This paper examines the cultural dimensions of production networks between Japanese and Taiwanese firms. Conceptually, we argue that, due to historical and cultural ties between the two countries, as well as long-standing associations with Taiwanese suppliers, Japanese lead firms have deepened their relationships as Taiwan has entered a more technologically based stage of development. Taiwan has also been pivotal in Japan–Taiwan–China relations because of its cultural as well as geographic proximity to the two economic giants. Empirically, the analysis draws on interviews with sixteen Japanese electronics companies in Taipei and Hsinchu Science City, as well as secondary data concerning Japanese trade and investment in Taiwan. We contend that Japanese lead firms have moved to a position of insiders and partners with their Taiwanese suppliers in the information, technology, and communications sector. In addition, Japanese electronics firms now see Taiwan as a viable bridge to production and markets in China, while corporate relations are moving towards heterarchical or matrix arrangements, away from the hierarchical flying geese model. The study notes that there are challenges and limits to these new forms of relations.
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