Abstract
This paper investigates theoretically a factor that impacts the institutional and structural environment of initiating small investments in Taiwan, namely personal relationship networks. A potential investor needs market opportunities in order to earn profit, business organization to exploit the opportunity, and capital to initiate the business. In Taiwan's network economy, the solidarity provided by “family” networks makes small initial business organizations possible. Subcontracting systems, both horizontal and vertical, make the entry-level investment low, and the decentralized production/marketing processes provide numerous market opportunities for small investments. Taiwanese entrepreneurs opt to start their business ventures primarily through the use of network financing, since bank loans fall under the dominion of government policies.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
REFERENCES
Amsden, Alice H. 1985 “The state and Taiwan's economic development.” In Theda Skocpol and Peter Evans (eds.). Bringing the State Back: 78–107. Cambridge: Cambridge University Press.
Aronson, Robert L. 1991 Self-Employment: A Labor Market Perspective. Ithaca, NY: ILR Press
Blau, David M. 1985 “Self-employment and self-selection in developing country labor market.” Southern Economic Journal 52:351–363.
Braveman, Harry 1974 Labor and Monopoly Capital. New York: Monthly Review Press.
Case, John 1992 From The Ground Up: The Resurgence of American Entrepreneurship. New York: Simon & Schuster.
Central Bank, Taiwan, Economic Research Department 1978 Financial Conditions Survey of Private Enterprises in Taiwan ROC Taipei: ROC Government.
1978 Statistics of Monetary Flow in the Taiwan Area. Taipei: ROC Government.
Chang, Ping-Yao 1984 “An analysis of decreasing size of Taiwanese firms.” Quarterly Review of Taiwan Bank 35:150–172.
China Credit Information Services 1985 Chinese Largest Private Enterprises. Taipei: Chinese Credit-Investigation Company.
Ch'ien, Ch'uan-Deng 1981 “A study of underground economy.” Quarterly Review of Taiwan Bank 32:145–171.
Chou, Tian-Chen 1984 “Impacts of industrialization on industrial structure.” Quarterly Review of Industrial Bank 7:74–88.
Davis, Winston 1987 Religion and Development: Weber and The East Asian Experience. New York: Walker Connor.
Devine, Theresa J. 1994 “Characteristics of self-employed women in the United States.” Monthly Labor Review 117:20–34.
Elvin, Mark 1973 The Pattern of the Chinese Past. Stanford, CA: Stanford University Press.
Evans, S. David and Boyan Jovanovic 1989 “An estimated model of entrepreneurial choice under liquidity constraints.” Journal of Political Economy 9:808–827.
Evans, S. David and Linda Leighton 1987 Self-Employment Selection and Earning over the Life-Cycle. New York: Fordham University Press.
Executive Yuan, Taiwan, Bureau of Statistics 1981 General Industrial and Commercial Survey Report in the Taiwan Area. Taipei: ROC Government.
1987 Yearbook of Manpower Statistics in the Taiwan Area. Taipei: ROC Government.
1993 Yearbook of Manpower Statistics in the Taiwan Area. Taipei: ROC Government.
Fei, J.C. and D. S. Paauw 1973 The Transition in Open Dualistic Economies: Theory and South-east Asian Experience. New Haven, CT: Yale University Press.
Fei, J.C. and G. Ranis 1964 Development of The Labor Surplus Economy: Theory and Policy. Homewood IL: Irwin.
Field, Gary 1975 “Rural-urban migration, urban unemployment and job search activity in LDCs.” Journal of Development Economics 2: 165–187.
Geertz, Clifford 1963 Peddler and Princes. Chicago: University of Chicago Press.
Gold, Thomas 1986 State and Society in The Taiwan Miracle. New York; M. E. Sharpe.
Granovetter, Mark 1985 “Economic action and social structure: The problem of embeddedness.” American Journal of Sociology 91:481–510.
1990 Society and Economy—The Social Construction of Economic Institutions. Draft.
Hamilton, Gary G. 1989 “Patterns of asian capitalism: The case of Taiwan and South Korea.” Draft of Working Paper Series No. 28 for Program in East Asian Culture and Development Research.
Hamilton, Gary G. and Nicole Woolsey Biggart 1992 “Market, culture, and authority: a comparative analysis of management and organization in the Far East.” In Mark Granovetter and Richard Swedberg (eds.), The Sociology of Economic Life. Boulder, CO: Westview Press.
Hamilton, Gary G., Nicole Woolsey Biggart, and Marco Orru 1987 “Organizational isomorphism in East Asia: broadening the New Institutionalism.” In W. W. Powell, and P. Dimaggio (eds.), The New Institutionalism in Organization Analysis. Chicago: Chicago University Press.
Hamilton, Gary G. and Cheng-Shu Kao 1990 “The institutional foundations of Chinese business: the family firm in Taiwan.” Comparative Social Research 12: 135–151.
Hamilton, Gary G., William Zeile, and Wan-Jin Kim 1990 “The network structures of East Asian economies.” in Steward R. Clegg and S. Gordon Redding (eds.), Capitalism in Contrasting Cultures. New York: Walter de Gruyter.
Hwang, Y. Dolly 1991 The Rise of New World Economic Power: Postwar Taiwan. Westport CT: Greenwood Press.
International Labor Office 1972 Employment, Income, and Equality: A Strategy for Increasing Productive Employment in Kenya. Geneva.
Jones, Leroy P. and Il Sakong 1980 Government, Business, and Entrepreneurship in Economic Development: The Korea Case. Cambridge, MA: Harvard University Press.
Ka, Chih-Ming 1993 Market, Social Networks, and the Production Organization of Small-Scale Industry in Taiwan—The Garment Industries in Wufenpu. Taipei: Institute of Ethnology, Academia Sinica.
Lin, Kuang-Yu 1979 A Study of Taiwanese Rotating Credit Association. Taipei: Taiwanese First Bank.
Lin, Pao-An 1991 “The social sources of capital investment in Taiwanese industrialization.” In Gary Hamilton (ed.), Business Networks and Economic Development in East and Southeast Asia. Hong Kong: University of Hong Kong.
Long, James E. 1982 “The income tax and self-employment.” National Tax Journal 35:31–42.
Ministry of Economic Affair, Taiwan 1986 Conditions of Small and Medium-sized Enterprises of the ROC Taipei: ROC Government.
Numazaki, Ichiro 1986 “Networks of Taiwanese big business.” Modern China 12:487–534.
Piore, Michael J. 1980 “Dualism as a response to flux and uncertainty.” In S. Berger and M. J. Piore (eds.), Dualism and Discontinuity in Industrial Societies. Cambridge: Cambridge University Press.
Piore, Michael J. and Sabel, Charles F. 1984 The Second Industrial Divide: Possibilities for Prosperity. New York: Basic Books, Inc.
Sheu, Chia-Tung 1986 “Financial dualism and industrial development in Taiwan.” Quarterly Review of Central Bank 8:87–113 Taipei: Central Bank.
1978 “Exchange rate, interest rate, and economic development: Taiwanese experience.” Quarterly Study of Taiwan Economy 1:9–30.
Shieh, Gwo-Shyong 1992 Boss Island: The Subcontracting Network and Micro-Entrepreneurship in Taiwan's Development. New York: Peter Lang Publishing.
Taiwan Bank, Economic Research Department 1986 Survey of Industrial Financial Conditions in the Taiwan Area. Volumes 21–27. Taipei: Taiwan Bank.
Weber, Max 1985 The Protestant Ethic and The Spirit of Capitalism. Translated by Talcott Parsons. Boston: Unwin Paperbacks.
Wit, Gerrit de and F. Winden 1990 “An empirical analysis of self-employment in the Netherlands.” Economic Letters 32:97–100.
Wong, Siu-Lun 1985 “The Chinese family firm: A model.” British Journal of Sociology 36.
Wu, Hul-Lin and Tian-Chen Chou 1987 “To reveal the myth of Taiwanese small and medium-sized firms.” Quarterly Review of Industrial Bank 11:60–71.
Wu, Yi-Tea 1983 “The behavior and interest rate of rotating credit association.” Fundamental Finance 6:159–184.
Yu, Yin-Shih 1981 History and Thought. Taipei: Lien-Ching Publication.
Zucker, Lynne 1987 “Institutional theories of organization.” Annual Review of Sociology 13:443–464.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Luo, JD. The Significance of Networks in the Initiation of Small Businesses in Taiwan. Sociological Forum 12, 297–317 (1997). https://doi.org/10.1023/A:1024654017270
Issue Date:
DOI: https://doi.org/10.1023/A:1024654017270