Strategic upgrading of an overseas subsidiary through export promotion activities: the case of Kuozui Motor

Abstract

This study examines the factors that influenced the role of Kuozui Motor – Toyota's Taiwanese subsidiary — in developing products and manufacturing for third countries. Employing a case-based exploratory research approach, this study reveals how Kuozui was able to become a regional hub with deep involvement in new product development. The study finds that while this change was partially crisis-driven, the major factor that leads to the acquisition of new roles related to new product development by this Taiwanese subsidiary of Toyota was capability building, particularly in manufacturing engineering. The case of Kuozui suggests that at subsidiaries of Toyota in small to medium-sized markets, while maintaining high factory performance, moving upstream from manufacturing excellence to process design and process improvement excellence is a major step toward the assignment of new product development work for third-country markets.