ABSTRACT
In the early 1990s, Taiwanese businessmen increased their investments in Southeast Asia phenomenally and their production activities were subsequently moved abroad. These investments in this region have created a new pattern of division of production between Taiwan and countries in Southeast Asia. Foreign direct investments of this sort have also led to similar divisions of production between Taiwan and the United States as well as countries in Europe. Hence, the dynamics of intra-organizational production networks, as well as interfirm networks, across different countries have become important issues that require empirical – and theoretical – investigation. We have discussed elsewhere interfirm linkages between Taiwanese factories in Malaysia and their suppliers in Taiwan (see Chen and Ku 2000). In this chapter, we focus on different patterns of investment by Taiwanese firms in Malaysia and Indonesia and the dynamics of their interfirm networks in both countries. We will examine the importance of common ethnic identity in aiding the development of mutual help personal relationships that have apparently become the basis for the creation of production networks between Taiwanese investors and Chinese businessmen in Malaysia and Indonesia.
