Regional Advantage: Culture And Competition In ... NEW!

Compares the organization of regional economies, focusing on Silicon Valley's thriving regional network-based system and Route 128's declining independent firm-based system. The history of California's Silicon Valley and Massachusetts' Route 128 as centers of innovation in the electronics indistry is traced since the 1970s to show how their network organization contributed to their ability to adapt to international competition. Both regions faced crises in the 1980s, when the minicomputers produced in Route 128 were replaced by personal computers, and Japanese competitors took over Silicon Valley's market for semiconductor memory. However, while corporations in the Route 128 region operated by internalization, using policies of secrecy and company loyalty to guard innovation, Silicon Valley fully utilized horizontal communication and open labor markets in addition to policies of fierce competition among firms. As a result, and despite mounting competition, Silicon Valley generated triple the number of new jobs between 1975 and 1990, and the market value of its firms increased $25 billion from 1986 to 1990 while Route 128 firms increased only $1 billion for the same time period. From analysis of these regions, it is clear that innovation should be a collective process, most successful when institutional and social boundaries dividing firms are broken down. A thriving regional economy depends not just on the initiative of individual entrepreneurs, but on an embedded network of social, technical, and commercial relationships between firms and external organizations. With increasingly fragmented markets, regional interdependencies rely on consistently renewed formal and informal relationships, as well as public funding for education, research, and training. Local industrial systems built on regional networks tend to be more flexible and technologically dynamic than do hierarchical, independent firm-based systems in which innovation is isolated within the boundaries of corporations. (CJC)

Regional Advantage: Culture and Competition in ...

Saxenian locates the origins of these differences in thehistory and culture of the two regions in the period after WorldWar II. University, corporate, and venture-capital leadership mayhave been key influences. Both regions had universities withleading research and training programs in engineering. But,compared to MIT, Stanford encouraged wider participation in itsactivities by local firms. Hewlett-Packard also helped to set thetone in Silicon Valley by welcoming and even helping start-ups,while its 128 counterpart, Digital, was largely closed to theregional economy. In addition, the venture-capital leadership inSilicon Valley played a role in transferring skills and knowledgeamong firms, whereas in Boston the more traditional sources offinance had little technical expertise. In almost stereotypicallyCalifornian fashion, the corporate culture in Silicon Valley was"laid back" about sharing of information and skills, whereas firmsin Massachusetts anxiously sought to protect their intellectualproperty--and ironically ended up with less to protect.

Regional Advantage has obvious interest for policymakers:What state would not like to have the "next" Silicon Valley? Butwhile Saxenian has some pertinent advice about policy (includingthe role of universities), it is not at all obvious how toreproduce the patterns that have made Silicon Valley successful.Investing in technology centers is relatively easy; creating aregional economic culture of trust, collaborative relationships,and open communication is a more elusive target. Still, those whowant to understand economic growth in the information age canhardly do better than to read Regional Advantage.

The first humans evolved in tropical and subtropical regions of Africa about 2.5 million years ago. Since then, we have successfully occupied all of the major geographic regions of the world, but our bodies have remained essentially those of warm climate animals. We cannot survive outside of the warmer regions of our planet without our cultural knowledge and technology. What made it possible for our ancestors to begin living in temperate and ultimately subarctic regions of the northern hemisphere after half a million years ago was the invention of efficient hunting skills, fire use, and, ultimately, clothing, warm housing, agriculture, and commerce. Culture has been a highly successful adaptive mechanism for our species. It has given us a major selective advantage in the competition for survival with other life forms. Culture has allowed the global human population to grow from less than 10 million people shortly after the end of the last ice age to more than 6.5 billion people today, a mere 10,000 years later. Culture has made us the most dangerous and the most destructive large animal on our planet. It is ironic that despite the power that culture has given us, we are totally dependent on it for survival. We need our cultural skills to stay alive.

During the next 20 years, this competition probably will make it harder to maintain commitment to many established norms and to develop new ones to govern behavior in new domains, including cyber, space, sea beds, and the Arctic. Existing institutions and norms are not well designed for evolving areas such as biotechnology, cyber, and environmental response and for the growing number of new actors operating in space. Many norm-setting efforts may shift from consensus-based, universal membership institutions to non-global formats, including smaller and regionally-led initiatives. Alternatively, new norms might gain momentum if states collectively perceive growing risks of unilateral action or if increasingly powerful nonstate actors throw their weight behind new guidelines, particularly regarding the use of emerging technologies. 041b061a72