Insights from Taiwan — What makes a good ecosystem?

By Reza Mirza.

Sources cited at the bottom. In queue to be posted at the Guardian.co.uk. 

Cut back to a year ago, before dumplings and porridge became staples in my diet. Before I flew to Taiwan to map out the social innovation landscape, I was in San Francisco working for a digital innovation agency. A brief call with Joseph Wong, a mentor and former professor changed all that. Who gives up an opportunity to research a burgeoning field with the capacity to change the world while on a tropical island? Not me – much to my mother’s chagrin.

It’s ironic that despite its speckled history, Taiwan has a thriving third sector. Speckled might be a tame way of describing the authoritarian regime’s Martial Law, which severely limited the autonomy of civil organizations. However, in the early 90s (just a few years after the lifting of Martial Law) Taiwan’s non-profit sector saw the development of commercial approaches and revenue generating arms[1]. (That’s another interesting fact our field work and literature review has revealed about Taiwan’s social enterprises: they’re less market-driven and often revenue-generating non-profits.[2])

The Taiwanese Ministry of Interior pegs the number of registered non-profits at over 60,000 and near 5000 for social enterprises. It’s no accident that the non-existent SE sector has grown so rapidly in a decade. Inspired by a EU program to develop the third sector, the Taiwanese government followed suit and in particular supported non-profits creating jobs for target groups – transforming many non-profits into social enterprises [3].

Here’s an interesting case study: while visiting Taipei’s famous hot springs, we learnt our spring was a private-partner partnership. The beauty of such an arrangement is that public resources are kept public and protected while still promoting competition and innovation. Instead of a single Minister of Hot Springs dictating how the springs are run, an individual entrepreneur runs it. And unlike government officials, the entrepreneur’s livelihood depends on the success of the spring. It’s not just Taiwan: public-private partnerships are taking off around the world. KPMG identified huge successes in India, Sweden has opened public-private hospitals, and there’s the Canada Line rapid transit system. And it’s no surprise, private-public companies have been shown to be more profitable than purely public enterprises and have even been attributed to the Taiwan Miracle, its period of rapid industrialization[4].

During a Taipei entrepreneur meet-up we attended, there was an exchange that was telling of the gulf between the government’s mandates and its actions. The organizer of the event attempted to introduce a special guest from the Taiwanese SMEA (Small and Medium Enterprise Administration). I’ve never seen someone try so hard to refuse an introduction as this mumbling fellow. Finally after some prodding, the government representative discussed some ministry programs available to entrepreneurs, but exclaimed that not enough people are aware of those services. It’s funny that the representative didn’t connect his disinterest in connecting with the community with his ministry’s failure at marketing of their programs.

This is in stark contrast with Silicon Valley. Like many, I was drawn to the Valley by its technology sector. This reverse brain-drain sustains the Valley’s dominance, but doesn’t explain how it came to be. The answer is that Silicon Valley wouldn’t exist without cooperation by public and private institutions. Top research institutions like Stanford and CalTech won lucrative military contracts from WW2 to the Cold War that funded high-tech research[5]. And to this day, Mayor Ed Lee of San Francisco regularly engages with tech companies as he did with faberNovel, my former employer. For Taiwan to sustain its rapid growth and become a social enterprise hub, it needs to hasten its dialogue with its third-sector to bridge the existing chasm.

[1] Kuan, Y. and Wang, S. (2010), “Taiwanese Social Enterprises: Characteristics, Development Trends and Effects”,  Paper presented at the  International Conference on “Social Enterprises in Eastern Asia: Dynamics and Variations”, Taipei, June 14-16.

[2] Kuan, Y., Chan, K., Wang, S. (2011). The governance of social enterprise in Taiwan and Hong Kong: a comparison

[3] Kuan, Y., Kao, A., & Pelchat, M. (2003). Governance, Organizational Effectiveness and the Nonprofit sector. Taiwan Report.

[4] Pluta, J. (1979). PUBLIC FINANCE QUARTERLY, Vol. 7 No. I, 25-46.

[5] The Secret History of Silicon Valley

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