Abstract
This article reviews interdisciplinary literature to explain how state legislation and the practice of law in California influenced the success of Silicon Valley in creating a startup business culture involving the commercialization of technologies built on venture capital finance. Scholarship has identified four major factors in the rise of Silicon Valley: business culture, symbiotic institutional relations with research universities, California contract and employment law, and Silicon Valley law firm culture. Both law and institutional support have been central to the commercialization of scientific knowledge that is the hallmark of Silicon Valley. Silicon Valley companies have remained leaders in technological innovation for over sixty years, encompassing various technologies from semiconductors to personal computers to the Internet. This entrepreneurial approach to technology continues to this day as exemplified by the successful DoorDash and Airbnb IPOs launched in 2020. The paradigmatic Silicon Valley technology company consists of a small group of entrepreneurs building a start-up technology company funded by a venture capital fund. The venture capitalists (VC) maintain hands-on management of the company and receive seats on the board of director and preferred stock rights. If the business plan is successful, the company offers shares to the public through an initial public offering (IPO), or arranges additional funding from another VC fund. This Silicon Valley model is characterized by a tolerance for failure and high labor mobility. Technology company employees have the freedom to leave established companies to start their own ventures.
Highlights
This article reviews interdisciplinary literature to explain how state legislation and the practice of law in California influenced the success of Silicon Valley in creating a startup business culture involving the commercialization of technologies built on venture capital finance
In addition to a unique business culture, Silicon Valley benefited from a close nexus between government funding, local universities, and technology start-ups
The Stanford Research Institute has promoted innovations in various sciences and was instrumental in providing economic and environmental reports which led to the creation of Disneyland in Anaheim, California (Stanford Research Institute, n.d)
Summary
In addition to a unique business culture, Silicon Valley benefited from a close nexus between government funding, local universities, and technology start-ups. The Stanford Research Institute has promoted innovations in various sciences and was instrumental in providing economic and environmental reports which led to the creation of Disneyland in Anaheim, California (Stanford Research Institute, n.d). Given this extensive history of successful innovation, the question arises whether any specific legislative or regulatory regime explains the rise and success of Silicon Valley’s technology sector. Politicians and policy makers in California did not formulate a detailed industrial policy to promote Silicon Valley or attract entrepreneurs to the state. The federal government in Washington, DC eschewed industrial policy legislation to promote the rise of Silicon Valley. The U.S Congress did not create a specialized trial court for Silicon Valley to adjudicate intellectual property disputes
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
