This study explains the roles of non-technical innovation, human resource productivity and government policies with respect to small and medium enterprises (SMEs) and their relationship with the future economic development of Taiwan. It also elaborates the role of human resources and how government policies facilitate the economic development of Taiwan. Taiwan ranks as one of the innovation-driven economies in East Asia and that innovation is mostly associated with SMEs in Taiwan [1] . So this study will predict the future effects of entrepreneurship on the economic development of Taiwan in terms of its innovation capacity and capability, productivity and government policies. This study has an important role to play in the formulation of government policies and decision making at the organizational level because SMEs are considered to be a backbone of the Taiwanese economy so their future role could be a decisive factor for the continued economic development of Taiwan.

The successful development of Taiwanese small and medium-sized enterprises (SMEs) has become the most important part of Taiwan’s economic legend. Taiwan experienced spectacular development with rapid growth as well as an ongoing transformation from a traditional agricultural-oriented to a modern industrial and service- oriented economy [2] .

The intention of this study is to explore the relationship between the characteristics of entrepreneurship with the future economic development of Taiwan. Economic development usually refers to the adoption of new tech- nology, skills and business processes in order to improve production facilitates and move from one economic stage into another that produces an important effect on the life of people in that country [3] . According to economics, there are three main economic development stages, namely: factors-driven economy, efficiency-driven economy and innovation-driven economy [4] . According to the global competitive index report 2012-2013, Taiwan is ranked as an innovation-driven economy because of the fact that Taiwan has high educational standards and the adaptation rate of new technology and sophisticated business processes are also appreciable. Taiwan attained 13^th position in the index, showing Taiwanese intellectual capability and capacity for innovation and adaptation of new technology [4] . The main pillar of Taiwan’s economy was the production capacity of small and medium sized enterprises (SMEs) that played a vital role in the economic success of Taiwan in the past [5] . The word “entrepreneurship” literally means “to take or carry between” in the sense of economic transaction [6] . Ahmad and G. Seymour (2008) argued that entrepreneurship was a phenomenon of entrepreneurial activity [7] . The journey of SMEs in Taiwan started after the Second World War when each country started to place more value and importance on venture capital [8] . The global arena was created and globalization became fundamental to each and every economy [8] . At that crucial time period, Taiwan produced “black hand bosses” who were supposed to be the key players in the Taiwanese economy [9] . Black Hand bosses were those people who had skills, practical experience and enough social networking skills to start their own business. Surprisingly, the wives of those bosses also played a crucial role in the success of the Black Hand bosses [9] .

This study will cover three elements of entrepreneurship, namely: non-technical innovation, government policies regarding SMEs and human resource productivity, and it will define their contribution to the future economic development of Taiwan. This study has limitations in terms of data usage, financial resources and the researcher’s exclusive dependence only on secondary data regarding the subject at hand. The objectives of this research are to find out the relationships between non-technical innovation, human resource productivity and government policies with regard to SMEs and the future economic development of Taiwan and to understand the social impact and economic impact of SMEs and then to make a final conclusive statement.

Taiwan SMEs were considered to play a significant role in the past economic development of Taiwan as the data showed that export share of SMEs in 1980s was 68% but later on, it reached 49% in 1997 [9] . SMEs accommodated large number of workforce in Taiwan and the trend was continuing but government also played a key role in boosting and promoting SMEs in the past [9] . This study will predict the role of SMEs in terms of entrepreneurship in future economic development of Taiwan as the economy has been developed from an agricultural economy after Second World War into an innovation driven economy.

According to Robert Solow (1956), neo classical theory for economic development, it states that productivity growth takes place when there is disequilibrium between labor-capital ratios. As the capital per worker increases, it decreases the marginal productivity of that capital and ultimately there is no benefit to investment because capital-labor ratio is constant. Then technological progress plays its role and progress happens [10] . Economic development is mostly characterized by increasing gross domestic product GDP in nations and GDP per capita [11] . It also means the distribution of income [12] . Economic development ideally refers to the sustained, concerted actions of communities and policymakers that improve the standard of living and economic health of a specific locality [13] . The terms “economic development” and “economic growth” are often used interchangeably but in fact there is a very big difference between the two. Economic growth can be viewed as a sub category of economic development [14] . When social mobilization increases expectations and ambitions, economic development increases the capacity of society to satisfy their ambitions and therefore should tend to reduce social frustrations and any resulting political instability [15] . Economic development can also be referred to as the quantitative and qualitative changes in an existing economy [16] . Economic development involves development of human capital, increasing the literacy ratio, improving important infrastructure, improvement of health and safety and other areas that aim at increasing the general welfare of the citizens [16] .

The development of Taiwan’s economy can be characterized by structural change in favor of more capital- and technology-intensive industries as well as the continued upgrading of the economy in general and these industries in particular [2] . Taiwan has been an economic success since 1992; Taiwan’s GDP growth has averaged 4.5 percent. This raised real per capita income from $9116 in 1992 to $19,762 in 2012, with the result that today Taiwan is the 28th wealthiest country globally, and 6th richest country in Asia. In addition, along the way Taiwan has transformed itself from a dictatorship into a vibrant democracy [17] . Fuelling this growth in Taiwan has been a rapid expansion in international trade. In 1992, Taiwan’s total trade was over $180 billion and repre- sented 82 percent of GDP. In 2012, Taiwan’s trade represented 140 percent of GDP and was valued at over $650 billion, making it the world’s 19th largest trader even though it is only the 28th largest economy in the world [18] .

This study has used transaction cost theory which is also called “Theory of the Firm” by Ronald Coase (1937) in order to elaborate the role of entrepreneurship in the future economic development of Taiwan. This theory mainly claims that firms exist not because of carrying out the functions of production, marketing and distribution of goods and services on a large scale but that firms exist because of the internal transaction costs of carrying those operations are less than the outside world where this is defined by Coase (1937) as “It began to be seen that there was something more important than the relations inside each factory or unit captained by an undertaker; there were the relations of the undertaker with the rest of the economic world outside his immediate sphere.

The main points of why firms exist are defined by Coase (1937) as follows:

1) The less the costs of organizing and the slower these costs rise with an increase in the transactions organized;

2) The less likely the entrepreneur is to make mistakes and the smaller the increase in mistakes with an increase in the transactions organized;

3) The greater the lowering (or the less the rise) in the supply price of factors of production to firms of larger size [19] .

The Taiwan economic success is obviously related to the effective and efficient institutionalization that has been inherited by the Taiwanese government and it played a crucial role in economic development of Taiwan [20] . “What gets measured gets managed” is an axiom in the business world [21] This is perfectly followed by Taiwanese entrepreneurs through reducing their transaction costs of information sharing, contract implementation and uncertainty cost, as argued by Williamson (1985) and Coase (1937) who empirically demonstrated that transaction cost minimization can help explain industry structure and decision-making by economic agents in the context of market transactions [22] - [26] . Taiwan’s emergence as a newly industrialized nation is not just a miracle but it is evidence of how socio-economic bondage and thinking can change the fate of the country which is also illustrated by the researcher through this research. This is argued with the statement: “Better to be the head of a chicken than the tail of an ox” which describes this feature of Taiwan’s ideology, especially in the business field. Such thinking drives machinists or apprentices to create their own businesses and become “black hands” bosses. These individuals, instead of learning from school, learned their skills through apprenticeship within factories. They learn by doing. Combining skills and experience, “black hands” set up their own businesses and creates opportunities for success [9] .

Taiwan is not accepted as a sovereign state by the international community and it somehow hinders economic growth and development of Taiwan as argued by Riegl (2014) who claims that lack of international recognition and international isolation prevents unrecognized states from joining the ranks of sovereign states, as the world’s most exclusive political club, and thus cannot enjoy all the benefits of political and economic globalization [27] . An unrecognized state is defined by Pegg (1998) as “places that don’t exist in international relations” [28] .

Economic development today involves far more than just traditional manufacturing industry; the key drivers of growth for Taiwan in the future will be the innovation economy and environmental protection-related demand. The last few years have seen a pronounced trend towards the formation of multilateral and bilateral free trade agreements (FTAs) and comprehensive economic partnership agreements (CEPAs) within the Asia region. Taiwan cannot afford to isolate itself from this trend. The fifth “Chiang-Chen Meeting” saw the signing of the Economic Cooperation Framework Agreement (ECFA), marking the beginnings of a mechanism for free trade between Taiwan and China. On September 22, 2011 Taiwan signed a Bilateral Investment Agreement (BIA) with Japan, covering the three key areas of investment promotion, investment protection and investment liberalization. Also, the Trans-Pacific Strategic Economic Partnership Agreement (TPP) was a major focus of discussion at the Asia-Pacific Economic Cooperation (APEC) can help Taiwan to gradually secure fuller participation in the process of regional economic integration in East Asia [29] .

The conceptual framework of this study (Figure 1) has followed the theory of the firm (1937) as its basis in order to explain the relationship between factors of entrepreneurship and future economic development of Taiwan. Then the researcher developed the following model and chosen three independent variables in order to define entrepreneurship. The research questions that would be answered through this research were whether or not there is a relationship between non-technical innovation, human resource productivity and government policies regarding SMEs with the future economic development of Taiwan and what is the overall economic impact of SMEs in the future economic development of Taiwan.

This research is inductive qualitative research which used secondary data from different sources to analyze the research problem [30] . Inductive reasoning begins with specific observations and concludes with broader generalizations and theories [30] . This research is applied research because it was carried out to understand a particular business phenomenon and its effect on the future. As the applied research definition suggests “Applied research is done to solve specific, practical questions; for policy formulation, administration and understanding of a phenomenon. It can be exploratory, but is usually descriptive [31] ”. The research has been carried out in natural settings and therefore it is non-contrived. The research has used qualitative data analysis software in order to analyze the data through coding and then applying text search and word frequency query at the end.

This research is carried out on the topic of the role of entrepreneurship in the future economic development of Taiwan and strived to answer three research questions related to this topic. As a matter of fact, entrepreneurship is an individualistic quality and it is linked with SMEs in Taiwan because most SMEs are sole proprietorship in

Taiwan, therefore the most part of this research is done on the SMEs of Taiwan. The variables used to investigate entrepreneurship were non-technical innovation, human resource productivity and government policies. This research asked the following questions to be answered by the research process:

1) What is the role of non-technical innovations of SMEs in terms of entrepreneurship and its relationship with the future economic development of Taiwan?

In the pursuit to find the answer to this first question, the researcher has found immense data and literature that supported conclusions such as that economic growth can occur in two ways: 1) improvement in technical knowledge (neoclassical studies largely focus on this aspect of research), and/or 2) increased awareness of the availability of opportunities. Hence, economic growth occurs not only “because of the availability of new opportunities, but because of expanded awareness of existing opportunities” [32] . It is the job of an entrepreneur to exploit existing opportunities and create new opportunities as well. Innovation is considered a very important factor in the economic development of any country because organizational innovation actually decides the future of that country one way or another as Lin & Chen (2007) argued, noting that innovation has been identified as the major factor in economic growth and the expansion of wealth and of an enterprise in the era of the knowledge-based economy depending on how it improves its organizational innovation capability. Porter (1990) described how companies achieve competitive advantage through acts of innovation [33] . Lin (2007) give the idea that innovation is the creation of new products, processes, knowledge or services, using new or existing scientific or technological knowledge [34] . This indicates that innovation is not only technical but includes non-tech- nical innovation which complements and supplements the vast area of technological innovation as mentioned by Wu (2009) in which he says that “Non-technological innovation is an important element of companies’ innovation activities that both supplement and complement technological innovation, i.e. the introduction of new products and new processes” [35] . His idea is reinforced by other scholars as well; innovation in firms is not just about developing and applying new technologies but also to adopt and re-organize business routines, internal organization, external relations and marketing [36] [37] . Non-technical innovation is considered to be innovation of business processes (mainly organizational innovation and marketing innovation). This is also mentioned by the Oslo manual (2005 Edition), “This non-technological character is reflected in the definition of the two new types of innovation introduced to the definition of innovation in the third (i.e. 2005) edition of the Oslo Manual. They are defined as follows:

“A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing [38] .” An organizational innovation is the implementation of a new organizational method in the firm’s business practices, workplace organization or external Relations” [38] . “Scholars have noted that SMEs are often more fertile than larger firms in terms of innovation [39] . Their comparative advantages over large firms in innovation are their flexibility and speed of response [40] [41] . As a result, SMEs generally make a valuable economic and social contribution because of their innovative capacities”.

Along with this obvious and clear evidence, the researcher has found a link between non-technical innovation of SMEs and economic development of Taiwan by using Nvivo 10 software.

It was concluded by the two queries (namely word frequency and text search query through qualitative software Nvivo) that there is a definite relationship between the role of non-technical innovation of SMEs and the future economic development of Taiwan.

2) What is the role of human resource productivity of SMEs in terms of entrepreneurship and its relationship with future economic development of Taiwan?

The researcher found that there is a strong relationship between human resource productivity and the economic development of Taiwan, based on the fact that Taiwanese SMEs accommodate more than 75% of the total workforce in Taiwan. The researcher also concluded with other scholars like de Silva (1997) and (Becker et al., 1990) that human capital is an endogenous driver for economic growth and economic growth is necessary for economic development [42] [43] . Economic development implies the development of social, economic and political dimensions of a country, but economic growth is the key to achieve economic development as Rautakivi (2012) mentioned when claiming that economic development is mostly characterized by increasing gross domestic product GDP in nations and GDP per capita [11] . Economic growth boils down to three factors: capital, labour, and how they are used―i.e., productivity. While economists may have widely differing views on economic growth, they all agree on the importance of productivity. Strong and increasing productivity is vital to drive wealth creation and create a successful and sustainable economy. Capital is vital for any economy, particularly at the early stages of development, supported by a growing and increasingly skilled labour force [44] . The researcher has also found that productivity of human resources is closely connected with the education system and skills development programs of any country as it was also confirmed by Ministry of Education report (2011) on Taiwanese education when it stated that:

“Taiwan’s vocational education has actually provided a basis for human resource productivity in Taiwan from the last six decades and it does continue to play its role for the economic development of Taiwan” [45] .

The researcher has also found that GDP per capita (PPP) is increasing and it implies that productivity is translated into GDP per capita as shown in Table 1 below.

The researcher has used two queries by qualitative software in order to reveal the relationship and role of human resource productivity of SMEs in the future economic development of Taiwan and concluded that:

There is a definite relationship between the role of human resource productivity of SMEs and the future economic development of Taiwan.

3) What is the role of government policies regarding SMEs in terms of entrepreneurship and its relationship with future economic development of Taiwan?

The researcher has found that government policies were central in entrepreneurship growth and development in Taiwan because without pro-SME policies, they could never have grown and prospered to this stage. This was also supported by other authors like the World Bank report (1994, 2002, and 2004) which stated that “The government policies actually determine the success and failure of SMEs because SMEs require external financial and legal support to compete and grow in the competitive environment”. This was also mentioned by Taiwan’s Ministry of Economic Affairs in that “The emergence of Taiwan’s SMEs is closely related to the economic, social and educational policies adopted by the government in the past: The ‘Land to the Tiller’ program and the Economic Construction Plan” [46] -[48] .

The above transcripts and other scholars related with this subject supported the researcher’s idea that government policies regarding SMEs have a relationship with and play a role in the economic development of Taiwan. Small and medium enterprises play a crucial role in the economic development of any country because they are easier to operate and individuals can groom their careers and financial stability through their solely-owned enterprises. Small and medium enterprises are central to economic development; they are the backbone of a country which wants to project itself as a fully developed nation with equitable socio-economic growth [49] .

Source: Website Title, Index Mundi (http://www.indexmundi.com/g/g.aspx?c=tw&v=67), last accessed 01 June 2015.

Interestingly, 95% of all registered firms across the world are SMEs, and the number is as high as 99% for regions like Europe. Therefore SMEs play an integral role in fueling the progress of any country [49] .

It is concluded by coding all data on the subject and analyzing it through Nvivo software word query and text search query that “There is a definite relationship between the role of government policies regarding SMEs and the future economic development of Taiwan”.

Therefore, the analysis concludes that:

It is concluded by the two queries namely word frequency and text search query through Nvivo that there is a definite relationship between role of non-technical innovation of SMEs and the future economic development of Taiwan.

Ÿ Two queries (namely word frequency and text search query through Nvivo) revealed that there is a definite relationship between the role of Non-technical innovation of SMEs and the future economic development of Taiwan.

Ÿ Two queries (namely word frequency and text search query through Nvivo) revealed that there is a definite relationship between the role of human resource productivity of SMEs and the future economic development of Taiwan.

Ÿ Two queries (namely word frequency and text search query through Nvivo) revealed that there is a definite relationship between the role of government policies regarding SMEs and the future economic development of Taiwan.

The final findings have achieved the four objectives of this study and the fifth objective is to produce a final statement based on the observations concluded by the final findings of the research. This research has found in previous section that there are enough qualitative data available to prove that there is a relationship between factors of entrepreneurship and future economic development of Taiwan. Moreover, following observations have been made to conclude the final statement of this research.

MahendarKumar, (2015) Role of Entrepreneurship in Future Economic Development of Taiwan. Open Journal of Business and Management,03,389-402. doi: 10.4236/ojbm.2015.34038