Silicon Valley grew very fast because of its technological specialization and innovative corporate culture. The firms and individuals in Silicon Valley showed a strong tradition of innovation and cooperation. There was coordinated focus on manufacture of hardware, development of software and capital investment.
Several economic development strategies converged to benefit Silicon Valley. The location of Stanford University, which was a private university and had focus on technology, provided well-trained and talented employees and innovators. There was also funding from government sources via the manufacturing facilities and location of defense labs.
Silicon Valley enjoyed great strengths in the expert and progressive cultures that facilitate the use of modern technologies into successful commercial ventures. These ventures are supported by such elements as government regulations, Education, Human workforce, experienced support services, adventure and risk taking, a varied technological economy, network clusters and regional focus.
Factors that comprise a thriving technological ecosystem
Economic Development Strategies
Economists argue that in order to maintain growth, economies need to develop new products and technologies. The course of creative destruction plays a leading role. Growth needs continuous innovation and invention as industry, technologies and new products replace the existing (Simoudis, 2011).
Education
States that are close to technological limit grow faster per expenditure by use of research universities. Higher education improves the performance of a state as education is necessary for nearly all high-skilled jobs and gives workers the suppleness to adjust to creative destruction. Education is necessary not just in the production of cutting edge technology, but also in providing the ability to regulate to technological innovation.
Research and Development
Research and development have a palpable direct effect on innovation, productivity and buildup of new technologically effective capital. After all these advances create new knowledge that is available to others without any extra cost, thus inducing more innovations at an even lower cost than that of the original discovery. Contrary to this, emerging economies can take up the leading machinery from the developer.
Research and development is not like the regular products as it involves ideas. It is not easy to restrict knowledge, and its ownership is difficult to determine or confine. In that case then, the development of research and Development benefits not just the inventor but offers spillover benefits to users of the ideas, hence the economy. The developers of research and development are not able to obtain the full return rate for their invention because of this spillover.
Investments
Building regional ecosystems cannot be accomplished without sustained, coordinated and significant investment effort either by the government or by the private sector. Finding a reliable source of funding is the key, although it is determined by the viability of the existing ideas (Wonglimpiyarat, 2005 pp. 205-206).
Government support
The rate of innovation in any country is influenced by many factors. Complete markets are a superior mechanism to help achieve a competitive milieu and to apportion resources across firms entering and exiting the arena. Markets are not usually perfects and efficiencies may arise, which diminish the progress of technology when not addressed. If this happens, the private market will under-produce good things from an efficiency perspective as the social benefits surpasses the private returns. This is when the government’s role comes in to make the market complete. This is done by giving the private and public benefits in relative sizes. The government diverts resources to and from the private sector to achieve this balance.
Culture and environmental Receptors
Risk and adventurous
In economic development, challenges and risks do not often emerge as well-defined setbacks with easy solutions. For success, it is important to acknowledge dilemmas as challenges in need of sustained attention. A systematic thinking approach about the future will be handy in preparing for decision making. Connecting to others in the region regarding long-term threats and opportunities gives individual foresight that is crucial in technological survival (Wonglimpiyarat, 2005 p. 210).
Location
The beauty of successful ecosystems such as Silicon Valley lies not in the place but in the community, business and social networks. It is important to find a success story or failure and link them to one’s local assets and strengths. With this in mind, one can exercise resilience, agility and flexibility to the economic climate in order to achieve success.
Silicon Valley Weaknesses
Just like in every area of success, there are challenges and weaknesses. At Silicon Valley, the biggest weakness is its market. Its dependence on a major consumer is dangerous because a small shift in consumption patterns can greatly affect it negatively or positively. Its concentration in one area is rather limiting to make Silicon Valley very vulnerable. Its activities can easily be disrupted by such small factors as a catastrophe in the area. Unlike what happens when businesses diversify their locations, Silicon Valley cannot enjoy diversity, and, multicultural interaction may be rather limited. With its exponential growth, expansion in terms of space may be difficult as the infrastructure has trouble keeping up with this growth. Because of this, the cost of living is high and would easily discourage even professionals seeking to bring innovations into Silicone Valley (Simoudis, 2011).
References
Seven Critical Success Factors – Silicon Valley & San Francisco Bay Area Directory. (n.d.). Goto-Silicon-Valley.com, the Silicon Valley & San Francisco Bay Area Directory.
Simoudis, E. (2010). Silicon Valley’s Defining Characteristics. Enterprise Irregulars.
Wonglimpiyarat, J. (2005). What are the mechanisms driving the success of the US Silicon Valley? International Journal of Technology, Policy and Management 2005, 5(2), 200-213.