Taiwanese Business Groups: Steady Growth in Institutional Transition

Abstract

AbstractThis chapter on Taiwanese business groups offers an interesting contrast to the Japanese and Korean cases. Taiwanese groups are loosely coupled networks of firms, positioned in between chaebols and keiretsu in terms of hierarchical control. Because the Taiwanese government uses tax incentives to favor new establishments, Taiwanese groups are more numerous and smaller than Korean chaebols. These groups have grown consistently, particularly since the country liberalized its economy in the 1980s. This liberalization opened key industries previously monopolized by state enterprises, such as banking, telecommunications, and electricity to the private sector, creating opportunities for business groups to expand. The Asian Crisis did not deter the growth of Taiwanese business groups. This chapter suggests that, at least in the short run, these groups will grow further and diversify more to exploit new business opportunities in the Taiwanese economy.