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Globalization of the Silicon Valley Ecosystem AnnaLee Saxenian UC Berkeley School of Information TRIPLE HELIX IX CONFERENCE Palo Alto, July 11-14 2011 Today’s plan: Research findings o From self-sufficient corporations to specialists and regional ecosystems o Local and global networks support innovative recombination Policy lessons o There is no recipe for growth o Compete by differentiating o Create global search networks o Monitor progress closely 20th century company Hierarchy Vertical integration Long term planning Internal job ladders Corporate secrecy & loyalty 20th century innovation: R&D lab Regional ecosystem advantage Vertical unbundling Minimal hierarchy Open boundaries: education & industry “Job hopping” Experimentation Learning via failure SMEs dominate in Silicon Valley Over 29,000 companies started in 1990s; onequarter have 5 or more employees, most have 1-4 Local networks as coordination Venture capital networks Professional and technical networks ◦ Alumni networks ◦ Ethnic associations Informal social networks Growth via innovative recombination Silicon Valley -technology evolution Cloud, Web & Mobile apps Internet, Ecommerce Value added Personal computer Integrated Circuit Defense 1950 1960 1970 1980 1990 2000 2010 Global competitive environment Information technology revolution means: 1. Dramatic increase in potential solutions to problems – end of fixed technology trajectories 2. Innovative solutions can come from anywhere Rise of global supply chains New regions link to global value chains Diaspora as a powerful global search network The New Argonauts Diaspora networks in former “periphery” scan globally for partners and solutions –link into global value chains Not replicas, more like extensions of Silicon Valley ecosystem Global supply chain: iPad Today’s plan: Research findings o From self-sufficient corporations to specialists and regional ecosystems o Local and global networks support innovative recombination Policy lessons o There is no recipe for growth o Compete by differentiating o Create global search networks o Monitor progress closely Lesson 1. There is no recipe Recipes Recipe 1. “Growing Silicon Valley” Ingredients: Technology park University research Venture capital Lots of engineers Incubator etc. Recipe 2. Perfect “free” markets Remove trade barriers Minimize regulation Privatize state-owned businesses Macro-balance: “get prices right” Protect property rights Recipe 3. Invest in national model Create post-national “champions” Target investment in leading firm(s) Fund strategic sectors in isolation Lesson 2. Partner to differentiate . . . and lower costs later Cost-cutting doesn’t offer sustainable advantage and undermines regional ecosystem Identify distinctive local strengths Build partnerships in order to: • Identify unique local capacities and promising markets • Explore new market opportunities Public-private partnerships Invest in local capacity-building Invest to build local capacities e.g. Training, technical assistance, education, standard setting, research, export promotion, etc. o Experiment and seek feedback o Aggregate lessons o Agricultural extension as model Lesson 3. Create global search networks Diaspora as a powerful global search network Tel Aviv, Israel Bangalore, India The New Argonauts Diaspora and innovative search Help define appropriate policy Link to distant customers and partners Transfer global “best practice” Broker technology or institutional adoption Taiwan in 1960s &1970s Poor GDP per cap < $2,500 Minister of Industry consults with Overseas Chinese in Silicon Valley Executive Yuan creates STAG - Science & Technology Advisory Group which includes special overseas advisors => Major investments in higher education, => Establish ITRI, public-private industrial research organization Learning from global best practice Ministry of Economy establishes venture capital industry STAG helps overcome political opposition from established interests Overseas Chinese set up first venture funds in 1985 From SV imitator to SV partner 1980s- Reverse engineer and clone PC & Mac 1990s- Entrepreneurship, stock market boom 2000s- Leads global IT manufacturing ◦ Perfects flexible, high quality, low cost systems ◦ Pioneers and dominates silicon foundry business 10,000 electronics-related firms The SV-Hsinchu-Shanghai network Ireland: Inward FDI as a search network Lesson 4. Monitor long term progress Set measurable goals, assess progress often Identify & address obstacles to further growth Adjust based on results and iterate Develop institutions to sustain external search Taiwan’s Electronics Production 2005-2010 Goal is sustained innovation and growth Incremental upgrading via specialization, collaboration, recombination: local and global — cumulates to sustained growth Key: Continuous monitoring and adaptation Requires time and patience!! Questions and comments Professor AnnaLee Saxenian [email protected]
