Abstract
The present study explored the associations among the core resources, strategic alliances, and business strategies of the Taiwanese controlled-environment mushroom industry. A total of 492 responses were collected, and the results support the hypothesised alliance-mediating model. The results indicate that core resources comprise four dimensions: organisational capabilities, individual capabilities, tangible assets, and intangible assets. The mushroom industry has two major types of strategic alliance, namely cost reduction and strengthening professional alliances, and the business strategies employed in the industry involve international market entry and focusing on domestic market operations. The results indicate that international market entry is directly influenced by cost reduction alliances and tangible assets, and indirectly influenced by organisational and individual capabilities. Whether an organisation focuses on its domestic market operations is directly affected by organisational capabilities, cost reduction alliances and intangible assets, and indirectly affected by organisational and individual capabilities.
1. Introduction
Mushrooms have numerous beneficial properties, including blood-pressure and sugar-level lowering and cholesterol-level lowering effects as well as antitumor, immune regulatory, and osteoporosis-delaying properties, indicating they have considerable market potential (Niazi and Ghafoor, 2021; Valverde et al., 2015). Since the 1950s, the Taiwanese government has assisted farmers in processing and exporting mushroom products. In 1960, Taiwan began regular commercial exportation of canned and bottled mushrooms, and by the 1970s, the country had become the world’s largest exporter of canned mushrooms, earning Taiwan the title of ‘the Kingdom of Mushrooms’ (Lin et al., 2019; Peng, 2010).
From 1990 to 2000, Taiwan’s controlled-environment mushroom industry developed rapidly due to government investment in agricultural laboratories. This has enabled various mushrooms to be produced year-round to satisfy the domestic market (Peng, 2010) and has led to Taiwanese mushrooms having considerable export potential. Taiwan’s mushroom industry has competitive advantages with respect to food quality and product diversification, leading it to have potential complementary markets in countries in the Southern Hemisphere (e.g., Australia), where the peak demand season coincides with the off-season sales in Taiwan (FAOSTAT, 2021).
Although it has undergone approximately 100 years of development, Taiwan’s mushroom industry continues to face several difficulties, including high agricultural land and labour costs that cause mushroom prices to be uncompetitive; a low output level, with the resources unable to reach the production possibility frontier because of the small planting scale; the lack of effective resource integration despite the mushroom industry chain being inclusive; and Taiwan’s agricultural products being unable to become internationally competitive because of (non)tariff barriers related to diplomatic difficulties (Lu et al., 2019; Peng, 2010; Yeh and Chen, 2017). Because of the small scale of Taiwan’s mushroom manufacturers, large investment for building controlled-environment factories, ensuring manufacturers’ effective marketing, and establishing alliances among manufacturers have become crucial development strategies.
Before an alliance is formed, each alliance partner must verify the core resources and competitive advantages of the other. However, most studies on the mushroom industry have investigated the means through which various technologies can enhance mushroom production; little research has focused on business strategies. Therefore, the current study focuses on two research questions: (1) What are the core resources, strategic alliances, and business strategies of the Taiwanese controlled-environment mushroom industry? and (2) What are the potential associations among the core resources, strategic alliances, and business strategies of this industry? The research findings could assist relevant industry players in forming strategies based on their business goals and could assist the government and academia in investigating and formulating relevant policies or subsidies for industrial development.
2. Theoretical foundation
2.1 Business strategies
A business strategy refers to an enterprise maximising its limited resources in relation to its objectives and making decisions and identifying means of sustaining its operation in a highly competitive environment (Ghemawat, 2002). Before formulating a business strategy, an enterprise must analyse its own circumstances and business goals and define the dynamic changes resulting from the strategy as it progresses (Teece, 2018). Several scholars have analysed the competitive strategies employed by enterprises in relation to specific agricultural products (e.g., fluid milk and sugar) in the United States (Dobson, 1992; Kennedy et al., 1998). In addition, Chen et al. (2016) reported that strategic management by agricultural enterprises must be considered from three perspectives: the external environment, the internal environment, and sustainable development.
Most enterprises focus on their domestic market operations, but enterprises must also consider whether they wish to enter the international market. The decision to enter the international market is influenced by diverse factors. These factors can be categorised as internal condition and external environmental factors (Chen et al., 2016; Hansford et al., 2003). Environment-controlled mushroom production is capital-intensive; although such production is not affected by the climate and seasons, the domestic market varies considerably in the low (summer) and high (winter) seasons, resulting in excess production in summer and extreme price fluctuations throughout the year; these issues can be resolved by selling over-produced products abroad (Campanhola and Pandey, 2019; Sher et al., 2010).
However, before entry into the international market, the environment-controlled mushroom industry should consider other countries’ dietary and policy trends. For example, local mushroom manufacturers in Malaysia face challenges related to various production conditions, such as a hot climate and weakened seeds. To overcome these problems, manufacturers have introduced advantageous seeds, educated and trained employees, and upgraded production facilities (Haimid et al., 2013). In Bangladesh, the focus of mushroom industry business strategies is improving rural development. Operating mushroom production businesses can provide the local people with nutritious food and more employment opportunities (Bose, 2016). In Indonesia, consumers eat mushrooms as a staple food and a snack (Haryati et al., 2020). Indonesian mushroom manufacturers adopt both technology- or organisation-oriented strategies. Technology-oriented strategies involve increasing the quality and yield per unit area of mushrooms, whereas organisation-oriented strategies involve cooperating with local communities to meet market demands (Febrianda and Tokuda, 2017).
In Taiwan, numerous environment-controlled mushroom manufacturers introduce smart agriculture to enable factory-based cultivation. They actively seek methods for recycling cultivation waste and actively develop energy-saving and environmentally friendly cultivation technology through cross-disciplinary cooperation (Lin et al., 2019; Lu et al., 2019). Consumers have generally recognised the health benefits of mushrooms, providing market opportunities for mushroom-related products (Lu et al., 2019; Peng, 2010). However, the small business scale of the mushroom industry has led to unsatisfactory business performance, and the industry lacks effective resource integration. Therefore, business operators should collaborate with others to improve their competitiveness (Haryati et al., 2020). In this rapidly changing environment, mushroom manufacturers should implement business strategies that involve planning marketing strategies, optimising digital sales models, and being open to partnerships to improve their access to business opportunities in the global market (Haryati, 2021).
2.2 Core resources
Core resources refer to unique assets and capabilities through which an enterprise can outperform its competitors (Antero and Riis, 2011; Wade and Hulland, 2004). The characteristics of enterprise resources are generally heterogeneity, immobility, value, rareness, imperfect imitability, and substitutability (Cegliński, 2017; Sharma and Erramilli, 2004). Heterogeneity leads to competitive differences within the industry and among enterprises; immobility is defined as the inability of competitors to obtain resources from the market; value enhances enterprises’ effectiveness in executing strategies; rareness indicates an enterprise’s unique features among competitors; imperfect imitability denotes that competitors cannot easily imitate a resource; and substitutability indicates a sustained competitive advantage that is not unique. These resources are the basic factors that lead to competitiveness for enterprises and enables the enterprises to create unique products and services (Cegliński, 2017; Marr et al., 2004).
Regarding the core assets, investing in environment-controlled cultivation facilities and using artificial grow bags can increase unit yields and shorten cultivation times (Zhang et al., 2014). This indicates that financial soundness can affect the operating outcomes of mushroom manufacturers (Ardaneswari et al., 2020). From the perspective of agribusiness operations, human management, cost analysis, social networks, and cooperation among all players are critical dimensions of core resources (Chen et al., 2016; Gall and Schroder, 2006). Moreover, applying technology to effectively manage these resources has become the main source of competitive advantage for agricultural enterprises (Chuang et al., 2020; Verdouw et al., 2015). Haryati et al. (2020) additionally indicated that the core assets of mushroom manufacturers include production facilities and equipment, efficient cultivation techniques, competent staff, good education and training programmes, a high-quality working environment, the ability to access information, favourable relationships with suppliers, and favourable relationships with customers.
Core capabilities can be classified into individual capabilities and organisational capabilities. Individual capabilities are physical and mental abilities for an individual to work skilfully. An individual retains their individual capabilities when they leave an organisation. Organisational capabilities are the collective capabilities of all individuals in an organisation and manifest when the individuals within an organisation interact. Organisational capabilities are not retained by an individual when they leave an organisation (Huber et al., 2021; Rösler et al., 2021). Accordingly, mushroom manufacturers should strengthen their marketing capabilities to reach potential customers, expanding the market (Bose, 2016). Mushroom manufacturers should also actively invest in talent development; strengthen their mushroom cultivation capabilities; promote production standards, such as quality and yield; maintain price stability; avoid unnecessary additional costs; and increase the utilisation rate of tangible assets (Bose, 2016). Therefore, Taiwanese environment-controlled mushroom manufacturers’ core capabilities may include fresh-keeping treatment, product grading, cultivation technology, supply chain relationships, processed product development, and international marketing.
2.3 Strategic alliances
A strategic alliance refers to the formation of an official and long-term contractual cooperation model by two or more enterprises to benefit from each other’s resources or competencies. Although partners in an alliance are independent and focused on their own areas of expertise, the alliance enables complementary capabilities or resource sharing to enable joint planning and problem-solving under common goals for sustainable development (Dong et al., 2020; Yang et al., 2014). Strategic alliances enable enterprises to obtain resources, jointly make purchases, expand services, enter a market, improve their competitive advantages, avoid risks, reduce costs, create value, and maximise synergy (Dong et al., 2020; Manners, 2000; Peterson et al., 2001; Wheelen and Hungar, 2000). Granovetter (2000) indicated that the relationship strength of strategic alliances is influenced by the timing, emotional tension, and reciprocal service of the alliance. That is, strategic alliances occur as a continuum of strong and weak partnerships, ranging from close partnerships in the value chain to alliances for joint ventures, product portfolios, marketing, functional outsourcing, commissioning, or licensing as well as to distant partnerships between bank syndicates and for reciprocal services, information provision, and technical support (Moody, 2017; Obioma, 2017; Rowley et al., 2000).
Agricultural enterprises must have sufficient funds for asset investment, and such enterprises form production alliances through mutual commitment with farmers (Cozzarin and Westgren, 2000). For example, in the mushroom industry, enterprises’ commitments include uniformly producing mushroom grow bags with stable quality, organising education and training on the cultivation process, providing technical support for production, and assisting farmers in selling their products. Farmers’ commitments include paying in full for the grow bags, implementing the learned cultivation processes, undertaking production infrastructure investment, implanting production management, and selling mushrooms to the enterprises according to the contracted quantity and price (Febrianda and Tokuda, 2017). Notably, food exports face high risks and trade barriers. If a food product enterprise can successfully join the procurement platform of a multinational system, the enterprise potentially has a competitive advantage in the global retail market (Cheptea et al., 2015).
Moreover, farmers are often unable to establish close cooperation with large enterprises. At such times, the government may provide subsidies for investment in equipment, technology, management, and advertising according to farmers’ needs to enable them to meet the requirements of the procurement systems of large buyers (De Boef et al., 2021). The government should legally require information transparency in the supply chain to ensure product quality, packaging specifications, and pricing according to what customers are willing to pay on the production side of the alliance (Babich, 2006). The government can also fund and promote pilot programmes involving cross-domain integration to improve the quality of research, cultivate talent, develop energy-saving operation processes, develop products with added value, and assist in establishing agricultural brands (United States Department of Agriculture, 2021). Furthermore, the government should establish a food safety verification mechanism, and assist farmers in learning international marketing and agricultural product trading development trends and in signing contracts with traders and multinational mass sellers to facilitate overseas market expansion (Sarkar, 2013; Thilmany et al., 2020).
2.4 Strategic alliance as a mediator
Considering the aforementioned limited but unique core resources and the benefits that can be gained from strategic alliances, Taiwan’s mushroom manufacturers should integrate their core resources to create value regardless of whether their focus is on international market entry or domestic market operations. However, few studies have focused on the associations among core resources, strategic alliances, and business strategies in the mushroom industry (Ardaneswari et al., 2020), although several scholars have provided evidence supporting the existence of this resource–alliance–performance relationship. For example, Gomes-Casseres (1997) noted that small firms must implement alliance strategies to achieve economies of scale and scope. Chung et al. (2006) recommended small firms in knowledge industries form strategic alliances to satisfy clients. Huang et al. (2013) reported that strategic alliances can mediate organisational performance. Spivack (2013) discovered that small businesses in advanced technology research alliances can achieve more favourable business outcomes. Yajid (2020) hypothesised and verified that core resources affect the overall performance of an enterprise through strategic alliances. Therefore, the present study proposes the following three hypotheses:
3. Methods
In this study, the quantitative survey method was adopted to investigate how the core resources of the mushroom industry and the strategic alliances within the industry or between industries influence the business strategies of international market entry and focusing on domestic market operations. The targets of this study were senior staff, researchers, managers, owners, and investors in the Taiwanese mushroom industry. To ensure the appropriateness of the sample, we conducted online surveys and distributed the questionnaire link to the members and employees of mushroom industrial associations in Taiwan. SurveyCake was used as the questionnaire platform. We informed the participants of the study purpose and guaranteed the anonymity of their responses to ensure that they would answer freely and would not have privacy concerns. The survey was distributed online from October to November of 2021. A total of 492 valid responses were collected.
The survey measures were developed based on the literature and the researchers’ expertise in mushroom production. A total of 18 items were included to measure core resources. These items were adopted from the studies of Ardaneswari et al. (2020), Bose (2016), Gall and Schroder (2006), Haryati et al. (2020), Rösler et al. (2021), Verdouw et al. (2015) and Zhang et al. (2014). In addition, 11 items were used to measure strategic alliances. These items were adopted from the studies of Dong et al. (2020), Febrianda and Tokuda (2017), Obioma (2017), Rowley et al. (2000) and Yang et al. (2014). For dependent variables, five items were included to measure business strategies. These items were adopted from the studies of Chen et al. (2016), Febrianda and Tokuda (2017), Hansford et al. (2003), and Haryati et al. (2020).
Eight practitioners and researchers in the mushroom industry were interviewed to ensure the content validity of the questionnaire items. All of the scales were scored using a 6-point Likert-type scale ranging from 1 (strongly disagree) to 6 (strongly agree). After the sample was obtained, confirmatory factor analysis (CFA) was conducted using Amos 25.0 to evaluate the factor structure of the items. Factor loadings, means, standard deviations, Cronbach’s alpha coefficients, composite reliabilities (CRs), and average variance extracted (AVE) values were obtained, and a structural model using the maximum likelihood method was tested in Amos 25.0. The goodness of fit of the model with the hypotheses was evaluated using
4. Results and discussion
Among the sample, 60.2% of the respondents were men, and 39.8% were women; the mean age was 42.3 years; 52.2, 26.8 and 20.9% possessed an undergraduate, postgraduate and high school degree or below, respectively; and participants were involved in mushroom production (29.9%), mushroom selling (10.0%), mushroom research (6.5%), mushroom processing (4.1%), agricultural machinery and materials (3.7%), and other agricultural areas (45.9%). In addition, the majority of the participants were managers (64.4%), followed by nonmanagers (28.0%), investors (3.9%) and others (3.7%).
4.1 Testing item factor structure
CFA was conducted to answer the first research question; the results revealed that core resources could be divided into four factors: organisational capabilities, individual capabilities, tangible assets, and intangible assets, and that strategic alliance could be divided into two factors: cost reduction and strengthening professional alliances. Organisational capabilities, individual capabilities, tangible assets, intangible assets, cost reduction alliances, strengthening professional alliances, international market entry strategies, and focusing on domestic market operations each had an appropriate fit (
According to the CFA results, the variable organisational capabilities referred to the ability to implement post-harvest preservation and product classification, develop stable relationships with suppliers, and develop trustful relationships with employees. Individual capabilities referred to the ability to integrate supply and distribution, implement strong product marketing, and master the utilisation of B2B channels. Tangible assets referred to the ownership of intelligent environment-controlled production facilities, grow bag production equipment, and post-harvest vacuum precooling equipment and refrigerated transport vehicles and the ability to introduce and preserve seeds. Intangible assets referred to ownership of a well-known brand.
Regarding strategic alliances, cost reduction alliances referred to having complementary exchanges, integrating production and sales systems, accessing previously unreachable markets, forming an alliance for the joint procurement of facilities and materials, and establishing comarketing operations. Strengthening professional alliances referred to forming an alliance to establish a common laboratory as well as a product research and talent development centre.
Confirmatory factor analysis (n=492).
Citation: International Food and Agribusiness Management Review 27, 2 (2024) ; 10.22434/ifamr2022.0109
Correlation matrix.
Citation: International Food and Agribusiness Management Review 27, 2 (2024) ; 10.22434/ifamr2022.0109
Regarding business strategies, international market entry strategies included strategies such as cooperating with farmers abroad, promoting whole-field output, forming alliances with companies from other countries, and entering a foreign market. Focusing on domestic market operations included strategies such as investing in the research and development of processed products, investing to strengthen cultivation capabilities, and expanding production capacities and the domestic market.
4.2 Testing influence of core resources on business strategies
The hypothesised mediating model had an acceptable fit (
Organisational capabilities can contribute to cost reduction alliances (
The direct effect of organisational capabilities on international market entry is nonsignificant, indicating the presence of indirect-only mediation. However, because both the direct and indirect effects of organisational capabilities on focusing on domestic market operations are significant, cost reduction and strengthening professional alliances have complementary mediation effects on the relationship between organisational capabilities and focusing on domestic market operations (Zhao et al., 2010). The indirect effects of organisational capabilities on international market entry strategies (
The direct effects of individual capabilities on international market entry and focusing on domestic market operations are nonsignificant, indicating the presence of indirect-only mediation (Zhao et al., 2010). The indirect effects of individual capabilities on international market entry strategies through cost reduction and strengthening professional alliances (
The other indirect effects, including the indirect effect of tangible assets on international market entry strategies and focusing on domestic market operations as well as of intangible assets on international market entry strategies and focusing on domestic market operations, are nonsignificant (Figure 1). In summary, the results partially support H1 (core resources affect business strategies), H2 (strategic alliances affect business strategies), and H3 (core resources affect business strategies through strategic alliances).
Results of the hypothesised model (n=492). Dotted grey lines represent nonsignificant effects.
Citation: International Food and Agribusiness Management Review 27, 2 (2024) ; 10.22434/ifamr2022.0109
Supplementary analysis was used to test the model on the manager subsample. The model yielded an acceptable fit for the manager subsample (
To answer the second research question, this study proposed and verified a mediating model, with results indicating that core resources affect business strategies through strategic alliances. According to the results, international market entry is directly influenced by cost reduction alliances and tangible assets, and indirectly influenced by both organisational and individual capabilities. Whether an organisation focuses on its domestic market operations is directly affected by organisational capabilities, cost reduction alliances and intangible assets, and also indirectly affected by both organisational and individual capabilities.
4.3 International market entry strategies
Most domestic controlled-environment mushroom manufacturers are limited in scale (Peng, 2010); therefore, they perceive cost reduction alliances to be their primary consideration to ensure they have a competitive advantage when considering international market entry, particularly when such manufacturers must account for (non)tariff barriers (Yeh and Chen, 2017). Accordingly, controlled-environment mushroom production is a capital-intensive business, in which the planned investment in and effective operation of tangible assets (such as production facilities, vacuum precooling, and cold chain logistics) have become essential for international expansion, especially when large and stable foreign market contracts are involved (Ardaneswari et al., 2020; Bose, 2016; Haryati et al., 2020).
Compared with strengthening professional alliances, cost reduction alliances can more effectively and observably produce immediate and concrete results (Dahan and Srinivasan, 2011). The effects of organisational and individual capabilities occur through the mediating effects of cost reduction alliances, indicating that individual competencies and trustful networking produce more favourable effects in this type of alliance, and that international market entry strategies could in turn be optimised through the integration of production and sales, joint procurement, comarketing operations, and other complementary tasks to reduce mutual costs. In addition, strengthening professional alliances requires long-term investment, which does not often result in observable, immediate outcomes (Dahan and Srinivasan, 2011).
4.4 Focusing on domestic market operations
Notably, organisational capability is the most widely recognised core resource according to its mean value (M=5.23) in this study, and it has the strongest influence on focusing on domestic market operations. In addition, cost reduction alliances significantly affect domestic business strategies. This is because the domestic mushroom industry mostly comprises family-owned enterprises that usually have unique cultivation techniques and trustful relationships with employees but limited resources for earning a living. They generally consider reducing costs to ensure their survival (Peng, 2010). However, if the scale of operation is expanded, the owner would move toward strengthening their seeds and cultivation techniques as well as toward integrating their production and sales systems to enable their access to previously unreachable markets (Lu et al., 2019; Peng, 2010).
These small-scale mushroom manufacturers considerably rely on their intangible assets to sustain their operation in the domestic market. In addition, the effect of individual capabilities on focusing on the domestic market is mediated by cost reduction alliances. Most family business owners are able to pursue their personal goals, which may not be in the best interest of the business, and they may expect alliance partners to utilise their employees’ capacities in pursuit of their shared goal (Plana-Farran and Gallizo, 2021). Tangible assets do not significantly affect the domestic business strategy. This may be due to the production conditions and product quality of domestic mushroom manufacturers being similar and refrigerated logistics systems for fresh mushrooms being common and easy to implement, diminishing the influence of tangible assets (Peng, 2010).
5. Conclusions, implications and suggestions
The current study verified that core resources can affect business strategies through strategic alliances. Cost reduction alliances are the strongest influencer on the decision to enter the international market, followed by tangible assets. Both organisational and individual capabilities affect international market entry strategies through cost reduction alliances. By contrast, organisational capability is the strongest influencer on the decision to focus on domestic market operations, followed by cost reduction alliances, and intangible assets. Both organisational and individual capabilities also affect focusing on domestic market operation strategies through cost reduction alliances.
These results have four practical implications for mushroom manufacturers preparing to enter the international market. (1) Manufacturers should actively engage in jointly procuring facilities and materials with other mushroom operators to achieve economies of scale. (2) Manufacturers should make key investments to ensure they have the capacity to cultivate mushrooms with a stable quality and yield, to handle post-harvest preservation treatment and quality classification, and to develop diverse processed mushroom products. (3) Manufacturers should master cross-border production and sales systems and become involved in the formulation of international standards for product regulation through cross-industry alliances to reach the target market. (4) Manufacturers should abandon the single-minded focus of shipping products for sale abroad and should substitute it with strategically exporting package plants, thoroughly establishing factories abroad, and purchasing foreign mushroom enterprises in the target country.
The results also have three practical implications for mushroom manufacturers targeting the domestic market. (1) Seed enhancement and cultivation techniques should be improved through continuous learning and strategic alliances. (2) Manufacturers should focus on maintaining controllable quality at the highest level and on strengthening their primary processing capacities to deepen their alliances and expand their bargaining power with distributors. (3) Under conditions of having limited core resources, manufacturers should diversify their development of new products and sales channels through close but flexible alliances with local businesses, and they should actively collaborate with universities and research institutions, branded processed food producers, and marketing companies.
This study has at least three limitations that should be considered, and they are potential directions for future investigations. (1) The questionnaire used in this study did not account for the internal financial structure and current industrial status of the participants’ enterprises. Therefore, objective scientific data collection to achieve comprehensive research outcomes is required. (2) Most respondents in this study are practitioners who are not required to consider the overall operation and costs of the enterprise they belong to as would be considered by a senior executive or owner, which potentially weakens the results of this study. In future studies, owners should be the focus, and their decision-making processes and judgements should be analysed through, for example, case study methods to analyse their successes and focus group discussions to summarise their difficulties. (3) Although enterprises can enter the international market through several modes, this study did not determine the most suitable mode of international market entry for various types of mushroom manufacturers. Future research can target the market in a particular region and explore the region’s demand gap and competitors as well as can identify appropriate modes of international market entry and the corresponding strategies.
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