Taiwan's Economic Development : The Role of Small and Medium-Sized Enterprises Beyond the Statistics

Taiwanese enterprises are efficiently producing a great deal of goods they had no experience in at all a few years ago. Moreover, in modern economies an increased utilisation of more and more advanced technologies as well as the more intensive use of physical and human capital can be observed. In this regard, the economic development of Taiwan is considered to be a complementary process of capital accumulation, innovation and learning. This economic evolution primarily takes place within the corporate sector. However, in reality the real activities of enterprises cannot be separated from their financial counterpart. Therefore, it is assumed that financial general conditions influence the investment and innovation behaviour of companies and vice versa. Regarding the above-outlined complementarities, it seems to be appropriate to include the heterogeneity of the company sector into the analysis. Here it has to be taken into consideration that small- and medium-sized enterprises (SMEs) contribute to a great deal of entrepreneurship, innovation and learning that play a decisive role in the process of economic development. In the spirit of Schumpeter (1912) it is argued that the importance of smaller enterprises is not adequately disclosed in statistical data. Furthermore, SMEs may have advantages as far as the implementation of new technology in general and new capital-embedded technology in particular is concerned. There is evidence that Taiwanese SMEs are playing a decisive role in technology assimilation as well as in the implementation of further technological advancements because of their entrepreneurial characteristics. However, most economic contributions consider entrepreneurship to be exogenous. Therefore, a few characteristics of the Taiwanese economy are presented suggesting why entrepreneurship is so prevalent in Taiwan's economy. In this respect, the relationship between competitive environment and entrepreneurship seems to be a matter of special importance