Abstract: This research aims to explore the possibilities and limitations of the role played by the interface region in the cross-border economic activities. In the globalizing economy, cross-border business networks prevails and constitutes the channels to engender coupling/decoupling effect for each connecting regions. Interface is defined here as a hybrid space where two divergent social and geographical organizations collide and articulate to create the tensions and opportunities in the interconnected economic system. In other words, it is an organizational field that engages the contrasting but overlapping socio-economic spaces. As Taiwan’s high technology industries grew by benefiting from the connection with the technology hub, Silicon Valley, it has extended the production networks to China, particularly Shanghai City and the neighboring regions, since late 1990s. In the cross-border networks, Taiwan’s high-tech firms take advantage of huge stock of business experiences, which was accumulated in the dense connection with Silicon Valley in more than two decades. At the same time, Hsinchu firms make the most of the cultural and language affinity to reduce transaction costs and entry barriers of doing business in China. In the sense, it will play well as the middleman in the triangle connection.
A number of challenges arose in the cross-border investments: technology diffusion management, subcontracting system constructing, labor regime regulation, and market channel expansion in the contrastingly institutionalized socio-economic space. At the same time, the cross-border business networks meant knife-edge effect for the headquartering regions: it both created partners to cooperate and fostered rivalries to compete. The activities of cross-border investment constitute the channel of profit leverage, and paradoxically of know-how leakage. Trans-border firms have to mobilize resources to enhance production improvement in host regions, and at the same time, enforce control mechanism to prevent competition from local spin-offs. By elaborating on ANT (Actor-Network Theory) framework, the research will attack these issues and explore the hybridization effects in the governing of the high technology cross-border networks connecting Hsinchu and Shanghai regions.
Finally, guanxi, or inter-personal relationship, is argued to be a key governance mediator within the worldwide Chinese capitalist system, and will constitute the arbitrage effect for the ethnical Chinese firms. In broad sense, it represents the culture turn in current urban and regional studies. However, the research cast concerns on such over-socialization arguments, and will explore the possibilities and limits of the ethnic ties in transnational Chinese business networks. The connection among Silicon Valley, Hsinchu and Shanghai will be the perfect case to examine the argument on Chinese guanxi capitalism.