As the rises of the market and industry cluster of China, the importance of the Taiwan¡¦s cluster effect to multinational corporations¡]MNCs¡^will have the changes. And the changes of cluster effect between Taiwan and China have had the impact on MNC Taiwan subsidiary¡¦s role. This thesis focuses of the cluster effect between Taiwan and China that changes the MNC¡¦s Taiwan subsidiary¡¦s role. With regard to the factors affecting cluster of industries, previous studies have based mainly on Porter¡¦s Diamond Model, which includes factor conditions, demand conditions, related and supporting industries and firm strategy, structure and rivalry. Besides, according to the series research by Birkinshaw, the HQ assignment and the subsidiary¡¦s behavior will also have the impact on subsidiary¡¦s role. This thesis will study the changes between these three dimensions and MNC¡¦s Taiwan subsidiary¡¦s role. This thesis uses the case study in order to support the formation of research structure and hypothesis, which also survey to collect data. The population is the list of foreign enterprises in Taiwan published by Dun and Bradstreet, 2000. The subsidiaries belong to manufacturing industry and service industry. The subsidiaries are owned by foreign MNC which must operate over one year in Taiwan. We use multi-regression to examine the relationships between the dependent variables and the changes of MNC Taiwan subsidiary¡¦s role. After analyzing 60 MNC¡¦s Taiwan subsidiaries, the results reveal that HQ assignment, the subsidiary¡¦s initiative behavior and the changes of cluster effect between Taiwan and China will have the influence on MNC¡¦s Taiwan subsidiaries¡¦ roles. Therefore, these dissertation results respond to Birkinshaw¡¦s perspective. The subsidiary behavior is simultaneously influenced by HQ, subsidiary and local environment.