The Leader Firms and the Evolution of an Industrial District: A Case Study of Hosiery District in Taiwan

The transformation of industrial districts has become a hot debate since the increasing globalization of national and regional economies occurred in the 1980s. This paper empirically examines the changing social networks, technological learning and industrial organization in the regional transformation of the hosiery district in Shetou, Taiwan. It shows that primordial social ties render the production networks costless and the networks of learning efficient for price competition in the early stage. However, as new challenges linked to the globalization process approach, the leader small and medium sized enterprises in Taiwanese industrial districts are not necessarily compelled to shift production jobs abroad, but they reposition themselves in local production chains with incurring extra-local resources to cope with the threats from new competitors. On the one hand, these leader firms take strategies of local reaction to rely overwhelmingly on local supply chains to meet the challenge. On the other hand, those owners of workshops which sit in the bottom of the local supply chains can do nothing but to live self-exploitative lives and face the perils of extinction.