New industry creation in less developed countries – the case of the Taiwanese flat panel display industry

Abstract

New industry creation in less developed countries is dynamic and complex. The catching-up process of the latecomers depends on the accumulation of resources and capabilities, as well as their interactions with the industrial environments. How the industrial environments interact with the industry and influence the development process is an intriguing issue. This study uses system dynamics to analyze the underlying structure which supported the industrial development process of Taiwan’s flat panel display (FPD) industry. The result shows that Taiwan has successfully created several reinforcing loops with the industrial environments during different development stages for its FPD industry to succeed. Although it may not be easy to duplicate Taiwan’s development model in other less developed countries, this study suggests that understanding the industry creation process through the reinforcing loops and matching strategies to stimulate the accumulation of resources and capabilities could be an important concern to the new industry creation process. This study also identified a potential new role for public research institutes to identify and accumulate pre-entry resources during the industry creation process. Implications to other latecomers are discussed.