Abstract
This paper aims to explore the evolutionary dynamics of the ODM model in the global notebook PC industry. We found that the “modular design” process of notebook products requires plenty of technical interaction and tacit knowledge exchanges among branding companies, key component suppliers and ODMs. Taiwanese ODMs serve as important sources of information and knowledge for specifications formulation through their system integration and technological development abilities. With increasing complexity and shorter design life-spans, the mutual dependency among the lead firms and ODMs increases, leading to the regional agglomeration in Taiwan and China.
Highlights
The Absentness of ODMs?ODM is a popular model of production in East Asian’s industrialization, especially for Taiwanese enterprises
Taking notebook PCs as an example, we find that Taiwanese ODMs’ share of the global market volume has increased continuously from 40% in 1998 to 85% in 2005 (Dedrick & Kraemer, 2008) during the process of further modular design, which is a pattern that departs from the assumed high substitutability through increasing modularity2
We argue that cumulated product innovation and system integration knowledge of Taiwanese ODMs is helpful to key component suppliers in terms of technology learning and in terms of specification developments
Summary
ODM (original design manufacturer) is a popular model of production in East Asian’s industrialization, especially for Taiwanese enterprises. In the ODM model, we observed that the lead firms (including the brand name companies and the key component suppliers) no longer direct the industrial specification in the product design of the notebook PC. Technology and new product development is a dynamic process that connects a sophisticated circuit of knowledge users and producers who interact, imitate, adjust, correct, exploit, adapt and learn mutually In their evolutionary model of growth, Dosi and Nelson (1994) conceptualized the technology progress as an explicit process of search and competition among heterogeneous actors, involving the periods of iteration, cumulating as well as network externalities. It is the “untraded interdependence” among production networks that contributes to the regional “relational assets”, including informal rules, routines and socially embedded networks (Storper, 1997)
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