Dual dependence on low-carbon transition of small and medium enterprises in Taiwan: the policy perspective

This study employed Taiwan as a case study to examine how government policies shape the low-carbon transition of small and medium-sized enterprises (SMEs) in the context of limited resources and rising supply chain pressures. The findings reveal that the government has long relied on consulting support and short-term financial subsidies to help businesses reduce transformation costs but lacks market-driven mechanisms or more comprehensive regulatory reforms; this has led to limited policy flexibility but long-term effectiveness. Meanwhile, constrained by traditional operating models and scarce resources, SMEs generally adopt short-term, low-cost carbon reduction measures and devote relatively little effort to technological innovation or structural transformation. Consequently, the government and SMEs reinforce each other’s reliance on existing practices, ultimately leading to a ‘dual path dependence’ hampering the sustained advancement of overall low-carbon strategies. By clarifying direct government intervention’s dynamic impact on SMEs’ low-carbon transition decisions, this study draws on the theoretical perspectives of ‘historical legacies’, ‘path dependence’, and ‘critical junctures’ to develop a policy-oriented analytical framework. Focusing on Taiwan, an export-oriented economy that plays a pivotal role in global supply chains, the research offers concrete recommendations for refining low-carbon policies and provides valuable insights for other countries and regions confronting similar challenges.Dual path dependence: The government relies on supportive consulting services and short-term financial subsidies, while SMEs follow short-term practices, limiting low-carbon progress.Historical legacy locks both governments and SMEs into low-impact, short-term carbon reduction measures.It is important to break dual dependence by integrating market incentives, regulatory reforms, and streamlined procedures to foster long-term innovation.Supply chain pressures and international standards should be leveraged to force synchronized adjustments in policy and corporate behavior.