Innovation and Learning in Asia and Africa
8. 8.1 Taiwan’s move from follower to leader1 INTRODUCTION The successful insertion of Taiwanese ﬁrms to the global information hardware (IH) value chain was greatly supported by the systemic and institutional environment developed through smooth coordination between government, institutions and ﬁrms. Government policy was particularly important in stimulating technological upgrading and research and development (R&D) activities. The Taiwanese government adopted policies that were complementary to its vertically decentralized structure and encouraged the development of technological capabilities. The ﬂexibility enjoyed by small size and strong bonds of trust helped Taiwanese ﬁrms to harness the advantages of scope oﬀered by global production chains. From original equipment manufacturing (OEM), strong coordination from markets and trust, and government participation in the stimulation of R&D activities helped transform Taiwanese computer and component ﬁrms to enter original design manufacturing (ODM) and own brand manufacturing (OBM). Although foreign direct investment has remained small, signiﬁcant diﬀusion of foreign technology to local computer and component ﬁrms took place in Taiwan. Lin’s (1986) study of cathode ray tubes (CRT) found that the manufacturing capability of personal computers and peripherals, such as monitors and computer terminals, originated from the manufacture of colour television (CTV) sets in the 1970s. The assembly of radios and black and white television sets in the 1960s, particularly by Japanese manufacturers, laid the foundation for technological capability building in the industry. Modern manufacturing technology was developed only since 1969 when foreign joint ventures started producing CTV sets in Taiwan. CTV used transistors...
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