Stars, Rings and Tiers: Organisational Networks and Their Dynamics in Taiwan's Machine Tool Industry

Abstract Effective inter-firm networks are an important competitive advantage in manufacturing. Based on a series of in-depth interviews, three case studies are presented which reflect and are representative of the underlying structure and organisational dynamics of supplier networks in Taiwan's machine tool industry. Basic organisational patterns include lead firm networks shaped like stars, rings and tiers. Multi-centred networks of small firms also play an active role in the industry. Factors influencing network shape include the capabilities and values of member companies, business demand and industry competition. In particular, a combination of economies of scale due to increasing product volume and greater trust stemming from an accumulated history of successful business interaction seem fundamental to changes in network structure.