Making It Integrated: Organizational Networks in Taiwan's Integrated-circuit Industry (review)

Dung-Sheng Chen, Making It Integrated: Organizational Networks in Taiwan’s Integrated-circuit Industry Socio Publishing, Taipei, Taiwan, 2008, 372 pages Mayumi Tabata Received: 28 December 2008 /Accepted: 28 December 2008 /Published online: 16 April 2009 # National Science Council, Taiwan 2009 Dung-Sheng Chen’s book is an important addition to the growing literature on the question of why late developing countries are catching up with advanced countries in the field of technology, especially through the mechanism of technology diffusion and innovation. Using the development in Taiwan’s integrated-circuit industry and TFTLCD industry as examples, Chen examines the forces that shaped Taiwan’s high-tech industry. He argues that the synergy of foreign technology and technology diffusion and innovation played a critical role, as did changes in organizational network. He approaches this question twofold: first, from a network governance structure, that of the trust relationships between organizations, and second, from the technology learning and development model, that of the trinity development model of technology introduction, technology diffusion and innovation. Chapter 2 describes the types and characteristic features of the organizational network in Taiwan’s integrated-circuit industry. Chen frames this discussion by way of a theoretical analysis of the historical, social, political, and economic institutions that helped to create Taiwan’s unique model of high-tech industrial organizational network. Chen argues that the organizational network in Taiwan’s integrated-circuit industry has two prominent characteristics. The first is the hybrid product network that combines vertical specialization in the manufacturing process and horizontal specialization in the inter-organizational technology transfer and venture capital. The second is the relational characteristic with strong ties and weak ties combined in inter-organizational network. Primary personal relationships continue to play a focal role in the organizational network of Taiwan’s small and medium-sized enterprise (SME). However, the results of Chen’s analysis show that the organizational network of technology and capital-intensive industry uses both local network such as industrial cluster and global inter-organizational network as the situation demands. In this respect, the influence of past dependence is minimal when compared with that East Asia Science, Technology and Society: an International Journal (2008) 2:577–580 DOI 10.1007/s12280-009-9076-7 M. Tabata (*) Department of Social Development, National Dong Hwa University, Hualien, Taiwan, Republic of China e-mail: mayumi@mail.ndhu.edu.tw of SME. Integrated circuit was a new technology for Taiwan’s high-tech manufacturers. Less accumulation of technology and financial resources made it necessary to expand the collaboration network globally while also introducing advanced technology and sufficient funds for capital investment. The next two chapters investigate the governance structure of inter-organizational network in Taiwan’s integrated circuit industry from the perspective of power and trust relationships. Chen criticizes previous studies on network governance structure for overestimating the role of personal relationships and personal interaction in the formation process of trust mechanism. He argues that inter-organizational network in Taiwan’s integrated circuit industry could not have been maintained exclusively on informal trust relationships. As Chapter 3 demonstrates, although trust relationships are playing a significant role in the horizontal specialization among fabless companies, power interaction mechanism is the main network operational principle in the vertical specialization between Taiwan’s fabless and American CPU manufacturer. In this respect, the maintenance of organizational network is dependent on both the formal trust relationships as well as personal trust mechanism. Relational trust is a closed mechanism that is distributed only in a small inner circle. However, formal trust, such as ISO standards or international certification of quality, flows freely over various networks across the border, and breaks down closed character of organizational network. According to Chen’s analysis, integrated circuit related firms is able to independently construct cooperate inter-organizational network because of formal and informal trust mechanisms on the one hand, and on the other hand, third parties, such as public research organization and venture capital, both of which help to accelerate the construction of network relationships. At the early stage of integrated circuit industry, public research organizations are the main booster of organizational network formation. As the industry matures, private venture capital will come to supplant government organizations. Furthermore...