Linkages between the Three Analyses

This study has conducted three key analyses. The first analysis on technological transitions provided insights to how technological dimensions in a regime serve as the fundamental basis to the progress of a high-tech manufacturing industry. The changes in the technological dimensions drive firms to make different choices for their organizational boundaries, which also lead to changes in network boundaries as firms seek external linkages that overall provide a feedback loop to the regime. The first analysis has emphasized the role of external linkages in the feedback loop process, of which the IC industry was found to be largely dominated by firms that pursued virtual vertical integration towards the end of 2000s. Since latecomers in the IC industry have to catch up in changing industrial structures as a result of firms‟ strategies for external linkages (i.e. the feedback loops), the first analysis also leads to the significance of understanding how exactly latecomers should conduct value coordination in their external networks.

167 Therefore, the second analytical framework goes further by dividing the structural changes found in the first analysis into six stages (dimensions) while taking into account the changes in value coordination. The catch-up process of the latecomers can thus be examined in detail at each stage. The second analytical chapter provided an in- depth analysis to the role of organizational boundaries and external linkages in the catch-up and leapfrogging process of Taiwanese latecomers in the IC industry. It examined the strategies for business model behind the firms‟ choices for organizational boundaries. It also examined how the latecomer firms acquired resources from different external linkages by extending the existing latecomer resource acquisition framework. The chapter also extended the findings in the first analysis by providing a deeper scrutiny to the role of external linkages to the Taiwanese latecomers in terms of outside- in (indirect) transfer of knowledge and technologies in open innovation context as well as strategic value coordination in networks.

The first and second analyses have therefore emphasized the crucial role of external linkages in latecomers‟ catching up and leapfrogging. Furthermore, the first analysis emphasized how the change of technological regimes is endogenous to firms‟ actions while the second analysis suggests that latecomers could rationally strategize their catch-up and leapfrogging paths. This leads to the importance of understanding how strategies of firms interact with external linkages to achieve the desired outcomes, i.e. how exactly could TSMC‟s endogenous strategies be influential enough to its upstream and downstream firms and led to changes of regime that seem to be in favour of its leapfrogging process? Hence, the third analysis of the thesis examined how the successful firm (i.e. TSMC) achieved the desired result in terms of its managerial process. The analysis showed how firms‟ endogenous strategies for external linkages could be planned by organizational leaders through revised expectations and vision

constructions, and explained that those strategies are effective when the firms‟ suppliers and customers are attracted and conformed to those strategies. TSMC‟s catch-up strategies and leapfrogging via virtual vertical integration in the IC industry became successful when the mutual-reinforcements between the firm‟s endogenous strategies and its external linkages progressed into coevolutionary lock-ins. The emphasis on external linkages in the first two analyses also indicates the importance of organizational absorptive capacity to assimilate external knowledge and technologies. The third analysis therefore also took into account the aspect by explaining how TSMC‟s strategies for external linkages have complemented its internal strategies for building its organizational absorptive capacity.

To sum up, this research has examined the catch-up and leapfrogging process of Taiwanese latecomers in the IC industry by considering the changes of technological regimes as the basis that drive firms to strategize for organizational boundaries which create feedback loops to the regime when firms seek external linkages. As analysed in the thesis, strategic external linkages has played a significant role in catch-up and leapfrogging process of Taiwanese foundries as it provides different opportunities for latecomers to seek vertical upgrading and virtual vertical integration, especially in an environment that evolves into an open innovation context among leading firms. However, although these processes are endogenous to firms‟ strategies, they are only effective when top management in firms are able to pull off the appropriate strategies at the right time so that the endogenous forces receive positive feedbacks from the other firms in networks and progress into high inter-path dependence between the firms. The success story of TSMC‟s arrival at the technological frontier has not been easily replicated because its catch-up and leapfrogging strategies have taken into account the appropriate resource acquisition and value coordination strategies for its external

169 linkages, which have led to successful coevolutionary lock-ins in an industry with evolving industrial structures and value systems.

Nevertheless, the catch-up and leapfrogging process of Taiwanese foundries remains very important to draw lessons for other latecomers in high-tech manufacturing industries, especially the IC industry. The first framework provides a useful template to other high-tech manufacturing industries that are driven by the similar technological nature, i.e. the similar technological dimensions. The second analytical framework is also relevant to latecomers in high-tech manufacturing industries, given its strong emphasis on the interface between the OEM latecomers and the advanced MNCs, value chain coordination, as well as the progress into an open innovation context. The third framework is not only relevant to latecomers‟ catch-up strategies, but also to industry leadership strategies in other high-tech manufacturing industries. This is because the nature of a high-tech manufacturing industry requires the leading firms to deploy strategies that could lead to technological capabilities that are substantial enough to interfere the industry‟s status quo, resulting in high inter-path dependence between the leading firms and their external linkages as well as coevolutionary lock-ins.