SME competitive strategy: learning from Taiwan's ODM industry

Abstract

Purpose From 2002 to 2005, Taiwan's ODMs concentrated on PCs and consumer electronics. Even though they lacked any well‐known brand names, they managed to develop an outstanding 34 percent compound annual growth. The purpose of this study is providing a viewpoint of SMEs competitive strategy from Taiwan's ODM industry. Design/methodology/approach In this article, we first examine the SMEs Transition of ODMs in Taiwan, highlighting the challenges executive face between Taiwan and Mainland China for better competitive strategy. Next, we introduce some of the ODM strategies using the innovative division of labor from the SEM in Taiwan and describe how they can play a role in overcoming the challenge in the global market. Findings In the traditional closed business models, the operating efficiency of the ODM industry has been impacted by both the rise of innovative R&D costs and shortening of the revenue period. The new open business model (OBM) strategy can overcome the shortcomings of costly R&D in the traditional business models. The case study in this paper shows that there are four new profit sources in the OBM using the innovative division of labor. Originality/value The study is the first to shed light on the role of the OBM using the innovative division of labor for the SMEs. The findings may have noteworthy implications for the SMEs. From this article, managers may gain insights into the innovative division of labor for the SMEs ways to integrate these insights into their managing.