Technology-based regional development strategies and the emergence of technological communities

www.elsevier.com/locate/technovation

Technology-basedregionaldevelopmentstrategiesandtheemergenceoftechnologicalcommunities:

acasestudyofHSIP,Taiwan

Tai-ShanHua,*,Chien-YuanLinb,Su-LiChangcaDepartmentofArchitectureandUrbanPlanning,Chung-HuaUniversity,No.707,Sec.2,WuFuRoad,HsinchuCity300,TaiwanbGraduateInstituteofBuildingandPlanning,NationalTaiwanUniversity,No.1,Sec.4,RooseveltRoad,Taipei106,Taiwan

cGraduateInstituteofTechnologyManagement,Chung-HuaUniversity,Hsinchu,

Taiwan.No.707,Sec.2,WuFuRoad,HsinchuCity,300Taiwan

Abstract

Less-developedcountriesalwayslackwell-developedindustrialclusters,andnurturingsuchclustersisessentialtotheireconomicdevelopment,especiallyfortechnology-basedindustries.Consequently,locationspecificclusterformationshouldbepromoted,includingefficienttechnologicalinfrastructure,matureinnovation–productioninteraction,andcompetitiveadvantages.Thesefactorshaveapositiveaccumulativeeffectontheselecteddistrict,andfirmsinthedistrictcompetefortheseresourcesthroughspatialproximity,afocusoncertaintechnologiesandtechnologicalinfrastructure.Toestablishmatureclusters,theTaiwanesegovernmenthasaggressivelydevelopedScienceParksduringthepasttwodecades.ThisstudyappliesthisconcepttoanalyzetheinteractionbetweenagentsandtheformationofinnovationclustersintheHsinchudistrict,thelocationofthefirstScienceParkinTaiwan.q2003ElsevierLtd.Allrightsreserved.

Keywords:HsinchuScience-BasedIndustrialPark;Proximity;Cluster;Technologicalinfrastructure

1.Introduction

Sincetheendofthe1980s,thedevelopmentoftheknowledge-basedeconomy,globalization,andinternationalcompetitivepressurehasincreasedtheimportanceofinnovationinlocaleconomies(Camagni,1995;Feldman,1994;Malmberg,1997;Porter,1990;Ritsila,1999;Storper,1995).Simultaneously,globalizationisincreasingdistinctlocaldifferencesarisingfromlocalcapabilitiesandenvironments.Undertheglobalizedinternationallaborsystem,themid-1990ssawanewdevelopmentmodelinvolvingTaiwan,ChinaandtheUnitedStatesreplacedthepreviousmodelinvolvingtheUnitedStates,JapanandTaiwanthathaddominatedduringthe1970sand1980s.AlthoughTaiwanretainscompetitiveadvantagesoverChinaintheverticaldivisionoftechnologyinthenew

*Correspondingauthor.Tel.þ886-3-518-6692;fax:þ886-3-537-2832.E-mailaddresses:hts@chu.edu.tw(T.-S.Hu),cylin@ccms.ntu.edu.tw(C.-Y.Lin),suli@mail.yust.edu.tw(S.-L.Chang).

0166-4972/$-seefrontmatterq2003ElsevierLtd.Allrightsreserved.doi:10.1016/j.technovation.2003.09.002

model,itstimeleadhasreducedsignificantly.1Therefore,tomaintaintheinternationalcompetitivenessofTaiwan,theestablishmentofabusinessfriendlyenvironmentandlocalinnovationclusters,namely,thecreationofanenvironmenttoenhancelocalinnovativecapabilities,isapressingtask.Empiricalstudiesduringthepast10yearsstressedtheroleof“endogenousgrowthmechanism”inlocaldevelop-ment,aswellasinfluencessuchaslocalentrepreneurship,socialnetwork,synergyelements,dynamiclearningpro-cess,andsoon.Theworkrevealaneedtofurtherstudytheroleofinnovativeactivities,theireffectonboostinglocaldevelopmentandgrowth,andtheagglomerationofmilieu.Empiricalresearchoninnovationisfocusedonknowledgespilloverandspatialproximity(AcsandAudretsch,1988;Audretsch,1998;Glaeseretal.,1992;Saxenian,1994;

AccordingtoasurveyresultpublishedbytheWintelSurveyCenter,78%ofinvestorsinvestinginTaiwanthoughtthattheyears2002–2003willrepresentthepeakofcapitalflowsfromTaiwanintoChina.Moreover,thesameinvestorsexpectedthattheChineseinformationtechnologyindustrywouldsurpassthatofTaiwanafter5years.

1368T.-S.Huetal./Technovation25(2005)367–380

Storper,1995),knowledgeflowandthelimitsofgeographi-caldispersal(AudretschandFeldman,1996),collectivelearningprocess(Maillat,1998),learningprocessandthestickinessofcertainformsofknowledge(Markusen,1996),anduntradeddependencies(Freeman,1991).However,spatialproximitydoesnotnecessarilyguaranteelearninginitiation(Malmberg,1997).Companiesrequireproximitytocompetitors,suppliers,consumers,andtechnologicalinfrastructuretoimprovetheircompetitivenessthroughlearning(Porter,1998).PreviousresearchonTaiwanincludedapplyingtheconceptoflearningregionstodiscusstheformationoftheindustrialcorridorinNorthernTaiwan(Hsu,1998),combiningtheconceptsoflearningregionandregionaldynamiccompetitiveadvantagestoanalyzetheindustrialsystemandgeographicstructureoftheHsinchudistrict(Yang,1999),andexamininghowspin-offscausedthegeographicconcentrationofhigh-techindustriesintheHsinchudistrict(Kung,1999).StudiesbyTaiwaneseornon-Taiwanesescholarsshareacommontendencyofstressingtheroleofspatialproximityinenhancinginteractionsamongcompanies,theestablishmentofnon-tradingdependencies,andagglomerationinasinglelocality.However,someresearchershavepresenteddiffer-entviews.Forexample,Porter(1990)believedthatgeographicclusteringintensifiescompetition,andthusincreasesinteractionintensitywithinthelocalintegralsystem.Thatis,theclusteringphenomenoninvolvesamechanismwhichcanmaintaincompetitivenessamongcompaniesandfacilitateinformationflowandexchange.HartandSimmie(1997)usedcasestudiestodemonstratethat,althoughinnovativecompaniestendtoagglomerateincertainareas,owingtotheircompetitiontoacquirecapitalandreleasenewproducts,suchcompaniesmaynotenjoycloserelationships,andmaynotevenformaninnovativeproductionnetwork.

SinceSMEsdonothavethesameadvantagesaslargeenterprisesinpursuinginnovation,thequestionarisesofhowsuchcompaniescancompeteandgainknowledge.Basedonthehypothesisofthisstudy,namelythatlocalproductionnetworksarethebasisofinnovation,knowledgespilloverfromacademicinstitutionsorresearchanddevelopment(R&D)conductedbyothercompaniesisthekeytoobtainingknowledgeforSMEs.Whilehigh-techindustrieshavelongusedemployeestockdistributionstoenhanceemployeeloyalty,theeffectivenessofthismethodforagentswithspecificeconomicknowledgeisuncertain.Anotherimportantquestioniswhetherthisisoneoftheresourcesthatcompaniesclusteringincertainlocalitiescompetetoacquire,especiallysincetheycanboosttheirprofitsbyacceleratingnewproductrelease.Becausefewworkhavestudiedtheseparticularresearchquestions,thisworkhypothesizesthatwhencompaniesclusterincertainlocalities,theirinteractionsinevitablyinvolvedcompetitionforspecificlocalresources.Theseresourcesincludeagentswithendowmentsofneweconomicknowledge,technologyprofessionals,knowledgeandinformation,production

markets,andevenpartners.Althoughlocalagentssome-timescollaborate,whetherthiscollaborationremainsessentialtocompetitionisuncertain.Thisstudyattemptstousethisperspectivetoexaminetheinteractionsamonglocalagentsandthedevelopmentofaninnovativeenvironment.Moreover,thisstudyalsousestheHsinchudistrict,wheretheTaiwanesehigh-techindustryiscon-centrated,asacasestudyforinvestigatingthedevelop-mentalcharacteristicsofaninnovativeenvironment.

Thispaperwillfirstdescribethetechnology-basedregionaldevelopmentstrategiesinTaiwan.Then,theresearchmethodandscopewillbeintroduced.Inadditiontoanalyzing,thedevelopmentalcharacteristicsoftheHsinchuScienceParkandthesurroundingareas,thesurveyresultsarediscussed.Finally,wewillsummarizethefindingsofthisworkandofferconclusions.

2.DevelopmentstrategiesofScience/TechnologyPark(STP)inTaiwan

Asiancountriesfrequentlyfollowpoliciesofusingstrategicinvestments,typicallybycentralgovernment,tocreatetechnology-basedclustersorcitiestoserveasgrowthenginesfortheirrespectiveregions.Owingtosubstantialgovernmentinvestment,aswellasrentandtaxincentives,TaiwaneseSTPsuchastheHsinchuScience-basedIndustrialPark(HSIP),establishedin1980,andtheTainanScience-basedIndustrialPark(TSIP),establishedin1995,havebecomecloselyintegratedwithregionalindustriesandlocaldevelopment.Thus,high-techandinnovativefirmsgenerallyremainconcentratedinspecificlocations,usesharedfacilities,andenjoycommoneconomicbenefits.Thesespecificcharacteristicscanbetransformedintoregionaldevelopment.Fromthisper-spective,STPcanbeaneffectivetoolforintegratingindustryandregionaldevelopment.Comparingthedevel-opmentofHsinchuScienceCityinTaiwanwiththeplanneddevelopmentofTsukubaScienceCityinJapanandTaedokScienceTowninKorearevealssomeuniqueexperiencesinTaiwaninthatthegovernment-ledprojectshavesuccessfullystimulatedtheregional,andevennational,emergenceofinnovationsystemsandeconomicdevelopment(Lin,1997).

ThefunctionsassignedtoParksandtheactualactivitiesconductedinthemdifferaccordingtodifferentregionaldevelopmentalgoals.Primarily,anSTPoffersplacefornurturingSMEsornewstart-ups,aswellasforfirmstoconductR&Dortechnologytransfersandproduceorassemblehigh-techproducts.Accordingtodevelopmentalgoals,functions,relationshipswithregionaldevelopment,anddevelopmentmethodsandmanagement,theorientationofSTPcanbecategorizedintothreetypes,namely,innovation/incubation-oriented(I&IO),R&D-oriented(R&DO),andproduction-oriented(PO).I&IOparks

T.-S.Huetal./Technovation25(2005)367–380369

primarilyendeavortoutilizenewtechnologytostimulateindustrialinnovation.SuchparkscreatenewindustrialfoundationstoattractR&Dpersonnelfromuniversitiesandresearchinstitutestoapplytheresultsofbasicresearch.Newtechnology-basedfirms(NTBFs)arecreatedduringthisprocess.Generally,thistypeofparkislocatedarounduniversitiesorresearchinstitutes.

Second,R&DOparksattempttodevelopindustrialtechnologiesandpromoteindustrialupgrading.TheseparksalsoaimatattractingregionalfirmsandadoptingmeasurestoencouragefirmstoparticipateinR&D.MostR&DOparksarealsolocatedarounduniversitiesorresearchinstitutes.Consequently,R&DOparkscanaccessspilloverfromknowledge-basedactivitiesandexistingtechnologicalinfrastructuresinthearea.Furthermore,suchparkshelptoattractknowledgeactors.

Third,POparksattempttoestablishregionalindustriesandpromoteeconomicgrowth.Theseparksgenerallyproduceorassemblytechnologicalproducts.Theitemsproducedintheseparksshareseveralcharacteristics:(1)largemarketpotential,(2)wideuse,(3)highaddedvalue,and(4)technologyintensive.Theaboveproductcharac-teristicsdistinguishScienceParkproductionfromthatofmostindustrialzonesinTaiwan.Basedonthespecialcharacteristicsofdifferentareas,Taiwancanbedividedintourbanandcommunityareas,andthefollowingdevelopmentalstrategiescanbeproposedforSTPsintheTaiwanarea(Fig.1).

Fig.1.DevelopmentstrategiesofScienceParkinTaiwan.

370T.-S.Huetal./Technovation25(2005)367–380

2.1.Urbanareas

Owingtodifferencesindevelopmentalfeaturesamongareas,thedevelopmentprocessproceedsthroughvariousphases.Additionally,specialcharacteristicsleadtotheparkfunctions.TheTaipeidistrictisthepoliticalandeconomiccenterofTaiwan,withahighconcentrationofuniversitiesandresearchinstitutes,aswellasR&Dinvestments.However,largeareasoflandaredifficulttofindinhighlydevelopeddistricts.Consequently,thedevelopmentofI&IOandR&DOparksinotherareasshouldbeemphasized.Intermsoflandavailability,employmentrate,andaveragelaborproductivity,theTaoyuanareacomparesfavorablywithotherurbanareas,althoughitsuffersfromarelativeweaknessintermsofR&D.However,sinceTaoyuanisclosetoTaipei,itisanideallocationforaproduction-orientedpark.SuchanarrangementwouldprovidetheTaipeiareawithareadilyaccessiblebaseforthemassproductionofnewlydevelopeditems.Suchanarrangementwouldbenefitbothareas.

TocomplementtheHSIPandgovernmentdevelopmentpolicies,theHsinchuareashouldfocusondevelopingI&IOandR&DOparks.BesidesfullyexploitingthetechnologyandR&Dresourcesofthisarea,suchanapproachwouldpromotetheHsinchuregionasthecenterfortechnologicalresearchinTaiwanandenhancetheinternationalcompeti-tivenessofthearea.

TheTaichungandTainanareashaverelativelyhighqualitylivingenvironmentandmaintaingoodR&Dsupportenvironment.Consequently,R&DfocusedSTPscouldbedevelopedinthesetwoareas.Meanwhile,theKaohsiungareaisthesecondlargestmetropolitandistrictinTaiwan,andisthepoliticalandeconomiccenterofsouthernTaiwan.BasedontheR&D,commercial,skilledmanpower,andeducationalstrengthsofKaohsiung,integratedparkscouldbedevelopedtherefocusingonincubationandproduction.2.2.Communityareas

Owingtolimiteddevelopmentalconditions,fewdevel-opmentopportunities,lowpublicinvestment,andpopu-lationmigrationoutflow,industrialdevelopmentislimitedinmostotherareasofTaiwan,besidesthemajorurbanmentionedabove.Consequently,plansshouldbedevelopedtoconnectthesecommunityareaswithurbanareas.Specifically,R&DOorPOparkscouldbeestablishedintheseareas,buttheestablishmentofI&IOparkswouldbelesssuitable.ThedevelopmentofPOparkswouldbesuitableinChanghuaandPingtung,especiallysincetheseareasarelocatednearTaichungandKaohsiung,respect-ively.Besidesofferingproductionfunctions,theseareasalsocouldofferhighqualityresidentialandrecreationalfacilities.

Asforotherareasfacingsluggishdevelopment,thepresentdevelopmentalconditionsareinadequateforestab-lishingSTPs.Considerationshouldfirstbegiventocreating

Table1

DistributionofScienceParksandincubators

Precinct

NumberofNumberofIncubatorsScienceParksNorthernregion

Chilung1–Ilan1–Taipei19–Taoyuan6–Hsinchu42aCentralregion

Hiaoli1–Taichung71Changhua2–Yunlin3–Southernregion

Chiai2–Tainan31Kaohsiung7–Pingtung3–Easternregion

Taitung1–Hualien

2

–

Source:NationalScienceCouncilandMinistryofEconomicAffairs,Taiwan,theendof2001.aItincludesHsinchuandChunanScience-basedindustrialpark,however,ChunanparkislocatedbetweenHsinchuandHiaoli.

technologytransfercenters,academicresearchinstitutes,orinvestinginpublicdevelopmenttoboostthetechnologicallevelofindustryandspurregionaldevelopment.TheestablishmentoffurtherSTPscouldbeconsideredinthefutureasappropriate.

Asof2001,Taiwanhadfourscience-basedindustrialparks,namelyHsinchu(1980),Tainan(1995),Chunan(1998),andTaichung(2001).Besidestheseparks,Taiwanalsohad62innovation/incubationcenters(Table1andFig.2),(47%)locatedmostlyaroundtheHsinchuandChunanParks.

3.Methodologyanddatacollection

Sinceinnovativeknowledgeisambiguous,difficulttorepresent,andoftendiscoveredincidentally,itsgeographi-calandspatialtransportationthroughcommunicationiscrucial.However,themarginalcostoftransportingknowl-edgeincreaseswithdistance,particularlyknowledgethatneedstobelearnedimperceptibly.Thatis,face-to-faceinteractionsandfrequentandrecurringcommunicationsareimportanttocompaniesseekingtoutilizesuchdifficult,ambiguousanduncertaininnovativeknowledge,acquiresuchknowledgethemselves,andevenattractagentsincludingindividualsorgroupsthathavesuchknowledge.Therefore,thisworkhypothesizesthataparticularinnova-tiveenvironmentinvolvestechnologicalinfrastructureestablishments(includinguniversitiesandresearchinsti-tutions),theimplementationandfacilitationofspecificpublicpoliciesbygovernment,andagentssuchascompanies.Thisenvironmentproducesself-sustaining

T.-S.Huetal./Technovation25(2005)367–380371

milieuisformedthroughinteractionsamongagentsinaninnovativeenvironment.Thepurposeofcompaniesinenteringsuchamilieuistoacquirenewtechnologyflowandutilizethetangibletechnologicalinfrastructuretomaximizeprofits(Figs.3and4).

Toachievetheresearchgoal,themethodologyofthisworkisbasedondescriptivestatistics,usingindicatorsofinnovativemilieu.Datasourcesincludegovernmentalstatisticsandempiricalsurveydatagatheredbycasestudies.Althoughsomecasestudiesandgovernmentdatafailedtoprovidetimelyandappropriateinformation,theyprovideagoodanalyticalbasisforfutureresearch.Thisinvestigationusedtwomajorsourcesofdata:

3.1.Empiricaldataonthecharacteristicsofinnovationclusterformation

Thesecharacteristicshelpcompaniestoenhancetheircompetitiveness.BecauseITRIhasbeencentralinthetechnologicaldevelopmentofHsinchuanditsinteractionwithsurroundingareas,thisworkutilizedthefindingsoftheITRItechnologydevelopmentprojectsandtheoutcomesofinnovativeincubatorsdevelopedbyITRI.Thisinvestigationusedindicatorssuchasnumberofnewcompaniesformed,R&Dcapitalinvestment,technologicalworkforcesizeandnumberofpatentstoanalyzethelocalinnovativepro-ductionnetworkandtheformationofinnovationcluster.ThisworkalsoutilizedsomestatisticaldatacollectedbyITRIandHSIP.

3.2.Surveysandinterviews

ThisworkalsoconductedsurveysandinterviewswithtechnologicalprofessionalsinHSIPandprojectmanagersofacademicorresearchinstitutionslocatednearHSIP.These

Fig.2.ThedistributionofScienceParksandincubators.

spin-offeffectsthroughdynamicinteractionsamongacademicandresearchinstitutionsandcompanies.Owingtothecharacteristicsofinnovativeknowledgeandspatialfactors,thisspin-offeffectcontinuestoaccumulateinaparticulararea,butthespeedofaccumulationdecreaseswithincreasingdistance,eliminatingcorporateadvantagesincompetingforeconomicagentsbasedonknow-howrelatedtonewknowledge,technicalprofessionals,knowledgeandinformation,andsoon.Consequently,theinnovative

Fig.3.Dynamicsstructureofinnovationcluster.

372T.-S.Huetal./Technovation25(2005)367–380

Fig.4.Conceptualdiagramofthestructureofinnovationcluster.

surveysandinterviewsaimedatenhancingunderstandingofthecultureofhigh-techsocialgroupsandinstitutions.2Thesurveycollected268validsamplesduringearly2001andinthemiddleof2001.Mostofthesubjects(45%)workedintheintegratedcircuitsindustry,followedbycomputersandperipherals(28%),telecommunications(20%),andoptic-electronics(7%).

4.CharacteristicsofinnovationclustersinandaroundHISP

Newdevelopmentsinglobalizationandcommunicationstechnologyhaveprompteddevelopedcountriestofocustheircompetitivestrategiesonimprovinginnovation.Thisshiftalsoincreasedthevalueofknowledge-basedeconomicactivities.Knowledge-basedeconomicactivitiesorinnova-tiveactivitiesgenerallyclusterinareaswitharichbaseofscientificknowledgerelatedtospecificindustries(Baptista,1996),whichiswhycompaniescapableofapplyingnewknowledgeinproductionandcommercializationarefocusedinjustafewareasoftheworld.Proximityhelpstogenerateandtransferknowledgemoreeffectively,andthusnewknowledge-basedactivitiestendtoclusterinspecificgeographiclocalities(Audretsch,1998).Accord-ingly,theTaiwanesegovernmentfirstcreatedITRIin1973,andthenestablishedtheHISPnearITRIin1980.

After20yearsofdevelopment,HSIPcurrentlycomprisesabout300companies,withatotalannualproductionofUS$20,330million.3HSIPhasgrownsignificantly,especiallyin

Intheearlystageoftheinvestigation,surveysweresentouttothesubjects.Afterthesurveyswerereturned,accordingtotheanswersoninterviewpreference,interviewswereconductedwithsubjectswhowerewillingtobeinterviewed.Theinvestigationconductedcompletedface-to-faceinterviewswithatotalof72people.3AccordingtotheHSIPadministration,therewere302companieswithanannualproductionofUS$20,330millionandatotalof105,782employeesinHSIPattheendof2001.

2thelast10years.Annualproductionhasincreased10-foldduringthepast10years,thenumberofcompanieshasincreased150%,andthenumberofemployeeshastripled.Becausethepresenceof300companiesattheHSIPwasveryattractivetotechnicalworkers,thequalityofthelaborforceintheHSIPhasimprovedconsiderably.Growthofemployeeswithcollegedegreesorbetterwas46%from1997to1999,comparedtoa21%increaseinthetotalnumberofemployees.TheareaaroundHSIPalsochangedsignificantly.Forexample,thenearbyandveryaccessibleHukouindustrialzoneoriginallywasfocusedontraditionalindustriessuchastheceramics,glass,beverageandchemicalindustries.However,bytheendof1999,electronicsrelatedindustrieshadgrowntorepresent30%ofthetotalnumberofindustriesinHukou.OutoftheseelectronicsrelatedindustriesinHukou,40%involvedsemiconductorcompanies.Furthermore,theTaiwanHigh-wayNo.1Corridor(excludingtheChunanSciencePark)islocatedsouthofHISPandbetweenHsian-ShanandTo-FenInterchange,andthishighwayhasalsobecomeanattractivelocationforhigh-techcompaniesbecauseofitsaccessibilityandlowcostland(Fig.5).ScienceParksorcompanieslocatedinthecorridorcreatedbythisroadincludetheKuan-YenSciencePark,Kin-YenElectronics,andsoon.TheforcebehindthisprosperousdevelopmentcomesnotonlyfromthePark,butalsofromITRI,whichisessentialtothetechnologicalinfrastructureoftheregion.4.1.Formationofspin-offinnovativecompanies

ITRIisanon-profitresearchanddevelopmentinstitutionwithafocusonappliedtechnologyresearchandscientifictechnologyservices.In2000,ITRIhad6000employeesand12researchunits.DuringthecreationofthePark,ITRIprovidedthegreatestsupporttotheHSIP,particularlywhenHSIPbegantofocusonsemiconductor

T.-S.Huetal./Technovation25(2005)367–380373

Fig.5.Hsinchudistrict:locationandmajorinfrastructureandurbancharacteristics.

andcomputer/peripheralindustries.4Notably,theelec-tronicsandtelecommunicationdepartmentsinITRIarethemajorsourcesofspin-offs.TheelectronicsdepartmentofITRIhad374employeesin1980,theyearafterHSIPwascreated.By1990,thenumberofemployeesintheelectronicsdepartmentofITRIquadrupledto1509,whilethenumberofcompaniesinHSIPhasgrowneightfold.FifteenpercentofthecompaniesthatmovedtoHSIPduring1987through19werecreatedbythespin-offeffectofR&DtechnologyprofessionalsinITRI.5Furthermore,duringtherapidgrowthoftheParkinthe1990s,25%ofthe171newcompaniesestablishedinHSIPwerecreatedbythespin-offeffectoriginatingfromthistechnologicalinfrastructure(ITRI),includingthe10companiescreatedbythebusinessincubatorestablishedbyITRIin1997(Fig.6).

Approximatelyone-quarteroftheinnovativecompaniescreatedbytheR&DtechnologicalprofessionalsofITRIfrom1981through1999chosetolocateinthePark,whiletheremainderchosetolocateneartheParkandITRI.Duringthesameperiod,R&Dtechnologicalprofessionalscontinuouslyspun-offtheirknowledgetocompanieslocatedwithinoroutsidethePark.Moreover,asnotedearlier,besidestheexisting12researchunits,ITRIcreatedabusinessincubatorin1997tofosternewinnovativecompanies.Thisbusinessincubatorhadsuccessfullycreated21innovativecompaniesbytheendof2000.Forty-eightpercentageofthesecompanieschosetolocateinthePark,

AccordingtotheHSIPadministration,theannualproductionofintegratedcircuitsandcomputersandperipheralsbytheendof2001areUS$11,556millionandUS$4602million,whichamountedto55%and31%ofthetotalannualproductionoftheHSIP,respectively.5Includingseveralbetter-knownsemiconductorcompaniessuchasTaiwanSemiconductors,MacronixInternationalCo.,Ltd.,WinbondElectronicsCorp.,TaiwanFiberOptics,andsoon.TaiwanSemiconductorswascreatedundertheleadershipoftheITRIPresidentChun-MoChungandateamofalmost70integratedcircuitsR&Dprofessionals.

4while24%chosetolocateinthevicinityofITRIandthePark(asrevealedinFig.6).

Overtheyears,theoutcomesofITRItechnologydevelopmentprojects,relyingontechnologytransferandspin-offs,havedirectlyorindirectlyledtothecreationofnumerousinnovativecompanies.Amongthesecompanies,manywerecreateddirectlybyspin-offsoftechnology,facilitiesorprofessionalsoftechnologydevelopmentprojects.Somewereinvestedandcreatedbycompaniesthatparticipatedinthetechnologydevelopmentprojectsorcompaniesthatbenefitedfromtechnologytransfers.Fur-thermore,somewerecreatedbyemployeesofITRI.Allthesedifferentinnovativecompaniesshareonecharacteristicincommon,namely,theirmanagementteamsandtechnologyalloriginatefromspecializedsciencetechnologyprojects.4.2.R&Dexpenditure,technologytransferandpatentsgranted

Thecostofcommunicationshasreducedsignificantlyinthepresenteraofglobalizationandcommunicationtechnology.However,becauseoftheambiguityanduncertaintyofnewknowledge,high-techcompaniesstilldependontheface-to-faceinteractionsfacilitatedbyspatial

Fig.6.LocationsofcompaniescreatedbytheITRIbusinessincubator.

374

Table2

R&DcapitalinputandapprovedpatentsYear

NumberofapprovedpatentsintheHSIP

T.-S.Huetal./Technovation25(2005)367–380

NumberofapprovedpatentsinthenationR&DcapitalintheHSIP(byUS$million)R&DcapitalinHsinchudistrict(byUS$million)

NationalR&Dcapitalofallmanufacturingindustries(byUS$million)12171269141773198621932428293133853666

1990199119921993199419951996199719981999––––32776699715821692253622601272812122231719032297072946929356250512914410713113919725639355773510101108191–210302382518–90712061302

Source:(1)IndicatorsofScienceandTechnology,Taiwan.(2)TechnologyAgencyandStatisticsAgency,MinistryofEconomicAffairs,Taiwan.

clustering,andthuslocationremainsimportant.Furthermore,themoreR&Disinputtedintoaclusteredspace,thefasternewtechnologiesandproductscanbereleased,thegreatertheprofitsfromnewtechnologiesandproductswillbe,andthemoreinnovativeoutcomeswillbestimulated.ExaminingtotalcorporatespendingonR&DintheHsinchudistrictin1990revealsthatonly56%camefromcompanieslocatedinHSIP.However,by1998,thisfigurehadincreasedto84%(Table2).From1990through1999,theR&DcapitalinputofcompaniesinHSIPincreased10-fold,exceedingnotonlythatofcompaniesinthewiderHsinchudistrict,butalsoexceedingthenationalaverage.ThisphenomenonwasfurtherevidencedinthedominanceofinformationtechnologyhardwareofpubliclytradedsemiconductorcompaniesintheUSsoftwarepatentsregisteredbyTaiwanesecompanies,revealedinthestatisticscollectedbytheIndustrialDevelopmentBureau,TaiwanMinistryofEconomicAffairs.Amongthetop106companiesandinstitutions,70%werelocatedinHsinchudistrict.

R&Dcapitalinputlevelfurtherstimulatescompetitionamongcompaniesoragents,asdemonstratedclearlybythenumberofpatentsgeneratedbycompaniesinHSIPandITRI.From1994through1999,thenumberofoverseasapprovedpatentsoriginatingfromTaiwanesecompaniesgrew53%.Duringthesameperiod,thenumberofoverseaspatentapprovalsoriginatingfromTaiwanesecompanieslocatedinHSIPincreased6.7-folds.Additionally,whileonly2%ofthetotalnumberofpatentsinTaiwanwereownedbyHSIPcompaniesin1994,thisnumbergrewto10%by1999.Moreover,12%ofthetotaloverseasapprovedpatentsowned

AccordingtotheIndustrialDevelopmentBureau,TaiwanMinistryofEconomicAffairs,from1995through1999,the10companiesthathadthehighestnumbersofapprovedUSpatentsinclude:UnitedMicroelectronicsCorp.(24),ITRI(24),MacronixInternationalCo.,Ltd.(18),TaiwanSemiconductors(13),WinbondElectronicsCorp.(13),PrimaxelectronicsLtd.(8),NationalScienceCouncil,Taiwan(7),HotelkSemiconductorInc.(7),BehaviorTechComputerCorp.(6)andInventecCorp.(6),andsoon.

6byTaiwanesecompaniesarecontrolledbyHSIPcompanies.7Thesedatademonstratethat,intermsofcompetitionforthetimelyreleaseofnewproductsandprocedures,informationandtechnologyflowintheclusterdrivesinnovation.

Likewise,in1994only22%ofthecapitalinvolvedintechnologytransferintheinformationelectronicsindustriesoccurredintheHsinchudistrict.However,by1996,42%occurredintheHsinchudistrict(Table3).Thisincreaseshowsthattheclusteringofrelatedorsimilarindustriesinaparticulargeographiclocationbenefitstheacceleratedreleaseofnewdiscoveriesortheacquisitionofmarketshareinformation.Consequently,thespeedandintensityofinnovationincreases.TheclusterofR&Dcapitalinputnotonlyincreasesinnovationenergy,butalsoboostsprofitsfromindustrialactivitiesthatrelyonnewknowledge.Forexample,30%ofthe78publiclytradedelectroniccompaniesintheHsinchudistricthadaverageEPSexceeding3from1996through1999,andonly11%recordeddeficits.

4.3.Localinnovationnetwork

SuccessfulinnovativecompaniescreatedbytheITRIbusinessincubatorincludenewbranchunitsestablishedbyexistingcompaniesspin-offsestablishedbyR&Dpro-fessionalsatexistingcompaniesandresearchinstitutions.Bothprofessionalspin-offsofITRIandinnovativecompa-niesincubatedbyITRItendtopreferlocationsinoraroundthePark.BecauseHSIPandITRIhavedifferentfunctions,thesetwoinstitutionsshareanintricaterelationshipcharacterizedbycompensationanddemand.Thatis,thetechnologicalinfrastructurespins-offortransfersprofessionalsortechnologytoHSIP,andtheParkdemandstechnologicalinnovationsandR&Dfromthetechnologicalinfrastructure.Thisrelationshipformsascienceparksystem

In1999,therewereatotalof11,092overseasapprovedpatentsinTaiwan.Outofthisnumber,1276wereownedbycompanieslocatedinthePark(Source:2000IndicatorsofScienceandTechnology,Taiwan).

7T.-S.Huetal./Technovation25(2005)367–380

Table3

ITRItechnologytransferstatisticsYear

InformationelectronicsNumberofcompanies

1994199519961997199819992000

HsinchudistrictTotalinTaiwanHsinchudistrictTotalinTaiwanHsinchudistrictTotalinTaiwanHsinchudistrictTotalinTaiwanHsinchudistrictTotalinTaiwanHsinchudistrictTotalinTaiwanHsinchudistrictTotalinTaiwan

4922328130522014417927824371249

US$(thousand)1058451001313249011352325732816935183738450511137

MetalmechanicsNumberofcompanies8136613851318109912496813103

US$(thousand)62724187109134129018195093133114412233732752

ChemicalengineeringNumberofcompanies2612763984112101485102342

375

US$(thousand)19393486710212515761323043761953851252

Source:DepartmentofTechnologyServices,ITRI.

containinganinnovationsystem(Hu,1991,2001;HuandLin,2003).Furthermore,althoughcommunicationcostshavefallensignificantlyowingtoglobalizationandimprovedcommunicationstechnology,face-to-faceinter-actionremainsessentialtohigh-techinnovativeactivities,particularlygiventhatnewinnovativeknowledgeisambiguous,uncertain,difficulttosymbolize,andcom-plex.Suchface-to-faceinteractionscanallowknowledgetobeaccumulatedandchangedslightlyinaspecificgeographiclocation.Consequently,whileclusteringisessentialtoinnovation,locationalsoremainsveryimportant.

Thereareseveralpotentialphenomenainthespecificgeographiclocationdescribedabove.First,agentswithnewknowledgeinresearchinstitutionsorcompaniesmaycreatetheirowncompaniesfocusedonmassproduction.Second,toacquirenewtechnologyorimproveproductsandprocedures,existingcompaniesmaycommissionacademi-c/researchinstitutionstoconductR&DorexportR&Dteamstoworkintheseinstitutions.Third,theinnovativecompaniesdevelopedbyalltypesofbusinessincubatorscanestablishfactoriesandinitiatemassproductioninaparticularlocality.Thesephenomenarevealthatinter-actionsoccurmainlybetweencompaniesandITRI,orbetweencompaniesandacademicresearchinstitutions,andenablefunctionssuchasR&D,massproductionandincubationandthegradualcreationofaninnovativeproductionnetworkinalocality(Fig.7).Thisnetworkisthefoundationoflocalindustrialinnovation.Thatis,innovativecompaniesseektogaincontrolofthelatesttechnologyorproductinformation,recruitimportantoroutstandingR&Dortechnologicalprofessionals,acquireelementsofstate-of-the-artorkeytechnologies,andaggregateinaspecificlocality.

However,thequestionarisesofwhethertheinteractionsamongcompanieswithinthisnetworkstructureareasintenseasthosebetweencompaniesandacademicresearchinstitutions.Moreover,ifthetwotypesofinteractionsareequallyintense,thenthequestionofwhethertheinter-actionsaresufficienttoenabletheformationofalocal

Fig.7.Conceptofalocalinnovationandproductionnetwork.

376T.-S.Huetal./Technovation25(2005)367–380

productionnetwork,atechnologicalcommunity,andsoonarises.ThisworkinvestigatestheformationofsuchalearningnetworkusingtheresultsofsurveysandinterviewswithR&DandtechnologicalprofessionalsinHSIP.

5.Surveyresults

Thehypothesisofthisinvestigationis“whencompaniesclusterinaspecificlocality,theirinteractionsarecharac-terizedbycompetitionforspecificresourceswithinthatlocality”.Specifically,thisworkfocusesontheformationofinnovativemilieuowingtosuchinteractions.First,companiescompetefortechnologicalprofessionals,andevenprofessionalsinotherareas.Thus,interms8ofchannelofinformation,26%offirst-timeemployeesinHSIPacquiredemploymentinformationfromrelativesorfriendswhowerealreadyworkinginHSIP.Amongthosesurveyed40%originallylivedinHsinchudistrict,andjust20%camefromareasoutsideHsinchudistrict.Oncethesepro-fessionalsenteredHSIP,38%acquiredfurtheremploymentopportunityinformationfromrelativesandfriendsworkinginHSIP,and22%acquiredsuchinformationfromsocialgatheringsinHSIPorwithincompanies.Consequently,theprofessionalemploymentmarketformedbytheclusterofsimilarand/orrelatedcompaniesintheHsinchudistrictisutilizedbycompaniestodiscovernewknowledgeteamsoropportunities.

Intermsoftheacquisitionofknowledgefromtheworkingenvironment,nearly75%ofR&Dortechno-logicalprofessionalsresolvedproblemsthroughformalchannelsestablishedforthispurposebytheircompanies,while25%utilizedinformalchannels,generallyseekinghelpfromfriendsworkinginsideoroutsideHSIPinsimilarindustriesbutdifferentcompanies.Amongprofessionalswhoutilizedinformalchannelsforproblemresolution,50%verifiedtheirinformationbyreferringtomultiplesources.Overall,thisapproachresembleslearn-ingnetworks(BessantandFrancis,1999).However,differentcompaniesinthesimilarindustriesareincompetition,makingitdangeroustorelyonasingleinformationsource.Asforthekeyknowledge,suchknowledgeisdifficulttoacquirelocally,eventhroughinformalchannels.Consequently,20%ofthesurveyedR&Dortechnologicalprofessionalsextendedtheirinformalnetworksoverseas,mainlytoSiliconValley9,andreliedonformerclassmatesorfriendsforinformation.

Thisworkalsospeculatedthatthelocalproductionnetworkisthefoundationofinnovation.However,thesurveyresultsrevealthatcollaborationsamongcompaniesonR&Dorproductdesignrepresentedlessthan30%,and

8Theothersourcesofemploymentincludedhumanresourcescompanies(30%)andnewspapers(23%).9ComparedwithSaxenianandHsu2001,p.919).

mostlywereinvolvedcompaniesinvolvedinthesameindustrybutatdifferentlevels.Thatis,companiesatthesamelevelofthesameindustryareincompetition.Consequently,suchcompaniesgatherintheHsinchudistricttoacquireelementssuchasinformationandagents,andtobetterunderstandtheircompetitors.Companiesmainlyforminternationalcoalitions,whileestablishinghorizontalcollaborationorverticalintegrationrelationshipswithlocalcompanies,thusformingbothcompetitiveandcollaborativeinteractions.ThistypeofinteractionestablishesexcellentcompetitiveadvantagesforcompanieslocatedinHSIPanditsvicinity.10Therefore,theinteractionnetworkamonglocalcompaniesisakeycontributortospecificinnovations.Furthermore,althoughcompaniesinandaroundHSIPhavecertainsupplyproductioncoalitions,11localeconomiclinkagesrepresentaweak,short-term,non-systematicproductionnetwork.Thatis,thecompaniesinandaroundHSIPultimatelywillbedriventootherregionssuchasChinaunderthepressureofpricecompetitionanddemand.12Thisindicatesthatthecompetitiveandcolla-borativerelationshipsamongthecompaniesdonothelpthemtoestablishdeeplocalroots.Thisstructurediffersfromthenotionofaninnovativeproductionnetworkembeddedinalocality,asconceivedbymostresearchonthistopic.However,theideathataninnovativeproductionnetworkencouragesinnovativecompaniestoclusterinalocalityisverified.ThisphenomenonconfirmsthatHSIPisbasicallyaproduction-orientedsciencepark.R&Dactivi-tiesinHSIPthustendtoinvolveenhancingexistingproductsortechnologiesratherthanintroducingnewinnovations(Table4).Notably,theseactivitiessimplyrepresentmethodstoprolongproductlifecyclesthroughexpeditious,frequentandgradualinnovationsandtheinternationaldivisionoflabor.

Intermsofturnoveroftechnologicalprofessionals,suchturnoverwashighestamongengineeringtechnologicalprofessionalsinproductiondepartments,followedby

10ThemilieucreatedbytheParkfurtherpromptedcompaniestocluster.Forexample,theICDesigncompanylocatednearTaiwanSemiconductorscommissionsTaiwanSemiconductorstoproducetheirIC.Oncetheproductioniscompleted,theycanperformtestsontheICimmediately.BecausethemachinesinTaiwanSemiconductorsareinoperationfor24haday,assoonastheICpassesthetests,itcanbeforwardedimmediatelytothepackagingfactory,whichisalsoin24hadayoperation.Anymistakesintheprocesscanbeimmediatelycorrectedthroughfeedback.Suchconnectedproductionprocess,whencomparedtomanylargeinternationalfirms’proceduresofcommissioningSouthKoreacompaniestoproduceICandpackagingICinSingaporeorMalaysia,theICdevelopmentprocessinTaiwanisatleast15daysshorter(Source:seniortechnologicalprofessionalsofTaiwanSemiconductor,2001).Becauseoftheshortproductlifecycleandthepressureofnewproductdevelopment,thecompressioninschedulecreatescompetitiveadvantagesforICindustriesinTaiwan.11SomecompanieslocatedintheParkandcompaniesoutsidetheParkbelongtothesamecorporationgroup,suchasAcerIncorporated,UnitedMicroelectronicsCorp.,MicrotekInternationalIncorporated,andsoon.12Particularlyindustriesthatareobsoleteorlaborintensive,suchasmanufacturersof8-inchIC,monitor,mouse,keyboard,andsoon.

T.-S.Huetal./Technovation25(2005)367–380

Table4

CharacteristicsofResearchinHSIPIndustry

Year1997

TypeofresearchAppliedresearch(%)

Integratedcircuits

ComputerandperipheralsCommunicationsOpticalelectronicsAdvancedmechanicsBiotechnology

11.6.212.423.3.947.8

Experimentaldevelopment(%)

1998

Appliedresearch(%)

Experimentaldevelopment(%)

1999

Appliedresearch(%)

377

Experimentaldevelopment(%)

88.553.887.676.745.152.218.950.620.323.810.424.581.049.178.372.1.675.520.035.720.323.447.737.479.962.579.276.552.360.7

Source:HSIPadministration.Note:Appliedresearchreferstotheactualapplicationofadiscoverednewknowledge,includinginventionsofnewmethodsornewusage,orfocusingonaparticularapplicationgoalorobjective.Experimentaldevelopmentreferstothedevelopmentofnewproduct,improvementsofprocedures,andmethodstoenhanceproductionefficiency.

technologicalprofessionalsinserviceandR&Ddepart-ments.Around53%ofintervieweesplannedtochangejobsin2–3years,and29%plannedtochangejobsin1–2years.Thereasonsforjobchangeincludedlowcurrentsalariesandbonuses(56%),followedbyanon-stimulatingworkenvironment(15%)andadesiretojoinateamworkingwithinnovativetechnology(9%).Therefore,themostpopularcareerpathinHSIPwastoworkforwell-knowncompanies(70%).Only11%ofintervieweeswerewillingtoworkforstart-upcompaniesworkingoninnovativeprojects.ThisindicatesthatthemajorityofR&Dandtechnologicalprofessionalsfollowconventionalcareerpaths,competingtoworkforbigger,morematureandbetter-knowncompanies,andlacktherisk-takingmentalityofseekingtoparticipateintheearlylifecycleofinnovativeproducts.Thismentalitydominatesinthecultureofthetechnologicalcommunitythroughproximityandsynergyelements.SuchacultureisalsoevidentintheemphasisoftheR&DactivitiesofHSIPcompaniesonimprovingproductionproceduresorenhancingproductionefficiency(aslistedinTable4).ThisphenomenondisplaysaverydifferentmindsettothatoftechnologyprofessionalsinSiliconValley,whocompetetoundertakenewchallengesindevelopingprogressivetechnology.Consequently,SiliconValleyleadsHSIPinvariouskeytechnologiesandadvancedproducts(Saxenian,1994).

Furthermore,agentswithneweconomicknowledgedonotchangejobsaseasilyasexpected.Onereasonforthisphenomenonisthattheircurrentcompaniescanstillmatchtheirexpectedvalues,thereforetheystaywiththesecompanies.Also,whenthecurrentcompaniesareunabletomatchtheirexpectedvalues,theteamwiththenewknowledgeortechnologywillmovetoanothercompanies,oralternativelycreateanewstart-uptorealizetheambitionsoftheteammembers.IntheimplementationprocessofspecializedsciencetechnologyprojectsconductedbytheITRI,becauseR&DactivitiesarecommissionedbycompaniesorR&DworkersareexportedtoITRIbycompaniestoconductR&Dactivities,thelocalspin-offphenomenonisparticularlyobvious.OnlybyworkingorexperimentingwithR&Dorinnovativeagentscantherecipientsoftechnologytransferreallylearnanewknowl-edgeortechnology.Thisprocessoftechnologytransferalsoleadstospin-offsofnewknowledgeortechnology.There-fore,companiesoperatinginsuchlocationsfinditeasiertogaincontrolofnewtechnologyorproductinformation,recruitimportantoroutstandingR&Dtechnologicalpro-fessionals,andacquirethelatestorkeytechnologies,thusfurtherstrengtheningtheaccumulationofinnovation.

Additionally,owingtotheambiguityanduncertaintyofnewknowledge,innovativeactivitiesofhigh-techcompa-niescontinuetobenecessarytoemphasizeface-to-faceinteractionsinspatialclustering,sothatknowledgecanbeaccumulatedandslightlychangedinaspecificspace.AmongcompaniesthatcollaborateinR&Dorproductdesignornearly30%ofthetotalinHSIP,55%maintainedface-to-faceinteractionsatafrequencyofatleastweeklytwice.Sincethelifecycleofhigh-techproductsisshortening,rapidproblemresolutionisessentialforthesecompanies.Theinteractionsbetweentwopartiesassociatedwiththesolutionofadvancedtechnologyrelatedproblemsgrowsignificantlyafterawhile,andbegintoinduceinnovationsandenhancethecompetitiveadvantagesofacompanycomparedtoitscompetitors.

Becausecompaniesatthesamelevelofthesameindustryarecompetitors,corporatecollaborationmostlyoccursamongrelatedindustries,andacontinuoussystemislacking(Fig.8).However,companiescanattaintemporarycollaborationorsupportquickly,whichcanbeattributedtoanembeddedlocalcompatibility.Namely,whencompaniesfacemarketcompetition,spatialproximityandthenormallyunattachedlocaltechnologycommunitywilladjustandreorganizeresourcesflexibly.AsPorter(1998)noted,theemphasisofcompaniestoclusterinalocalityiscontrolled

378T.-S.Huetal./Technovation25(2005)367–380

Fig.8.Hsinchudistrictinnovativeproductionnetwork.

bykeyresourcesandinformation.Todevelopcompetitivecapital,companiesclusteredinanareamustrelyonhumanrelationships,commoninterests,face-to-faceinteractionsandidentificationwiththelocalcommunity.Therefore,inHSIPandotherclustersofparticularindustries,over60%ofscienceandtechnologicalprofessionalsinthetechnologicalworkforceutilizeinformalsocialgatherings,suchasreunionsandbookclubs,tomaintainandexpandtheirprofessionalnetworks.Suchchannelscanprovideopportu-nitiestodiscussdifficultproblems,orsharecommonexperiences.Additionally,around20%ofscienceandtechnologicalprofessionalsformedprofessionalnetworksthroughseminarsorconferences.Forty-fourpercentageofthesegatheringswereconductedirregularly,while38%wereconductedonceortwicemonthly.Thefrequencythusresemblesthatofinformalchannelsusedbyscienceandtechnologicalprofessionalstoacquiresupportortechnology.ThisphenomenonindicatesthatthespontaneityanduncertaintyofnewknowledgeintheinnovativeR&Dprocessledtooccasionalandnon-continuousinteractionsandcollaborationsamongtechnologicalprofessionalsandcompanies.

Themoreagglomeratedcompaniesare,themoreobviousaretheopportunitiesforinnovation.Thecapabilitiesandflexibilityformedinalocalitycanhelpcompaniestoacquiretheresourcestheyrequire.Theserequiredresourcesincludeinteractionswithsuppliersin

relatedindustries,whichcanaccelerateinnovationandmakeproductsandservicesbettermatchmarketdemands.However,thesoundnessofalocalbusinesspotentialenvironmentcreatedbyclusteringwillinfluencetheabilityofcompaniestoachievesolidgrowth.Owingtoovercrowdingandthecompetitiveeffectcreatedbyclustering,similartothegrowthofagglomeration,overcrowdingisexpectedreducethebenefitsofcluster-ing.Likewise,anyadvancedtechnologywillbereplacedbyanewinnovativetechnology.Whennewindustrialclustersemerge,existingindustrialcentersdecline(BrezisandKrugman,1993).Therefore,developingaclusteringlocalitycaninfluencetheformationofproductioncapabilitiesthroughtheaggregationofinno-vativespin-offcompanies.Around40%oftechnologicalprofessionalsinterviewedidentifiedtheabilityofinnova-tivespin-offcompanieswithinnovativeenergytoenhancelocalinnovationsduringtheclusteringprogress.Thatis,thespin-offofinnovativecompaniesmeanstheemergenceofnewproducts,whichstimulatesinnovationinlocalrelatedindustriesorcompaniesmanufacturingsimilarproducts.6.Conclusions

Less-developedcountriesalwayslackwell-developedindustrialclusters,andthustheirregionalornational

T.-S.Huetal./Technovation25(2005)367–380379

economiescanonlycompetegloballybyrelyingoncheaplaborandnaturalresources(Porter,1998).Allindustrialclustershaveanagglomerativeeconomiceffect,butclusterlocationisimportantinindustriesthatrelyonnewknowledge.Clusterlocationsrequireadequatetechnologi-calinfrastructure,matureinnovativeinteractionswithintechnologicalhumanresourcesandbenefitsthatcancompensatefordiseconomyfactors.Theproximityamongcompaniescreatedbysuchclustersisessentialtostimulatecompanylearning,creatingcompatibleknowledgespillovereffectsandestablishingapositivefeedbackamongvariouslocalagents.

Competitionisthebasisforformingalocalinnovativemilieu.Althoughnumerousstudieshaveintroducednotionsofcollectivelearning,stickyknowledgeandlearningprocesses,untradeddependencies,andevennetworkformation,competitionamongnewproductsandtechnol-ogiesremainsessentialtotechnology-basedindustrialcompetition.Tobeleadersincreatingnewproductsorintroducingnewtechnologies,companiesmustbelocatedinanindustrialclustertocompeteforkeyresources.Suchresourcesincludeanythingthatcanhelpincreaseprofits,includingagentswithnewknowledge,technologicalprofessionals,information,andevenpotentialpartners(suchaslocalcompaniesorsuppliers).Similarly,withinthetechnologicalworkforcecenteredontheindustrialcluster,knowledgeableagentscompetetoworkforcompaniesthatmeettheirrequirementsforanemployer,andtechnologicalprofessionalscompeteforbetteremploy-mentopportunities.Consequently,mostR&Dandtechno-logicalprofessionalsintheHsinchudistrictfollowthecareerpathofcompetitiontoworkforlarger,morematureandmorefamouscompanies,andlacktherisk-takingmentalityrequiredtoparticipateinthepreliminarystageofdevelopingnewknowledge.Owingtoproximityandsynergy,thistrendisthenormintechnologicalcommunityculture.

Moreover,themajorityofinnovativecompaniescreatedthroughspin-offsfromlocalcompaniesortheInstituteofIndustrialTechnologyResearch(ITRI)chosetolocatetheirmassproductionintheHSIPorHsinchudistrict.Addition-ally,toutilizespatialproximitytoexploitthecompetitiveelementsoutlinedabove,thesecompaniesconsiderthetransferoflocaltechnologicalinfrastructure,spin-offsoftechnologicalprofessionals,andequipmentandresourcesforfurtherR&D.Businessincubatorsrecentlyestablishedbyacademicorresearchinstitutionsarealsobeneficialforenhancinglocalentrepreneurialenvironment.ThesephenomenabenefitthefurtherR&DofexistingcompaniesortheR&Dincubationofinnovativecompanies,thusestablishingalocalinnovationnetwork.Furthermore,toachievethesamegoalswhileboostingmarketcompetitive-ness,relatedindustriesandcompaniescollaborateintheshort-term.Thistypeofcooperationisoccasionalratherthancontinuous,andthusrepresentsatemporarycollabora-tiveproductionnetwork(asshowninFig.8).Consequently,

theinnovationnetworkformedintheHsinchudistrict,focusedonITRI,furthercausestheaggregationofinnovativecompaniesandincreasescompetitionamongnewproductsandproductionprocedures.However,owingtotheobscurelocalproductionnetworkandweaklinkswithinthelocaleconomy,companiesarenotembeddedinthelocaleconomy.Thatis,theHsinchudistrictclusterisbasedmainlyonacombinationofcollaborativeandcompetitiveinteractions.Althoughthispatterndiffersfromthatemphasizingcollaborationanddependencies,asdiscussedinpreviousresearch,itisstillalocalinnovativemilieu.

Acknowledgements

TheauthorswouldliketothanktheNationalScienceCounciloftheRepublicofChina,Taiwanforfinanciallysupportingthisresearchundercontractno.NSC92-2211-E-216-012.

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