Title: Learning and innovation: the role of market, government and trust in the information hardware industry in Taiwan

Authors: Rajah Rasiah, Yeo Lin

Addresses: Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia. ' School of Management, Ching-Yun University, 229 Chien-Hsin Road, Jung-Li 320, Taiwan

Abstract: This paper examines the role of markets, trust and government in the development of Taiwan|s information hardware industry. The overlapping and integrated operations of markets and trust played a critical role in coordinating inter-firm relations so that firms in the initially dispersed industrial structure negotiated competition successfully to appropriate small-size flexibility and achieve scale and scope economies. However, government intervention became unavoidable as rising production costs and technological sophistication of IH products forced firms| participation in R&D activities. The government promoted and invested in R&D and high-tech human capital. The integrated operations of markets, government and trust helped reduce failures in all three in coordinating learning and innovation, which helped transform IH firms in Taiwan to high-volume low-margin production, global service provision, and original brand-name building with distribution and customer service networks.

Keywords: markets; trust; government intervention; information hardware; Taiwan; learning; innovation; inter-firm relations; high technology; human capital; R&D; research and development; globalisation; loyalty.

DOI: 10.1504/IJTG.2005.008750

International Journal of Technology and Globalisation, 2005 Vol.1 No.3/4, pp.400 - 432

Published online: 21 Jan 2006 *

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