Towards a knowledge-based view of OEM relationship building: sharing of industrial experiences in Taiwan

Abstract

This paper addresses issues of knowledge transfer through OEM (original equipment manufacture) sub-contracting in high-tech industries in Taiwan. Major issues explored in this paper include: how a firm in Taiwan establishes an OEM relationship with its world-class competitors, how the relationship was maintained, and how knowledge transfer was facilitated under such a relationship. Findings of our study suggest that the Taiwanese firms deliberately chose to collaborate with their world-class competitors in order to learn from them. Under OEM sub-contracting, knowledge transfer took place in a systematic fashion. The types of knowledge transferred were diverse, and the transferred knowledge influenced profoundly the firms' operations or even their ways of thinking. Such knowledge transfer enhanced the firms' absorptive capacity, and could be divided into several phases. Benign contexts in which mutual trust developed between the firms and their OEM buyers facilitated the transfer of knowledge. Propositions for further research are proposed.