Network Learning and Strategic Inertia: LCD industry in Taiwan

Thus, while Uzzi (1997) speculates on the differences between a homogeneous network and a heterogeneous network, Danneels (2003) and Afuah (2000) address the possibility of getting trapped by one’s own current buyers. Here I report a case study based on archival data to trace the development of the LCD business by two firms in Taiwan: Chi Mei (CM) and China Tube (CT).

In addition to network theory, I draw on the inertia literature (Burgelman, 2002) and organizational momentum (Miller and Friesen, 1984) to explain the puzzle of why CT is lagging behind CM. Despite coming from a related field (i.e., CRT), with over 30 years of operation, and being the first to mass produce large size LCD panels in Taiwan in 1999, CT not only lags behind CM who entered from the petrochemical field nine years ago, CT is also currently reported to be a likely merger target.