IDEAS home Printed from https://ideas.repec.org/a/taf/ecinnt/v19y2010i4p295-324.html
   My bibliography  Save this article

Upgrading through innovation in a small network economy: insights from Taiwan's IT industry

Author

Listed:
  • Dieter Ernst

Abstract

This paper analyzes the recent experience of Taiwan's information technology (IT) industry to explore the challenges and opportunities faced by a small economy that is deeply integrated into global networks of production and innovation. I introduce a conceptual framework to examine how specialization, learning ('absorptive capacity') and innovation enhance the potential for industrial upgrading. Finding the right balance between firm-level and industry-level upgrading and between domestic and international elements is a moving target and requires permanent adjustments to changes in markets and technology. Three findings distinguish this paper from prior work. First, absorptive capacity is critical for Taiwan's attempts to upgrade its IT industry through innovation. Second, Taiwanese firms now must increase R&D to avoid diminishing returns of network integration. Third, integration into diverse networks of production and innovation may well provide new lower-cost opportunities for 'industrial upgrading through innovation'. 'Technology diversification', which combines incremental and architectural innovations, can serve as a complementary and arguably less costly option to 'technology leadership' strategies.

Suggested Citation

  • Dieter Ernst, 2010. "Upgrading through innovation in a small network economy: insights from Taiwan's IT industry," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(4), pages 295-324.
    • Handle: RePEc:taf:ecinnt:v:19:y:2010:i:4:p:295-324
    DOI: 10.1080/10438590802469560
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/10438590802469560
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10438590802469560?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Anthony J. Venables, 2006. "Shifts in economic geography and their causes," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 15-39.
    2. Michael Hobday, 1995. "Innovation In East Asia," Books, Edward Elgar Publishing, number 226.
    3. Alice H. Amsden & Wan-wen Chu, 2003. "Beyond Late Development: Taiwan's Upgrading Policies," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011980, December.
    4. Ng, Francis & Yeats, Alexander, 2003. "Major trade trends in East Asia : what are their implications for regional cooperation and growth," Policy Research Working Paper Series 3084, The World Bank.
    5. Ernst, Dieter, 1997. "From Partial to Systemic Globalization: International Production Networks in the Electronics Industry," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series qt7326w69k, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    6. Carliss Y. Baldwin & Kim B. Clark, 2000. "Design Rules, Volume 1: The Power of Modularity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024667, December.
    7. Arora, Ashish & Fosfuri, Andrea & Gambardella, Alfonso, 2001. "Markets for Technology and Their Implications for Corporate Strategy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 10(2), pages 419-451, June.
    8. Tain-jy Chen & Yi-Ping Chen, 1995. "Foreign Direct Investment," Industry and Innovation, Taylor & Francis Journals, vol. 2(1), pages 57-68.
    9. Mathews, John A., 2002. "Dragon Multinational: A New Model for Global Growth," OUP Catalogue, Oxford University Press, number 9780195121469, Decembrie.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hsu, Chia-Wen & Lien, Yung-Chih & Chen, Homin, 2013. "International ambidexterity and firm performance in small emerging economies," Journal of World Business, Elsevier, vol. 48(1), pages 58-67.
    2. Chaminade , Cristina & Plechero , Monica, 2015. "The role of geographical proximity in the international knowledge flows of European firms: an overview of different knowledge transfer mechanisms," Papers in Innovation Studies 2015/30, Lund University, CIRCLE - Centre for Innovation Research.
    3. Ann Ling-Ching Chan, 2012. "Innovation activity and corporate financing: evidence from a developing economy," Applied Financial Economics, Taylor & Francis Journals, vol. 22(20), pages 1665-1678, October.
    4. Chen, Liang-Chih, 2015. "Building extra-regional networks for regional innovation systems: Taiwan's machine tool industry in China," Technological Forecasting and Social Change, Elsevier, vol. 100(C), pages 107-117.
    5. Juan Lin & Han Li & Mingshui Lin & Chuhai Li, 2022. "Rural e‐commerce in China: Spatial dynamics of Taobao Villages development in Zhejiang Province," Growth and Change, Wiley Blackwell, vol. 53(3), pages 1082-1101, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dieter Ernst, 2005. "Limits to Modularity: Reflections on Recent Developments in Chip Design," Industry and Innovation, Taylor & Francis Journals, vol. 12(3), pages 303-335.
    2. Dieter Ernst, 2005. "Complexity And Internationalisation Of Innovation — Why Is Chip Design Moving To Asia?," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 9(01), pages 47-73.
    3. Hye-Ran Hwang & Jae-Yong Choung, 2014. "The Co-evolution of Technology and Institutions in the Catch-up Process: The Case of the Semiconductor Industry in Korea and Taiwan," Journal of Development Studies, Taylor & Francis Journals, vol. 50(9), pages 1240-1260, September.
    4. Jenn-Hwan Wang, 2007. "From technological catch-up to innovation-based economic growth: South Korea and Taiwan compared," Journal of Development Studies, Taylor & Francis Journals, vol. 43(6), pages 1084-1104.
    5. Intarakumnerd, Patarapong & Goto, Akira, 2016. "Technology and Innovation Policies for Small and Medium-Sized Enterprises in East Asia," ADBI Working Papers 578, Asian Development Bank Institute.
    6. Buckley, Peter J. & Hashai, Niron, 2014. "The role of technological catch up and domestic market growth in the genesis of emerging country based multinationals," Research Policy, Elsevier, vol. 43(2), pages 423-437.
    7. Iammarino, Simona & Padilla-Pérez, Ramon & von Tunzelmann, Nick, 2008. "Technological Capabilities and Global-Local Interactions: The Electronics Industry in Two Mexican Regions," World Development, Elsevier, vol. 36(10), pages 1980-2003, October.
    8. Keun Lee, 2009. "How Can Korea be a Role Model for Catch-up Development?: A 'Capability-based View'," WIDER Working Paper Series RP2009-34, World Institute for Development Economic Research (UNU-WIDER).
    9. Nicholas Crafts & Anthony Venables, 2003. "Globalization in History.A Geographical Perspective," NBER Chapters, in: Globalization in Historical Perspective, pages 323-370, National Bureau of Economic Research, Inc.
    10. Kinsuk Mani Sinha & Pamela Adams & Franco Malerba, 2015. "Intermediate Users as a Source of Innovation in a Development Context: Empirical Evidence and Theory," Globelics Working Paper Series 2015-14, Globelics - Global Network for Economics of Learning, Innovation, and Competence Building Systems, Aalborg University, Department of Business and Management.
    11. Jiatao Li & Rajiv Kozhikode, 2008. "Knowledge management and innovation strategy: The challenge for latecomers in emerging economies," Asia Pacific Journal of Management, Springer, vol. 25(3), pages 429-450, September.
    12. Yoruk, Deniz E., 2019. "Dynamics of firm-level upgrading and the role of learning in networks in emerging markets," Technological Forecasting and Social Change, Elsevier, vol. 145(C), pages 341-369.
    13. Liu, John Jen-wei & Ray, Pradeep Kanta, 2012. "The ‘Triple-alliance’ perspective for new industry creation: Lessons from the flat panel industry in Taiwan," Journal of Asian Economics, Elsevier, vol. 23(5), pages 585-599.
    14. Stefano Brusoni & Keith Pavitt, 2003. "Problem solving and the co-ordination of innovative activities," SPRU Working Paper Series 93, SPRU - Science Policy Research Unit, University of Sussex Business School.
    15. Kenney, Martin & Breznitz, Dan & Murphree, Michael, 2013. "Coming back home after the sun rises: Returnee entrepreneurs and growth of high tech industries," Research Policy, Elsevier, vol. 42(2), pages 391-407.
    16. World Bank, 2003. "Lithuania : Aiming for a Knowledge Economy," World Bank Publications - Reports 14769, The World Bank Group.
    17. Ernst, Dieter & East-West Center (ed.), 2006. "Innovation Offshoring:Asia's Emerging Role in Global Innovation Networks," Economics Study Area Special Reports, East-West Center, Economics Study Area, volume 10, number ewcsreport1, January -.
    18. Hu, Mei-Chih, 2012. "Technological innovation capabilities in the thin film transistor-liquid crystal display industries of Japan, Korea, and Taiwan," Research Policy, Elsevier, vol. 41(3), pages 541-555.
    19. Franco Malerba & Richard R. Nelson, 2012. "Introduction," Chapters, in: Franco Malerba & Richard R. Nelson (ed.), Economic Development as a Learning Process, chapter 1, Edward Elgar Publishing.
    20. Jenn-Hwan Wang & Chuan-Kai Lee, 2007. "Global Production Networks and Local Institution Building: The Development of the Information-Technology Industry in Suzhou, China," Environment and Planning A, , vol. 39(8), pages 1873-1888, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ecinnt:v:19:y:2010:i:4:p:295-324. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/GEIN20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.