Entrepreneurship, flexibility, and policy coordination: Taiwan’s computer industry

In just 15 years, Taiwan has emerged as a leading producer of hardware for nearly every major computer vendor in the world, despite little previous experience in high technology industries. By 1995, Taiwan ranked fourth in the world in computer hardware production and exports through its strategy of being a “fast follower.” Taiwan’s success in the computer industry has been due to a coordinated government strategy to support private entrepreneurship by a large number of small, flexible, innovative companies. Taiwan’s computer companies have responded rapidly and effectively to continuing changes in the international market and avoided many of the problems encountered by their counterparts in Japan and South Korea in recent years. They have done so by emphasizing close supplier relationships with multinational computer companies all over the world as a means of promoting exports and keeping apprised of market conditions. They continue to show great adaptability as Taiwan’s computer industry moves toward diversification both upstream and downstream, full-service OEM (original equipment manufacturing) for multinationals, and industry consolidation for scale economies. The government has closely complemented the efforts of industry by carrying out research and development and transferring technology to the private sector, by conducting market intelligence for private sector use, and by providing engineering and technical manpower. As a result, Taiwan is probably Asia’s best positioned country for continued success in the global computer industry.