The challenges of moving towards OBM : a study of Taiwan clothing companies

Abstract

Upgrading to the original brand manufacturing (OBM) by the export-originated firms with an export-oriented industrialization background has been acknowledged to be the most difficult but rewarding step in the industrial upgrading process. However, this upgrading phenomenon has been under-researched. The purpose of this study is to determine what challenges were encountered by the Taiwan companies when moving towards the OBM stage and how these challenges were overcome. By an incorporation of two perspectives the industry evolution and the socio-economic changes -this study traced the sources of the upgrading challenges in terms of the opportunities/barriers/problems encountered by the Taiwan companies, examined how these challenges influenced their upgrading process, and furthermore identified how the knowledge and competencies gaps were closed, from the macro environmental level into the micro organizational level. A two-phase qualitative investigation informed by the constructivist-interpretative philosophical stance was adopted, i.e., a study of the socio-economic environments of relevance by means of a basic type of qualitative inquiry, and a study of the current industry practices via a multiple-case study inquiry. This research design supported the development of the holistic insights and the contextual understanding into the studied phenomenon. It was revealed that OBM opportunities were found in the domestic market which was characterized by the diverse consumer fashion needs, coupled with severe competition from the post-internationalization market. The supporting resources from the Taiwan textiles and clothing industries and the local branding environments were the weaknesses impeding the OBM progress of the studied cases. The major OBM challenges encountered were the acquisition of the appropriate retailing channels/locations and the obtainment of the necessary know-how. The findings showed that the involvement in the global value chain using the original equipment manufacturing/original design manufacturing model resulted in a pair of dual influences - the gained business vision coupled with the created perception/knowledge gaps - affecting the OBM implementation. The strategic operations adopted for tackling the posed challenges during the OBM course exhibited a characteristic of a series of sequential shifts along the implementation path, since these operations were confined by the four dynamic factors. It was also uncovered that the missing knowledge for implementing OBM was obtained by acquiring the human resources. The subsequent knowledge diffusion, integration and further creation were largely achieved through the in-house learning-by-doing practices over a long period of time. An incremental penetration into the branded fashion beyond the perception limited by their previous role in the global value chains was achieved in the situation of the two quasi-successful cases. In addition to the provision of the in-depth and rich descriptions of the investigated phenomenon, this exploratory study also provided a pioneer explanatory framework explaining the constitution of the OBM phenomenon observed at the firm level. This framework illustrated the dynamic nature of the OBM phenomenon and the great complexity involved in managing the OBM challenges revealed from the authentic business practices.