The Limits of Guanxi Capitalism: Transnational Collaboration between Taiwan and the USA

In this research we explore the relationship between high-technology regional development and ethnic networks in the connection between Silicon Valley, California and Hsinchu, Taiwan. We elaborate the argument that regional industrial structure and embedded social networks, rather than the multinational firm, should be the focus in the study of transnational business. The complementary regional industrial structures allow economic and technological collaboration between these two regions while the social networks help coordinate these transnational (cross-regional) collaborations. However, we seek to distinguish this account from the dominant perceptions of the role of guanxi (interpersonal relationships) in overseas Chinese business networks (OCBN). In contrast with the arguments for OCBN, that guanxi provides resources for Chinese firms to coordinate and control transnational business, we argue that the skill and competence required for technological upgrading are not necessarily guaranteed within the ethnic network. Although ethnic networks facilitate transnational business and technology cross-fertilization, it seems go too far to argue the Silicon Valley–Hsinchu connection is another version of Chinese guanxi capitalism.