Competitive strategy and flexible manufacturing: New dimensions in high-technology venture-based economic development

Abstract

The recent proliferation of high-technology venture-based economic development beyond the well-established research centers of Santa Clara's Silicon Valley, Boston's Route 128 and Carolina's Research Triangle, has raised important questions concerning the demands placed on a facility's location by a modern high-technology firm. Historical arguments promoted the idea that venture capital opportunities intertwined with skilled engineering and professional networks, all propelled by the advanced technology spin-offs of major research universities and neighboring firms, were necessary both to attract and to retain existent high-technology enterprises and incubate new start-up ventures. Yet, current empirical research suggests that these oft-cited infrastructure requirements that fueled the “technopoli” high-technology centers are inadequate in their ability to explain the spatial tendencies and location behavior of modern technologybased enterprises. Accordingly, we argue that in order to more fully understand the economic dynamics of technology development, it is important to consider carefully the implications of competitive strategy and recent advances in manufacturing technology. Utilizing an empirically derived typology of competitive strategy for high-technology firms, we investigated the linkages between strategy and community infrastructure requirements at both the regional and site-specific levels of analysis. We also examined the impact of flexible manufacturing technologies on both actual and anticipated location behavior. To develop a relevant typology of competitive strategy for high-technology ventures, we incorporated elements of three important dimensions that frame a corporation's overall strategy: manufacturing strategy, technology strategy and market strategy. Using a cluster analytic technique, three generic competitive strategy types were established: “technology mills,” “technology specialists,” and “technology mass producers.” Further statistical analyses indicated that these three strategies had significantly different infrastructure requirements at both the broad community level and the specific-site level. In addition, firms employing more flexible manufacturing technologies appeared to have very different spatial tendencies, and were more likely to shift production between various facilities. The results of this study have important implications at two levels: for high-technology economic development strategies and for corporate strategies. For the economic development officer or community planner, especially those involved with smaller communities without the vast and complex infrastructure of a Silicon Valley, this study suggests that a productive economic development strategy would be one that takes a relatively focused approach. These communities should encourage infrastructure development, provide appropriate government incentives, and establish community marketing plans by targeting firms with competitive strategies that value the type of infrastructure inputs the community can provide. For the corporate strategist, this study underlies the importance of closely integrating the location decision with the firm's overall competitive strategy. Matching plant location with strategic thrust is often overlooked by corporations in their misplaced desire to simply find a low-cost solution.