New Industrial Cities? The Four Faces of Silicon Valley

Abstract

Silicon Valley has been admired and much emulated as an American version of a new industrial district based on its heavily networked, small-firm, innovative electronics sector. This industrial structure has been argued to give the region a uniquely cooperative, flexible, and dynamic structure. Based on field research and data analysis, we argue that Silicon Valley's success and culture owes much to the presence and success of large organizations-its defense industrial complex, its headquarters and high-tech branch operations of large domestic firms, and the recent entry of foreign firm operations. Relationships among these large organizations are more often characterized by competitive, arm's length relationships, market power imbalance, cooperation with organizations external to the district, and relatively low levels of interorganizational mobility of personnel. These relationships undermine the cooperation, innovation, and governance conditions celebrated by the new industrial districts scholars. Furthermore, their modus operandi tends to raise the regional cost of doing business and exacerbates centrifugal tendencies in corporate location and dualism in income distribution. Silicon Valley may not be as easy to replicate as many have assumed, nor does it deserve unalloyed high marks as a regional prototype.