關係品質與組織學習對組織績效之影響—以社會網絡觀點闡述台灣自行車產業

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(1)國立高雄大學亞太工商管理學系碩士班碩士論文. 關係品質與組織學習對組織績效之影響 —以社會網絡觀點闡述台灣自行車產業 The Influence of Relationship Quality and Organizational Learning on Organizational Performance -- Using Social Network Theory to Interpret Taiwan's Bicycle Industry. 研究生:凃吟臻撰指導教授:李亭林博士邱彥婷博士. 中華民國九十七年六月.

(2) 中文摘要本文採用視覺化的社會網絡分析(SNA)呈現台灣成功的零組件與成車廠在國內自行車市場的網絡活動情形；研究對象鎖定 65 家企業發放問卷，得以了解代表各公司立場填答的採購/業務主管在組織學習、關係品質、組織績效上的認知情形。研究結果顯示關係品質正向影響組織學習與組織績效，續以組織績效亦正向受到組織學習影響，然而，網絡定位正向影響組織績效的假設卻只有部分成立，原因出自於自行車業者多半群聚於中台灣地區，廠商之間最遠的距離僅需透過三家公司為中介者，再者自行車產業的群聚存有「空氣之謎」與「標竿學習」特性，因此，相互學習和資訊/知識的傳遞可以藉由從事相似與相關產業的員工來扮演媒介角色，換句話說，緊密的中心性是本研究所認定的最能闡述組織績效的網路指標。. 關鍵字: 社會網絡、組織學習、關係品質、網絡定位、組織績效. I.

(3) Abstract The article use visually social network analysis (SNA) to present networking activities of successful Taiwan’s components and bicycle firms interacting in domestic market. The study uses data from questionnaires of sixty-five bicycle or component firms to discover how the purchasing or sales agents’ perceptive conditions of organizational learning, relationship quality, and organizational performance. Results show that relationship quality positively affects organizational learning and organizational performance. Next, the hypothesis that organizational performance is positively affected by organizational learning is also supported. However, the outcome shows that organizational performance is partially supported by network position. It is the reason that bicycle manufacturers mostly concentrate in the central Taiwan, the distance between any two firms is so close that the farthest distance is four steps. Besides, the mysteries in the air and collective benchmarking exist in the bicycle industry, so mutual learning and information/knowledge translation are able to take place through a concentration of workers engaged in similar and related skills and experience. That is, closeness centrality is the most interpretable network indicator for organizational performance.. Keywords: social network, organizational learning, relationship quality, network position, organizational performance.. II.

(4) 致謝本論文承蒙指導教授李亭林老師和邱彥婷老師的悉心指導與經驗的傾囊相授，使論文得以順利完結，回想撰寫論文的這一年中，從論文題目、架構、研究方法的選擇、及觀念上的溝通與提醒，兩位老師同等給予專業且珍貴的建議，並且也提供我無數的鼓勵，讓我得以勇敢並積極的面對，在此要對恩師致上最誠摯的感謝；續以感謝兩年來，多位師長們在課堂中的辛勤授課與熱誠解惑，使我奠定了良好研究基礎，進而有助於論文進展順利。除此之外，在口試期間，感謝口試委員劉佳玲教授與方世杰教授對於本論文的細心審閱，並於論文口試時，提供寶貴的建議與指正，讓本論文更臻完備。更要感謝的是台灣自行車相關業界先進們，無論是在問卷的填答與訪談的協助下，提供妳們寶貴意見與建議，沒有其熱心的回應與支持，想必無法成就本論文。回首這兩年多來的求學生涯，所幸有研究室同學與學弟妹的鼓勵與輔助，使我得以完成學業，最後感謝父母親無論身處何地，都不忘給予我最大的支持；在親人們的加油聲下，讓我心備感溫暖，最後，也感謝男友這兩年在我身旁不斷對我述說勵志的一番言論，使我不忘求知的真諦與自我理念實現的必要性。. III.

(5) TABLE OF CONTENTS Page ABSTRACT .................................................................................................................. I ACKNOWLEDGMENT .............................................................................................III TABLE OF CONTENTS ............................................................................................IV LIST OF TABLES .....................................................................................................VII LIST OF FIGURES ..................................................................................................IX 1. INTRODUCTION ………………………………………………………….……1 1.1 Research Background ………………………………..…………………..…1 1.2 Research Motivation …………………………………………………..……1 1.3 Research Objectives and Research Questions………………………..….…..3 1.4 Research Procedures………………………………………………………….5 2. LITERATURE REVIEW ...………………………………………………………7 2.1 Relationship …….……………………………………………………………7 2.1.1 Relationship Quality ...………………………………………………..8 2.1.2 Trust ...……………………………………………………………….11 2.1.3 Satisfaction ...………………………………………………………..11 2.1.4 Commitment ...……………………………………………………....12 2.2 Organizational Learning ...………………………………………………...13 2.3 Social Network Analysis ...……………………………………….………17 2.3.1 Network ...…………………………………………………………...17 2.3.2 Network Position ……………………………………………………18 2.3.3 Network and Graph Theory …………………………………………19 2.3.4 Indicators of Social Network Analysis ……………………………...20 3. BICYCLE INDUSTRY IN TAIWAN …………………………………………...24 IV.

(6) 3.1 The Development of Bike Industry ………………………………………24 3.1.1 The phase of Japanese colony: 1930s-50s …………………………..24 3.1.2 Import substitution and subsequent stagnation: 1950s-70s ………....25 3.1.3 The export drive and industrial consolidation: 1970s ………………25 3.1.4 Industrial growth and upgrading: 1980s …………………………….26 3.1.5 Innovative capability and global marketing: 1990s and after ………27 3.2 Existed Phenomena of Taiwan’s Bicycle Industry ……………………...29 3.2.1The influence of America and Japan ………………………29 3.2.2 Effect of international standards …………………………………….30 3.2.3 Local cluster and parallel business network ………………………...31 3.2.4 Related institution and policy …………………………………….…33 3.3 The Characteristics of Firms to Take Part in A-TEAM ………………….35 4. RESEARCH METHODOLOGY ………………………………….……………36 4.1 Research Structure ………………………………………………………..36 4.2 Research Hypothesis ……………………………………………………….36 4.2.1 Relationship Quality and Organizational Learning …………………37 4.2.2 Relationship Quality and Organizational Performance ……………..38 4.2.3 Organizational Learning and Organizational Performance …………39 4.2.4 Network position and Organizational Performance ………………...41 4.3 Questionnaire Design ……………………………………………………...42 4.4 Data Collection ……………………………………………………………..45 4.5 Network Design …………………………………………………………...47 4.6 Analytic Tools and Method ………………………………………………..48 5. FINDINGS AND RESULTS …………………………………………………….50 5.1 Sample Characteristics ……………………………………………………..50 V.

(7) 5.2 Reliability and Validity Analysis ………………………………………….52 5.3 Network Analysis ………………………………………………………...53 5.3.1 A-TEAM Communication Network (TCN) …………………….......53 5.3.2 Overall Collaborative Communication Network (CCNI) ……58 5.4 Hypothesis Prove …………………………………………………………...64 6. DISCUSSION AND CONCLUSIONS…………………………………………..74 6.1 Findings and Discussion …………………………………………………..74 6.1.1 A-TEAM is not an Exclusive Network for Large Firms …….74 6.1.2 The Key Player………………………………………………….....74 6.1.3 Network Characteristic …………………………………………….75 6.1.4 Facilitate Collective Knowledge Transfers………………………..76 6.1.5 The Motivations of Joining in A-TEAM………………………….76 6.1.6 Lacking Learning Inventiveness…………………………………77 6.1.7 The Overlapped Network Structure………………………………..78 6.1.8 Bike-industry Cluster……………………………………………….79 6.2 Conclusions…………………………………………………........................81 6.3 Managerial Implications ……………………………………………………82 6.4 Limitations and Future Research …………………………………………...83 REFERENCE ………………………………………………………………………86 APPENDIX ...……………………………………….................................................96. VI.

(8) LIST OF TABLES Table 2-1 Summaries of different dimensions of relationship quality………………10 Table 2-2 Summaries of influential dimensions……………………………………..16 Table 2-3 Four processes of organizational learning…………………………………17 Table 3-1 Exports of Taiwan’s bicycle industry, 1970–2005 ………………………..28 Table 3-2 Components imports of Taiwan bicycle industry …………………………34 Table 4-1 An overview of hypotheses ……………………………………….............42 Table 4-2 Items in Survey ……………………………………………………………43 Table 4-2 Continued …………………………………………………………………44 Table 4-3 The Introduction of Interviewers’ Information……………………………46 Table 4-4 The Items of Interview…………………………………………………….46 Table 5-1 Demographic characteristics of the responding firms …………………….51 Table 5-2 The responding rate of bicycle and components firms …………………....52 Table 5-3 Reliability of research constructs …………….. ………………………..53 Table 5-4 Network indicators of TCN firms ………………………………………57 Table 5-5 Network indicators of CCNI firms ……………………………..……….62 Table 5-6 Correlation matrix of variables …………………………………………64 Table 5-7 Test of simple regression model ……………………………………….65 Table 5-8 Result of examination influence of relationship quality to organizational learning……………………………………………………………………………….65 Table 5-9 Test of simple regression model ………………………………………….66 Table 5-10 Result of examination influence of relationship quality to organizational performance …………………………………………………………………………67 Table 5-11 Test of simple regression model ……………………………………...…67 Table 5-12 Result of examination influence of organizational learning to organizational performance………….........................................................................68 VII.

(9) Table 5-13 Test of multi-regression model ……………………………………….…69 Table 5-14 Result of multiple-regression analysis coefficient ………………………70 Table 5-15 Regression analysis between direct ties and organizational performance ………………………………………………………………………....71 Table 5-16 Regression analysis between betweenness centrality and organizational performance ………………………………………………………………………….71 Table 5-17 Regression analysis between closeness centrality and organizational performance …………………………………………………………………….……72 Table 5-18 Summaries of hypotheses …………………………………………..…..73. VIII.

(10) LIST OF FIGURES Figure 1.1 The Flow Chart of this Research…………………………..........................6 Figure 3-1 Average export price for Taiwan’s bicycles, 1970-2005 ..............………..29 Figure 4-1 Research Structure ………………………………………………….……36 Figure 5-1 Visualization of TCN’s In-Degree Centrality …………………………....54 Figure 5-2 Visualization of TCN’s Betweenness Centrality ………………………..54 Figure 5-3 Visualization of TCN’s Closeness Centrality ……………………………55 Figure 5-4 Visualization of CCNI’s All Degree Centrality …………………….……59 Figure 5-5 Visualization of CCNI’s Betweenness Centrality ………………………59 Figure 5-6 Visualization of CCNI’s Closeness Centrality ….......................................60. IX.

(11) 1. Introduction 1.1 Research Background On the subject of Taiwan’s traditional industries, the public will think of Contract Manufacturing (CM) of well-known international factories. Among others, bicycle industry is a critical role which can truly stand for Taiwan. In 2007, the export volume approaches to around 4.75 million sets whose growth rate rises almost to 17 %. Moreover, the export value amounts to $10.54 billion, all the growth rate in 2007 closes to 25.63%. Even the average export unit price jumps from the level of $200 to $221.91 respectively in 2005 and 2007. It cannot be denied that CM of bicycle and related components is a marvelous industry, which creates high value-added profits and at one time has great effects upon Taiwan’s economic development. Since industrial environment has progressed by leaps and bounds, small and medium-size firms which insist on staying in Taiwan must be difficult to face international competition individually, especially low-price trend in China and other countries of Southeast Asia. Hence, in 2003 Giant and Merida propose establishing A-TEAM (Taiwan Bicycle Association) in order to possess firmly industrial foundation and strong link of global supply chain. The study follows above streams to mainly explore bicycle and components firms in A-TEAM whether they possess a better organizational performance than those outside the association.. 1.2 Research Motivation Nowadays, global bicycle industry is under the condition that supply is greater 1.

(12) than demand. Numerous companies, therefore, have become involved in price war. Taiwan’s SMEs cannot help adjusting their business strategies in order to shine succeed in international markets. For this reason, bicycle’s association, A-TEAM, is positioned to improve industry level collectively and to provide high-end and innovative key components and bicycle. Moreover, it is considered that traditional competition would be no effect. Business network consisting of conflict and harmony attributes displays competition and cooperation synchronously (Bengtsson et al., 1999). However, competition within strategic teams, as Caves and Porter (1977) suggests, isn’t more intensive than between strategic teams. Rivals within a strategic team still incline to abstain from competing directly. Since the concept of mutual cooperation is easily accepted by those firms. That is the reason why Taiwan’s bicycle and components companies have higher motivation to join A-TEAM. Firms in bicycle industry can be classified into two categories: bicycle and components firms. It displays an assembler-supplier relationship between two types of firms. Apart from Giant and Merida (OBM), most bicycle components firms in A-TEAM belong to OEM and ODM manufacturers. Therefore, it presents the nature that relationships among components firms are competitive and cooperative. According to the strategy of Co-opetition, the goal of strategic association is to enlarge the scale of the international marketplace; instead they merely compete with each other in the same market. Undoubtedly, most firms in A-TEAM seek competitive advantage; even anticipate possessing possible opportunities of mutual learning and innovation among other partners. Some research point out that a variety of organizations have executed organizational 2.

(13) learning strategies. Even many studies have discussed the relationship between organizational learning and organizational performance, yet mere high-tech and financial firms have confirmed the concept of organizational learning throughout overall companies (Yang, Wang, & Niu, 2007). Additionally, it would be a mistake to assume that innovative thought is the sole competence of large firms. SMEs incline to innovation and learning, since effects of scale are not significant and SMEs can be more closer to market demand and flexibility (Garcia-Morales et al., 2007). In the past, one mode of technology transfer, as Fransman (1985) proposed, originates from the role of foreigners: learning by exporting. Those American buyers, in addition to providing technology transfer, actively assist the local producers in management, such as monitoring process of production, offering financing through issuing letters of credit, and marketing the products in developed countries. Moreover, one bicycle assembler need the support of full network of local components suppliers, otherwise pre-existence of accumulated learning will disappear today. All in all, the study hopes to test the above viewpoint and interprets the importance of organizational learning in this research.. 1.3 Research Objectives and Research Questions In the past research, most reference related to bicycle industry is concentrated on in-house R&D, the level of usage, and the demand of bicycle users. What seems to be lacking, however, is to use a visually whole framework to explore the industry. Therefore, the study will employ social network analysis (SNA), its concepts coming from graph theory, to discover the pattern of network, to detect which ones are the key 3.

(14) actors, and to trace the direction of the flow of information among those surveyed firms whether it will indirectly do good to the follow-up accumulated learning. Then, to know well the network positions will state the close business relationships in the industry. By those messages, it is discovered that what effects will benefit organizations to actively learn new productive techniques and trends in market, and finally tend to become learning organization. Since it is worth while examining the research objectives more closely, objectives can be divided into three parts. First, by use of exploratory study and descriptive statistics, the study can dig out the motivations why bicycle and components firms participate in A-TEAM. Therefore, the research questions include: ¾. To which degree have these join motivations have been achieved? Have expectations been met?. ¾. By examining cooperative business relationships, did firms appear to be divided into several sets of actors known as cliques or clusters?. Second, the study exercises social network structure to represent the positions of bicycle and components firms of Taiwan’s bicycle industry. The research questions include: ¾. To visualize the communication network of bicycle and components firms and to seek out critical actors in Taiwan’s bicycle industry.. ¾. To describe network structures such as degree level, close level, betweenness level.. Third, research objectives are stressed on whether quality of business. 4.

(15) relationships affects organizational learning and network position, even eventuating in differently organizational performance. Two questions need to be made as follows: ¾. Between firms inside and outside A-TEAM, which type benefits organizational performance profoundly?. ¾. With the thought of learning and innovation, do bicycle and components firms within the A-TEAM learn more techniques and possess innovational experience?. 1.4 Research Procedures According to the research question, the relevant literature was initially searched and reviewed for the statement of social network analysis and Taiwan bicycle industry. In succeeding to that, the conceptual framework, the scope, and hypotheses of the study were then proposed. A survey questionnaire was developed for conducting the static method. Afterward, the in-depth interview was proceeded to assure that the analysis outcomes are correct. Finally, the conclusion is presented in the research.. 5.

(16) Figure 1.1 The Flow Chart of this Research. 6.

(17) 2. Literature Review 2.1 Relationship Over the past twenty-five years, the tangible relationships between companies, that are linked together to form a Quasi-Organisation in a broad scope of studies (Sheth JN, 2000). Buyer-seller relationships have appeared since humans began trading products and services. Those relationships cultivate in an evolutionary way over times as two parties cultivate trust and companionship supported by quality merchandise and service (Wilson, 1995). Moreover, it is clear that the relationships are complicated and long-term and their form is the result of previous interactions between the business units (Hakansson & Ford, 2002). Relationships in business environment have interestingly influences on many companies’ operating strategies (Wilson, 1995). There is no disagreement on the point that business participants under the stressful environment have less time to carefully explore the range of long-term relationship development. Furthermore, a recent advancement in workplace diversity has strained various work relationships, including those between purchasing and sales professionals (Smith, 1998). Ford (1980) refers to the fact that not all business transactions between industrial buying and selling firms occur within close relationships. Namely, how to find out critical relationships is the strategic and the process of relationship development is accelerated as firms strive hard to maintain relationships to achieve their goals. In contrast to the traditional view of marketing analyzing the reaction of an aggregate market to a seller’s provision. The interaction approach proposes that both buyer and seller may take the motivation in seeking a partner. Neither buyer nor seller 7.

(18) intends to make unilateral changes in each business activity without deliberation, or at least consideration, of the possible responses of their individual opposite numbers (Ford, 1980). That is, buyers and sellers are likely to adapt to business partners’ own newly manufacturing process or product technologies to accommodate each other. Business relationships, to borrow Hakansson and Ford’s phrase (2002), the interaction between any of two companies, whether to buy, to sell, or to co-operate in some aspects, will rely on what happens in relation to the third firm. For instance, if A is a customer and B and C are both suppliers, then any interactions between company A and customer B will have a negative or positive effect on its relationship with the other supplier C. All in all, the development of any one relationship between two companies will rely on numbers of elements: on what has happened in the past in the relationship; on what each of the two parties has learned in its other relationships in the past; on what currently happens between the companies in the relationship and in the others with which they are concerned; on both firms’s hope of cooperating in the near future.. 2.1.1 Relationship Quality Rosenberg and Czepiel (1983) state that the cost of obtaining a new customer is five times higher than that of keeping an existent customer, while Reichheld and Sasser (1990) evaluate that the retention of an additional 5% of customers can gain profit by nearly 100%. Maintaining customer relationship well is therefore cost-effective marketing, and has become a key aspect of most firm’s business strategy.. 8.

(19) The section will devote a little more space to examining what relationship quality in B2B market is. The concept of relationship quality mainly arises from theory and research in the special area of relationship marketing (Crosby, Evans, & Cowles, 1990; Dwyer, Schurr, & Oh, 1987) in which the conclusive purpose is to strengthen already solid relationships and to convert unfamiliar customers into loyal partners (Rauyruen & Miller, 2007). Similarly, Smith (1998) defines relationship quality as the entire estimation of the strength of a relationship and the degree which it answers to the needs and expectations of the groundwork on the previous history of successful or unsuccessful encounters or affairs. The same observation applies to B2C market, relationship quality is defined as when the customer is able to depend on the salesperson's probity and has confidence in the salesperson's oncoming performance since the level of past performance has been unerringly satisfactory (Bejou, Wray, & Ingram, 1996). In respect of B2B market, suppliers undoubtedly comprehend that the intangible aspects of a relationship may not be easily copied by the competition, hence providing an exclusive competitive advantage (Roberts, Varki, & Brodie, 2003). Next, in B2B manufacturing setting, business customers need more customization of services, merchandise and price structure than general consumers. Likewise, each business customer also uses the service and products in a different fashion (Rauyruen & Miller, 2007). The above statement is an obvious evidence in support of segmenting market according to the disparate requirements of business customers and regarding its potential market as a network of relationships. Despite the business environment, each of those firms must be estimated according to the opportunity and how the relationship are able to cultivate. 9.

(20) Furthermore, the management of relationships must proceed according to firms’ skills and involved costs. It is the same that the allocation of resources between different relationships based on the likely return (Rauyruen & Miller, 2007). From this viewpoint, developing individual relationship with business customers can be regarded as providing supplier a secure loyal customer foundation and opportunities to attain a high degree of profitability. Table 2-1 Summaries of different dimensions of relationship quality. Crosby et al. (1990). Satisfaction, Trust. Morgan & Hunt (1994). Trust, Commitment. Lee & Kim (1999). Roberts et al. (2003) Bejou, Wray, & Ingram (1996); Garbarino & Johnson (1999). Trust, Business understanding, Benefit and Risk share, Conflict, Commitment Trust, Commitment, Satisfaction, Affective conflict. Satisfaction, Trust, and Commitment. The notion of relationship quality (Bejou et al., 1996; Crosby et al., 1990; Hsin Hsi, 2007; Kumar, Scheer, & Steenkamp, 1995) has been tested in a number of research contexts, the definition and dimensions of relationship quality is different from research scheme to research scheme. To put it another way, the study of relationship quality has chiefly concentrated on preliminary identification of factors that might be significant in relationship cultivation (Bejou et al., 1996). Nevertheless, these authors agree that the concept of relationship quality is a higher order construct, including several distincts but related components or dimensions. The Table 2-1. 10.

(21) clearly indicates various scholars’ views in each literature. Relationship quality is often believed to constitute three aspects: trust, satisfaction, and commitment.. 2.1.2 Trust The term “trust” is exerted in the most of papers printed on the topic of relationship marketing in the business environment (Blois, 1999). Similarly, as Berry (1995) pointed out, relationship marketing is built on the foundation of trust. Comprehending the nature of trust and the importance of its contribution to loyalty will put heavy emphases on how businesses develop and manage B2B relationships. Customers need to feel relieved in their dealings with suppliers and need reliance that their interaction is confidential in that they can trust their suppliers (Rauyruen & Miller, 2007). Moreover, trust is defined as the willingness to count on an business partner in which one feel relieved. (Ivens & Pardo, 2007; Moorman, Deshpande, & Zaltman, 1993). That is, trust is an important trait or aspect in the building and advance of relationship quality through a course of making and keeping promises (Dwyer et al., 1987).. 2.1.3 Satisfaction Before formly entering a closer examination of satisfaction, let us discuss the subjet from paradigm point of view influencing satisfaction deep. This paradigm describes that the customer’s feeling of satisfaction originates from a comparative process between perceived performance and one or more comparative levels, such as. 11.

(22) expectations (Ulaga & Eggert, 2006). In other words, the customer is content when someone feels that the product’s performance equates what was expected (confirming). Supposing product’s performance surpasses expectations, the customer is very contented (positively disconfirming). Satisfaction judgments show how positively or negatively a previous event is being explained (Day, 1984). In addition to the above statement, satisfaction comes from the cognitive process comparing perceived performance against some comparive levels. On the other hand, the feeling of satisfaction essentially portraits an affective state of mind. Moreover, the contents of satisfaction judgments differ between discrete and relational exchange (Rudolph, 1998). “While in discrete exchange the object to be estimated, the single transaction, is distinctly unrestrained, in business relationships the picture is less clear” (Ivens & Pardo, 2007). The reason for this is not hard to see: it is that business character lies in the complex character of ongoing exchange. The person deciding the relationship must blend information related to diverse levels of exchange and to diverse stages of a relationship (Ivens & Pardo, 2007). Hence, the aims of exchange is less evident to define than in the discrete case. In the Rudolph’s (1998) current study, two multi-item scales were exerted to estimate satisfaction. While one scale concentrated on economic satisfaction of customers with a specific relationship, the other one copes with social satisfaction of customers. This two-dimensional approach reflects the complexity of the construct.. 2.1.4 Commitment The third variable, commitment, typically broached in the relationship marketing 12.

(23) literature as forming a dimension of relationship quality is an actor's commitment towards a business relationship (Ivens & Pardo, 2007). In the beginning, Fehr (1988) describes it as an intention to continue a process of activity such as keeping a relationship with a business customer. Dwyer, Schurr, and Oh (1987) consider commitment an implicit or explicit pledge of relational persistence between exchange associators” Second, commitment has been defined as “an enduring desire to maintain a valued relationship” (Moorman et al., 1993). Then, Morgan and Hunt (1994) define the construct as an exchange partner trusting that an ongoing relationship with someone is vital to guarantee maximum efforts to maintain it. Namely, the committed party accepts the relationship is worthy to work on to ensure that it guarantees indefinite. While the concept is widely accepted, there is still some disagreement. On the customer side, suppliers' increased value creating activities lead to cumulative commitment. Nevertheless, customers are neither more trust, nor do they satisfy their suppliers more when they acquire crucial account status (Ivens & Pardo, 2007). It follows from what has been said that seeking relationship maintenance zealously is indispensable for the customer, whereas uncommitted customers can only be controled in relationships through instruments such as use of power, long-term contracts or in monopoly situations.. 2.2 Organizational learning Cangelosi and Dill (1965) state that organizational learning has appeared in the 13.

(24) lexicon over 30 years ago (Crossan, Lane, & White, 1999), but little consensus on what is purported by the term, or its basic nature, has occurred (Huber, 1991). The main reason is that different researchers have applied the concept of organizational learning to different domains. Indeed, recent studies show that numerous organizations have performed organizational learning strategies (Chin-Yen & Tsung-Hsien, 2007; Tsai, 2005). Organizational learning can be separated into multi-levels. A basic hypothesis is that insight and innovative concepts happen to individuals – not organizations (Simon, 1991). The reason for researchers to make implicit assumptions about each level of learning is most scholars often neglect to cogitate how the levels relate. If one regards organizational boundaries as being blurred, the level of analysis may be interorganizational (Crossan, Lane, White, & Djurfeldt, 1995). However, as knowledge generated by the individual does not come to absorb the organization independently. “Ideas are shared, actions taken, and common meaning developed” (Daft & Weick, 1984; Huber, 1991; Stata, 1989). Thus, Table 2-2 represents multilevel framework of organizational learning to adjuvant statement in advance. Undoubtedly, there is a sound consensus that a theory of organizational learning needs to take account of the individual, group, and organizational levels (Crossan et al., 1995). While inquiring why organizations do not learn, maybe the study should inspect what kinds of organizations do learn and how and why organizational learning does take place among firms (DiBella, Nevis, & Gould, 1996). Organizational learning can be regarded as a principal means of attaining the strategic renewal of a firm (Crossan et al., 1999). As for renewal, it truly needs that organizations explore and learn new 14.

(25) ways while recently exploiting what they have already learned (March, 1991). Organizational learning may be augmented by establishing on existing capabilities or developing new ones. The former is related to improve recent capabilities, the latter is related to a cultural change. That is, organizations can enhance their learning capability through either approach (DiBella et al., 1996). Information in innovative new products and services is exploited by organization’s ability, which in turn will be relied on the speed of employee and organizational learning, a trick to survival in innovative customer environment (Stata, 1989). To put it briefly, organizational learning is a need rather than a selection (Garcia-Morales, Ruiz-Moreno, & Javier Llorens-Montes, 2007). “Organizational learning is concerned with developing knowledge related to the relationships among actions, consequences and the environment.” (Chin-Yen & Tsung-Hsien, 2007). Namely, knowledge development is the goal of organizational learning. Organizational learning has been regarded as history-dependent, target-oriented, and routine-based (Levitt, 1988). It is hard to attain the sharing of tacit knowledge and the key factors to cause learning to be channels of communication (Chin-Yen & Tsung-Hsien, 2007). Finally, the research has studied organizational learning to understand its dimensions. Organizational learning, to borrow Huber’s phrase, has developed a model of organizational learning stressing the significance of four parts: knowledge acquisition, information distribution, information interpretation and organizational memory. By the Table 2-3, the meaning of four processes will be clearly shown.. 15.

(26) Table 2-2 Summaries of influential dimensions Author. Multilevel Framework. Herriott, S., Levinthal, D., & March J. (1985). Individual. Garvin, D. A. (1993) Fiol, C. M., & Lyles, M. A. (1985) Individual - Organization Shrivastava, P. (1983) March, J. G. (1991) Senge, P. (1990). Individual - Group. Stata, R. (1989). Group - Organization. Parkhe, A. (1991) Organization Levitt, B., & March, J. G. (1988) Huber, G. P. (1991) Daft, R. L., & Weick, K. E. (1984) Individual - Group - Organization Argyris, C. (1967) Watkins, K. E., & Marsick, W. I. (1993) Source: taken from Crossan, Lane, White & Djurfeldt (1995) ; Crossan, Lane & White (1999). 16.

(27) Table 2-3 Four processes of organizational learning Knowledge acquisition, which due to its distinctive characteristics can Knowledge acquisition. be sub-divided into external and internal knowledge acquisition Distribution, by means of which knowledge is spread among the. Knowledge distribution. members of the organization. Interpretation, in which individuals share and incorporate aspects of. Knowledge interpretation. their knowledge that are not common to all of them, achieving a shared understanding as well as co-ordination in decision-making.. Organizational memory, which tries to store knowledge for future use, Organizational memory. either in organizational systems designed for this purpose or in the form of rules, procedures and other systems.. Source: taken from Lopez, Peon, & Ordas (2005). 2.3 Social Network Analysis 2.3.1 Network The perspective of coevolution and interdependence are important characteristics in an industrial network, and the competitive aspect of strategy turns into less important (Gadde, Huemer, & Hakansson, 2003). The degree of network structuredness is composed of business relationships and network positions (Huat Low 1997). If the network structure is tight, business interdependencies between actors are strong. Then strong social relationships often pose as high obstacles for new companies. On the other hand, if the network structure is loose, then intends to build a position will be relatively easier because network positions are changeable and the interdependencies and relationships between firms are relatively weak. 17.

(28) The above statement will direct attention to something else. With a stable network, the firm can plan and define beforehand the type and nature of the relationships it hopes to have with other actors in the network (Huat Low, 1997). On the contrary, in an evolving or unstable network, especially when information relating to the types of resources, the performance of what actions, and connections to which actors are not known. Despite the fact that network is marked by lots of advantages, there are still three managerial paradoxes in networks (Hakansson and Ford 2002). Close relationships are at the heart of a company’s survival. The rear paradox is that a well-developed network of relationships also binds a firm into its operating way and thus restrains its ability from changing in business environment. Second, the comprehending that a company’s relationships are one of the critical means used to affect others. As for the paradox, it is believed that the company itself is a result of those relationships and their development. At last firms usually do their best to control the network around them and to administrate relationships so that their objectives are attained. The last paradox is that the more successful a firm is in its control goals, the less innovative the network becomes.. 2.3.2 Network Position As the structural allegory, network positions depicted how firms have relations with the other firms in the network (Huat Low, 1997). A company’s position is decided from the outside firms rather than from the inside ones, and is on condition that the company relates to the firms which it actually possesses business exchanges. 18.

(29) (Gadde et al., 2003). These positions capture the complexity, connections and dynamicity of these relationships (Huat Low, 1997). Thus, it should not be considered that position changes are easily achieved or even always possible (Easton, 1992). Positions and business relationships among the firms are the result of an ongoing historical process (Henders). It is true that firms may be in a favorable position and defend those positions by any means at their treatment (Huat Low, 1997). Position in this context, much like power is inherently a relational, relativistic idea (Axelsson, 1992). Through the way, firms must be in keeping with resources and activities to their requirements of the other ones in the network. There is no doubt that information and knowledge can be regarded as external resources. Central network positions supply more opportunities to gain these resources than peripheral positions. Speaking of these resources, they display “fuel” in the innovation process, driving innovation performance (Tsai, 2001). To be capable of exercising the potential residing in joint resource combining, it is important for a company to take possession of an information-rich position within the network (Gadde et al., 2003).. 2.3.3 Network and Graph Theory Social network analysis acquires various of its concepts from graph theory. The beauty of network approaches to organizational studies is the extent to which the same network methods and topics apply at different levels (Kilduff, 2003). A graph is a set of vertices (points) and a set of lines between pairs of vertices. 19.

(30) Vertices and lines understood in graph theory display actors and their ties known in social network analysis, directed graphs with one or two way arrows are used to display the degree of correlation between actors, and so on (Harary, 1965). Graph theory truely assists us in understanding the extent to which networks reflect. segregative. social. systems,. mechanistic. organization,. organizational. effectiveness, and liable to resolve conflicts (Kilduff, 2003). In the research, actor refers to a person, organization, or nation that is involved in a social relation. Moreover, the approach assumes that different configurations of social ties produce dissimilar benefits for actors (Burt, 2000). Therefore, it is obvious that detecting and interpreting patterns of social ties among actors is very important. Once scholars try to orient social network ideas, it is undoubt that we have had to use a variety of terms that characterize organizations from a network perspective. As for network characteristics of organizations, they are density, centralization, reachability and balance. These terms help to distinguish different networks in the same organizational unit, or to contrast networks across organizational units (Kilduff, 2003).. 2.3.4 Indicators of Social Network Analysis Density Social networks often include dense area of people who “stick together” (Nooy, 2005). The density of a network is an examination of how many correlation there are between actors compared to the maximum possible number of connections that exist between actors. It seems that numbers of possible lines adds rapidly with various of 20.

(31) vertices, however, the number of ties that each person can maintain is restricted. In other words, densities across diverse networks is mere possible if the networks are of probably the same size. Based on the law of family interaction, as the amount of actors in a network increases,. the. amount. of. possible. relations. between. actors. increases. disproportionately (Bossard, 1945). As the amount of actors in a network increases, the amount of possible relations between actors will disproportionately increases (Kilduff, 2003). Although the concept of the density in organizational network research has inclined to be decreased to be a control variable (Krackhardt, 1999). Network density can have some counter-intuitive effects on results. Therefore, network density is not very useful in the concept of the network. That is the reason why the concept of degree is worthy to explore in the following section.. Centrality The centralization of a network can also supply unexpected insights into network capability. The concept of centrality attributes to the degree to which the network is centralized around one or several actors. The scolar enable to investigate if those central actors are congregated together in a structural centre, or if multiple centres are throughout the network (Kilduff, 2003). In the following place, three popular measures of the centrality which calculate the centrality are degree, closeness, and betweenness (Freeman, 1979). 1. Degree Centrality / Direct Ties Network density is not very valuable, for it counts on the size of the network. On 21.

(32) the contrary, degree centrality is superior to observe numbers of ties in which each vertex is involved. As for previous research, scholars usually stress the emphasis on an interpersonal tie, explained as a combination of the sum of time, the intimacy, the emotional intensity, and the reciprocal services characterizing the tie (Granovetter, 1973). In an undirected network, the degree of a vertex is equivalent to direct ties. Comparatively, a directed network will be more complicated since we need to discriminate between the amount of arcs received by a vertex (its indegree) the number of arcs sent (its outdegree). Degree is defined as the sum of lines incident with a vertax, hence represents the sum total of indegree and outdegree. Moreover, the important point to note is that the number of the indegree and the outdegree of a vertex doesn’t be the same as the number of its neighbors. In respect of social ties, they form a social capital that is likely to used to mobilize social resources. Generally speaking, the stronger ties between two vertices, the more sources of information it gains at its disposal, the faster information will attain the vertex, thus the more central it is. Similarly, research recommends that specific types of strong ties may promote the transmission of complex knowledge (Hansen, 1999). That is, the larger the number of sources accessible to a pivotal position, the easier it is to obtain information. 2. Closeness Centrality Closeness centrality specially stresses the concept of distance among three different kinds of centrality. In respect of distance, it means the geodesic between two vertices. The shorter the distance is, the more central the vertex is. Moreover, it is. 22.

(33) important to understand that the notion of distance isn’t the same as direct relation. The closeness centrality of a vertex is relied on the distance between one vertex and other vertices, which means that larger distances yield lower closeness centrality scores. The closer a vertex is to all other vertices, the easier information may be acquired, the higher its centrality is (Nooy, 2005). As for degree centrality, it measures the ability of actor’s own transaction, instead the ability of controlling others actors. On the contrary, although the theory of betweenness centrality exists the controllable ability, it can’t avoid being controlled. What is more, closeness centrality measures the uncontrolled ability, therefore, an actor can be more interdependent. 3. Betweenness Centrality To explain betweenness centrality, a comparison with degree and closeness centrality may be helpful. To put it plainly, degree and closeness centrality are based on the reachability of an actor in the communication network. One explaination for betweenness centrality may be to what extent may an actor dominate the flow of information because of his position within a network (Nooy, 2005). Similarly, the betweenness centrality of an actor is the portion of whole geodesics between pairs of other vertices that contain this vertex. That is, it measures an actor’s extent of intermedium in a network. Once, someone possesses the high extent of betweenness centrality, the chains of contacts will be cable of facilitating the spread of information in the network. The higher a person is a go-between, the more central someone’s position within the network (Nooy, 2005). 23.

(34) 3. Bicycle Industry in Taiwan 3.1 The Development of Bike Industry After entering the industrial society, bicycle becomes the first transportation tool in the world. In addition to the importance of transportation, bicycle has various functional demands for the public. During the period of colony, there are very few bicycles in Taiwan society; even the common components are imported from Japan. However, Taiwan manufacturers change the status of excessively depending on Japan to locally implement in-house R&D for producing critical components and bicycles (Hsu, 2007). What is more, the industry is active to march forward the remarkable way of Original Design Manufacturing (ODM) and Own Brand Manufacturing (OBM). In the following parts, the industrial history can be divided into several phases of evolutional situations.. 3.1.1 The phase of Japanese colony: 1930s-50s During the Japanese colony, possessing a bicycle, meant being rich or powerful. However, as for the poor, bicycle had been used to be a lucrative tool which was capable of earning money for raising his family. Almost the first batch of bicycles which was used in Taiwan came from some of famous Japanese manufacturers, such as Fuji, Kent, Large and Premier. In the later stage, facing the difficulties and inconvenience of the repairing and maintaining bicycles; therefore, some enterprising wholesalers, known as the Five Tiger Generals, started abundantly importing Japanese parts to Taiwan market (Hsu, 2007). However, the condition caused initiative. 24.

(35) components manufacturers to decrease or cease production. As for the budding bicycle industry, it seemed to be a crisis and a turning point.. 3.1.2 Import substitution and subsequent stagnation: 1950s-70s After the Second World War, for the sake of reducing the dependence on foreign exchange used for imports and of protecting the domestic bicycle industry as well, the government banned the importation of whole bicycles and twelve parts (rims, front forks, handlebars, frames, chains and hubs) in 1954 (Yan & Hu, 2008). Therefore, bicycle production maintained at around 30-40 thousand. However, four bicycle firms (Da-Tong, Taiwan Bicycle, Taiwan Machinery, and Wu-Shuen) couldn’t meet the demand of the public, then, the market was full of shoddy products flooded and undermined the original market structure (Hsu, 2007). Due to the low level of general customers’ income, the public tended to stress price rather than quality. To make matters worse, in 1962 the local manufacturers started to assemble motorcycles, which directly led to stagnant the bicycle industry. Therefore, manufacturers couldn’t help changing the local market to focus on enlarging the foreign markets.. 3.1.3 The export drive and industrial consolidation: 1970s In 1967, government organized the first International Cycle Show, which caused Wu Lien Bicycle Corporation to have the opportunities of exporting 500 bicycles to Indonesia (Hsu, 2007). As for American market, in addition to the String-Ray (High Raiser), the emergence of the BMX (the first generation mountain bike) marks the beginning of a new golden age for Taiwanese bicycles and the prelude to be second 25.

(36) exporting country. Moreover, thanks to the coming of oil crisis, the American market brought lots of business, the phenomenon sped up the growth of Taiwan’s bicycle industry. That is the reason why exports sharply rose from 0.1 million to 1.32 million units. Nevertheless, the American government thought of protecting its local manufacturers, the anti-dumping case was filed in 1974. With the emergency of underground bicycle assemblers formed the image of low-end level, not only had the industry lose the market in Canada, but also American bicycle dealers refused to sell and repair bicycles from Taiwan due to the unsafe quality (Wei, 2006). In 1974-75 it was obvious that the export volume dropped to around 0.8 million sets. In order to improve the low atmosphere in bicycle industry, the government in Taiwan established a set of safety standards for bicycle firms and uses the standards to eliminate the sub-standard bicycles exported abroad (Chu, 1997). Consequently, with the shoddy bicycles disappeared, the image of the whole Taiwan’s productive quality began to obtain applause.. 3.1.4 Industrial growth and upgrading: 1980s In 1980, after undergoing the improvement of quality, being devoted to raise product image, and broadening the foreign market, not only did the export volume overtake Japan, but also Taiwan became the number one exporter around the world (Wei, 2006). It was indicated that in Table 3-1 the quantity of bicycles increased nearly constantly from 1978 to 1986, decreasing only in 1982, and reaching the peak of 1024 million sets. Nevertheless, the local currency, the New Taiwan Dollar, obviously appreciated against the US dollar during the later 1980s (Chu, 1997). The changing range, then, had greatly impact on production cost and on price advantage, 26.

(37) so the export volume diminished. It was noteworthy to note that the rapid growth in the export quantity of Taiwanese bicycles did not go up with the average export price; and to make matters even worse, the export volume even declined or went flat after 1987 (see Table 3-1).. 3.1.5 Innovative capability and global marketing: 1990s and after In 1991, although the export value amounted to 24.1 million dollars, the export share to American decreased to around 30% (see Table 3-1). It was the reason that the emergence of China and Southeast Asian countries in global markets, Taiwan bicycle industry faced the cut-throat pricing competition. Therefore, both the export volume and the export share to American slowed down. Even in 2001, the export volume declined to 460 million sets and the export share to American decreased to around 20%. For choosing toward high quality and value-added bicycles, domestic manufacturers, with the support of government, couldn’t help innovating new material (carbon-fibre) and key components (derailleur) for improving and raising high level of bicycle structure. Besides, considering lower labor costs, similar culture, and language across the Taiwan Strait, production factories were set up by lots of Taiwanese bicycle firms there, although the R&D and marketing work was conducted and high-end bicycles were still produced or assembled in Taiwan (Wei, 2006). That is, an obvious trend tends to set up factories in mainland China is inevitable. In order to maintain competitive advantages and to raise industry level collectively, the slogan “Order to Taiwan, produce in China, and distribute globally” became a better strategy existing in bicycle industry.. 27.

(38) Table 3-1 Exports of Taiwan’s bicycle industry, 1970–2005 Production. Exports. Exports. Export ratio. Exports to. Unit price. Year. (units). (units). (value). (%). the USA (%). (NT$1000). 1970. N/A. 107,141. 72,199. N/A. N/A. 0.67. 1971. N/A. 270,000. 168,808. N/A. N/A. 0.63. 1972. 1,184,000. 1,055,392. 985,007. 88.25. 85.58. 0.93. 1973. 1,542,000. 1,318,112. 1,292,108. 89.75. 81.41. 0.98. 1974. 1,084,000. 867,545. 1,029,003. 84.42. 66.72. 1.19. 1975. 957,000. 815,752. 873,499. 82.98. 48.51. 1.07. 1976. 1,673,000. 1,523,849. 1,707,578. 88.90. 41.02. 1.12. 1977. 2,002,000. 1,745,000. 2,103,594. 89.29. 46.11. 1.21. 1978. 2,289,000. 1,849,418. 2,371,964. 88.56. 51.47. 1.28. 1979. 2,483,000. 2,204,000. 3,784,521. 89.49. 53.51. 1.72. 1980. 3,101,000. 3,003,045. 5,032,201. 91.48. 40.95. 1.68. 1981. 3,476,000. 3,338,035. 6,184,981. 91.94. 42.65. 1.85. 1982. 3,213,000. 3,146,000. 5,505,136. 91.36. 45.10. 1.75. 1983. 5,266,000. 5,058,291. 8,964,246. 93.86. 59.80. 1.77. 1984. 6,539,000. 6,328,278. 11,143,197. 94.47. 69.38. 1.76. 1985. 7,715,000. 7,442,063. 11,952,162. 95.01. 74.48. 1.61. 1986. 10,768,000. 10,239,473. 16,688,755. 95.88. 78.65. 1.63. 1987. 10,227,000. 9,685,344. 17,511,384. 95.16. 73.92. 1.81. 1988. 7,717,000. 7,151,626. 13,613,924. 93.09. 62.36. 1989. 7,573,000. 8,200,883. 17,104,898. 93.98. 53.28. 2.09. 1990. 7,794,000. 8,942,518. 24,388,273. 94.03. 43.45. 2.73. 1991. 9,831,048. 8,361,000. 24,067,006. 85.05. 33.70. 2.88. 1992. 8,427,073. 7,689,000. 24,503,020. 91.24. 32.40. 3.19. 1993. 8,621,237. 7,867,000. 27,450,278. 91.25. 32.80. 3.49. 1994. 8,751,660. 7,537,000. 26,065,229. 86.01. 30.50. 3.46. 1995. 9,064,129. 7,656,000. 28,200,000. 84.46. 32.20. 3.68. 1996. 9,485,000. 7,385,000. 26,910,000. 87.04. 30.70. 3.64. 1997. 8,827,000. 7,238,000. 24,519,000. 82.00. 32.50. 3.39. 1998. 9,779,000. 9,388,000. 29,925,000. 96.00. 36.66. 3.19. 1999. 8,150,000. 7,783,000. 24,523,000. 95.50. 35.52. 3.15. 2000. 7,848,000. 7,534,000. 25,548,000. 96.00. 31.23. 3.39. 2001. 4,747,000. 4,596,000. 17,978,000. 96.82. 28.50. 3.91. 2002. 4,975,000. 4,760,000. 19,811,000. 95.68. 31.70. 4.16. 28. 1.90.

(39) 2003. 4,792,601. 4,562,892. 21,854,000. 95.21. 26.50. 4.79. 2004. 5,200,000. 4,957,822. 26,034,000. 95.34. 24.40. 5.25. 2005. 5,562,000. 5,241,000. 30,684,000. 94.23. 25.80. 5.85. Source: Ministry of Finance (various years). Figure 3-1 Average export price for Taiwan’s bicycles, 1970-2005. 3.2 Existed Phenomena of Taiwan’s Bicycle Industry In the following place, some specific topics are going to discuss whether the industrial development has opportunities and capabilities of pushing and diffusing the concepts of learning and innovation in whole bicycle industry.. 3.2.1 The influence of America and Japan In the past, technology transfer of developing countries originates from 29.

(40) foreigners: learning by exporting (Chu, 1997). American buyers, in addition to providing technology transfer, even actively benefit the local bicycle firms in management, such as monitoring process of production, offering financing through issuing letters of credit, and marketing the products in developed countries (Chu & Amsden, 2003). For example, Schwinn represents an important episode for Giant to jump into the international production chain. Moreover, in 1979, as facing a major strike of production in Chicago, Schwinn made up its mind to close factories in the USA and shifted nearly its production to Giant (Chu, 1997). At that time, Schwinn transfers technicians and efficient productive process to Giant to copy with related production problems, which upgrades Giant’s productivity and raises its total sales volume toward American market (Wei, 2005). That is, the largest market and customers’ demand in USA offer Taiwan manufacturers opportunities to accumulate wealth and learning capabilities of improving modern management techniques. In addition to the incapability of manufacturing components in 1930s-50s, the demands of assembling high-end bicycles burgeon nowadays. It is the reason that causes the visible value of Shimano’s derailleur going upward. Furthermore, Taiwan’s components firms, KMC, Merida and Kenda, also indirectly obtain the advanced production technologies through strategic alliance with Japanese components firms, such as Shimano and Bridgestone…etc (Yan & Hu, 2008).. 3.2.2 Effect of international standards In the past, the industry doesn’t have concerted standards, therefore, facing two times unheard-of crisis in 1950s and 1970s. Thanks to Mr. Hsu, the former director of. 30.

(41) the Taiwan Bicycle Industry Association, and King Liu, Giant’s leader, in different periods visit Japan’s bicycle manufacturers and bring back some valuable data regarding Japan’s parts specifications (Hsu, 2007). Then, Mr. Hsu zealously persuades Taiwan’s component firms to unify their specifications and helps set up the fundamental standards for Taiwan’s bicycle industry to improve the integral quality and to firmly grab export market. What has to be noted that the bicycle industry at present is highly fragmented on the basis of specialized capabilities associated with the manufacture of the various components. It mainly originates from the characteristics of bicycle that can be deconstructed into a series of components and assemble in some specific way. That is, every component connects and interacts with surrounding components in a limited number of ways, making the bicycle a modular product (Galvin & Morkel, 2001). The flexibility of standardizing component interfaces across product architecture will lead to reduced barriers to entry within the industry and more regular incremental and modular innovation on the basis of enhanced learning opportunities at the component level (Galvin & Morkel, 2001), but less architectural and radical innovations (Galvin, 1999).. 3.2.3 Local cluster and parallel business network Bicycle industry intends to be typically labor-intensive business among traditional industries and the specialized capabilities lead to compact links between components and bicycle firms. On account of short life circle and various types of components, standardizing component interfaces across the product architecture need higher opportunities of exchange. Business network displays in the industry cluster are concentrated in the central part of Taiwan (Yan & Hu, 2008). In other words, 31.

(42) Taiwan’s bicycle industry has developed complete components suppliers within a close network which are composed of many components suppliers and assemblers. The concentration on a limited number of components can be observed in the fact that over 90% of bicycle assemblers produce no parts themselves and beyond 90% of part manufacturers produce only one type of bicycle part (Chu, 1997). Moreover, the advantages of geographical concentration not only reduce the transportation cost, but also benefit to the manufacturers, including the flexibility, convenience, and the diffusion of new knowledge. Under the circumstances, components suppliers and assemblers constitute competitive and cooperative relationships in the central part of Taiwan. In 1970s, the scale of components and bicycle firms is small; however, they significantly grow and obtain economies of scale with the gradual increase of exporting capabilities. Due to the uncertainty of demand from OEM buyers, both of them try to disperse their own local and foreign customers. The degree of dependence on a particular supplier or buyer is not particular high (Chu & Amsden, 2003). Moreover, in order to interact with foreign OEM buyers simultaneously, it forms a unique bicycle cooperation system in such a way that assemblers and components suppliers set up parallel-connected relationships (Chu & Amsden, 2003). No matter what firms run business, they aren’t willing to build exclusionary relationships which hinder the opportunities of collaborative design and mutual benefit. Local suppliers and assembles separately concentrates on specialized technologies in their specific area on the purpose of lowering the defect rate and minimizing production cost. Instead of closed network, the open network will be beneficial for local manufacturers to promote their capabilities of incremental innovation among foreign OEM buyers.. 32.

(43) 3.2.4 Related institution and policy With the emergence of Taiwan bicycle industry, related government units and private groups spring up step by step. Despite of unlike the active support in IT industry, government intervention has been passive yet somewhat helpful in the industry (Chu, 1997). Since 1972, the main policy and institution have been focused on technical level. First of all, in 1984, the more direct contribution is to form the institution, Corporate Synergy Development Center (CSD). Formerly, Industrial Development Bureau Ministry of Economic Affairs (IDB) establishes the center, anticipating pushing Taiwan industry to be more cooperative. The design conception of the institution is to include numerous small suppliers and a big enterprise on pursuing higher productivity of whole economics and the more efficient industry level. In 1995, IDB even asks CSD to provide different components and bicycle firms with more services of develop horizontal cooperation, such as sharing marketing distribution or global market information. However, the significant help is about total quality management (TQM), rationalizing overall cost. To improve the phenomenon that the key components, transmission system and brake system, are greatly depended on the export products from Japan. In 1992, IBD and components and bicycle firms collectively build the institution, the Taiwan Bicycle Industry R&D Center (TBIRDC), which is dedicated to focus on bicycle design, develop the technology of the key components, such as gearshifts, and mechanical innovation and the standardizing testing. Among those functions, the most successful event is to transfer the critical technology to specific components firms, Falcon and Sun race, which is beneficial for promoting foreign bicycle markets. Therefore, the export volume of derailleur successfully jumps to the number two 33.

(44) around the world. Table 3-2 indicates that both growth rates of imports of transmission and brake systems are declining in 2004-2005.. Table 3-2 Components imports of Taiwan bicycle industry Year. Unit: NT $ one million dollar. 2001. 2002. 2003. 2004. 2005. Growth rate (%). Bicycle. 5. 66. 188. 468. 672. 43.6. Frame. 2,118. 2,504. 2,813. 3,720. 4,747. 27.6. Transmission. 1,892. 2,341. 2,954. 3,785. 3,332. -12.0. Wheel. 738. 1,072. 1,308. 1,845. 2,020. 9.5. Steering. 351. 457. 465. 575. 678. 17.9. Brake. 817. 1,147. 1,613. 2,238. 2,000. -10.6. 25. 38. 58. 61. 60. -1.6. 5941. 7,559. 9,211. 12,225. 12,837. 5.0. Accessories. Total. Source: the export statistic database of Taiwan customs. In 2003, Giant invited its domestic opponent, Merida, with Taiwan’s 11 bicycle parts companies to form the A-Team, with the anticipating of increasing the general competitiveness of Taiwan’s bicycle industry and enlarging the difference of producing level from China and other countries of Southeast Asia. A-TEAM, a learning organization, hopes 22 members within the association to share each valuable manufacturing process to others. Moreover, the A-TEAM was realized to take advantage of the collective resources to jointly develop new and high-quality bicycle 34.

(45) parts and bike-model-upgrading plans, and to shorten the design and delivery time (Ling, 2006). Finally, with the consistent distribution and cooperative selling, to build brand will boost more opportunities to connect with foreign OEM buyers.. 3.3 The Characteristics of Firms to Take Part in A-TEAM Once, the mass of firms wanting to join A-TEAM must accord with specific rules. First, firms chiefly set manufacture or R&D department in Taiwan. Besides, firms highly recognize Specialty Bicycle Retailer (SBR) market or are devoted to consistently capital investment / R&D expenditure. Second, companies stress on A-TEAM’s core value and are energetic to take part in activities of A-TEAM. No matter where parts are sold in domestic or international market, the total sale revenues need to achieve forty million dollars. Third, firms should consider not only how to raise the competition of bicycle industry in Taiwan, but also how to stress the importance of A-TEAM’s future development.. 35.

(46) 4. Research Methodology 4.1 Research Structure The research structure (Figure 4-1) illustrates the relationships between different variables and organizational performance. Moreover, the research will examine whether the bicycle network will be beneficial for each firm to improve organizational learning and whether network type presents the cooperative characteristic among 65 firms. The clear structure is shown in Figure 4-1.. Figure 4-1 Research Structure. 4.2 Research Hypothesis This section is centered on the discussion of different assumptions. It is worth to consider them in detail and assure the feasibility of each hypothesis. 36.