The Network Configuration of Taiwanese Enterprise's Central Satellite Factory System and the Internationalization of Its Firms: An Empirical Study of Electronic and Textile Industries

This paper investigates the two trends in Taiwanese industry: an idiosyncratic pattern of networks among small-to-medium enterprises (SME's) and their proclivity toward internationalization. An attempt is made to evaluate empirically how different configurations of current industrial networks •can lead to better performance in the global settings. A conceptual framework derived from the literature suggests causal linkages between the structural attributes of industrial networks and the path and degree of successful internationalization on the criterion of better business performance. There are hypothesized that (1) the more rigorous an industrial network, the higher the degree of internationalization, (2) that the path and degree of internationalization is influenced by attributes of an industrial network, and (3), that a rigorous industrial network leads to better management performance than a loose one. Data from questionnaires administered to members of networks in the electronic and textile industries were used to evaluate these hypotheses. A discriminant analysis assessed the correlation between attribute network structures and their effects on internationalization. A path analysis suggested different causal links among the three basic variables investigated, (network rigor, degree of internationalization and business performance), between the electronics and textile industries. The results from this study generally supported the hypotheses. The basic conclusion is offered that under competitive market conditions, SME's need to develop and apply their network relationships to benefit their international endeavors and to enhance their managerial performance.