Institutions and systems of innovation: an empirical analysis of Taiwan's personal computer competitiveness

By connecting institutions within industrial evolution, this paper develops a set of systems of innovation to explain the innovative performance of Ta iwan's personal computer industry. Three major institutional blocks are ide ntified: technology as a paradigm; organizational routines that are histori cally rooted in the structure of economic dominance; and the state's govern ance as an institution of policy style. The paper explores how each of thes e institutions is important for innovation, and then identifies methods ass ociated with creating and sustaining innovative performance. The analysis i s focused at the level of industry segments, that is, one level below secto ral analysis. While institutional co-evolution in technology and society of ten results in improved performance of an industry segment, institutional c onflicts are likely to produce obstacles to the search for new markets by n ational firms as well as hinder adaptation to a changing environment. This explains why Taiwan's personal computer industry is competitive and innovat ive in hardware, but lagging in distribution and software development. The paper concludes with several strategic and policy implications. (C) 2000 El sevier Science Ltd. All rights reserved.