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:
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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
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Hierarchy
Vertical integration
Long term planning
Internal job ladders
Corporate secrecy &
loyalty
20th century innovation: R&D lab
Regional ecosystem advantage
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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
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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
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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
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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
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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
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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
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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
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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!!
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Questions and comments
Professor AnnaLee Saxenian
[email protected]
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