Supply Chain Positioning and Innovation: Taiwan's Challenge

Abstract

We argue that supply chain positioning affects the ability and scope of innovation. This is so because positions on the supply chains affect the access to knowledge and the ability to appropriate the value coming out of innovation. Knowledge determines the capability of innovation and appropriation power determines the incentive of innovation. Most Taiwanese firms position themselves as suppliers of intermediate goods. They innovate in collaboration with end users that are typically brand marketers of final goods and services. Their innovations manifest several characteristics that are closely associated with their position on the global value chains.