCD) PCs, laptops, and information appliances 10

Supplier: 50 employees, located in Kaohsiung City Customer: 49000 employees located in Taipei Supplier ‘Transformer’: manufacture of transformers, power supplies, and integrated circuit (IC) boards Customer ‘Power Supply’: manufacture of power supply products, opto-electronic components, modules, and systems 10

Supplier: president, managing director, assistant manager, marketing manager, manufacturing director Customer: managing director, domestic department vicemanaging director, purchasing manager, manufacturing director, product design manager

Supplier: president, managing director, marketing manager, R&D manager, manufacturing director Customer: production manager, purchasing manager, buyer, module-manufacturing director, equipment engineer

Supplier: managing director, vice-managing director/ manufacturing director, domestic marketing manager, domestic sales person, R&D manager Customer: vice-managing director, purchasing manager, buyer, manufacturing director, R&D manager

Supplier: managing director, marketing manager, quality control manager, R&D manager, production manager Customer: vice-managing director, component quality control manager, purchasing manager, buyer, R&D manager

28 pages

27 pages

28 pages

26 pages

Supplier: managing director, domestic marketing manager, R&D manager, manufacturing director, supply manager Customer: vice-managing director, purchasing manager, buyer, quality control manager, supply chain manager Number of pages transcribed for case study interviews 24 pages a

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Activitiesa

Case A: Supplier ‘Chip’ Customer ‘Resistor’

All supplier and customer names are fictitious in order to retain confidentiality.

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Table 4 Summary of findings on asymmetric relationship characteristics and development stages. Stage of relationship development Exploratory stage (cases B and D) Mutuality

Particularity

Co-operation

Conflict Intensity

- Focus on making joint concessions to obtain mutual - Goals focused on low price/reasonable quality benefit and aim for target setting in discussion (case B) with other party (case C) - Some cooperation on price agreements and - Goals and interests revolve around creating joint customer's support for supplier's technological targets for prices, technological skills, product solutions, but common goals/interests not yet quality and good service (case A) established (case B) - Supplier gives up individual product technology goals to maintain relationship (case D) - Customer reduces price to maintain relationship (case D). - Companies have individual profitability goals and different long-term priorities (case D). - Particularity not yet in focus, relationships treated - Customer and supplier show growing adaptations similarly to others (case B and case D) and preference for working together above alternatives (case A) - Cooperation in relationship takes priority over Long-term cooperation depends on supplier's individual profit goals (case A) performance and technological improvements - Cooperation based on continued profitability for tested/monitored (case B) both companies (case C) - Conflicts arise over price negotiation/product - No overt conflicts (case A and case C) specifications (case D) - Relationship fairly insecure and distant with - Relationship more intense with strong and regular limited staff from either firm involved (case B) contact across functions and firms (case C)

Interpersonal inconsistency

- Communication stifled by irregular meetings and lack of commitment from management (case D) - Imperative to determine roles and communication/meeting patterns for customer and supplier (case B) Power/dependence - Perception that supplier contributes more and customer gains more from relationship (case B) - Customer controls orders, product standards and can dictate final price of products (case B) - Different views of customer and supplier on who contributes most and who gains most (case D) Trust

Developing stage (cases A and C)

- Contractual trust — sign contract for every transaction (case B) - Customer insists on contracts (case D)

Stable stage (case E) - Investing senior management time and effort in finding opportunities for working on common goals (case E)

- Very secure relationship. Customised designs by supplier for customer add to exclusivity of relationship (case E) - Customer and supplier see k opportunities and make efforts to sustain their work together (case E) - Conflict not an issue (case E)

- Long-term inter-firm friendships support continuation of relationship and development of exclusivity (case E) - Inconsistency issues resolved by mirroring behaviour - Inconsistency not an issue (case E) and communication by supplier to demonstrate agreement with customer (case A and case C)

- Power fairly evenly balanced; supplier's strong design/technological capabilities contribute to recognised expertise (case E) - Company size does not influence relationship, focus on common development goals and shared influence (case E) - Supplier A trusts customer's goodwill and Customer A - Goodwill trust between customer and supplier based on technological expertise trusts supplier's production and pricing competence and managerial skills that underpin (case A) interaction (case E) - Supplier C trusts customer's goodwill, and Customer C trusts supplier's technological competence (case C)

- Supplier controls provision of cheap product price, product design and good product quality/Customer controls order placement and strategic direction (case A)

“Good cooperation is beneficial for both companies. Cooling can obtain regular order placements from us, and at the same time we can increase our business. However, long-term cooperation depends on Cooling, and Cooling is responsible for our cooperative developments. This is because we are only interested in Cooling continuing to offer us cheap products, better product quality, and delivery of goods on time.” Intensity had not yet built up sufficiently to guarantee any regular communication pattern between the smaller suppliers and their larger customers. Senior-level staff were only involved on a ‘need’ basis and were not often visible in meetings. Inconsistencies existed between departments in the supplier firms and in exchanges between customers and suppliers. These often arose from the perception on both sides of the relationship that the supplier was not performing to the best of its abilities e.g. making frequent mistakes in orders and product specifications. Suppliers could blame themselves and take responsibility for problems in order to avoid conflict escalating with a large customer: “The percentage of bad products in our company is high and customers always complain about this. We know that it is impossible to achieve zero-defects, but we will try our best to reach this goal. The operation strategies of our company are to reduce costs, increase profits, and improve the added value of our products.” (Vice Managing Director, Cooling)

Despite these difficulties, the customers were prepared to offset problems in the exploratory stage against competitive prices and the ease of doing business with a smaller supplier. Inconsistency was resolved in the latter stages of the exploratory stage through clearer definitions of roles and responsibilities for communication being determined by the customer and supplier. Power was predominantly in the hands of the customer during the exploratory stage and trust was contractually-focused (see quotes below from case B). Customers were dominant and distance between the parties wide. However, there was a tentative understanding that the relationships could be of longer-term significance and power and trust issues might be more evenly distributed if the relationship continued: “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 every time we make a deal. In this way, the company's interests are secured.” (Managing Director, Diode) The difficulties in trusting the other party were mirrored in concerns about lack of commitment from counterparts. The other party could be considered as selfish, potentially untrustworthy and interested

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only in their own benefits. Suppliers could feel coerced without seeing the 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 the developing stage. The relationship characteristics that were most important to the firms in this stage were mutuality, particularity, cooperation, intensity, interpersonal inconsistency, power/dependence and trust. Conflict was not a part of the set as it was no longer an issue for customers or suppliers. The relationships in cases A and C showed greater mutuality than in the exploratory stage and mutual adaptations increased for the sake of prolonging the relationship. Suppliers tended to give concessions on prices and minimum order size to maintain the relationship with customers. Customers made concessions on preferred prices and delivery dates to satisfy suppliers. Although larger customers were still focused on their own benefits in the developing stage, they were more likely to take consideration of mutual growth opportunities and weigh the two concerns in balance: “Even if Chip offers the same price as other suppliers, we always consider Chip first. This is because Chip's product quality is similar to that of other suppliers and we have a long-term relationship.” (Purchasing Manager, Resistor) Customers were more likely to compromise in the developing stage. The responses of the larger customers and smaller suppliers mirrored each other in their communication in this respect, showing how mutuality, particularity and cooperation developed in parallel and how interpersonal inconsistency was overcome through mirroring behaviour, as demonstrated in the following quotes from case C: “In some cases, Semiconductor gives up insistence on its preferred price to keep the relationship with us.” (President, Clean System)

“Sometimes Clean System concedes lower prices in order to maintain the relationship with us”. (Purchasing manager, Semiconductor) Mirroring behaviour and communication by the supplier thus enabled the smaller firm to demonstrate commitment and agreement with its larger customer. More cross-functional interaction was evident during the developing stage, with increasing numbers of managers interacting across customer and supplier firms. Smaller suppliers had more input to decisions that would affect their business and were able to communicate regularly with management at a higher level in customer firms. In the developing stage, growing interdependencies were found to exist, but the overall strategic direction still rested with the larger customer. Trust had developed beyond a contractual basis: suppliers trusted their larger customer's goodwill, whereas the larger customer trusted 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 potential, but Case E was the only one which was classified as being currently in the stable stage. The relationship characteristics important to the firms during the stable stage were mutuality, particularity, cooperation, intensity, power/dependence and trust. Conflict and interpersonal inconsistency were not part of the stable stage set of characteristics as these areas had been resolved by the customer and supplier in the earlier stages of the relationship.

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The capabilities of the smaller supplier were better recognised by customers in the stable stage. No dominant organisation took overall control of the strategic direction of the relationship; each party was recognised to control different aspects of the relationship. Thus, there was strong mutuality and particularity and more balanced interdependencies between the larger customers and smaller suppliers. The suppliers took a more forceful and prominent role in managing the relationship. Senior management invested time and effort in finding opportunities for working on common goals. The relationships became more relaxed, friendly and sociable. Each party focused on retaining and enhancing the benefits and value of the relationship through further cooperation. Neither the customer nor supplier showed significant problems in dealing with power and dependence in the stable stage. Company size differences became less significant as the boundaries between power domains were more clearly identified and understood, as demonstrated by the following quotes from case E: “We have very strong technology. Thus, I do not worry about the relationship with Power Supply.” In addition, trust had developed to the extent that the relationship remained exclusive and precluded the development of alternative relationships. “Transformer has good product technology and their product quality is stable. We have built an especially friendly relationship. Transformer always keeps their promise that any types of product sold to Power Supply will not be sold to other customers.” (Vice Managing Director, Power Supply) The stable stage was differentiated from other stages by a focus on identifying areas for improvement and enhancing the long-term potential of the smaller supplier: “Power Supply's main products are notebook computers and other electronics products with short life cycles. This means we must always improve and innovate with our customer, but we have limited financial resources. It is very difficult to offer adequate employee training ourselves for the whole staff.” (Managing Director, Transformer) This focus on the supplier's potential increased the impetus for the smaller supplier and larger customer to maintain the relationship and to work together to ensure the enduring value of the relationship.

7. Conclusions This paper set out to examine the characteristics of asymmetric customer–supplier relationships during the exploratory, developing and stable stages of relationship development. Previous studies on asymmetric relationships have shown that relationship characteristics are important determinants of the nature of asymmetry and possess the potential for suppliers or customers to achieve their desired outcomes in their relationships (Hingley, 2005; Johnsen & Ford, 2008; Johnsen et al., 2008). The linking of the full set of characteristics of asymmetry and relationship development stages is a key contribution of this study. Our contribution is both conceptual and empirical and encompasses a new typology of the asymmetric relationship development stages, empirical findings on the typology and data from both larger customers and smaller suppliers. Our findings have important implications for customers and suppliers through focusing on key relationship characteristics at different relationship stages. The findings show that the relationship characteristics in asymmetric relationships vary at each stage of development (exploratory, developing and stable), and that three distinctive patterns are

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each critical for supporting the relationship through the three stages (see Fig. 1). Fig. 1 is a simplified illustration of our conclusions on the relationship development stages in asymmetric relationships. This illustration shows that in the exploratory stage mutuality, cooperation, conflict, intensity, interpersonal inconsistency, power/dependence and trust are of critical importance in building the relationship and coping with problems between smaller suppliers and larger customers. In the developing stage mutuality, particularity, cooperation, intensity, interpersonal inconsistency, power/dependence and trust are the focus of larger customers and smaller suppliers in establishing and managing the relationship, creating the foundations for long-term interactions. In the stable stage ensuring the continuation of the relationship depends on maintaining the smaller suppliers' and larger customers' emphasis on mutuality, particularity, cooperation, and intensity and dealing with power/dependence and trust issues. We now draw conclusions on how each of the relationship characteristics is manifested during the asymmetric relationship development stages shown in Fig. 1. Mutuality was essential in creating equilibrium in asymmetric relationships (Ford et al., 1986) and was particularly important in the exploratory and developing stages to steer the relationship and develop commonly understood priorities. Particularity was an important issue for both larger customers and smaller suppliers in the developing stage, but it became especially critical for suppliers in ensuring the longevity of their relationships with larger customers through the stable stage. Particularity supported suppliers in demonstrating their uniqueness and value to larger customers. Cooperation was desirable for smaller suppliers in the exploratory stage of asymmetric relationships, but did not become of interest to larger customers until the developing stage. Overcoming conflict was important in improving the quality of the relationship and the long-term trust between the parties (Claycomb & Frankwick, 2010; Mohr & Speckman, 1994; Ren et al., 2010). Conflict was a major issue for both larger customers and smaller suppliers in the exploratory stage of the relationship, but once the developing stage had been reached overt conflicts were significantly reduced and in the stable stage they were dissolved completely. Intensity developed from few customer–supplier interactions with a limited number of lower-level staff in the exploratory stage, to increased cross-functional and cross-firm involvement in the developing stage. In the stable stage senior personnel became more involved (Geser, 1992) and long-term friendships evolved. Interpersonal inconsistency was a concern predominantly in the exploratory stage. The energy which enabled the firms to establish shared communication patterns was important in propelling them to the developing stage of the relationship (Havila & Wilkinson, 2002). The important impetus in the developing stage was the ability of the larger customer and smaller supplier to mirror each other's behaviour and echo each other's priorities in their

communications. This created a positive setting for the stable stage in which the larger customer and smaller supplier communicated on more equal terms. Power could be coercively used in relationships to manipulate a positive outcome for the stronger party (Frazier & Antia, 1995; Hausman & Johnston, 2010). In the exploratory stage customers appeared to control their smaller suppliers and encourage dependence. However, after the exploratory or ‘test’ phase, power was more evenly distributed and dependence waned if suppliers were able to demonstrate their value in areas deemed important by customers. In the exploratory stage contractual trust developed in both parties (Sako, 1992). However, in the developing stage suppliers could already have developed goodwill trust in customers, while trust by customers remained at the competence trust level. Goodwill trust was evident for both parties in the stable stage. Unevenness of trust could be destabilising for the asymmetric relationship. 7.1. Theoretical and empirical contributions Through the conceptual developments of the paper our aim has been to contribute to growing theoretical discussions on the nature of asymmetric relationships and relationship development stages from an IMP perspective. This research is amongst the first to offer a conceptual structure linking asymmetric customer–supplier relationship characteristics and relationship development stages. The research has contributed to the field that investigates the nature of asymmetry in relationships (e.g. Hingley, 2005; Johnsen & Ford, 2008). The research also contributes to understanding power and dependence in relationships, by highlighting the potential for the less powerful smaller supplier to contribute more actively in relationships with larger customers. The stable stage of relationship development in asymmetric relationships is characterised by mutual advantages for larger customers and smaller suppliers when coercive power is reduced and mutual dependencies exist (Ganesan, 1994; Hausman & Johnston, 2010). Furthermore, the research has contributed to conceptualising the characteristics of dyadic asymmetric relationship development, where previous studies have often 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 development for smaller suppliers in giving access to opportunities and resources through linking in long-term relationships with larger customers. However, research to date has not considered how large customers and smaller suppliers manage relationship development in asymmetric relationships. To better understand the influence of asymmetric relationships on relationship development, we identified a set of customer–supplier relationship characteristics that define asymmetry: various sets have been developed in past research, but for the purpose of identifying contemporary relationship characteristics we decided to

Exploratory Stage

Developing Stage

Stable Stage

Building Mutuality Building Cooperation Building Intensity Coping-Conflict Coping-Inconsistency Coping-Power/Dependence Building Trust (contractual)

Establishing Mutuality Establishing Particularity Establishing Cooperation Establishing Intensity Managing Inconsistency Managing Power/Dependence Establishing Trust (Competence-Goodwill)

Maintaining Mutuality Maintaining Particularity Maintaining Cooperation Maintaining Intensity Maintaining Power/Dependence Maintaining (Goodwill) Trust

Relationship Maturity Fig.1. Relationship development model for asymmetric relationships.

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draw on recent sets developed by Johnsen and Ford (2008) and Johnsen et al. (2008). However, neither of these contributions specified how asymmetric relationship characteristics may develop over time as relationships move from exploratory to developing or stable stages, as we have done in this study. 7.2. Managerial implications, limitations and avenues of future research This study has highlighted the importance for smaller suppliers and larger customers of assessing their development stages in relationships. Firms can use the framework set out in this paper to guide the focus of their relationship characteristics at each stage of development. An analysis of their relationship development may enable customers and suppliers to achieve a stronger position and a more active role in decisions concerning their future in asymmetric relationships. Furthermore, self-awareness and critique concerning their role in asymmetric relationships may enable firms to make better, more informed choices about their wider network of relationships. We would recommend that managers assess the stage of maturity and characteristics of their customer–supplier relationships to enable their desired relationship aims to be achieved, to identify areas of future relationship improvement or to assess the value of strategic customer–supplier relationships in conjunction with traditional supplier evaluation methods. The outcomes of such analysis would prove useful as a basis for discussion between larger customers and smaller suppliers in evaluating and overcoming problem areas in their relationship and in setting relationship development milestones. The findings of this research contribute to informing the development of smaller suppliers in relationships with larger customers, offering opportunities for enhancing the management and growth of their relationships with their larger customers and contributing to increasing their appreciation and value in their larger customers' eyes. Through a better understanding of relationship development and the characteristics of asymmetric relationships, smaller suppliers may ensure that they capitalise on developing critical relationship characteristics to enable the continuation of important customer relationships through key growth stages. The findings offer insights for larger customers on how relationships with smaller suppliers may be developed, by identifying key issues for involving suppliers and enhancing the relationship at each stage of development 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 developing smaller suppliers beyond traditional methods of supplier assessment and evaluation. The involvement of senior managers from customer firms in advisory and mentoring capacities could play a major role in increasing the momentum and effectiveness of a smaller supplier's development and growth, leading to an improved position in the customer's supplier portfolio and in a more active and dynamic supply relationship for the customer. The empirical findings from this study were drawn from a research context that is less well researched in the IMP school, namely relationships in a Taiwanese setting. Thus, the research has contributed to knowledge of asymmetric customer–supplier relationships and relationship development in a Chinese-based culture. This is important for potential customers and suppliers in understanding the dynamics of relationship development in the rapidly developing Taiwanese economy. However, limitations of the study concern the narrow focus on larger customers and smaller suppliers from one country and one sector. Furthermore, we focused predominantly on previous work of the IMP Group for our conceptual basis. Our qualitative research used five in-depth case studies. Future research could use quantitative techniques to examine the concepts discussed in our paper and to conduct similar studies in other countries, sectors and companies. Our study's delineation of the three stages of relationship development could be used to explore the links between the dimensions of the stages to longevity and stability in relationships. We

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adopted the difference in size between larger customers and smaller suppliers as a proxy for relationship asymmetry. So, our findings relate to relationship development stages in the context of one form of asymmetric relationships, namely that of larger customer and smaller supplier. However, further research would be needed to confirm whether our observations are unique to this context or whether, for example, larger supplier–smaller customer relationships, or symmetrical relationships would demonstrate similar patterns in the relationship development stages. Appendix A. Interview protocol The questions were designed to be open-ended enabling respondents to provide clarification or examples. The specific questions varied depending on whether respondents represented customers or suppliers. The following is a short, generic version of the interview guides used. 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 for investigation • Longevity and nature of the customer/supplier relationship • Identification of customer/supplier actors Relationship characteristics — experiences of customers/suppliers related to characteristics of: • • • • • • • •

Mutuality Particularity Cooperation Conflict Intensity Interpersonal inconsistency Power/dependence Trust Relationship development experienced by customers/suppliers:

• Identification of relationship stage of customer–supplier relationship • The specific experiences during exploratory, developing and mature stages • Examination of relationship characteristics during key stages of relationship development • Attempts to influence the characteristics of the relationship during key stages of development Appendix B. Participant observations Case B (Bright Light–Diode) Case B meetings were observed for six one-hour sessions. These meetings involved the purchasing manager and the domestic department's vice-managing director on the customer side and the marketing 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 half hours. These meetings involved the buyer, production manager, purchasing manager and president on the customer side and the marketing manager and the president on the supplier side. 27 pages of notes transcribed.

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