Learning by Manufacturing Parts: Explaining Technological Change in Taiwan's Decentralized Industrialization

This article is motivated by the notion of technological interdependence to understand technological change and learning in the context of Taiwan's quest for industrial upgrading and innovation. A distinctive feature of Taiwan's postwar economic development was decentralized industrialization, which gave rise to a system of production networks consisting of numerous small- and medium-enterprise parts makers and processing specialists who focused on intermediate input instead of final product. Contrary to the latecomer literature that stresses lead/large firms in driving technological learning, this article, through an in-depth case study of Taiwan's bicycle manufacturing, argues that breakthroughs were accomplished at the intermediate level by parts makers in the system of decentralized production. Thus, technological interdependence through cross-industry learning accounts for the parts makers' learning. The article then illustrates the process of technological change and diffusion through the adaptation and application processes of entrepreneurs and bicycle manufacturers in commercializing new technologies. This article contributes to STS studies by introducing the industrial dynamics and structural dimensions of entrepreneurs' and manufacturers' learning to open the black box of technological change and innovation.