The Relationship Between the Cross-Strait Division Models and Financial Performance of Parent Company-An empirical study of Taiwanese Machinery Industry
Date Issued
2006
Date
2006
Author(s)
Tseng, Wan-Yu
DOI
zh-TW
Abstract
Specialization and flexibility have been considered as key factors of the competitiveness of small and medium machinery enterprises in Taiwan. Beginning in 1990, domestic machinery enterprises have made substantial investment in mainland China. They have utilized cross-strait division model to sustain their competitive position and grasp new opportunities. The purpose of foreign direct investment is to allocate the innovation, marketing, and strategic planning functions in Taiwan and upgrade the manufacturing function in mainland china. Therefore, enterprises can create different products and services to each market.
This study conducted a penal data to collect 6 years (1998-2003) financial information from 51 listed on TSE and OTC companies in Taiwan and employed multiple regression models to process the data. And examines the relationships of Taiwanese Head-quarters’ performance with vertical division of labor, export ratio, and Chinese experiences.
The empirical results show that vertical division of labor and export ratio have significant positively effects on the operating performance. The clustered machinery industry has resulted in a complete cooperative network of upstream and downstream manufacturers supply chains to lower down costs and upgrade competitive capabilities through expert labor division. The Chinese experiences, the location choice in clusters both have significant positively effects on the operating performance. However, there is only limited association between the factor of investment scale and business performance.
There are about 60% of the precision machinery businesses clustering in the region of Taichung City and County. This provides the industry with rich resource of professional division network and manpower. Since the supply network migrated in China still highly relies on the Taiwanese supporting system, acquirement for core competitive capacity and improvement for the supply network will influence competitive advantage for long. These results not only supplement existing work on the migration of supplier network and Taiwanese machinery industry, but also help to provide a reference worth for the future development of Taiwanese machinery industry.
Subjects
台商大陸投資
機械產業
產業群聚
Taiwanese FDI in China
machinery industry
industrial cluster
Type
other
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