Strategic positioning of Taiwan in the outsourcing market: Evidence from information technology services and electronic manufacturing outsourcing to China

In outsourcing relationships with China, the Electronic Manufacturing (EM) and Information Technology Services (ITS) industry in Taiwan may possess such advantages as the continuing growth of its production value, complete manufacturing supply chain, low production cost and a large-scale Chinese market, and language and culture similarity compared to outsourcing to other countries. Nevertheless, the Council for Economic Planning and Development of Executive Yuan (CEPD) found that Taiwan's IT services outsourcing to China is subject to certain constraints and might not be as successful as the EM outsourcing (Aggarwal, 2003; CEPD, 2004a; CIER, 2003; Einhorn and Kriplani, 2003; Kumar and Zhu, 2006; Li and Gao, 2003; MIC, 2006). Some studies examined this issue, but failed to (1) provide statistical evidence about lower prevalence rates of IT services outsourcing, and (2) clearly explain the lower prevalence rates of IT services outsourcing by identifying similarities and differences between both types of outsourcing contexts. This research seeks to fill that gap and possibly provide potential strategic guidelines to ITS firms in Taiwan. This study adopts Transaction Cost Economics (TCE) as the theoretical basis. The basic premise is that different types of outsourcing activities may incur differing transaction costs and realize varying degrees of outsourcing success due to differential attributes of the transactions in the outsourcing process. Using primary data gathered from questionnaire surveys of ninety two firms, the results from exploratory analysis and binary logistic regression indicated that (1) when outsourcing to China, Taiwanese firms' ITS outsourcing tends to have higher level of asset specificity, uncertainty and technical skills relative to EM outsourcing, and these features indirectly reduce firms' outsourcing prevalence rates via their direct positive impacts on transaction costs; (2) Taiwanese firms' ITS outsourcing tends to have lower level of transaction structurability relative to EM outsourcing, and this feature indirectly increases firms' outsourcing prevalence rates via its direct negative impacts on transaction costs; (3) frequency does influence firms' transaction costs in ITS outsourcing positively, but does not bring impacts into their outsourcing prevalence rates, (4) relatedness does influence firms' transaction costs positively and prevalence rates negatively in ITS outsourcing, but its impacts on the prevalence rates are not caused by the mediation effects of transaction costs, and (5) firm size of outsourcing provider does not affect firms' transaction costs, but does affect their outsourcing prevalence rates in ITS outsourcing directly and positively. Using primary data gathered from face-to-face interviews of executives from seven firms, the results from inductive analysis indicated that (1) IT services outsourcing has lower prevalence rates than EM outsourcing, and (2) this result is mainly attributed to Taiwan's core competence in manufacturing and management and higher overall transaction costs of IT services outsourcing. Specifically, there is not much difference between both types of outsourcing context in the transaction characteristics of reputation and most aspects of overall comparison. Although there are some differences in the feature of firm size of the outsourcing provider, the difference doesn't cause apparent impacts on firms' overall transaction costs. The medium or above medium difference in the transaction characteristics of asset specificity, uncertainty, frequency, technical skills, transaction structurability, and relatedness has caused higher overall transaction costs for IT services outsourcing. This higher cost might cause lower prevalence rates for ITS outsourcing relative to EM outsourcing. Overall, the interview results are consistent with the statistical analyses and provide support to my expectation that in outsourcing to China, Taiwan's electronic manufacturing firms do have lower prevalence rates of IT services outsourcing relative to EM outsourcing due to higher transaction costs caused by certain attributes. To solve this problem, firms' management should aim at identifying alternative strategies and strive to reduce their overall transaction costs of IT services outsourcing by initiating appropriate strategies which fit their environment and needs.

The Study of Clustering of Taiwanese Tourists' Motivations to Hong Kong

Abstract Driven by the political and economic forces of cross-strait, Taiwan has become one of the major source markets for Hong Kong tourism industry since 1987. The major purposes of this study were to investigate the following factors (1) The influential factors of travel motivation, (2) The clusters of travel motivations, (3) The marketing segmentation of clusters of Taiwanese tourists to visit Hong Kong. Through ten travel agents, self-report surveys were distributed to collect data from 366 Taiwanese travelers. Hence, four push factors and six pull factors were identified as travel motivations through the factor analysis. Combined with the cluster analysis; five new groups were founded. Finally, five clusters which process unique profiles (location difference, visiting frequency, travel satisfaction, and destination loyalty) were addressed. The suggestions of developing effective market strategies to attract Taiwanese tourists to Hong Kong were also provided.

Branch and Price Solution Approach for Order Acceptance and Capacity Planning in Make-to-Order Operations

The increasing emphasis on mass customization, shortened product lifecycles, synchronized supply chains, when coupled with advances in information system, is driving most firms towards make-to-order (MTO) operations. Increasing global competition, lower profit margins, and higher customer expectations force the MTO firms to plan its capacity by managing the effective demand. The goal of this research was to maximize the operational profits of a make-to-order operation by selectively accepting incoming customer orders and simultaneously allocating capacity for them at the sales stage. For integrating the two decisions, a Mixed-Integer Linear Program (MILP) was formulated which can aid an operations manager in an MTO environment to select a set of potential customer orders such that all the selected orders are fulfilled by their deadline. The proposed model combines order acceptance/rejection decision with detailed scheduling. Experiments with the formulation indicate that for larger problem sizes, the computational time required to determine an optimal solution is prohibitive. This formulation inherits a block diagonal structure, and can be decomposed into one or more sub-problems (i.e. one sub-problem for each customer order) and a master problem by applying Dantzig-Wolfe’s decomposition principles. To efficiently solve the original MILP, an exact Branch-and-Price algorithm was successfully developed. Various approximation algorithms were developed to further improve the runtime. Experiments conducted unequivocally show the efficiency of these algorithms compared to a commercial optimization solver. The existing literature addresses the static order acceptance problem for a single machine environment having regular capacity with an objective to maximize profits and a penalty for tardiness. This dissertation has solved the order acceptance and capacity planning problem for a job shop environment with multiple resources. Both regular and overtime resources is considered. The Branch-and-Price algorithms developed in this dissertation are faster and can be incorporated in a decision support system which can be used on a daily basis to help make intelligent decisions in a MTO operation.