Symbiosis-Orientation and the Survival of Small

Abstract

This article studies the long-term performance of entrepreneur firms by paying more attention to their external environments. It argues that prior research on the long-term survival and growth of entrepreneur firms has paid insufficient attention to the effects of external environmental factors. As a result, it remains unclear why only a small percentage of newly established entrepreneur firms can survive for more than 3 years (citation), and an even smaller percentage of the firms can achieve sustainable growth over a longer period of time. To address this research gap, we review the literature on symbiotic strategies in ownership, corporate governance, marketing and new product development, based on which we highlight the importance of symbionts in the sustainable growth of the resource-constrained entrepreneur firms and develop a conceptual model showing the relationship between symbiosis-orientation and its consequences for entrepreneur firms (Figure 1).

Keywords

Symbiotic strategy long-term growth resource constraints newly established entrepreneur firms

Introduction

Researchers began to study the issue of symbiotic strategy several decades ago (e.g., Adler, 1966; Varadarajan & Rajaratnam, 1986). The most important characteristic of symbiotic strategy is to develop and maintain a mutually beneficial symbiotic relationship with external parties or symbionts. Operating in this relationship, the symbionts involved have neither significant conflicting interests nor fierce competition for common resources (Li, Young & Tang, 2010). Symbiotic strategy helps business partners or symbionts to overcome their resource constraints more efficiently, to reduce the threat of market competition and uncertainty, and to achieve long-term cooperation and sustainable growth. As a result, all of the partners or symbionts can perform better than those in other types of strategic alliances or in no alliances. Here, the main reason is that, in other types of strategic alliance rather than a symbiotic one, partners involved may still have conflicting interests or power struggles among them, which should in turn have negative effects on their performances.

Symbiotic strategy can be especially useful for small entrepreneur firms that have resource constraints. For instance, by building a symbiotic supplier–buyer relationship with a large firm, such as the relationship with IBM built by Microsoft and Intel in their early years, small entrepreneur firms may obtain critical resources from their large partners more efficiently, increase their market shares more effectively and secure their reasonable return and long-term development (e.g., Mitsuhashi & Greve, 2009).

In spite of the studies on symbiotic relationship, it remains unclear the effect of symbiotic trust on the relationship. As relevant research before focused on trust of one party only, the effects of mutual trusts among parties or symbionts in a symbiotic relationship have not be considered sufficiently. Many interesting questions can be raised here. For instance, in a dyadic symbiotic relationship consisted of a supplier and a buyer, what may happen if the supplier has a high level of trust in its buyers, but the buyers do not have much trust in the supplier? Should we consider their mutual or symbiotic trust? More importantly, what should be the antecedent of their symbiotic trust? In this study, we address these issues by focusing on the relationship between symbiosis-orientation and symbiotic trust.

Reviewing the current literatures of symbiotic strategy, including those related to similar topics such as relational marketing (e.g., Lavie, Kang, & Rosenkopf, 2011), one can see that the issues related to symbiotic trust, as mentioned above, have not been studied sufficiently. For instance, it remains unclear the relationship between symbiosis-orientation and symbiotic trust, and it is not clear either the relationships among symbiosis-orientation, symbiotic trust and the survival of symbiotic relationship. Moreover, while prior research recognised the importance of mutual trust, it failed to consider the trust of all parties involved in a symbiotic relationship or strategic alliance. In other words, the trust tested in those studies is normally one-side trust, which may or may not match the trust of the other party involved in the symbiotic relationship. As a result, the joint effects of the trusts in all parties on the survival of symbiotic relationship remain unclear. Indeed, even among empirical studies published in top-tier journals (e.g., Morgan & Hunt, 1994), there were no empirical data showing effects of symbiotic or mutual trusts of all symbionts involved in symbiotic strategy. On the other hand, in the real world today, one can never assume the existence of this mutual or symbiotic trust in a symbiotic relationship or strategic alliance. Take a dyadic relationship of supplier–buyer symbiotic relationship as an example. A buyer may trust its supplier, but the supplier may not trust the buyer. Given different levels of trust in different parties in a given symbiotic relationship, firms’ behaviours and performances in a given symbionts can be different, which in turn can affect the survival of symbiotic relationship. Academically and practically, it would be of significance to conduct a study dealing with these issues.

Objective

Academically, such a study should contribute by developing and testing a new model showing the relationship among symbiosis-orientation, symbiotic trust and the survival of symbiotic relationship. The new model and new empirical evidence from testing this model should help enrich the literature of symbiotic strategy and strategic alliance.

From a practical perspective, this study should help practitioners to understand better how symbiotic relationships can be better maintained. This is especially true for small entrepreneurs that seek to establish a symbiotic relationship with a large firm. Because of their resource limitations, small entrepreneurs may have more difficulties securing the trust of large firms and build a mutually beneficial relationship. Addressing the difficulties of these small entrepreneur firms, our current research should be useful.

In the rest of this article, we first propose a model showing the relationships among symbiosis-orientation, symbiotic trust and the survival of symbiotic relationship. After that, with multi-source data collected from China’s auto industry, we propose a theoretical model and test this model. This article concludes with a discussion on the implications of the findings for future theoretical research and business practice.

Literature Review

Symbiotic strategy and symbiotic relationship have been studied for decades. For example, as early as 1950, an author considered this issue and defined symbiotic relationship as ‘a mutual dependence between unlike organisations’ (Hawley, 1950, p. 36). One example here can be the dyadic symbiotic relationship between a small auto part producer and a large car maker. With this symbiotic relationship, the parties or symbionts involved may reduce environmental uncertainties related to their critical resources and achieve better performance (refer Varadarajan & Rajaratnam (1986) for a comprehensive list of advantages resulted from symbiotic strategy).

Symbiotic strategy can be especially helpful to small entrepreneurs in an unfamiliar business environment, such as that of an overseas market. By establishing win-win symbiotic relationship with large firms, small entrepreneurs can effectively overcome their difficulties in tangible, intangible and human resources, adapt better in new institutional environments and avoid fierce competitions with local competition in host countries. Relying on their symbiotic relationships with large multinational enterprises (MNEs), small entrepreneurs can also enter international markets faster and achieve first-mover advantages (e.g., Li et al., 2010).

According to Varadarajan and Rajaratnam (1986), the structure of symbiotic relationship can be understood by considering six dimensions: time frame (short, medium or long term), proximity (arms-length or close working), number (one or a simultaneous multiple), level (organisational or functional), focus (product offerings of one partner or those of both symbiotic partners) and scope at the functional level (joint formulation of overall strategy or limited to specific projects or programmes). While these dimensions are helpful understand the maintenance or survival of a symbiotic relationship, they may become irrelevant without symbiotic trust among parties or symbionts involved in the symbiotic relationship. As indicated above, based on more recent research on symbiotic relationship and related topics, such as relational marketing (e.g., Copulsky & Wolf, 1990; Mitchell et al., 1992), it is arguable that symbiotic trust should play a very critical role in the maintenance or survival of symbiotic relationship. A better understanding the issues related to symbiotic trust should help us to predict and to explain the maintenance of symbiotic relationship and the success in symbiotic strategy.

As a specific type of strategic alliances, symbiotic relationship differs from other strategic alliance in the degree of competition among its symbionts for common resource (Li et al., 2010). In other words, the parties or symbionts involve normally do not compete for same resource. The resource being critical for the growth or survival of one symbiont can be the resource that the other symbiont does not need. As a result, there can be no fierce competition between these symbionts for the same resource, while both symbionts can perform better with their demands for resources satisfied (Li et al., 2010).

The same may not be true for other type of strategic alliances where there can still be politics and power struggles among the strategic partners for common resources that all partners want to control. One example here is the strategic alliance with the relationship of coopetition (Lavie, 2007; Ritala, Hallikas & Sissonen, 2008). While the partners in this type of alliances have cooperation among them, they also compete for some common resources that they all need, such as the same market or the same supply.

Prior research has also suggested that the trust among strategic partners, including those in symbiotic alliances, can provide a basis for expanded business relationships (Brenkert, 1998). According to the literature (Moorman, Zaltman, & Deshpande, 1992), trust can be defined as the degree to which one believes in the goodwill and reliability of another in a risky symbiotic exchange situation. Prior research has also shown that trust can influence positively many types of strategic alliance such as car makers’ alliances (Bensaou & Vekatraman, 1995), keiretsu alliances (Gerlach, 1992), cross-national alliances (Madhok, 1995) and manufacturer–retailer ones (Kumar, 1996). In addition, the external validity of causal inferences between trust and performance of strategic alliances has been supported (Saparito, Chen, & Sapienza, 2004).

Consistently, trust in each other may also have a positive effect on the maintenance and survival of symbiotic relationship (e.g., Gulati & Singh, 1998; Gulati & Westphal, 1999; Li & Rowley, 2002; Li et al., 2010). The main reason here is that symbiotic relationship should also be trust-based. A lack of trust among partners in a symbiotic relationship may cause a high level of uncertainty, such as that seen in possibly opportunistic behaviour that may lead to one party gaining and the other losing (refer Williamson, (1985) for a detailed discussion on opportunistic behaviour). For example, Latham (1993) illustrates the negative effects of a lack of trust in the UK construction industry. Both relational contracting theory and transaction cost economics demonstrate that the danger of opportunistic behaviour leads partners to perform in a defensive way—firms tend to pursue their own self-interest at the expense of their partners. This typical kind of defensive activity caused by an absence of trust should have a negative impact on the maintenance and survival of symbiotic relationship.

A subset of symbiotic relationships is the dyadic symbiotic relationship between a supply and a large buyer. Some authors have considered the effects of trust on the maintenance or survival of this type of small–large symbiotic relationship, such as a dyadic symbiotic relationship between a smaller seller and a larger buyer (e.g., Graebner, 2009; Kotha, Rajgopal, & Venkatachalam, 2004). It was suggested that the buyer in this symbiotic relationship should be more likely to feel that it lacks sufficient knowledge to trust the small seller, while the seller may have more trust in the buyer (Graebner, 2009). In other words, the seller and buyer in the symbiotic dyad may have asymmetric views on the trustworthiness of its counterpart or partner in the symbiotic relationship (Graebner, 2009). Given this problem, mutual or symbiotic trust may not be easy to build. Considering all these findings, we believe that the trust of the large and more powerful symbiont is more important than that of the small and less powerful one. Our reasoning reflects the suggestion of Castellucci and Ertug (2010) that the larger and higher status firm in the dyad can actually control the survival of the symbiotic relationship by choosing whether to continue or terminate the relationship. In other words, the large symbiont should have the ability to terminate the symbiotic alliance yet faces much lower costs than does the small one. On the other hand, it is insufficient to maintain a symbiotic relationship if the trust in a symbiotic relationship is only one-side trust, such as that of a small supplier in the larger buyer.

In spite of the research of the importance of trust in a symbiotic relationship, such as that of large party in small one, it remains unclear how small firms can do anything for developing symbiotic trust or mutual trust, so that they can build symbiotic relationship. In this article, we address this issue by focusing on the effect of one variable, that is, the small firms’ symbiosis-orientation, which can arguably be seen as an antecedent of symbiotic trust.

Symbiosis-orientation and its effect on symbiotic trust: According to research (e.g., Castellucci & Ertug, 2010; Heide & Miner, 1992; Joskow, 1987; Li et al., 2010), we can define symbiosis-orientation as the degree to which a business organisation or firm adopts the symbiotic concept and strategic approach that colours the attitudes and behaviour of all its members. The concept of symbiosis-orientation itself represents a distinct element of organisational culture, and its related approach adopted by an organisation should result in a mutually beneficial strategic relationship with its key business partners. To put it differently, symbiosis-orientation reflects a firm’s willingness to set its strategic objective as satisfying the need of its key partners in a given alliance while ensuring its own resources for survival and growth.

Empirical studies have shown evidence, suggesting that symbiosis-orientation should contribute to the establishment of symbiotic trust (e.g., Das & Teng, 2000; Heide & Miner, 1992; Joskow, 1987). For instance, based on the perspective of transaction cost theory, Lai and Chang (2010) studied how partners’ willingness to consolidate their symbiosis can help reduce transaction costs, which can be affected by the trust in each other among the parties involved in a symbiotic relationship. Other authors have also obtained similar findings (e.g., Castellucci & Ertug, 2010; Heide & Miner, 1992; Joskow, 1987; Larson, 1992; Levinthal & March, 1993). According to all these studies, symbiosis-orientation may shape the strategies and behaviours of a given firm or business organisation, so that it can be more effective in establishing symbiotic trust. We therefore propose,

Hypothesis 1

H ₁ : There is a positive relationship between symbiosis-orientation and symbiotic trust in all parties in a symbiotic relationship.

Resource sharing and its effect on symbiotic trust: Another significant antecedent of symbiotic trust can be the understanding of partner in a symbiotic relationship. Based on research evidence (e.g., Guo, Xiao, & Tang, 2009; Martin, 2010), it is predictable that resource sharing may have both direct and indirect effects on symbiotic trust, which in turn can influence the maintenance of symbiotic relationship. Below we provide a brief discussion on these effects.

Resource sharing enables a given firm to provide appropriate resources, including tangible and intangible ones, to its partners or other symbionts in a symbiotic alliance, which should increase their mutual trust (Li et al., 2010). For instance, in manufacturing industries, if a firm can share resources with its partners, it should be more likely to do a good job in developing mutual trust or symbiotic trust (e.g., Jiang et al., 2015; Oliva & Kallenberg, 2003; Raja et al., 2013). As a result, the firm should be more likely to develop and maintain symbiotic relationship.

Research has provided consistent evidence on this issue. On the one hand, resource sharing may have a direct and positive effect on symbiotic trust. Research has shown that, if symbionts in a dyadic symbiosis can understand their demands in the market, they are more likely to improve their mutual or symbiotic trust (Inkpen & Beamish, 1997; Jiang et al., 2015). Furthermore, resource sharing can become a continuous reciprocal process that provides further mutual benefits between the symbionts, which can continue improving symbiotic trust over a long period time (e.g., Li et al., 2010; Luo, 2005). Accordingly, it is predictable that resource sharing can have a positive effect on symbiotic trust.

Hypothesis 2

H ₂ : There is a positive relationship between resource sharing and symbiotic trust in all parties in a symbiotic relationship.

On the other hand, resource sharing may have an indirect effect, that is, enhancing the relationship between symbiosis-orientation and symbiotic trust. Research has suggested that partners’ resource sharing can improve the performance of network (e.g., Dyer & Hatch, 2006; Dyer & Nobeoka, 2000; Jiang et al., 2015), which should have a positive effect on the relationship between symbiosis-orientation and symbiotic trust. In addition, resource sharing can improve the recognition and credibility across the different parties (Mudambi, 2011), which also enhance the relationship between symbiosis-orientation and symbiotic trust. Accordingly, we propose,

Hypothesis 3

H ₃ : Resource sharing moderates the relationship between symbiosis-orientation and symbiotic trust. Other conditions being equal, the higher the level of resource sharing, the more likely a strong relationship between symbiosis-orientation and symbiotic trust.

Furthermore, it is arguable that symbiotic trust should have a positive effect on the survival of symbiotic relationship. According to prior research, as mentioned above, it is crucial to have mutual or symbiotic trust among all symbionts in a given symbiotic relationship. Only with a high level of symbiotic trust can the maintenance or survival of a symbiotic relationship become possible. Accordingly, we predict,

Hypothesis 4

H ₄ : There is a positive relationship between mutual or symbiotic trust and the survival possibility of this symbiotic relationship.

Finally, based on the hypotheses 1 and 4, we also predict the mediating effect of symbiotic trust on the relationship between symbiosis-orientation and survival of symbiotic relationship. In other words, symbiotic trust can be considered as an important mediator through which symbiosis-orientation and resource sharing influence the survival of symbiotic relationship. Accordingly, we propose,

Hypothesis 5

H ₅ : Symbiotic trust has a positive mediating effect on the relationship between symbiosis-orientation and the survival of symbiotic relationship.

Methods

Setting, Sample and Data

To test the hypotheses proposed previously, we collected data from symbiotic alliances in China’s auto industry. The main reason for selecting this sample was that China has become one of the largest car markets in the world, yet little empirical research has been conducted in this Chinese industry. Moreover, in this industry, there are more small–large dyads or symbiotic alliances than many other industries. Finally, in comparison with firms in other industries, firms in this industry seemed to be more willing to cooperate with our data collection process. We first obtained approval to conduct this study from the top management of one of China’s largest car producers, which has over 120,000 employees. Using a name list and relevant data from the car marker, we randomly contacted one hundred of its auto parts suppliers in 2015, 83 of which were willing to allow us to conduct an interview in their firm and to respond to our questionnaires. Among these suppliers, the largest firm had 6,202 employees, while the smallest had only 212. The mean was 598 employees. The data collected from these 83 firms and from their large partner in the alliance—the car maker—therefore gave us data from 83 sets of symbiotic dyads to test our hypotheses.

To avoid common method variance, we adopted a multiphase and multi-source approach. We first collected data from the suppliers, that is, the small entrepreneur that provided auto parts to the car maker. Two weeks later, we collected data from the leaders of car marker who are in charge of making decisions on outsourcing. More importantly, we collected data from three sources: (a) the questionnaire data collected from each of the suppliers; (b) the questionnaire data gathered from the car maker; and (c) the panel data obtained from the car maker comprising its records and statistics on suppliers, such as the age of the firms, its size and its ownership. All these data are discussed next.

Measurement

All questionnaire items employed in this study were measured on a seven-point Likert scale in which the responses ranged from ‘1’ (strongly disagree) to ‘7’ (strongly agree). The questionnaire items were adapted from publications in top-tier academic journals originally produced in English. We adopted the technique of translation and back-translation to develop a Chinese version of the measurement instruments and conducted pretests of their reliability among a group of MBA students in China.

Symbiosis-orientation was measured by three items adapted from McFarland, Bloodgood and Payan (2008): (a) we expect the relationship with this company to continue for a long time; (b) renewing the relationship with this company is what we are trying for; and (c) in the next 2 years, we want to terminate this relationship (reverse coded). Managers of suppliers responded to the items with an inter-rater correlation of 0.81, and the reliability alpha of this scale is 0.816.

Symbiotic trust was measured with data from all symbionts in a given symbiotic alliance. Specifically, this construct was measured in two steps: First, we applied a three-item instrument adapted from Kale, Singh and Perlmutter (2000) for studying trust in alliance: (a) there is a good understanding among the partners; (b) the symbiotic strategy is characterised by mutual respect among the partners; and (c) the symbiotic strategy is characterised by mutual trust among the partners. Our pretest showed a reliability alpha of 0.905.

Second, after recording the scores from both parties in a dyadic symbiotic relationship, we aggregated the scores and computed their average for each dyad. Our assumption here was that this average score reflected the mutual or symbiotic trust of parties involved in a symbiotic relationship. The scores of dyads with high symbiotic trust should be much higher than those with low symbiotic trust.

Resource sharing was measured by eight items adapted from Jiang, Jiang, Cai and Liu (refer Appendix A, Jiang et al., 2015). These items measured how partners were sharing their tangible and intangible resources, such as equipment, patent and market knowledge. Managers in charge of outsourcing in the large firm responded to this scale with an inter-rater reliability of 0.72. Also, according to our data, this instrument has a reliability alpha of 0.982.

Survival of symbiotic relationship was measured by questionnaire items adapted from McFarland et al. (2008): (a) even if we could, we would not drop this supplier because we like being associated with them; (b) we want to continue as a customer of this firm, because we genuinely enjoy our relationship with them; and (c) our positive feelings towards this company are a major reason we continue to work with them. Managers of the car maker responded to this set of items. Our assumption here is that if the large and more powerful car maker in a small–large dyadic symbiotic relationship is unwilling to continue, the symbiotic alliance will be terminated. The car maker can either find another supplier or internalise the production of the auto part by itself depending on which way is likely to result in lower transaction costs. Accordingly, we had manager in charge of outsourcing in the large firm respond to this scale. Our assumption here was that the higher the score from the car maker, the more successful the symbiotic strategy is. Our data showed that this instrument had a reliability alpha of 0.927.

Control Variables

As noted earlier, we controlled for the effects of several variables. These variables include firm size, location proximity, tenure of the symbiotic relationship, geographical distance, joint venture and whether the resources exchanged among the symbionts are unique and difficult to copy. Firm size was measured by the log of the total number of employees working for a given firm. Location proximity was measured by a dummy variable indicating whether the supplier was located in an inland province of China. Because most domestic car makers are located in these provinces and were coded as one (i.e., proximate), those located elsewhere were coded as zero (i.e., not proximate). Tenure of the symbiotic relationship was measured by the number of years that a given symbiotic relationship has been maintained. Geographical distance was measured by the distance between the location of the car maker and the location of the supplier in a given dyad. Joint venture was coded by a dummy with joint ventures as one and the others as zero. And finally, whether the resources exchanged among the symbionts are unique and difficult to copy was also measured as a dummy with one as ‘Yes’ and zero as ‘No’.

Findings

Validation of the Measurement Model

Confirmatory Factor Analysis (CFA) was used to access the convergent and discriminant validities of the variables. First, we examined a four-factor model, which included symbiosis-orientation, symbiotic trust, resource sharing and survival of symbiotic relationship. The average variance extracted (AVE) for each construct exceeds the 0.5 benchmark (AVE = 0.716, 0.786, 0.873, 0.811 separately), demonstrating sufficient convergent validity. According to Table 1, the full model yielded an acceptable fit to the data (χ² = 304.491, df =113, p < 0.01; RMSEA = 0.142, CFI = 0.923, TLI = 0.907), which suggested that these variables should be considered as separate constructs. Second, we computed six alternative three-factor models and a one-factor model (Table 1). All six of the three-factor models and the one-factor model (χ² = 990.775, df =119, p < 0.01; RMSEA = 0.295, CFI = 0.647, TLI = 0.597) yielded a poorer fit than the original four-factor model. These results show sufficient discriminant validity of these variables.

Table 1.

Results of CFA for the Measures of the Variables Studied

Model	χ²	df	∆χ²	TLI	CFI	RMSEA
Four-factor model	304.491	113		0.907	0.923	0.142
Three-factor model 1
Symbiosis-orientation and resource sharing	549.128	116	244.637**	0.795	0.825	0.211
Three-factor model 2
Resource sharing and symbiotic trust	554.701	116	250.210**	0.972	0.822	0.212
Three-factor model 3
Symbiotic trust and survival of symbiotic relationship	696.998	116	392.507**	0.724	0.765	0.244
Three-factor model 4
Symbiosis-orientation and symbiotic trust	428.406	116	123.915**	0.852	0.874	0.179
Three-factor model 5
Symbiosis-orientation and survival of symbiotic relationship	563.761	116	259.270**	0.788	0.819	0.214
Three-factor model 6
Resource sharing and survival of symbiotic relationship	389.823	116	85.332**	0.870	0.889	0.168
One-factor model	990.775	119	686.284**	0.597	0.647	0.295

Source: Data are from our survey in China's auto industry, N=83.

Notes: TLI = Tucker–Lewis index; CFI = comparative fit index; and RMSEA = root mean square error of approximation.

*p ≤ 0.05; **p ≤ 0.01.

Descriptive Statistics

Table 2 shows the descriptive statistics. Several interesting correlations can be observed among the variables, and the correlations of the main variables are in the expected directions. For instance, geographical distance has a significant negative correlation with symbiotic trust (γ = −0.283, p < 0.01)

To test the hypotheses 1–4 proposed above, we adopted the approach of hierarchical linear regression. We first entered symbiotic trust as a dependent variable. After that, we entered six control variables, that is, geographical distance between the supplier and the buyer, tenure, firm size, location proximity and the degree to which the product being supplied is unique and difficult to copy (easy to copy) (Model 1), which were followed by our major independent variable, that is, symbiosis-orientation (Model 2). Next, we entered a moderator, that is, resource sharing (Model 3). Finally, the interaction, that is, the interaction between symbiosis-orientation and resource sharing, was entered (Model 4). In addition, we entered survival of symbiotic relationship as a dependent variable, and then control variables (Model 5) and symbiotic trust (Model 6).

Table 2.

Means, Standard Deviations and Correlations

Constructs	1	2	3	4	5	6	7	8	9	10
1. Geographical distance	1
2. Tenure	−0.125	1
3. Firm size	0.177	0.256*	1
4. Location proximity	0.554**	−0.152	0.133	1
5. Joint venture	−0.087	0.230*	0.233*	0.174	1
6. Easy to copy	−0.057	−0.023	−0.342**	−0.225*	−0.385**	1
7. Symbiosis-orientation	−0.213+	−0.153	−0.127	−0.173	−0.072	0.050	1
8. Resource sharing	−0.106	0.114	0.153	−0.094	0.079	0.042	−0.195+	1
9. Symbiotic trust	−0.283**	−0.170	−0.015	−0.014	−0.010	−0.212+	0.581**	0.180	1
10. Survival of symbiotic relationship	−0.126	0.077	0.145	−0.012	0.093	−0.173	−0.096	0.708**	0.536**	1
Mean	395.430	15.720	598.060	0.260	0.150	0.710	4.680	2.443	4.036	3.470
SD	379.046	8.092	1054.065	0.443	0.364	0.454	0.557	1.152	0.435	0.665

Source: Data are from our survey in China's auto industry, N=83.

Note: + p ≤ 0.1; *p ≤ 0.05; **p ≤ 0.01.

Table 3 shows the results of the analyses. The significantly positive effect of the independent variable, that is, symbiosis-orientation (β = 0.212, p ≤ 0.01, Model 2), supports H1, which predicts symbiosis-orientation may positively influence symbiotic trust. Also, according to the results of Model 6, the effects of symbiotic trust on the survival of symbiotic relationship are significant (β = 0.523, p ≤ 0.01), which supports H4.

Table 3.

Results of Hierarchical Linear Modelling

	Symbiotic Trust				Survival of Symbiotic Relationship
	M1	M2	M3	M4	M5	M6
Intercept	4.191**	4.165**	4.199**	4.182**	3.509**	3.323**
Control variables
Geographical distance	−0.160**	−0.121*	−0.104*	−0.095*	−0.085	0.108
Tenure	−0.073	−0.039	−0.042	−0.030	0.038	0.126+
Firm size	−0.002	0.009	−0.016	0.000	0.059	0.061
Location proximity	0.126	0.173	0.184+	0.249*	0.081	−0.071
Joint venture	−0.053	−0.107	−0.122	−0.146	−0.064	0.001
Easy to copy	−0.275*	−0.240*	−0.291*	−0.300**	−0.136	0.195
Independent Variable
Symbiosis-orientation (SO)		0.212**	0.226**	0.265**
Mediator
Symbiotic trust						0.523**
Moderator
Resource sharing (RS)			0.142**	0.148**
Interaction
SO*RS				−0.114**
R2	0.217	0.422	0.54	0.589	0.033	0.463
∆R2		0.205**	0.118**	0.049**		0.430**

Source: Data are from our survey in China's auto industry, N=83.

Note: + p ≤ 0.1; *p ≤ 0.05; **p ≤ 0.01.

In addition, according to the result in Model 3, Table 3, there is a significantly positive direct effect of resource sharing on symbiotic trust (β = 0.142, p ≤ 0.01). This result supports H2, which predicts a significant and positive effect of resource sharing on the survival of symbiotic trust. Moreover, as shown in Model 4 in Table 3, there is a significant interaction effect between symbiosis-orientation and resource sharing (β = −0.114, p ≤ 0.01). Accordingly, the result partially supports H3, which suggests that resource sharing should moderate the relationship between symbiosis-orientation and symbiotic trust. Interestingly, however, the direction of this moderating effect is different from what H3 is predicting. In other words, why H3 predicts a significant and positive effect of resource-sharing on the relationship between symbiosis-orientation and symbiotic trust, our data here show a significantly negative moderating effect, which can also be observed in Figure 2. In other words, Figure 2 shows consistently a negative direction of this moderating or interactive effect (symbiosis-orientation—resource sharing) on symbiotic trust graphically. When resource sharing is low, there is a stronger positive association between symbiosis-orientation and symbiotic trust (simple slope β = 0.379, p < 0.01) than that when resource sharing is high (simple slope β = 0.151, p < 0.01). This result is surprising, and we will discuss this issue in the next section.

Figure 1.

Conceptual Model

Source: Data are from our survey in China's auto industry, N=83. Figure 2.

Moderating Effect of Resource Sharing

Source: Data are from our survey in China's auto industry, N=83.

H5 predicts that symbiotic trust mediates the relationship between symbiosis-orientation and the survival of symbiotic relationship. We tested this mediating effect with two approaches. One was developed by Kenny, Kashy and Bolger (1998) and Shrout and Bolger (2002), and the other was proposed by Preacher and Hayes (2004, 2008). The former approach suggests that, given a significant relationship between symbiosis-orientation and symbiotic trust, and a significant relationship between symbiotic trust and the survival of symbiotic relationship, the mediating effect can be supported even if symbiosis-orientation is not related to the survival of symbiotic relationship (Kenny et al., 1998, p. 260). Accordingly, based on the results of Model 2 and Model 6, Table 3, the mediating effect of symbiotic trust exists, which supports H5.

On the other hand, according to the approach proposed by Preacher and Hayes (2008) for testing indirect effects, one can use structural equation modelling to supplement mediation test with indirect effect tests using the bootstrapping approach (Preacher & Hayes, 2008). Adopting this approach, we obtained results that symbiotic trust had a significant indirect effect on the relationship between symbiosis-orientation and the survival of symbiotic relationship (indirect effect = 0.304, 95% confidence intervals = [0.174, 0.471]). Furthermore, we also found that symbiotic trust had a significant indirect effect on the relationship between resource sharing and the survival of symbiotic relationship (indirect effect = 0.143, 95% confidence intervals= [0.056, 0.262]). The whole model (including the interaction between symbiosis-orientation and resource sharing) yields an acceptable fit to the data (χ² = 16.357, p > 0.05; CFI = 0.939, RMSEA = 0.133).

Discussion and Implications

A fundamental theoretical issue that our research raised is whether symbiosis-orientation and symbiotic trust should be considered and tested in the research of symbiotic strategy. With a new theoretical model, we argue that symbiosis-orientation and symbiotic trust should have a significant and positive effect on the survival of symbiotic relationship, and our research findings support this argument. Specifically, our data support a significantly positive effect of symbiosis-orientation on symbiotic trust. Our data also support a significantly positive effect of symbiotic trust on the survival of symbiotic relationship. In addition, showing that symbiotic trust can function as a mediator, our data also support the positive effect of symbiosis-orientation on the survival of symbiotic relationship.

In addition, the results of our current study also support the effects of resource sharing. Consistent with prior research, our data show a significant moderating effect of resource sharing on the relationship between symbiosis-orientation and symbiotic trust, which in turn influences the survival of symbiotic relationship. In other words, to implement a strategy of symbiotic strategy successful, it is important for partners or symbionts to understand each other. Among the small–large dyads tested in our current study, it is especially important for the small or less powerful partner to understand the needs and demands of its large partner and to establishing a resource sharing relationship with large partners, which should help establish symbiotic trust in each other among the symbionts.

Theoretical Implications

The findings in this study highlight the importance of considering symbiosis-orientation and symbiotic trust when studying the issues of symbiotic strategy, which should contribute to the development of theory regarding symbiotic strategy. One can infer that firms with a strong symbiosis-orientation are more likely to establish symbiotic trust, which in turn can help maintain a mutually beneficial symbiotic relationship.

In addition, this study has several other theoretical implications. First, our results show that it is necessary and useful to conduct more comprehensive investigations testing all variables or variables that may influence the performance or survival of symbiotic relationship. For instance, according to Varadarajan and Rajaratnam (1986), the structure of symbiotic relationship can be understood by several dimensions, such as time frame (short, medium or long term) and proximity (arms-length or close working). The results from our current study show that some of these dimensions may not influence the development of symbiotic trust and the survival of symbiotic relationship. In other words, while these dimensions are helpful to understand the characteristics of symbiotic relationship, they can be irrelevant to the maintenance or survival of a symbiotic relationship. For instance, although past research has suggested that increasing the tenure of an alliance (and repeated interactions) has a positive effect on its likelihood of survival, our data show that when this variable is considered together with others such as resource dependence, ownership and location, its effect can be insignificant. In other words, this variable seems to be relatively unimportant in comparison with other variables. Second, academically, our findings suggest a need to improve the methodology employed for studying symbiotic marketing and strategic alliance. In other words, future investigations of symbiotic marketing or similar issues need to collect data from all partners involved in the alliance and not from one party only. As the results of our study show, if a researcher collects only questionnaire data from one partner or symbiont in the alliance—the approach adopted by some researchers in the past—such data alone may not be sufficient to predict the performance of the alliance correctly, as seen in the case of trust from the supplier in this study. This is especially true when the data from this one partner are collected through a self-reporting questionnaire only.

Practical Implications

The findings in this study should be useful for practitioners, especially for those leading small entrepreneur enterprises. On the one hand, firm location or geographic proximity makes no difference in the developing of symbiotic trust and the survival of symbiotic relationship. In other words, given a great improvement of highway system in China, geographic proximity is no longer a variable that can influence the development of symbiotic trust and the success of symbiotic strategy. On the other hand, the findings of this study suggest that joint venture or overseas ownership is very effective in maintaining the small–large symbioses we examine in this study. After more than 30 years of opening up and economic reform, managerial value and other institutions, including those relating to symbiotic marketing, are moving closer to their international equivalents in which overseas ownership may not have any significant effect on the success of a symbiotic strategy. This may be true for at least some modern and capital-intensive industries such as the auto industry. Therefore, for small- and medium-sized firms that seek to build relationship of symbiotic marketing with large and more powerful firms, it is important to understand what variables are really important. For the dyads studied in this article, for example, the trust of the buyer seems to be the most important factor predicting the success of the alliance.

Limitations and Future Research

The cross-sectional nature of the data in our study may restrict conclusions to those of association, not causation, such as the effects of symbiosis-orientation and symbiotic trust. The development of a time-series database and testing the effects of symbiosis-orientation in a longitudinal framework in a future study would provide more insight into probable causation. In addition to the preceding suggestions for modifying the research design, future research might also address the following issues pertaining to symbiosis-orientation.

In addition, it would be useful in the future to test the relationship of symbiosis-orientation to additional performance among partners in symbiotic relationships. For example, what is the relationship of symbiosis-orientation to firms’ profitability, new product success and sales growth? In addition to further examining the effect of the magnitude of symbiosis-orientation on business performance, future studies should also examine the effect of the proportions of the components of firms’ performances.

Concluding Observations

Our study is an important first step in validating the symbiosis-orientation/success of symbiotic strategy. For both academic researchers and business practitioners, especially those who are interested in symbiotic marketing, relationship marketing and other related topics issues related to strategic alliances, the implications of the study are clear. The research must be replicated in diverse environments and over time to increase confidence in the nature and power of the theory. Our current study has obtained evidence suggesting that symbiosis-orientation should help the success of symbiotic strategy. Our current study has also found interesting relationship among symbiosis-orientation, resource sharing and symbiotic trust. All these findings are entirely consistent with the intuition and expectations of both scholars and practitioners over the past decades about the nature and effects of symbiotic strategy. The findings should encourage scholars and practitioners to go beyond mere intuition for recommending the superiority of symbiotic strategy and make greater efforts in the future to study and implement symbiotic strategy in business organisations.

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Symbiosis-Orientation and the Survival of Small–Large Strategic Alliances

Abstract

Abstract

Keywords

Introduction

Objective

Literature Review

Methods

Setting, Sample and Data

Measurement

Control Variables

Findings

Validation of the Measurement Model

Results of CFA for the Measures of the Variables Studied

Descriptive Statistics

Means, Standard Deviations and Correlations

Results of Hierarchical Linear Modelling

Conceptual Model

Moderating Effect of Resource Sharing

Discussion and Implications

Theoretical Implications

Practical Implications

Limitations and Future Research

Concluding Observations

References