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• W232279660 abstract "E B A article, Twn/Korea 11-9-94 Diverging Paths for IT Industries in Taiwan and Korea Jason Dedrick and Kenneth L. Kraemer Center for Research on Information Technology and Management University of California, Irvine The 1980s were the glory days of the information technology (IT) industry in Korea and Taiwan. Riding the crest of the PC revolution, both countries' IT industries grew from virtually nothing to become multi-billion dollar industries. Korea's computer hardware production topped US$3 billion in 1989, with production of PCs reaching US$1.7 billion. By 1991, Taiwan ranked seventh in the world in computer production and third in exports. The 1990s have been a different story. Brutal price competition in the PC industry squeezed the Taiwanese and Korean industries while their own costs were being driven up by rising wages. In this new harsh environment, Korea's industry wilted. Korean PC production dropped by almost 40% in 1992 alone, to just US$834 million, while exports declined by over 50%. Taiwan, however, continued to flourish. Hardware production reached US$7.8 billion in 1992 as PC production reached US$2.1 billion. In 1993, Taiwanese companies produced 24% of the world's portable computers, or 861,000 units. Why have Korea's computer makers struggled unsuccessfully in the 1990s while Taiwan's have continued to thrive? Three reasons stand out: First is Korea's rigid industry structure versus Taiwan's highly flexible one. Korea's electronics industry is dominated by the large chaebol, including Samsung, Goldstar, Daewoo and Hyundai. Their ability to make huge capital investments has enabled them to become major producers of consumer electronics and commodity memory chips. However, they are poorly suited to compete in the fast-changing IT industry. The chaebol have highly centralized, bureaucratic decision-making processes, making them slow to respond to changing and unpredictable market conditions. Taiwan's industry, by contrast, consists of hundreds of small and medium sized enterprises (SMEs), most of which specialize in a few product areas. They are highly flexible and entrepreneurial, have low fixed costs, and are able to respond quickly to new market opportunities and to adopt new technologies. These companies can take an engineering concept to volume production in just 90 days, the fastest in the world. They have also been able to move quickly into leading edge products where growth is fastest and margins highest. A n example of the value placed on flexibility and entrepreneurial skills is Acer's plan to break itself up into 21 public companies by the 21st century. Such a radical corporate shakeup would be unthinkable for the Korean chaebol. Second is government policy. The Korean government has favored the large, vertically integrated chaebol, thereby reinforcing its industry structure, whereas the Taiwanese government's flexible policy has fostered innovation, entrepreneurship and change among its SMEs. The Korean government has long favored the chaebol with cheap credit," @default.
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• W232279660 title "Diverging Paths for IT Industries in Taiwan and Korea" @default.
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