Abstract
By connecting institutions within industrial evolution, this paper develops a set of systems of innovation to explain the innovative performance of Taiwan's personal computer industry. Three major institutional blocks are identified: technology as a paradigm; organizational routines that are historically rooted in the structure of economic dominance; and the state's governance as an institution of policy style. The paper explores how each of these institutions is important for innovation, and then identifies methods associated with creating and sustaining innovative performance. The analysis is focused at the level of industry segments, that is, one level below sectoral analysis. While institutional co-evolution in technology and society often results in improved performance of an industry segment, institutional conflicts are likely to produce obstacles to the search for new markets by national firms as well as hinder adaptation to a changing environment. This explains why Taiwan's personal computer industry is competitive and innovative in hardware, but lagging in distribution and software development. The paper concludes with several strategic and policy implications. (C) 2000 Elsevier Science Ltd. All rights reserved.