The co-evolution of business incubation and national innovationsystems in Taiwan☆

Fu-Sheng Tsai a,⁎, Linda H.Y. Hsieh b, Shih-Chieh Fang c, Julia L. Lin d

a Department of Business Administration, Cheng Shiu University, Fong Shan City, Kaohsiung County, Taiwanb Birmingham Business School, University of Birmingham, Edgbaston, Birmingham, UKc Department of Business Administration, National Cheng Kung University, Tainan City, Taiwand Department of International Business, I-Shou University, Dashu Township, Kaohsiung County, Taiwan

a r t i c l e i n f o

a b s t r a c t

Incubation has already proven to be of great value in promoting small and medium enterprise(SME) entrepreneurship activities and technological development in developed anddeveloping countries. Incubation not only provides a diversified and integrated service forentrepreneurial ventures but also contributes upward to regional and national innovation andeconomic growth. Building upon the logic of co-evolution theory, this paper argues thatincubation acts at the meso-level as a critical interface between macro-innovation systems andmicro-business ventures. These multi-directional coupling elements in innovation ecology co-evolve to achieve collective interests and excellence, which in turn may stimulate technologicaldevelopment and social change. Important processes/mechanisms, including a policy kit andaction, strategic networking, supportive associations, knowledge and intellectual capitalmanagement, among others, are discussed. Drawing on the national innovation system (NIS)and business incubation (BI) experience in Taiwan, we discuss the future prospects ofincubation and innovation policies, including industrializing and globalizing incubationactivities and virtual business incubation.

Keywords:Co-evolutionBusiness incubationIndustry and national innovationInnovation policy

1. Introduction

The focus of public administration and policy on a nation's economic development has been oriented towards entrepreneur-ship, strategic renewal, growth and the sustainable development of national innovation systems. A national innovation system(NIS) is composed of a number of major elements, including technology, firms and governmental units at either micro- or macro-level, which collectively determine the context within which innovation occurs [1,2]. While technological forecasting, innovationand commercialization are often the starting points for entrepreneurial activities, they are important antecedents for long-termsocial and economic progress. Business organizations are often seen as the backbone of a country's economic development andgrowth, while governmental organizations working on strategies for national development provide the resources and theinfrastructure to support national systems of innovation. However, research and practice often show that an intermediary isneeded to ease the coordination between these two actors in a national innovation system.

Incubation, led and implemented by business incubators (i.e. business incubation centers), can be seen as an appropriatecoordination mechanism at the meso-level. According to Hackett and Dilts [3,4], a business incubation center is defined as “ashared office space facility that seeks to provide its incubatees (the ‘tenants’) with a strategic, value-adding intervention system of

monitoring and business assistance… with the objective of facilitating the successful new venturing development whilesimultaneously containing the cost of their potential failure… It is a network of individuals and organizations”. Incubation centershave already proven to be of great value in promoting the entrepreneurship activities and technological development of SMEs [5–7]. They develop and integrate the resources and knowledge gained from prior experience in incubation consulting, with supportfrom government and industrial institutions, or through formally subsidized projects. These resources and knowledge are thenprovided to their tenants, who are often young and lack the critical resources to commercialize their products and/or services.Incubation, therefore, describes the value-adding processes, activities, arrangements, designed programs and services whichbusiness incubators offer to facilitate and accelerate the development of their tenants/incubatees to the point where they can leavethe incubator and compete efficiently and independently in a dynamic market. Here, incubation is used to refer to the abovesituation within an economy — or at least a nation-wide level of analysis. Moreover, business incubators are an importantinstrument for developing an economy through the support of entrepreneurship and innovation [8]. In this respect, theperformance of business incubators could directly or indirectly affect the success of micro-level entrepreneurial businesses and thesustainability of macro-level national innovation systems.

In view of the inseparability of incubation and national innovation system, surprisingly few studies have tried to systematicallyreview the dynamics of innovation by investigating the inter-relationships between university, industry, government and theextended knowledge value chain for incubation (e.g., [9,10]). Most previous studies have focused on issues either at micro-level(e.g. the operational issues of incubation programs) or at aggregate/macro-levels (e.g. the impact of business incubators in termsof job creation and growth). In addition, the concept of a national innovation system has traditionally been analyzed from a quasi-static approach. Nevertheless, in the context of globalization, one can argue that a nation's innovation system must evolve to staycompetitive, which, in turn, could enhance a nation's innovative capacity. In order to understand the evolving and complex natureof a national innovation system, this paper applies ideas from an evolutionary economics and system dynamics perspective [11–14]. We argue that a co-evolutionary analysis of interactions between firms, business incubators, institutions and other actorswould provide a more fruitful approach to understanding how a national innovation system functions or evolves.

The active participation of a firm in its innovation system plays a critical role in achieving higher innovative performance, aswell as shaping the institutional environment evolving in its industry [15,16]. The search for innovation often requires a firm towork with other constituents/actors in its innovation system, such as government and official innovation-support units, businessincubation centers, research institutions, etc. In small countries such as Taiwan, policy inputs from government have proven to bean effective way to develop innovation networks and supporting infrastructure to encourage technology diffusion and collectiveinnovations [17]. Among these, the public policy on incubation plays a critical role in encouraging business incubation to supportthe R&D activities of innovative enterprises. In Taiwan, SMEs constantly use one-stop incubation services provided by innovationincubation centers, such as the ITRI (Industrial Technology Research Institute), to enhance their capabilities in innovation andcreation [18,19]. In spite of the success of Taiwan's experience in IT industries, however, globalization has posed challenges togovernment policies on innovation, business incubation centers and SMEs. To effectively respond to such challenges, it is essentialthat actors/constituents in Taiwan's national innovation system interact and co-evolve in the interests of collective development.

The present study aims to review Taiwan's national innovation system and business incubation experience and also to discussthe future prospect of business incubators and implications for national innovation policies. The research question being studied ishow business incubators provide the bridge between start-ups and the environment in which they operate. To answer thisquestion, this paper is structured as follows. In Section 2, we briefly review the literature on national innovation systems and co-evolution in innovation ecology. Section 3 discusses incubation and its importance in developing an economic and innovatorysystem. Drawing on a framework provided by system dynamics scholars (e.g., [20]), we discuss the reciprocal positive interactions(the ‘positive circle’) between business incubation and industrial and national innovation systems. In Section 4, several notableissues are proposed for future business incubation development. Finally, we consider some issues of sustainable development andcivil society and the impact of these on entrepreneurial and innovative development in Taiwan.

2. Co-evolution in innovation ecology

Co-evolution theory, originating in Ecology, describes situations where two or more species influence each other's evolutionand has been attracting increasing attention in organization and management studies [21]. The fundamentals of co-evolutiontheory extend Darwin's evolutionary view by recognizing that the driving force behind change is an interplay of two interactingsubjects which are interdependent and may exercise an influence on each others' evolutionary development [22]. According toLewin et al. [23], a co-evolutionary perspective ‘considers organizations, their populations, and their environments as theinterdependent outcome of managerial actions, institutional influences, and extra-institutional changes’. In other words, co-evolutionary theory argues that change is not an outcome of ‘managerial adaptation’ or ‘environmental selection’ but rather thejoint outcome of intentionality and the environment [24]. This co-evolutionary approach incorporates the perspective of theorganization and its environment as a system of complex inter-dependence. Building on the systems approach [25] and theevolutionary perspective, several scholars [2,26] have adopted a holistic approach to understanding the creation of innovation andtechnological change as a result of complex and sophisticated interactions between a number of actors/constituents in the ecologyof innovation.

Innovation ecology is the environment created by the system of interrelated institutions, laws, regulations, and policiesproviding an innovation infrastructure which involves education, research, tax policy, and intellectual property protection, amongother things [27]. It is essential to create a habitat network for innovation, in order to catalyze and foster the generation of new

knowledge [28]. The concept of the triple-helix model , grounded upon the national innovation system approach, has been used inmore recent years to illustrate how rapid learning and innovation can be generated in an environmental setting where there isclose collaboration and interaction between universities, industries and government [29]. Moreover, there is an increasingawareness of the importance of a well-functioning innovation ecology to a nation's sustained economic growth and development.Evolutionary economists, such as Lundvall [26], argue that, in theory, the economies with well-functioning innovation systemstend to experience higher rates of economic growth than those economies with less well-functioning innovation systems. Thisrequires the establishment of a proper system or mechanism for effective knowledge flows and exchanges between stateinstitutions, universities and businesses [30].

Geels [14] suggests that innovation systems can be defined and analyzed at various levels, including the national, regional andsectoral. Despite some limitations associated with the analysis of innovation systems at national level, the ‘national innovationsystem’ (NIS) approach appeals to policy makers and researchers, because it contributes to formulating an holistic policy whichtakes into account all the actors and factors affecting the innovation process and helps to understand and explain a nation'seconomic growth and development [1]. The NIS concept has been discussed since the mid-1980s by various scholars (e.g.,[2,26,31]) who study the interrelations between the institutional embeddedness of innovative organizations and technologicaldevelopment. According to Galli and Teubal [32], a national innovation system is defined as “the set of organizations, institutions,and linkages for the generation, diffusion, and application of scientific and technological knowledge operating in a specificcountry”. Moreover, Lundvall [26] states that the NIS represents “… a system of innovations constituted by elements andrelationships… It is also a dynamic system, characterized both by positive feedback and by reproduction… Cumulative causation,and virtuous and vicious circles, are characteristics of systems and sub-systems of innovation”. In this conception, the linksbetween the actors in an innovation system are essential for promoting the interactive learning process and increasing theopportunity for technological spillovers across firms and sectors, leading to a virtuous cycle of growth and innovation. This requiresthe creation of an institutional context for facilitating positive feedback loops between the actors in the innovation system.Researchers have shown that institutional infrastructure or arrangement coevolves with the technological development ofinnovating firms via the interactions between innovators, regulators, suppliers and customers [33–36]. They see institutions andinnovative firms as mutually embedded in one another and collectively shaping the capacity of a nation's innovation system.Building on this, the NIS approach offers an appropriate analytical framework within which the co-evolution of institutions,organizations and technology can be analyzed and understood.

Over the past ten years, the concept of interactive learning has become fundamental to innovation systems research. It helps inunderstanding the complexities of the innovation process because innovation is the result of the learning and exchange ofscientific information, values, norms, wishes and expectations between the actors in an innovation system [26,37]. Accordingly, thenational innovation system approach emphasizes that the overall innovation performance of a national economy greatly dependson both how specific organizations such as firms and research institutes manage to exploit the experience and knowledge of otherorganizations and how they interact with each other andwith the government sector in the innovation process [38]. To survive in aknowledge-based economy characterized by rapid technological change, organizations therefore need to develop and adapt theirskills and capabilities through continuous interactive learning.

While earlier research focused mostly on the developed countries, in recent years, there has been increasing interest inapplying the NIS framework to analyze the innovation experiences of newly industrializing economies such as Korea, Taiwan andSingapore, which have experienced more intensive technological learning and narrowed the technical knowledge gaps betweenthemselves and developed countries [39,40]. In the following sections, a case review of specific patterns of co-evolution betweenbusiness incubation and national innovation systems in Taiwan will be undertaken.

3. Co-evolutionary processes/mechanisms

3.1. The phenomenon of business incubation in Taiwan

The business incubation centers in Taiwan were initially established in accordance with the decision on “Pointers forEncouraging the Establishment of SME Incubation Centers by Public and Private Institutions” made by MOEA's (Ministry ofEconomic Affairs) SME Development Fund Management Commission in April 1996. This policy was in line with the government'scall for the promotion of Taiwan as an Asia-Pacific hub for manufacturing and R&D. The incubation activities in Taiwan are mainlyguided byMOEA's Small andMedium Enterprise Administration and financed by the government's SME development fund. A basicmodel of Taiwanese incubation is shown in Fig. 1 [41].

In Taiwan, many intellectual properties and leading technologies have been initiated by higher education and researchinstitutes, which are often seen as extra sources of industrial innovation [42]. To keep pace with innovation, close collaborationbetween industry and universities can be an effective inter-organizational linkage for advancing new technologies andstrengthening the industry's R&D capabilities. However, there is often a gap in their collaboration between industry and academiesin terms of cognition and technology. The lack of productive interaction between industry and academies often leads to excessivetime being spent on project negotiation, evaluation and planning, leaving too little for execution and quality checking. Therefore,an adequate coordination interface, where policies can be made collectively by higher education and research institutes, firms andpublic organizations, is vital for facilitating knowledge sharing and interactions [19,43]. The part of such a coordinative interfacecan be played by incubation centers and the incubation programwhich they implement. The co-alignment of inter-organizationalrelationships and knowledge bases determines the extent towhich those intangible assets could be exploited at the highest level of

Fig. 1. Basic model of Taiwanese incubation. Source: Shyu (1999).

value. Thus, Taiwan's incubation centers are an important mechanism for building an innovation platform to aid the cooperationbetween businesses, academies and research institutions. To date, more than 90 incubation centers have been set up in Taiwan,demonstrating a high density in such a small geographical region. Notably, Taiwan's incubation centers have been establishedmostly by universities and colleges, allowing the effective use of existing resources to stimulate the cultivation of innovation-oriented SMEs, thereby contributing to the upgrading of Taiwan's industries and technologies. Fig. 2 shows the statistics ofcompletion andwithdrawal of incubation in recent years. It seems that although Taiwan's incubation centers are fairly successful interms of the growth rate of incubatees/tenant companies, completion rates have been less satisfactory. This could be due to aconstantly changing environment with many operational issues confronting incubation centers, such as those associated with thegrasp of market dynamics and trends aswell as the funds required to support incubatees. To enhance the function of the incubationservice, the Challenge 2008 National Development Plan was implemented by the Taiwanese government with the aim ofestablishing a high-quality incubation center network which would contribute to the development of a systematic learningmechanism to create a knowledge-based entrepreneurial society [44].

In short, business incubation centers are not only crucial to a nation's economic growth and prosperity but also directly orindirectly contribute to the development of other constituents in a national innovation system. For instance, the knowledgespillover effects of universities or research institutions often led to innovative activities around them. Through internal andexternal networking, incubation centers become the knowledge providers which then diffuse scientific knowledge to enterprisesand the whole area of the regional/national innovation system. In the following section, the present study discusses the reciprocalinteractions between business incubation, industrial and national development.

3.2. The co-evolution

Co-evolution between constituents in innovation ecology in Taiwan is inherently a recursive journey from technologicalforecasting and the evaluation of techno-societal sub-systems toward social change and economic progress. Contrary to theassumption of social stability and integration, innovation resulting from the interaction between constituents should be examinedin the light of social complexity and conflict. Different institutional contexts may lead to different innovation outcomes [43].Moreover, initial technological forecasting by different constituents in an innovation system tends to be incongruent because of thediverse technology bases and preferences [43]. Business incubators are seen as playing an important role in such journeys in

Fig. 2. Brief statistics of formal subsidized incubation in SME incubation centers. Note: (re-plotted based on the data from SMEA (SME Administration) and CPC(China Productivity Center)).

Taiwan, in that they bear the responsibility of integrating, mediating and supporting the development of entrepreneurial,economic and social activities in the national economy. From our observation, the co-evolutionary processes/mechanisms withinTaiwan's national innovation system can be sketched as shown in Figs. 3 and 4. We argue the relationship between businessincubation activities and industrial and national innovation can be perceived as a reciprocal positive circle [20] as Fig. 3 shows; andthat the detailed situation of co-evolution could be sketched as in Fig. 4. No matter where the ‘circle effect' starts, one thing to besure of is that positive growth at one endwill reflect positive benefits at the other end. Therefore, they coexist and none of them canpredominate nor be ignored. The figures also demonstrate how government, incubation and enterprises respectively act and reactin this process. To offer illustrative explanations of the process by which co-evolutionary effects take place at multiple levels, thisstudy used several key constituents, including governmental policy kits or projects, industrial practices, and incubation centerssuch as the ITRI incubator, to describe the multi-directional causalities and complex interactions between and across innovationsystem elements.

3.3. Nation and industry as facilitators of business incubation transformation

Given that the quality of business incubation activities is related to the extent of economic development, incubation centersneed support and assistance from either industry or national bodies during their development. Generally, a nation's institutionalenvironment determines how an organization behaves [45–47]. Important technological activities are usually carried out in anembedded context (e.g., [48–50]) where various institutional and relational factors may influence the progressing structures andmodels of innovation. The interaction between macro-level institutional factors (e.g. the accessibility and availability of funds,availability of pools of educated human resources and regulatory policies for the transfer of technology) determines thedevelopment of integrative and relational capabilities formed by linkages across meso-level networks serving to facilitate orconstrain innovative activities [51]. It could be argued that business incubation activities represent meso-level networks which arecrucial to the technological development of incubatees. Nevertheless, such activities are often constrained by laws, regulations,government control, or industry-specific features (e.g. industrial norms, structures and social relations) when it comes to handlingprojects and consultation. In general, the influence of a nation's institutional environment or industry on business incubation canbe investigated from the following perspectives.

3.3.1. Government planning, supports and policy kitsPolicy planning interacts with technological forecasting in such a way that the latter is a significant reference for the former,

while the former in the past could often determine the scope of possibilities for the latter. Strategic planning for public orsystematic level affairs is critical, in that it configures the possible resources for the realization of actions for collective mission andgoals [52–54]. Even though the importance of entrepreneurship and innovation is fully acknowledged, not all governments provide

Fig. 3. Co-evolutionary model of Taiwanese incubation.

Fig. 4. Co-evolutionary processes/mechanisms (detailed) in innovative ecology.

a high level of support. The lack of support for business incubation is normally caused by inadequate or insufficient macro-economic budgets, which in turn affect the priority and support of national policies on business incubation activities. As a generalrule, it is difficult not only to reverse policy-makers' prejudiced logic, but also to require countries with limited resources to carryout uncertain industrial activities. This situation will not be improved unless a country's leader with innovative boldness takes along-term view of national development. Hence, government's policies and supports shape the institutional conditions forbusiness incubation activity [55]. For example, a half of ITRI's funding was supported by government (the other half came fromindustry) [56]. Major directions of research and other related services were directed under the technological policy of thegovernment. At the outset of the development of Taiwan's high-tech industry, ITRI mainly played the agent's role as an incubatorandmanufacturer in order to assist the government's implementation of its technological policy [57]. It contributed significantly topromoting and establishing Taiwan's semiconductor industry. Successful spin-off ventures include the United MicroelectronicsCorp. (UMC) and Taiwan Semiconductor Manufacturing Company (TSMC), two world leaders in semiconductor foundries.

The issues of successive development and coordination between incubation centers and policy-making units, however, shouldnot be overlooked. To improve incubation, first, laws and regulations must be reviewed thoroughly to ensure that they meetinternational standards. Second, many governmental departments must adequately adjust their controlling attitudes towardsservices, i.e. from being passively restrained and avoiding fraudulent practices to actively directing development. Moreover, in anopen and free atmosphere, government departments should assist business incubation centers to develop their own capabilitiesand to trymore possibilities. These are aimed at improving the efficiency of the business incubation centers, as well as reducing thecost of related activities. At the same time, with the decline of funding support, the increased maturity in its capability-building,and the expansion of business scope, lately, ITRI has started to act more autonomously in terms of determining for itself thedirections of technological and business development. Meanwhile, ITRI has more power to influence the higher-level sensemakingand decisions within governmental units and of others in Taiwan's innovation ecology. By the end of 2005, ITRI's Open Laboratoryplan for joint research and incubation programs had created an R&D investment of over US$ 2 billion, and supported over 130 start-ups [56,58]. In 2006, the 694 technology items transferred to companies in Taiwan were worth a total of US$41.56 million. These,together with the 2302 patent applications and 985 domestic and foreign patents obtained, have made ITRI (and its sub-units suchas the incubation center, the Open Lab for collaborative research, which hasmany important tenants and graduates in the industry)an influential and informative factor in strategizing technological policies for the whole national innovation system. Related

government administration has also been forced to change its mindset of preferring the top-down communication of technologicalforecasting, even if a system of traditional law and institutional procedures is still in operation.

3.3.2. Feasible implementation and measuresAlthoughmaking policy announcements is essential, the corresponding implementation measures must be in place, active and

complete. The coordination and integration of government departments are critical for efficiency and coherence, while peoplewithcapability should be empowered to develop or involve themselves in system-level affairs [59]. Since innovative incubation includesawide range of activities, related task or activitymanagement often involves several different alliedministries and departments. Inorder to unify regulatory authorities, it will be necessary to implement ‘one-stop’ mechanisms in the future. Besides, businessincubation centers should be brought within the scope and under the guidelines of venture capital investment. In this respect,sufficient sources of funding are provided and the support of SMEs or each type of innovative business activity is indirectlynurtured. To a certain degree, business incubation centers can be considered indispensable assistants to governmental units, inrespect of enhancing entrepreneurial new activities. From the venture capital perspective, giving financial assistance to businessincubation centers should present a good return on investment [55]. In addition, governments should include incubation businessin the list of emerging strategic industries which are eligible for special tax incentives. An integrated performance evaluationsystem should be established aswell, in order tomanage and track outcomes on a regular basis. Mutual appraisal between businessincubation centers and their managing units in terms of performance result and evaluation can also be used as an essential tactic toeffectively manage incubation activities. In Taiwan, cross-governmental-unit projects such as the “Inter-Ministerial Project forAcademic-Industry Collaboration” were initiated in 2008 to foster the synergistic use of resources from different governmentdepartments (i.e. the National Science Council, Ministry of Education, and Ministry of Economic Affairs)1. The project was plannedto raise the ratio of enterprise investments in research by higher education institutes, to increase higher education income fromintellectual property, and to encourage more incubated entrepreneurial ventures through increased triple-helix collaboration, etc.Also, a complementary project entitled the “2008–12 Project for Value-added Incubation in Industrial and AcademicCollaboration” is under way, to expand the effects and performance of intellectual property creation.

3.3.3. Articulation of intellectual capitalFor an organization or economy, it is fundamental to develop valuable specific human capital, including both scientific and

technical experts. Intellectual capital can be regarded as the sum of professionals' capabilities, knowledge and their inter-relationships [60,61]. The development of core competence in the private and public sectors is of special importance, because in aknowledge-based economy the cross-level integration and utilization of human capital and their intellectual power serve as thedriver in gaining competitive advantage [62]. Intellectual capital has three key elements, namely, human capital, internal structuralcapital and external relational capital [60]. Given that a nation considers innovation as a source of unique advantage, thecompetences of professionals and their interactions directly affect the whole innovation system in terms of knowledge procedures(create, share, integrate and apply), their knowledge base and the ability to manage this knowledge base [61]. Moreover, relationalcapital represents an importance source of sustenance for organizational competitive advantage [63,64]. In particular, innovativeincubation involves cross-level activities which often result in a high level of complexity in knowledge innovation.

The ITRI incubator in Hsinchu, Taiwan, for instance, benefited from the intellectual capital effects generated by the nearbyHsinchu industrial cluster [65]. With governmental support, the ITRI incubator was established in July 1996 and has proven itsoutstanding capabilities in both consulting to ensure tenant success and transforming itself toward better performance andenhancing the capacity of the innovation and incubation service. From its establishment to the present, the ITRI incubator has beenrecognized by honours and awards, such as the 2006 Randall M. Whaley Incubator of the Year Award by the National BusinessIncubation Association (NBIA) and also the 2005 Asian Association of Business Incubators (AABI) Award. The major reason for itsreceiving such recognition is its provision of high-quality intellectual capital (i.e. talent, expertise, networks and structuralmechanisms and tools) for entrepreneurs. There are highly interconnecting human resources (such as college faculties andstudents and company R&D staff and professionals in the research lab) contributing strategic and technological knowledge by theirdifferent work roles and daily task routines. The science park and the two top-tier universities provide a rich pool of new-generation human resources, which facilitates knowledge learning and the development of the ITRI incubator per se. Theintellectual capital generated, in turn contributes further to the more macro-industries and national innovation system by theeffect of knowledge diffusion and new business ventures [58]. When much knowledge has to be communicated throughinterpersonal, group and organizational interaction, it is essential to develop close individual or organizational relations tofacilitate the diffusion and integration of such knowledge [66].

Innovative incubation is a knowledge-intensive industry. While developing national policies, governments often take intoaccount the establishment of a pool of sound manpower. On this basis, they further develop a system to maintain and attracttalented personnel. If a nation has a high quality of pooled talent and effective investment in the business incubation industry, thiscan indicate that the nation has built up its own irreplaceable and inimitable knowledge capability. The above concrete actions areusually taken into consideration when governments devise a policy for matching social and economic resources to technologicaldevelopment. The issues involve the quantity and quality of education and training provided to internal professional technicalemployees, as well as formal and informal professional interaction mechanisms. Regarding the demand for cross-field talents, in

1 For more information, please see the official website (http://www.aic.org.tw/index/index.asp).

addition to self-cultivation, governments can offer high incentives to emigrant professionals to return to work in their homecountry and also to recruit foreign professionals. While the policy and package of cultivating professionals can be perceived as anation's commitment to building intellectual capital, it is still vital to address the issues of synthesizing the above concerns andcontemplate a policy model which can effectively help to construct and develop intellectual capital.

3.4. Business incubation as a wheel for industrial and national innovation

When an incubator's managerial system is established, it becomes a capable consulting actor [67]. Through the use of theirown capacity to assist the tenants to succeed, incubation centers can directly and/or indirectly interact with and influence theenvironmental settings of the innovation. In addition to basic office service provision in ‘software and hardware’ terms, accessto business and technical advice on strategic actions is also provided on the basis of each incubation center's specializedtechnology and through resource networking shared between them. Such advice and actions are critical because they are majorstimulators for possible changes and transformation in the incubation centers themselves as well as the other actors in aninnovation system. For example, Steffens [68] suggests that incubation centers cannot only help new enterprises to create jobopportunities, but they also cultivate the quality human resources that a nation needs to create greater economic prosperity. Inother words, the business incubation industry drives a nation's economy and innovative capacity. One important ground of thisargument is that business incubation institutionally bridges different levels. Due to its unique organizational attributes, it canact as the connector as well as the coordinator within the national innovation system. On the one hand, incubation centersaccept the requests of tenants to provide resources and support of all kinds. On the other, they must intervene/liaise betweengovernment, other industrial organizations and professional organizations in order to operate efficiently and to acquiresufficient resources to incubate new ventures. Another important argument is that incubation centers, in essence, also act asresource integrators. Based on the current situation in Taiwan, incubation centers can be operated from the following bases toachieve the functionalities described above.

3.4.1. Active involvement in triple-helix collaborationPolicy analysts have long argued that public–private partnerships facilitate both the efficiency and effectiveness of

implementation of macro-level issues [10]. The industrial innovative relationship directed by government has always playedthe role in a changing economy of stabilizing the wheel formed by innovation, practices, and systematic support and norms.Despite the government's role, innovation and its appropriation processes are highly political and the central focus involves awider range of complex networks and knowledge embedded in these processes [69]. Accordingly, the effective management of thenexus of University–Industry–Government relations, which could affect the development of a nation's innovation system, grows inimportance when investigating the relationship between innovative economy and performance. On the one hand, there are over70 university-based incubation centers in Taiwan, each with a diversified combination of knowledge, because every departmentwithin a university has its own speciality and different strategic development goals. In this context, incubation centers can performnot only the function of professional knowledge sharing and communication, but also the function of knowledge coordination, byactively becoming involved in triple-helix collaboration. Consequently, this leads to entrepreneurial organizations or projectsbeing firmly rooted in the knowledge network composed of transparent professional knowledge and official information.

On the other hand, the higher education and research institutes such as universities and ITRI also undergo changes when theirincubation centers become involved in triple-helix cooperation. The natural penetration of business management concepts broughtin by the more commercialized departments (i.e. the incubation centers built inside universities) per se has an impact on andimplications for the management of the non-profit universities. The performance measurement of universities and researchinstitutes has been incorporatingmore than pure scientific knowledge generation; it also reveals howuniversities could apply suchpure knowledge to industries and even others in innovative ecology, so as to add that value. As compared to other developedcountries, inwhich such transformation in academic and higher education may be mostly caused by the pressure of expectation ofuniversity management to actively compete in acquiring both financial and non-financial resources (by trading universities' ownintellectual resources) [70], the transformation in Taiwan's higher education is more evident and systematic after the widespreadestablishment of BIs.

3.4.2. Cooperation with mature or large enterprisesThe emphasis in past literature tends to be on the usefulness of business incubation in nurturing small andmedium enterprises.

This paper argues that the close collaboration between business incubation centers and larger, mature companies is important andoffers the potential advantage in terms of preventing strategic and operational inertia. When existing firms are relatively large,they need to be aware of some potential dangers, such as rigidity or over-investment [71,72]. Nevertheless, they do have someincumbents' advantages, which newer, smaller companies should imitate. Often, such advantages are embodied in the forms ofpositioning [73], an established resource base or portfolio [74], brand value [75], experience and knowledge [76], etc. As a resourceintegrator and coordinator within an innovation system, it is the responsibility of the incubation center constantly to seekresources and opportunities. Having regular collaboration or communication with mature or large organizations (or other, non-profit, organizations), incubation centers constantly experience different types of requests or opportunities. The moreopportunities of this type of interaction, the higher the chance of a tenant being placed in a position where many opportunitiesare available. The ITRI's cooperationwith the leading companies in theworld, such as HP, Texas Instruments and SunMicrosystemsindeed generates such helpful effects. Besides, tenants of ITRI incubators can participate in multi-level organizational learning and

renew their capability portfolio, directly or indirectly, from these larger companies, using the incubation centers as interfaces.Moreover, incubation centers can act as referral agents by referring a large organization's sub-contracting business to a tenant. Thiscan help the tenant to learn and grow through the experience of collaborating with a reputable enterprise. Simultaneously, anincumbent can benefit from strategic renewal via cooperationwith newer, smaller, but innovative firms, to adapt to environmentalor technological changes (e.g., [77]).

3.4.3. Activation of traditional industriesThe role of business incubation in stimulating innovation in newer high-tech industries in emerging economies has been

extensively discussed in previous studies. However, its potential function of upgrading more traditional industries is relativelyunexplored. Many traditional industries follow a set of operational rules of long standing. Nevertheless, they may run the risk ofbeing stuck in established practices, which subsequently may lead to a weaker capacity to reform and innovate. In the social orpolitical dimensions of technological and innovation systems, the motives and behaviors are often expected and defined bynorms composed of various roles and contexts [78]. The avoidance of uncertainty and the continuance of maintaining efficientoperations would normally be the primary concerns in traditional industries. Nonetheless, industrial technology and behaviorlogics are continuously being updated. For a nation, when business incubation centers accept clients' requests to provideassistance to traditional industries, this amounts to charging an agent with stimulating innovative ideas and behavior in itscontext. ITRI and its incubation center have helped activate the traditional industries (e.g., textile, bicycle, agriculture, etc.) interms of both products and production and services. New technologies and materials (e.g., synthetic fibres, vibration absorbingtechniques for bicycles) have been introduced and modified procedures (e.g., process safety management or smoke control)and training services in new industrial practices have been set up. In sum, business incubation centers should try to avoid lock-in inertia while recognizing their responsibility to persuade traditional industries to believe in the necessity andappropriateness of innovation. When traditional industries spontaneously start to think over ways to operate to create highervalue-added products or management mode, business incubation activities can be considered as contributing to the nationalinnovation system.

3.4.4. Sound and supportive business incubation associationThe growth of innovative incubation business cannot solely depend on the independent operations of incubation centers.

Instead, it needs a shared knowledge group in which members have similar organizational core activities (i.e. innovativeincubation) and are operating in similar environments, but perhaps with different case experiences, which can be used to guideand assist each other. The shape of the human and organizational actors' participation is socially constructed [79]. A soundlyorganized business incubation association can offer a knowledge-sharing platform whereby information can be acquired andspecific resources shared (e.g. joint participation in large governmental projects). The association committee includes supervisorsfrom every incubation center or the person in charge of the incubation center. This subsequently forms the unique supportnetwork for business incubation centers. So far, most incubation centers in Taiwan operate as sub-units or departments withinlarge bureaucratic higher education institutes. To forestall possible inefficiency when coordinating internally and externally,several ongoingmechanisms have been developed. Regional incubation centers have been set up to support the incubation centerslocated in different universities within a limited geographical area. Moreover, an organizational cluster of incubation centers willnot only strengthen public policy making in respect of the incubation business but also can integrate scattered incubationorganizations, making the national innovation system more sound and complete. The American National Business IncubationAssociation has been a famous success. In recent years, the Chinese Business Incubation Association (CBIA) and GlobalTalentrepreneur Innovation & Collaboration (GlobalTIC) in Taiwan have been making good progress by actively exchanginginformation and experience with other overseas associations in order to improve the performance of these centers in Taiwan.

3.4.5. Integration with science parksBI can stretch the scope of its services by integrating itself within the operation of a science park. Science Parks are areas with

abundant R&D activities [80]. If an incubation center is established within a Science Park or close by, it can improve the speed atwhich it updates technical knowledge and facilitates the integration and application of research resources by integrating withrelated research institutions to meet tenants' requests [81]. For instance, the ITRI's incubation center, which has long been a majorsupporter for technology commercialization and the creation of new ventures [82], was set up near the Hsinchu Science Park. Someresearchers and professionally talented people working previously in ITRI have moved into industry and contributed to itsproductivity and creativity [58]. Moreover, the request of tenants for assistance usually involves not only the technologicaldimension, but also effective business knowledge and start-up funding. The strategy and planning of the Hsinchu Science Parkdevelopment have been trying to encourage sound financial institutions to set up a business and provide financial services there,e.g. mortgage consultation, accounting and IPO preparation2. With effective integration, science parks can be considered the bestplaces for high-tech start-ups. ITRI has been continuing to expand the scope of its integration with major science parks in Taiwanand other economies. The start-up of ITRI-south has been authorised by the government to operate at its discretion in the newlyestablished Southern Taiwan Innovation & Research Park (STIR).

2 For example, there have been nine former tenants of the incubation center of National Tsing Hua University (NTHU) which have successfully gone public inthe past few years, creating a market value of up to 50 billions. Also, the incubation center of the National Chiao Tung University (NTCU) has facilitated thecreation of new ventures at a rate of +/5 year.

3.5. BI-initiated catalyst mechanisms: strategic networking and knowledge management

As can be discerned from the above discussion, at the higher, abstract level, strategic networking and high-quality knowledgemanagement (including continuous learning) of all the constituents of the innovation ecology are major catalyst mechanismsduring the transformative journey. Successful implementation of networking and knowledge activities creates value-addedcomparative advantages in intellectual properties at personal, organizational, national, and even regional levels [33,83,84]. Asshown in Fig. 4, all actions from multiple parties leave an impact and result in co-evolution through strategic networking andknowledge management.

3.5.1. Strategic networkingStrategic, long-term and stable organizational networking of incubation centers will benefit their own operations and those of

the national innovation system. In a knowledge-based economy, most scholars agree that the leverage of organizational relationcan accelerate the flows of resources between organizations, improve the quality and quantity of knowledge and informationacquired, and strengthen the cohesion of related organizations. Building trust and social capital is crucial for supportingnetworking and thus effective interactive inter-organizational learning [33] which positively contributes to the innovationperformance of both organizations and the nation [83,85,86].

First, like other contemporary industrial structural evolutions, the phenomenon of networking is inherently in the process ofincubating industrialization, which emphasizes the inclusion of various kinds of organizational actors. The strategic networking ofincubation centers synthesizes the advantages of both internal organizations and the external market. Second, although inter-organizational relationships may facilitate or constrain organizational strategies and capabilities [83,86,87], the strategicnetworking of incubation centers improves the possibility of their efficiently and effectively transforming raw technology andknowledge into commercialized products/services. An incubation center is seen as a knowledge-sharing and -learning hub as wellas a facilitator, providing interface access and channels along which tenants can acquire valuable information and exchange orshare information with the information's owner. Sufficient diffusion and high-quality integration of knowledge is the key toinnovation. Regarding the future governance structure of knowledge diffusion within the innovative incubation business, ways ofbuilding, managing and properly applying an organizational network structure (including a tenant-incubation center, a tenant–tenant and an incubation center–other incubation centers) are of strategic concern. In the incubation center's intertwinedorganizational network, tenants can overcome the resource deficiency via strategic networking interaction mechanisms andacquire valuable knowledge assets through the center's connections. Moreover, maintaining communication with the ‘alumni’ ofthe incubation center and incorporating the ‘alumni’ as part of the center's network group are imperative tasks for successfulincubation. Inherently, the objective of establishing a networking organization is to achieve the division of labor in value-chainactivities.

In Taiwan, significant industries such as integrated circuits and biotechnology feature these characteristics of inter-innovative-organizational networking [55] and benefit from improved performance caused by the effective internetworking of incubationcenters (such as the ITRI incubator and the close NTHU and NCTU university incubators) in cooperative knowledge exchanges andthe collaborative development of technology and commercialization. In addition, parts of the aforementioned GovernmentalPolicy Kit, such as the 2008–2012 Project for Value-added Incubation in Industrial and Academic Collaboration set out to improvethe inter-connectivity of all incubation centers in the economy.

3.5.2. Knowledge management of business incubationThe knowledge-based view of labor and organizations frames a perspective which forms effective strategic actions [88,89].

Innovation and knowledge creation form the basis of economic development. Therefore, the capacity of an organization tocreate and apply knowledge becomes the key to its competitiveness in the global market. Knowledge management, as aprocedural model from knowledge creation to knowledge application or value-addition, is the key to the effectivetransformation of laboratory outputs into industrial success. It is not solely focused on financial benefits but on thearticulation of its competence and the development of the shared intellectual repertoire needed for success. It is also crucial fororganizational actors to collaborate, in terms of developing knowledge strategy and management for the whole innovationsystem [90,91]. From the knowledge source perspective, every regulation amendment, every project service, every externalcollaboration institution, every request and feedback from a tenant are important sources of knowledge to the incubationcenter. The center itself and its internal and external networking together serve as a Ba [92] for knowledge creation andsharing. Therefore, a business incubation center should grasp every opportunity and learn from previous incubationexperiences.

Major incubators in higher education and research organizations in Taiwan, such as ITRI or the Industrial TechnologyIntelligence Service (ITIS), benefit from the successful development and applications of their own KMmodels [93]. Take ITRI as anexample; the knowledgemanagement advantages of this stem not only from the creation of cutting-edge technological know-howin research units, but also from the high-quality transfer and application of both technological and managerial intelligence toenterprises through the so-called knowledge-intensive services by consulting units, including the ITRI incubator and the ITRIcollege. As a result, ITRI not only grows its own knowledge bases, but it also creates a knowledge-enabling environment for thewhole innovative ecology. Such creation generates reciprocal benefit for ITRI, because the firms, industries and even governmentalunits are now on a higher knowledge horizon and are more capable of generating new ideas which can flow back to ITRI'sknowledge repertoire as further new knowledge stimulators.

As compared to the traditional model of Taiwanese incubation (see Fig. 1), this paper summarizes the more dynamicrelationship of the two domains in Figs. 3 and 4. The relationship is mutually influenced, but the subsequent results of being avirtuous or vicious circle depend on how well those loosely-coupled elements (e.g. the incubation center, policy center, tenants,university and/or research institutions, etc.) are connected to and integrated with each other. It may also be a differentiating factorbetween countries in terms of the idiosyncrasy of the incubation performance. Different countries may imitate each other in moretangible dimensions, such as the law and the construction of specific associations, but they cannot easily imitate the moreintangible things, such as relationship development and knowledge integration.

4. Future prospects of business incubation

Recognizing the proposed co-evolution between business incubation and national innovation systems, it is suggested that,since business incubation is progressively moving towards the mature stage, it will face several types of upgrading ortransformation demand or problem3. The graduation vs. withdrawal rate of tenants in Taiwanese incubation programs in Fig. 2 hasdemonstrated a need for breaking up the bottleneck in current BI operations. The following section discusses emergingmechanisms for possible future challenges and prospects of business incubation, including the possibility of business incubation'smoving towards industrialization and virtual business incubation, and the globalization of business incubation.

4.1. Industrialization of business incubation

In the late 1980s, some scholars suggested that practitioners and researchers should move the focus away from analyzing thecharacteristics of incubation centers and concentrate on incubation itself [94]. Today, such a ‘concept upgrade’ could be furtherbroadened to include the issues mentioned above and to emphasize the importance of shaping the incubation industry. Asmanufacturers outsource certain industrial value-chain activities to other businesses to strengthen core competitiveness or costreduction, the need of entrepreneurial firms to outsource or create opportunities for incubation to be developed as a major serviceindustry. In a knowledge economy with entrepreneurial prosperity, the core capability of business incubation centers can be seenas integrating the key service industries4. Accordingly, the significance of the industrialization of incubation activities and theattention which it should have received are not inferior to any of the key functions listed above.

With industrialization, the set up of an incubation center which is currently mainly conducted by higher education institutescan be adapted by any knowledge-intensive organization in different industries. Business incubation can operate moreautonomously and flexibly on the premise of integrating incubation centers from various industrial and professional backgrounds,as well as the development of the BI industry's own normative standards and value chain. A creative example is the incubationcenter set up recently by the Mackay Memorial Hospital in Taiwan. Its mission is both to assist the development of its tenants byproviding and sharing valuable clinical and laboratory experience, and also to facilitate the development of all related businesses inChinese medical care and medicine, biomedical engineering facilities and so on. In sum, the issue of the efficient industrializationof incubation and the effective integration of the incubation industry's development with other service industries has become animportant issue to consider in the future.

4.2. Virtualization of business incubation

Virtual business incubation is a new style of business incubation in which tenants are incubated from their own locationthrough the incubation center's information infrastructure. Information and communication technology can improve thetransferability and applicability of knowledge [95]. In many advanced industries, such as high-tech manufacturing and software,the connections between value-chain activities are geographically remote. Therefore, highly-rated knowledge or information isoften communicated or exchanged through telecommunication technology. Since innovative incubation is usually embedded in ahighly knowledge-based context, the main functions of a virtual business incubation center include: helping to integrate thescattered organizations along an industrial value chain, establishing a structure for information exchange and serving as aknowledge broker [96].

4.3. Globalization of business incubation

Given the premise of a globalized knowledge structure with different socio-political contexts for innovation [97], the quality ofthe globalizing knowledge activities depends on administrative effectiveness, led by correct entrepreneurial strategies andincubation. The ITRI worldwide offices facilitate mutual collaborationwith potential international ventures or teams of talents. Forexample, combining the ITRI International Inc. (International VAC, Venture Acceleration Sphere, a technological incubation center

3 See Dodgson et al [17].4 Regarding the latest development of service industries in Taiwan, the Council for Economic Planning and Development has set out guidelines and action plans

to develop the following key services: 1) Financial services, 2) Distribution and transportation services, 3) Telecommunication and media services, 4) Medical,healthcare & care-giving services, 5) Manpower training, dispatching & property management services, 6) Tourism, sporting & recreational services, 7) Culturaland creative services, 8) Design services, 9) Information services, 10) Research and development services, 11) Environmental protection services, and 12)Engineering consulting services [93].

based in Silicon Valley) with the ITRI Incubator and Open Lab, ITRI could provide early-stage development and incubation servicesfor international ventures. However, this is merely the first step. Entrepreneurial strategies need to fit entrepreneurial firms' socialand societal contexts. Because there is no single route leading to the new venture's success or failure [87], entrepreneurialstrategies which consider only the relevance of the business environment in Taiwan may not be effective when the new venturestry to globalize their businesses. From the proactive standpoint, Taiwanese incubation businesses cannot consider the market andcompetitors in Taiwan alone. They must develop international skills and knowledge of incubation in order to assist tenants todevelop their international competence. In addition, globalization can push the standard of BI quality and knowledge creation to ahigher, world-class level. Taiwan has been producing a great number of patents, but most of these lack original value or the impactof foresight. But if incubation centers have the chance to collaborate with their excellent foreign partners in leading and evendeveloping economies (e.g., the ITRI's partners include MIT, Carnegie Mellon University, Stanford University, Matsushita ElectricWorks Ltd., Japan, the European Telecommunication Standard Institute, STMicroelectronics, Singapore and Moscow StateUniversity) and contact international tenants (e.g., foreign firms intending to be ‘born global’ directly in Taiwan), the generatedexperiences and knowledge can then be applied to the incubation of local tenants and generate a multi-directional knowledgespillover effect. Incubation can even attract international (foreign) entrepreneurial human resources through expanded BIoperation overseas5. Therefore, Taiwanese enterprise can also seek the opportunities of international business incubationcollaboration and this will finally feed back to the Taiwanese experience of innovation. Furthermore, now that China has joined theWTO, there are many service industry opportunities, including finance, insurance and telecommunications. Taiwan should takeadvantage of having a similar culture and language to preempt international competitors. And this will contribute significantly tothe overall competitiveness of the Taiwanese business incubation industry.

5. Conclusion

This paper did not originally set out to argue that Taiwan's is the sole standard for innovative operation. However, it aims toprovoke an exchange of ideas by offering an introduction to and critical review of the advantages, the need for improvement, thespecial, and the so far unseen situations in business incubation. Compared with earlier studies, which focus on the overallconnection between government, research and business (e.g., triple-helix research), the major contribution of this paper is itsfocus on and explication of the energetic interface role of incubation in the context of co-evolution between innovative ecologyconstituents, such as technology, enterprises and national innovation systems.

Practical observations confirm that all constituents in innovation ecology evolve by co-evolutionary processes/mechanisms, whichresult in double-loop (reflective) learning and lead to strategic changes in their functions and roles. Offering services in assisting tenantfirms on theirway to becomingbusinesseswhich can independently and efficientlymanage their operations and technology, the role ofbusiness incubation has evolved from theoriginally expected facility and service provider into a consultantorganization for knowledge,resources and policy coordination for both enterprises and national innovation systems. Meanwhile, traditional governmentinstitutions have been transformed into leaders and supporters of technology initiatives with integrative capability in technologicalforesight, market shaping, and self re-engineering in governmental structures through its interactive learning from incubation andenterprises during the co-evolutionprocess. This new role helps change the situation of competing for innovation resources among theconstituents in the innovation ecology and then achieving a cooperative balances in resource distribution and utilization.

Theoretically, there seems to have been a long-lasting incommensurability between classical institutionalism and the theory ofmanagerial intentionality in discussing the evolutionary power of the technology and the innovation machine of specificeconomies or countries. On the one hand, institutionalism provides a complete framework for describing howmacro-institutionalpower guides innovative ecology during the processes of technological and social change [98]. On the other, managerialintentionality theory argues that the micro-enterprises and entrepreneurs can strategically choose their direction to the path ofinnovative transformation [99]. The co-evolutionary framework in this paper is rigorous in reflecting such incommensurability. Itargues that both the top-down and bottom-up influential powers could be well governed to generate positive effectiveness so longas a coordinative meso-level constituent (i.e. incubation) exists. Past approaches of innovation system analysis may have a fewimportant methodological problems such as a top-down orientation and the independence of the discussed innovation systems[100]. However, sustainable development in technology and society has been emphasized as the feasible paradigm for multi-wayimpacts [59]. National competitiveness must be obtained through industrial and national innovation. Meanwhile, supportiveenvironments for active technological development would facilitate the survival, development and upgrading of organizations in ahyper-competitive environment [101].

Civil society stresses the multi-level integration and participation of systematic elements, such as the ‘grassroots’ forces ofsociety, including human beings, technology and organizations in the private and public sectors, in order to develop the capacityfor excellence in governance and management [9]. For Taiwan in the past, micro-level constituents played a minor role in theformation of technological policy. Over the last decade, Taiwanese enterprises laid a good foundation in manufacturing. However,to upgrade Taiwan's industrial structure and improve national competitiveness, it is imperative to have both a commitment toinnovation and R&D and an alignment between top-down and bottom-up innovative forces. Therefore, such meso-levelcoordination and integration as business incubation are needed to function as the change agent [102] between all the constituents

5 An example can be seen in the Campaign of GlobalTIC Talentrepreneurship Award & Forum, held in 2007 by the BI association of GlobalTIC. Such activity notonly creates an opportunity of exchange and interaction among entrepreneurs from different countries, but also increases the opportunity of appealing tointernational new ventures to consider starting their business in Taiwan.

in the innovative ecology in order to gain maximummanagerial quality from andminimum conflicts between the sub-innovation-systems at macro- and micro-level.

The limitations of this study have naturally pointed up several areas worthy of further research. First, empirical examinationwith statistical data can demonstrate insights on smaller but more specific issues within our proposed framework, which would becomplementary to our review. Second, we used Taiwan as the illustrative context of discussion. To expand the scope of ourunderstanding, future studies are recommended to compare the co-evolutionary systems across some differently embeddedcountries. Since the boundary of national or regional innovation systems has become blurred, some inter-dependence may befound between constituents or sub-systems from different economies (e.g., the borderless incubation discussed above). Therefore,gaining a deeper understanding of the differences and commonalities between these embedded contexts would be valuable forexplaining the possible operation of a larger globalizing innovation system and value chain.

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Fu-Sheng Tsai (Ph.D., I-Shou University, Taiwan) is an assistant professor in the Department of Business Administration, Cheng Shiu University, Taiwan. Hisresearch interests are on knowledge management and social network in the context of entrepreneurial Chinese societies. He has published his works in KnowledgeManagement Research & Practice, Pan-Pacific Management Review, Handbook of 21st Century Management and other leading Chinese journals like the Sun Yat-SenManagement Review and Journal of Technology Management.

Linda H. Y. Hsieh (Ph.D., University of Birmingham, United Kingdom) is a lecturer in International Business, joined University of Birmingham in September 2008,having previously worked as a senior lecturer at Sheffield Hallam University, United Kingdom. Linda's main research interests are in the areas of post-formation

governance in international joint ventures; internationalization of SMEs; issues of co-evolution. Her future research will be on how social capital and institutionalsupport influence the internationalization process of SMEs.

Shih-Chieh Fang (Ph.D., National Taiwan University, Taiwan) is a professor of the Department of Business Administration, National Cheng Kung University, Taiwan.His research focuses on inter-organizational relationships, knowledge management, and multi-national enterprises' operations. He has published in the Tech-novation, Service Industry Journal, Industrial Marketing Management and first-tier Chinese journals including The Journal of Management, Management Review,among others.

Julia L. Lin (Ph.D. National Chengchi University, Taiwan) is a professor in the Department of International Business and the Dean of the School of Management at I-Shou University, Taiwan. Her research interests include cooperative strategy, inter-organizational relationship, internationalization, and knowledge management.Some of her papers have appeared in the Technovation, International Journal of Technology Transfer, and Commercialisation, Pan-Pacific Management Review andfirst-tier Chinese journals including The Journal of Management and Management Review.