Value creation for the growth of contract manufacturers by technological competence leveraging

Applying existing competence to different end products is an easy and low risk way, vis-a-vis building new competence, for a contract manufacturer (CM) to pursue growth. As such, a CM in effect adopts competence-related diversification. However, there is a strong concentration on value of competence building and neglecting that value is also created by competence leveraging for CMsʹ growth. Two case studies compared and contrasted two CMs in the composite material and IT industry in Taiwan. A survey of existing literature provided the relevant constructs and concepts for developing a conceptual framework of technological competence leveraging (TCL) functions for CMsʹ growth. Subsequently, in-depth interviews and secondary data from many sources were compared and analyzed. The results showed five functions of TCL that influence CMs strategic growth and they are: leveraging existing competence into new market; 1) having low risk; 2) utilizing slack resource; 3) displaying the value of competence to buyers; 4) building new competence for future growth; and 5) creating opportunities to build own-brand with low conflicts.