| Summary: | 碩士 === 大同大學 === 事業經營研究所在職專班 === 90 === Most of the FDI theories attribute the determinants of foreign direct investment by firms to the Ownership Specific Advantages they possess. On one hand,a vast literature has emerged seeking to explain the operational models of the American and Japanese multinational enterprises (MNE). Also, it is widely recognized that the economic growth in Taiwan has been contributed much by numerous small and medium enterprises (SMEs). But in the mid 1980s, while the management environment for the enterprises went through a drastic change, the labor-intensive SMEs of Taiwan were forced to make direct investment to ASEAN, Mainland China, and even to the developed countries in America and Europe. Since FDI activities by Taiwanese firms differ from the US or Japanese MNE models, the precedent FDI theories are incompetent to explain how Taiwan SMEs could make FDI successfully without enough internal resources.
In recent years, network relationships, especially between buyers and suppliers (that is, production networks), are widely used as one explanation of the flexibility and competitiveness of Taiwanese firms. At the same time, a network approach, focusing on the pattern of relationship that surrounds a firm, has captured the attention of academics and business writers. This approach has also been used to explain the international expansion of firms.
The objective of this study is to explore the relationships among the drives and models of restructuring overseas production network, and firm’s FDI performance. As the literature reveals, we have limited knowledge of how firms move their production networks (PNs) abroad and how they manage these PNs in foreign countries. To address this issue effectively, it is appropriate to follow a research design with exploratory nature, such as a case study. To avoid the pitfall of relying on one single case from which to draw conclusions, three cases were examined. Through the analysis of three cases, this study makes the following findings:
1. The reason why the PNs of Taiwanese firms can contribute to their corporate competence is due to the location specific advantage of Taiwan. This advantage includes natural location advantage (Ln) such as geographic position and low labor cost and creative location advantage (Lc) such as social/cultural features and government policies. Therefore, it is rather difficult for the PNs to transplant them in the foreign countries where the location advantages differ a lot from those in Taiwan.
2. The big high-tech enterprises with their distinct and strong “firm-specific advantages” are easier to “recreate” their overseas PNs by taking their suppliers with them to make investment in the host countries and achieve FDI performance soon. Furthermore, they are able to “extend” their PNs by linking up with the international industry networks and accomplish the global “supply chain” logistics.
3. Small & Medium Enterprises (SMEs) of traditional industries are tending to seek local suppliers in the host countries and “reproduce” their PNs by copying after the PN model in their own home country. The local suppliers in the host countries include the Taiwanese firms, oversea-Chinese’s firms, and also domestic firms in the local market. The FDI performances of those SMEs depend on the progress of their PN formation in the host countries.
4. Since the local specific advantages of the host country (referring to the Philippines in this study) differ from those of home country (Taiwan), it is rather difficult to reconstruct all the same kind and same scale of PN in the host country. In such a situation, the firms going abroad are tending to achieve their FDI performances by internalizing the most of their key-parts production rather than by transplanting their PN.
Research Limitations & Future Research
1 This study centers on three Taiwanese firms which make FDI in the Philippines. It is an exploratory study on the overseas PN structuring modes and the consequences of the foreign investment performances. It does not touch on the other aspects of the evaluations of foreign investment management. Nor does it touch on the empirical aspect. Thus, it has its own limitations.
2. Future research intends to expand the scope of the study. It will cover more Taiwanese firms investing in other foreign countries, including Mainland China. It will study further on the relationships between management of the supply chain of the firms and the performance of their overseas investment. This empirical study will provide guidelines for the firms’ planning and strategy on the expansion of future overseas investment.
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