Growth, Disintegration, and Decentralization: The Construction of Taiwan's Industrial Networks

Abstract

Manufacturing based on networks of small family firms is widely regarded to have been integral to Taiwan's development success. Many studies discuss the social embeddedness, flexibility, efficiency, and competitive advantage of these networks, but there have been few systematic attempts to theorize their origins. A processual analysis of the changing spatial structure of Taiwan's industry, in its social, political, and historical contexts, reveals that Taiwan's concentrated industries of the 1950s did not disintegrate into smaller firms. Rather, there was a proliferation of new rural firms after the mid-1960s. The construction of a disintegrated, decentralized, and networked structure was driven by the contingent actions of rural household entrepreneurs, pursuing strategies of social reproduction, under circumstances resulting from, among other things, an extensive land-reform program and redistributive agricultural policies. Transactions costs and neo-Weberian authority approaches elucidate important factors, but fail to explain the creation of this new class of petty entrepreneurs, and how the conditions of their entrance shaped the networked form of organization they created. Furthermore, their actions did not result from state-led development policies as much as they were the unintended consequences of state policies, preceding by several years government efforts to support the growth of small firms and rural industry. Finally, urban-push explanations assume a passive countryside, thus ignoring the ways rural actors energetically created new structures of production out of the resources at hand.

Weber meets Godzilla: social networks and the spirit of capitalism in East Asia and Africa

“…But since little evidence is available on this subject for Taiwan, and since my primary interest is the uses of public power, I say little more about it.' While the leading scholars of East Asian capitalism have continued to focus on the commanding heights of rapid development, others have taken up the challenge of investigating the industrial networks of small and medium firms operating at the margins of the state (Buck 2000, Cheng and Gereffi 1994, Deyo et al 2001, Greenhalgh 1994, Yeung 1997, 1999a. As Cheng and Gereffi (1994, p. 202) explain, 'neither market forces nor the state can explain the dynamism of the small-firm sector.…”

Similar opportunities, different responses: Explaining the divergent patterns of development between Taiwan and South Korea

“…The government's programme of 'household factories' in the late 1970s came after the proliferation of the rural industries (Hsiung, 1996). Policies such as the establishment of rural industrial parks and substantial credit programmes to assist SMEs followed the export boom (Buck, 2000). Moreover, if the size of small firms is shaped by the state, this still does not explain how small firms compete internationally and the number of entrepreneurial skills involved in such an endeavour.…”

Social capital and poverty of the wage‐labour class: problems with the social capital theory

“…The geographical work on inter‐firm relations and new industrial spaces in developed and less‐developed countries also makes use of concepts of trust, embeddedness and networks, which are all part of the social capital concept (Molina‐Morales et al . 2002; Buck 2000; Pinch and Henry 1999; Christerson and Lever‐Tracy 1997; McDade and Malecki 1997; Gertler 1995). This work, like social capital research generally, rightly suggests that ‘economy and society are incorrigibly intertwined’ (Thrift and Olds 1996, 314; see also Biggart and Castanias 2001).…”