An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Tsuilin Kuo
National Chengchi University

Anne Wu
National Chengchi University

Abstract: Time magazine recognizes Taiwan as a strong innovator. Taiwan’s electronics industry has invested many resources in innovation and has become one of the biggest electronic design and production centers in the world. Through an increase in internationally patents, Taiwan is now a sophisticated player in innovation consortia. The two important determinants of innovation are ownership structure and foreign capital in Taiwan, which are different from Western countries. In Taiwan’s unique situation, it is relevant to understand whether ownership structure and foreign capital influence organizational innovation and then performance. We focus on the sample of Taiwan’s electronics industry from 2002 to 2004. The empirical results show that foreign capital has positive impacts on organizational innovation. The family ownership structure has a direct positive impact on a firm’s performance. However, the effect of foreign capital on organizational performance is induced indirectly by innovation.

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