The Determinants of SMEs' Market Share in 1991 – Taiwan Manufacturers

Abstract

Small and medium-sized enterprises (SMEs) have become increasingly popular in recent decades, having caused concern among scholars of various areas. Our line of research focuses on the determinants of SMEs' market share. This study explores the topic base on Taiwan's manufacturers' data collected in 1991. Our empirical results indicate that Taiwan has witnessed SMEs becoming prosperous in manufacturing industries with higher relative labor productivity, low entry barriers, prosperous subcontracting activities, and young ages. Our results indicate that, in the transitory process of industrial development, Taiwan's SMEs no longer can afford high wage payments when at the same time the quality of labor does not increase accordingly. As Taiwan approaches the status of a developed economy, the beneficiaries of export activities have changed. Unlike 1986, in 1991 there was a smaller share of SMEs in Taiwan's export oriented industries. Furthermore, SMEs benefited from their efforts to increase their automation status. The emphasis on issues concerning environmental protection proved to be another source of entry barrier that kept SMEs from prospering. Certain similarities arise when comparing our conclusions with those of the U.S., Canada, Germany, and Japan, all of whom represent industrialized countries. We can conclude that as Taiwan matures in her industrial development process, SMEs also struggle to a certain maturity in theirs.