Driving Force That Shifted the LCD Industry in Taiwan from Sustained Progress to Rapid Growth - The Metanational Management Viewpoint

The purpose of this paper is to elucidate, from the standpoint of the relationship with metanational management, the factors behind the shift by the LCD industry in Taiwan from sustained progress to rapid growth through the participation of new companies from 2000 onward. Taiwan introduced mass-production technology for large-scale TFT-LCDs from Japan in 1997 and started mass production in 1999. By 2002 it had already overtaken Japan in terms of gross production volume and become the world's second-largest producer, with a market share of 34.7%. However, the development of the LCD industry in Taiwan had started in the 1970s, and although an inflow of multinational corporations started in the 1980s, the speed of the industry's development was extremely slow until the mid-1990s. The new market entrants after 1997 were, unlike TFT-LCD companies in Japan and South Korea, very small in terms of corporate scale and were severely lacking in internal management resources. In spite of this, these companies overcame their disadvantageous conditions for development and were able to achieve in an industry such as the LCD industry, with its heavily capital and technology-intensive character and extremely rapid technological evolution. The factors behind this were not only that the government has established the infrastructure for industrial development, but also the companies' adoption of metanational management.



As regards the former, since 1991 the infrastructure for financing has been developed, since 1995 personnel at master's and doctorate levels have been nurtured at universities, and research personnel have been provided through the formation of a joint research system with universities at the Industrial Technology Research Institute (ITRI). These steps have lowered the barriers to entry by companies. With regard to the latter, after considering the fact that Taiwan and the world offer huge TFT-LCD markets, companies introduced mass-production technologies from major Japanese companies and procured funds by listing their shares on the Taiwan stock market, thereby overcoming their internal limitations on management resources. By channeling these funds into vigorous investment in the development of next-generation technologies, they have both acquired competitiveness and at the same time been expanding their corporate scale. This has been the driving force within the LCD industry in Taiwan that since 2000 has shifted it from conventional sustained progress to vigorous growth.