Growth, disintegration, and decentralization: the construction of Taiwan'sindustrial networks

Manufacturing based on networks of small family firms is widely regarded to have been integral to Taiwan's development success. Many studies discuss t he social embeddedness, flexibility, efficiency, and competitive advantage of these networks, but there have been few systematic attempts to theorize their origins. A processual analysis of the changing spatial structure of T aiwan's industry, in its social, political, and historical contexts, reveal s that Taiwan's concentrated industries of the 1950s did not disintegrate i nto smaller firms. Rather, there was a proliferation of new rural firms aft er the mid-1960s. The construction of a disintegrated, decentralized, and n etworked structure was driven by the contingent actions of rural household entrepreneurs, pursuing strategies of social reproduction, under circumstan ces resulting from, among other things, an extensive land-reform program an d redistributive agricultural policies. Transactions costs and neo-Weberian authority approaches elucidate important factors, but fail to explain the creation of this new class of petty entrepreneurs, and how the conditions o f their entrance shaped the networked form of organization they created. Fu rthermore, their actions did not result from state-led development policies as much as they were the unintended consequences of state policies, preced ing by several years government efforts to support the growth of small firm s and rural industry. Finally, urban-push explanations assume a passive cou ntryside, thus ignoring the ways rural actors energetically created new str uctures of production out of the resources at hand.