This study focuses on small business in Taiwan. It first discusses the most important features that modern small firms provide, how they are involved in the growing integrated world economy, and the recent rising trends in the number of small and medium sized enterprises (SMEs). This trend, which follows an earlier decrease is further investigated in the context of the
Taiwan economy. Finally, three conditions of Taiwan’s successful small firm sector are discussed: appropriate policy, global involvement, and entrepreneurship. Alternative small business futures depend on the conditions that encourage the development of SMEs. In one scenario, where SMEs can find the niche markets quickly, and enhance their expertise in logistics, a rise in SMEs in the global market may be expected. In another scenario, if SMEs fail in forming alliances and networks when confronting with giant firms or large Foreign Direct Investment, there might be a reduction in enterprising behavior. Judging from the former performance of Taiwan’s SMEs, it can be concluded that there is a good chance that SMEs will remain a vibrant and important participant of its economy and the world economy in the future.