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Small and medium-sized enterprises (SMEs) play an important role in Taiwan economy. However, the size of these enterprises limits their research resources and research personnel. According to the 1998 Republic of China's indicators of science and technology, a total of 66.7% of the PhD level researchers in Taiwan are found in academia. Out of the many methods that can be used to release the capabilities accumulated within the academic field in order to help and lead Taiwan's industries to perform R&D, especially that within the SMEs, the industry-university cooperation programme was found to be particularly effective. Twenty-six of the 67 industry-university cooperation projects (IUCPjs) funded by the National Science Council have been completed to date. These IUCPjs can be classified into two types. The first type is vertical cooperation which uses academic theories to execute new R&D work and is suitable for product innovation such as that found in the high-tech industries. The second type is horizontal cooperation which is more suitable for mature industries adopted to perform process innovation, improvement, and system integration. This study shows that the second type of IUCPjs possesses the following characteristics. Firstly, they produce more R&D results including transferring the research results to industry and promoting product competitiveness. Secondly, they make SMEs gradually realise the importance of product quality and R&D effort. Thirdly, they tend to look for another opportunity to participate in a new IUCPj within three years of the completion of their first IUCPj. Cases of IUCPjs for Machining Centre and Wire-cut Electrical Discharge Machine Industries are studied. They demonstrate that two different approaches were adopted for promoting R&D activities: (1) IUCPjs for machining centres emphasise their efforts in establishing key components and core competence for individual enterprises; and (2) an IUCPj for wire-cut electrical discharge machine industry is successful by promoting the competitiveness of the whole industry by naturally forming strategic alliances and by diversifying their core technologies.
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