The Effect of Industrial Clusters on the Firm Performance of Taiwan's IT Industry

It has been increasingly recognized that the competitive opportunities of industrial clusters have become a critical element of national, state, regional, and local plan activities. The Hsinchu Science-based Industry Park is the most successful industry cluster of Taiwan, it was established in 1980, and drives the development of the whole Hi-Tech industry of Taiwan. The Hsinchu development contains mainly Taiwanese home-grown firms, which are mow becoming significant world players. This research focuses on industrial clusters to investigate the contribution of Taiwan's industrial clusters on the firm's performance. We use the IT industry as an example and ROA (return on assets) as the index of firm performance. The VARCOMP procedure is used to divide the sources of firm performance. The findings show that the firm factor dominates the others. The cluster factor is not significant compared to the firm factor.