Spatial clustering and organizational dynamics of transborder production networks: a case study of Taiwanese information-technology companies in the Greater Suzhou Area, China

Transborder investment by Taiwanese information-technology (IT) companies has driven the development of a new industrial space in the Greater Suzhou Area (GSA) of China over the last ten years. In this paper we aim to explore some characteristics of this expansion from the perspective of the organizational dynamics of global production networks. We found that foreign brand-name companies have played a key role in propelling this wave of investment in the GSA by Taiwanese IT companies. At the same time, their business strategies have influenced the mechanisms governing these Taiwanese companies’ supply chains and have forged the dynamics of spatial agglomeration. We argue that the transborder extension of the production networks is interwoven with the exercise of power between enterprise organizations. Our findings suggest that interdependence among firms in close geographical proximity is inseparable from the asymmetrical power relations embodied in global commodity chains; a point emphasized by economic geographers as the main reason for transborder production shifts that result in the formation of new industrial spaces in developing countries. However, if these production networks can respond collectively to such a strict environment through instituting suitable organizational governance, then their competitive advantage will be enhanced, while also benefiting the host region’s development through localization.