A Study on the Organizational Culture, Organizational Behavior and Subcontractor Networks of the Backlight Module Industry in Taiwan: From the Viewpoint of a Subcontractor(2007-2012)

Although its high-tech Original Equipment Manufacturing (OEM) earned Taiwan the title “OEM Kingdom”, gradually diminishing gross profits have caused a discord between output value and profit, a phenomenon known as “minimization of profit”, creating a predicament for OEM industries here. At the same time, the case of serious internal corruption at Foxconn Technology Group (under the Hon Hai Technology Group) exposed in early 2014 reflects the widespread nature of corporate bribery across high-tech OEM industry. From 2007 to 2012, while the author of this research was working in the backlight module supply chain, he observed that the causes of these two seemingly unrelated phenomena, to a certain degree, could both be found within the corporate internal ecology and culture, and in interactions between subcontractors.
For this reason, the purpose of this research is to focus on the backlight module industry that the author worked in, while focusing on the path of dependency, in order to discover - through the examination of factors such as corporate culture, corporate behavior and subcontractor networks - the reason why the OEM industry faces issues of loss of competitive edge, difficulties in transitioning, and pervasive internal corruption. The research also intends to answer the following questions: What is the path of development, the industry structure, and the business operational modes of the OEM industry? How do workers within the industry interact and what type of value hierarchy do they shape? What type of phenomena does the subcontractor network structure of the OEM industry present? Is there a common organizational culture and organizational behavior within the industry? What influence does this have on the development of the industry? Through a comparison of experiences in South Korea and Mainland China, the research also seeks to explain the following: differences between the competitive strategies of the TFT-LCD panel industries of South Korea and Taiwan, changes in the roles and attitudes of manufacturers in Taiwan and Mainland China caused by Mainland China’s economic and market growth, and differences in work attitudes, values and work performance among workers in Taiwan, South Korea, and Mainland China.
In general, this study believes that traditional thought processes in society and the path of industry development affect the values and behavioral patterns of each industry entity, shaping a common organizational culture and organizational behavior as well as an operational structure of subcontractor networks. These cultures, behaviors, and structures in turn affect industry workers and result in different practices. Dialectical interaction among these entities produces a driving force to decide the future direction of an industry. Therefore, the experiences of every country are unique, and analysis of these experiential factors with academic methods cannot piece together the original form of the experience, meaning that it is impossible to replicate the original form of the experience.
The “power structure within an industry” emphasizes that identities of workers are not fixed, but instead, the various forms of “practices” are gradually constructed and molded through the use of various symbolic representations in the industry, various situations and sentiments in the workplace, and dialectical interaction with exterior systems and ideologies. Power exists not only in the ranks of the company systems, but also in the politics of production formed by the industry position of the enterprise and the scale of the company, as well as in the dominant masculine organizational culture, and is shaped by many forms of ritual and acts of governance. These rituals and acts of governance cause participant groups to understand their relationship with the “governor”, and at the same time understand that all others understand this governing relationship. A “common understanding” of authority is thus created among the governed participant groups in these rituals.
Regarding interactive relationships within the triangle of company, employees and suppliers, due to downward industry development trends, the company can utilize its advantageous trading position to harshly redefine the work values of employees on the one hand, and on the other hand force suppliers to accept all sorts of exploitative trading conditions, in order to secure profits. This in turn causes employees and suppliers to form an alliance of resistance through a form of corporate bribery. This is not only an act of resistance against unreasonable governance by the enterprise, but also a transformed interaction mode of the subcontractor network.
In terms of “organizational behavior of the industry”, it was discovered that the pervasive value systems and behavioral norms of society still deeply affect the roles played and the development of every worker in the industry. From the common attitude of all workers of seeking benefit while avoiding harm, these societal values guide the organizational behavior within the industry and in turn shape the organizational culture. The importance of interpersonal relationships in the industry further proves that organizational behavior in Chinese society is based on social relationships, but due to the unique characteristics of the industry, establishment of a network of contacts for the most part is done externally and naturally, differing from the traditional form of “pulling strings”.

Regarding technical innovation, due to the fact that industry development in Taiwan starts from small and medium enterprises, the cost of high-tech innovation is too high. Therefore technical innovation in Taiwanese enterprises mainly depends on external resources. This reflects on the habit of local entrepreneurs of mainly focusing on OEM modes of production. Under this context, employing a short-term profit strategy may be the most competitive strategy for an individual within the industry. This difference between the position of the industry as a whole and the position of individual enterprises may very well be one of the reasons why the TFT-LCD panel industry and the backlight module industry cannot escape their OEM predicament. In addition, technical modes of innovation and craft modes of innovation are evaluated in drastically different ways within the industry. This possibly derives from the way academic degrees are valued above all else in Taiwan, with the result that Taiwan can enter the field of high-spec technology, but not the field of high-price production.
Comparing the characteristics of the backlight module industry development of Taiwan, Mainland China and South Korea, it was discovered that due to differences in the value systems, social culture, mode of economic structure formation, government attitudes, and market scale, completely different categories of industry types and market segmentation have resulted. The fact that the South Korean mode matches the characteristics necessary for the development of TFT-LCD panel and backlight module industries is surely the reason South Korea is now a global industry leader.