Essays on the IT Industry in Korea and Taiwan

Date of Award

Spring 5-15-2012

Author's School

Graduate School of Arts and Sciences

Author's Department


Degree Name

Doctor of Philosophy (PhD)

Degree Type



This dissertation consists of three studies on the development of information technology (IT) industry in Korea and Taiwan. Using industry-level data from those countries, I would like to investigate why similar economies would take different paths toward developing their industries.

The first chapter, "Span of Control and Production Efficiency: Evidence From Korean and Taiwanese IT Firms," studies the relationship between industry structure and production efficiency within an IT manufacturing sector? I construct a dataset with relevant variables in three IT manufacturing sub-industries: DRAM, LED and TFT-LCD. The computed production efficiency reveals that Korean business groups (Chaebols) are much more efficient in the standardized DRAM industry than those of their Taiwanese rivals, whereas Taiwanese small and medium-sized firms dominate the customized LED business and are tied with Korean Chaebols in the TFT-LCD industry. In addition, potential DRAM integration in Taiwan could enhance productivity by 126%-183% in 2005, 31%-44% in 2006, 13%-14% in 2007, 15%-16% in 2008 and 17%-20% in 2009 based on three different integration scenarios. Counterfactual exercises suggest that output distortion in terms of pricing restrictions in product markets, imposed product tax or product subsidies thereby becomes the dominant source in deriving production inefficiency in the IT manufacturing industries in Korea

and Taiwan.

The second chapter, "Endogenous Vertical Industrial Structure in a Successive Oligopolistic Entry Game" studies the question as to why Korea and Taiwan have different vertically-related IT industrial structures. It is found that production license controls on firm entry should be a crucial factor in driving the major differences

in the vertically-related industrial structure. The Nash equilibria in successive oligopolistic models reveal that vertical integration (separation) tends to arise when there are more upstream (downstream) licensed firms from the outset. When the numbers of upstream and downstream licensed firms are "close", both the maximum number of integrations and no integration at all can be Nash equilibrium outcomes. The results of this study provide strategic explanations for the determination of industry structure in this type of verticallyrelated market.

What is the relationship between start-up entrepreneurial performance in the IT industry and venture capital investment.? To answer this question, the third chapter, "Venture Capital and Business Milestones: a Study of IT Entrepreneurship in Taiwan," uses a hand-collected sample of Taiwanese venture capital deals,

and approves the importance of social network ties and accumulated human capital. Measures of educational

link obtained by having undergraduate or graduate studies at the same school better predict venture capital fund performance than do measures of educational link obtained through having the same degree. This provides new insights on how the social network interactions between start-up entrepreneurs and venture

capitalists fuel the development miracles of the IT manufacturing industries in Taiwan.


English (en)

Chair and Committee

Ping Wang

Committee Members

Amitay Alter, Sebastian Galiani, Carlos Garriga, Juan Pantano, Yongseok Shin


Permanent URL: https://doi.org/10.7936/K7WS8R62

This document is currently not available here.