The taxonomy and evolution of technology strategies: a study of Taiwans high-technology-based firms

The purpose of this paper is to study the strategic technology choices of Taiwanʹs high-technology-based firms and their impacts on performance. Cluster analyses were used to classify the firms into different groups based on four strategic tradeoffs, including the balance of product mix, the degree of research and development involvement, the breadth of technology scope, and the institutional sources of innovation. Six distinct technology strategies were then derived statistically; they were classified as opportunistic subcontractors, plural marketers, technological explorers, focused branders, hierarchical controllers, and professional subcontractors. Our study demonstrated that most of the firms remain in the same technology group over time. Yet, shifts in the firmsʹ technology strategies are likely, notably the movement to the groups of opportunistic subcontractors and professional subcontractors. We also found that a relatively large group of firms shifted their strategies from groups of hierarchical controllers and professional subcontractors to the opportunistic subcontractors group, and from the plural marketers group to the focused branders group. In terms of profit differentials of technology groups, we found that, during an economic boom, technological explorers and focused branders had higher financial performance. In an economic recession, hierarchical controllers and professional subcontractors maintained higher profit margins. Conversely, throughout the period of study, opportunistic subcontractors had consistently poor financial performance.