It has been argued that Taiwan's small and medium sized companies represent the real engine behind the island's remarkable economic growth. As an internationally successful industry comprised mostly of small and medium sized firms, Taiwan's machine tool industry is an interesting example of how such growth has been achieved. This dissertation looks at a number of factors, including localization, outsourcing, and supplier networks, to better understand the industry's development. To do so, this thesis has drawn on a number of different sources, including data from Taiwan's Ministry of Economic Affairs and the island's machine tool trade association, the results of a mail survey, company interviews, annual reports, and the work of scholars both in Taiwan and elsewhere. This dissertation finds Taiwan's machine tool makers located in and around Taichung (a city in central Taiwan) constitute a multi-centered industrial district of locally owned, specialized companies. Moreover, that clustering, in concert with active and articulated supplier networks, seems to have helped improve firm performance and promote innovation. This dissertation has also assembled a substantial amount of information on the structure of supplier networks in Taiwan's machine tool industry. In so doing, it has revealed that firms in the industry engage in a high level of outsourcing and that there exist a number of different network configurations, including star, ring, tiered, and multi-centered networks. Factors that appear to influence the structure of supplier networks include location, product attributes, scale economies, the competitive and developmental environment of the supply base, bargaining strength, and interfirm trust.
Supervisor: Bruce Kogut. Thesis (Ph.D. in Management) -- University of Pennsylvania, 2000. Includes bibliographical references.