From Manufacturing to Innovative Value Creation: Industrial Paradigm Shift of Taiwan

Industry in Taiwan inherently dominated by small and medium size enterprises mostly are engaged in OEM/ODM works, leading to the second mover approach, which is advantageous, because companies reduce their risk by entering the markets while the related technologies and manufacturing processes are in mature. Companies tend to acquire licenses from first movers, as well as purchasing, learning, and eventually imitating first mover technologies, that is reducing the costs through mass production. These approaches have helped Taiwanese companies to dominate the manufacturing value chain and achieve excellent performance for many decades. However, in the face of global competition, the increased competitors have made this approach severely being challenged because of the razor-thin profit margins. To overcome this phenomenon, a new strategies in paradigm shift for innovative value creation by extending the value chain of Taiwan beyond manufacturing has been proposed which includes extending the value chain into innovative R&D and marketing, branding, creative design, assertion of patent rights, infringement litigation and most importantly IP value creation, active participation in standards formation, effective integrating existing technologies, sensitive in market needs and adopting new business models and so on. For a long period, research organizations, especially the Industrial Technology Research Institute (ITRI), is one of the most important Taiwanese innovation system. ITRI has strongly influenced not only technical innovation policy, but also technological development, commercialization of technologies.