Taiwan's Integrated Circuit (IC) industry is of particular interest due to its increasing global importance and its unique, virtually integrated infrastructure. This study was conducted to examine the strategy-performance consequences of strategic group membership and attempted empirically to investigate the relationship between the profitability of Taiwan's IC firms (dependent variables) and both firms' business strategies (virtual integration versus IDM) and industrial business cycles (contingent variable). Data was taken from the Taiwan's Integrated Circuit industry for the period 1994-2001. Significant and interesting results were obtained. First, the main factor of business models significantly affects a firm's profitability and the variation over time. Secondly, the significance of the effect of the business models was still found when the variable of business cycle was included. It implied that the effectiveness of virtual integration to increase a firm's return on assets and return on equity existed at any stage of business cycles. An increasing number of independent IC design firms worldwide seem to support the findings of this study. However, the IDM firms may still exist due to their strategic commitment though the virtually integrated firms have higher profitability.

This study bridges a gap in current literature by providing empirical evidence of factors affecting the performance of non-academic spin-offs originating from the Acer Group in Taiwan. The Acer Group is the epitome of Taiwan's industrial development over the past 30 years. This study utilizes the spin-offs of the Acer Group to empirically analyze the influences on spin-off performance, demonstrating that the performance of a spin-off is significantly correlated with the number of years of service of the CEO in the parent company, as well as the method of company establishment, sources of company technology and number of items shared in common with the parent company. The analytical results obtained by this study highlight two issues. First, spin-off performance is likely to be enhanced if its operations are linked to those of the parent, and if the CEO has a long history of involvement with the parent, feeding his/her ability to tap into the resources of the parent. Second, a spin-off performs better during its initial stages if it is an internal venture spun out from the parent company with its technology researched and developed within the parent.