The significance of networks in the initiation of small businesses in Taiwan

This paper investigates theoretically a factor that impacts the institutional and structural environment of initiating small investments in Taiwan, namely personal relationship networks. A potential investor needs market opportunities in order to earn profit, business organization to exploit the opportunity, and capital to initiate the business. In Taiwan's network economy, the solidarity provided by ''family'' networks makes small initial business organizations possible. Subcontracting systems, both horizontal and vertical, make the entry-level investment low, and the decentralized production/marketing processes provide numerous market opportunities for small investments. Taiwanese entrepreneurs opt to start their business ventures primarily through the use of network financing, since bank loans fall under the dominion of government policies.