The Role Of Market, Trust and Government in the Development of the Information Hardware Industry in Taiwan

The dominant accounts about industrialisation in Taiwan have taken on either a market-government dichotomy or a confluence of both. In addition to market and government, this paper attempts to establish the role of trust in the development of the information hardware industry in Taiwan. While the dispersed industrial structure of Taiwan facilitated entry and exit of firms, selective intervention was important in stimulating firms' participation in innovative activities. Trust played a critical role in coordinating inter-firm relations so that firms negotiated the currents of creative destruction effectively to appropriate small-firm flexibility and scale economies at the industry level. Trust was also instrumental in strengthening coordination between government and market. Smooth coordination through markets and trust, and government participation in the stimulation of R&D activities, helped transform Taiwanese information hardware firms from Original Equipment Manufacturing (OEM) to Original Design Manufacturing (ODM) and Original Brand Manufacturing (OBM) operations