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Original Articles

The limits of silicon valley: a critique of network theory

Pages 231-245 | Published online: 26 Jun 2007

References

  • Miles , R.E. and Snow , C.C. 1986 . Organizations: New Concepts for New Forms . California Management Review , XXVIII ( 3 ) Spring for the general argument. For the case of the Silicon Valley regional network, see A. Saxenian, ‘Regional Networks and the Resurgence of Silicon Valley’, Californian Management Review, Fall 1990, pp. 89-112; A. Saxenian, ‘The Origins and Dynamics of Production Networks in Silicon Valley’, Working Paper 5 16, Institute of Urban and Regonal Development, University of California at Berkeley, 1990a; D. P. Angel, ‘New Firm Foundation in the Semiconductor Industry: Elements of a Flexible Manufacturing System’, Regional Studies, 24, pp. 211; and A. J. Scott, The Technopogies of South California, UCLA Research Papers in Economic and Urban Geography, No. 1, Los Angeles, University of California, 1991. Closely related ideas can be found in the work of M. J. Piore & C. F. Sabel, Ihe Second Indutrial DKJ& (New York, Basic Books, 1984); T. J. Peters, Thriuing on Chaos: Handbookfor a Management Revolution (New York, Knopf, 1989); C. Handy, 7he Age of Unreuion (London, Business Books, 1989); and G. Gilder, ‘The Revitalization of Everything: the Law of the Microcosm’, Harvard Business Reaim, March-April 1988, pp. 4961. Some authors connect the emergence of new network forms with advances in information technology, for example, C. Antonelli, ‘The Emergence of the Network Finn’ in: C. Antonelli (Ed), Hew Information Technology and Industrial Change: the Italian Case (London, Kluwer Academic Publishers, for the Commission of the European Communities, 1988)
  • Chandler , A.D. 1990 . Scale and Scope: the Dynamics of Indutrial Capitalism , Cambridge, Mass : Belknap Press .
  • Saxenian . 1990 . op. cit , Ref 2 in particular
  • Moody , A. 1989 . Changing Finn Boundaries: Anabsis of Technology-Sharing Apeements. Industry and Energy , PPR : The World Bank Industry and Energy Department . Industry and Energy Department Working Paper, Industry Series Paper No. 3 J. Hagedoorn, ‘Organisational Modes of Inter-firm Cooperation and Technology Transfer’, Technovation, 10, 1990, pp. 17-30
  • Lundvall , B. 1988 . “ Innovation as an Interactive Process: from UserProducer Interaction to the National System of Innovation ” . In Technical Change and Economic Theory , Edited by: Dosi , G. , Freeman , C. , Nelson , R. , Silverberg , G. and Soete , L. London : Frances Pinter .
  • Baba , Y. 1988 . Systemic Innovation: its Nature and how to Benefit from it , Brighton : Science Policy Research Unit . Mimeo, first draft K. I. Imai & Y. Baba, ‘Systemic Innovation and Cross-Border Networks: Transcending Markets and Hierarchies to Create a New Techno-Economic System’, paper prepared for the International Seminar on the Contributions of Science and Technology to Economic Growth at the Organization for Economic Cooperation and Development, Paris, June 1989; M. Aoki, ‘Horizontal vs. Vertical Information Structure of the Firm’, American Economic Review, 76, December 1986, pp. 971-983; M. Aoki, Information, Incentiues, and Bargaining in the Japanese Economy (Cambridge, Cambridge University Press, 1988)
  • Porter , M. 1990 . The Competitive Advantage of Nations , London : Macmillan .
  • Freeman , C. 1990 . Networks of Innovators: a Synthesis of Research Issues . paper presented at the International Workshop on Networks of Innovators organized by the Center for Research and Technology (CREDIT UQUAM-Concordia-Universite de Montreal . May 2-3 1990 , Canada.
  • Miles and Snow . op. cit , Ref 1
  • Piore and Sabel . op. cit , Ref 1 For example,Peters, op. cit., Ref 1; Handy, op. cit., Ref 1
  • Teece , D.J. 1986 . Profiting From Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy . Research Policy , 15 : 285 – 305 .
  • Hamel , G. , Doz , Y. and Prahalad , C.K. 1986 . Strategic Partnerships: Success or Sunender? lh ChalLmge or Competitive Collaboration , London : Business School, Centre for Business Strategy . Although large firms engage in strategic partnerships they are highly unlikely to distribute their core assets in a dynamic network for the economic, technological and strategic reasons discussed in part 3. Strategic partnerships are quite different from the dynamic network arrangement. This underlines the need to distinguish carefully between the different ‘network’ types. For an analysis of strategic partnerships, Working Paper Series, Number 24
  • 1993 . Fortune , 22 March Buiness Week, 11 January 1993; Financial Emes, 9 February 1993
  • Mowery , D. 1991 . Public Policy Influences on the Formation of International Joint Ventures . International Trade Journal , 22 March See review by Freeman, op. cit., Ref 8. Mody, op. cit., Ref 4; Hagedoom, op. cit., Ref 4
  • Miles and Snow . 1991 . op. cit , 22 March Ref 1
  • Saxenian . 1991 . op. cit , 22 March Ref 1 Angel, of. cit., Ref. 1
  • Chandler . 1991 . op. cit , 22 March Ref 2 Porter, op. cit., Ref. 7
  • Gilder . 1991 . op. cit , 22 March Similar ideas are put forward Ref 1 semiconductors and electronics and more generally by Peters, op. cit., Ref. 1 and Handy, op. cit., Ref. 1
  • Miles and Snow . 1991 . op. cit , 22 March Ref 1
  • 1991 . Ibid , 22 March : 64
  • 1986 . Business Week , 3 March
  • Piore and Sabel . 1986 . op. cit , 3 March Ref 1
  • 1986 . Ibid , 3 March : 195
  • 1986 . op. cit , 3 March See for instance Saxenian, Ref 1 Angel, op. cit., Ref. 1, for semiconductors; and Scott, of. cit., Ref. 1, for views of flexible production in Southern California
  • Saxenian . 1986 . op. cit , 3 March Ref 1
  • Saxenian . 1986 . op. cit , 3 March Ref 1
  • Angel , D.P. 1989 . The Labour Market for Engineers in the US Semiconductor Industry . Economic Geography , 65 ( 2 ) April : 99 – 114 . Angel, op. cit., Ref. 1
  • Saxenian . 1989 . op. cit , 65 ( 2 ) April : 89 Ref 1
  • 1989 . Ibid , 65 ( 2 ) April : 98 – 99 .
  • 1990 . Dataquest . cited in Business Week , 65 ( 2 ) February : 37
  • 1990 . Dataquest . cited in Electric Business , 65 ( 2 ) April
  • Ferguson , C.H. 1988 . From the People who Brought You Voodoo Economics: Beyond Entrepreneuralism to US Competitiveness . Hamard Business Review , 65 ( 2 ) June : 55 – 62 . The reasons for the US decline and Japanese success are varied and controversial. See, for example, M. G. Borrus, Competingfor Control: Amca's St& in Microehctronics (Cambridge Massachusetts, Ballinger, 1988); C. V. Prestowitz, Trading Places: How W e AllowedJapan to Take the Lead (New York, Basic Books, 1988); Semiconductors: a Strategic Industy at Risk, A Report to the President and the Congress from the National Advisory Committee on Semiconductors (Arlington, Virginia, NACS, 1989); M. L. Dertouzos, R. K. Lester & R. M. Solow, Made in America: Regaining the Productiue Edge (Cambridge Massachusetts, MIT Press, 1989); and R. N. Langlois, T. A. Pugel, C. S. Hacklisch, R. N. Nelson & W. G. Egelhoff, Microelectronics: an I n d u t y in Transition (Boston, Unwin Hyman, 1988)
  • 1993 . Japan in Fortune , 65 ( 2 ) March For example, see the special survey Also see Electronics, April 1992, for US gains in semiconductor equipment production, and Buriness Week, 11 January 1993, and Financial T m s , 9 February 1992, for analyses of the chip industry
  • Utterback , J.M. and Abermathy , W.J. 1975 . A Dynamic Model of Process and Product Innovation . Omega, International Journal of Management Science , 3 ( 2 ) March : 639 – 656 .
  • Abermathy , W.J. , Clark , K.B. and Kantrow , A.M. 1983 . Industrial Renairsance: Producing a Competitive Future for America , New York : Basic Books .
  • Although PLC/innovation analysis has relevance to semiconductors, as shown below, there are various problems with Utterback and Abernathy's model.
  • Teece . 1983 . op. cit , Ref 11
  • Kotler , S. 1976 . Marketing Management: Analysis, Planning and Control , London : Prentice Hall International . Although most PLCs include a fourth, decline stage, for simplicity this is not included here. Part 3 includes the decline stage for semiconductors. For PLC evidence Third edition and Utterback and Abernathy, op. cit., Ref. 33. As Kotler, ibid., p. 233, points out, PLC theory is based upon research into the diffusion of innovations. One of the major findings in fields such as microeconomics, sociology, education and public health is the S-curve (or ‘sigmoid’) curve by which many successful innovations diffuse [e.g. E. M. Rogers, Diffusion of Innovation (Ontario, Free Press, 1962); E. M. Rogers & F. F. Shoemaker, Communication ofInnovationr: a Cross-Cultural Approach (New York, Free Press, 1971); Z. Griliches, ‘Hybrid Corn: an Exploration in the Economics of Technological Change’, Econometica, 4, 1957, pp. 278-286; E. Mansfield, ‘Technical Change and the Rate of Imitation’, Econometrics, 29, 1961, pp. 741-7661, PLCs can be seen as a subset of diffusion analysis, dealing with industrial products. PLCs usually follow a normal, bell-shaped curve when frequency of adoption is plotted over time. If cumulative adoption is plotted over time the result is the standard S-shaped diffusion curve
  • Hall , M. 1959 . Made in New York Case Studies in metropolitan Manufacturing , Cambridge, Massachusetts : Harvard University Press .
  • Lichtenberg , R.M. 1960 . One-Tmth o f a Nation: National Forces in the Economic Growth ofthe New York Region , Cambridge, Massachusetts : Harvard University Press .
  • Vernon , R. 1960 . An Interpretation of the Findings of the New York Metropolitan Region Study , Cambridge, Massachusetts : Harvard University Press .
  • Hall . 1960 . op. cit , : 12 Ref 39
  • McClean , W.J. 1987 . Status 1987: a Report on the Integrated Circuit Industry , 1 Scottsdale, Arizona : Integrated Circuit Engineering Corporation (ICE) . Chapter 7
  • Swann , G.M.P. 1985 . Product Competition in Microprocessors . Journal of Industrial Economics , XXXIV September
  • McClean . 1985 . op. cit , XXXIV September Ref 43 Chapter 7, p. 4, points out, the industry is notorious for underestimating the time it takes for users to accept new products
  • McClean . 1985 . op. cit , XXXIV September : 2 Ref 43 Chapter 7
  • Chandler . 1985 . op. cit , XXXIV September Other economies of scope are also gained. These include common material inputs, shared computer design facilities and shared management, planning, marketing and distribution channels. Ref 2 for the importance of large firm scale and scope economies in a wide range of industries
  • 1988 . Financial Time , XXXIV July
  • 1988 . Financial Time , XXXIV May
  • 1988 . Ibid , XXXIV May
  • Ferguson . 1988 . op. cit , XXXIV May For detailed comparisons of capital and R & D expenditures of US and Japanese chip companies through from 1976 to 1986 see Ferguson, op. cit., Ref. 32. For details of the huge industrial scale of the six major Japanese keiretsu (societies of businesses) which supply chips and other electronics, see Ferguson, op. cit., Ref. 32, and M. Anchordoguy,
  • 1989 . ICE data . cited in Electronic Times , XXXIV June : 2
  • 1989 . Ibid , XXXIV June
  • Abermathy . 1989 . op. cit , XXXIV June Ref 35
  • Saxenian . 1989 . op. cit , XXXIV June Ref 1 Gilder, op. cit., Ref. 1
  • 1992 . Financial Times , XXXIV February
  • Chandler . 1992 . op. cit , XXXIV February Ref 2
  • Pavitt , K. 1990 . What We Know about the Strategic Management of Technology . Californian Management Review , 32 Spring : 17 – 26 . K. Pavitt, ‘The Nature and Determinants of Innovation: a Major Factor in Firms’ (and Countries') Competitiveness', paper prepared for Conference Fundamental Issues in Strategy: a Research Agendafor the IggOs, Napa, California, mimeo (England, University of Sussex, Science Policy Research Unit, 1990)
  • Aoki . 1990 . op. cit , 32 Spring Ref 6 discusses how Japanese firms benefit from employment stability; large US firms such as IBM and Hewlett Packard also gain the advantages of stable intra-hm labour markets
  • Steinmueller , W.E. 1988 . “ International Joint Ventures in the Integrated Circuit Industry ” . In International Collaboratine Ventures in USA Manufacturing , Edited by: Mowery , D.C. Cambridge, Massachusetts : Ballinger .
  • Miles and Snow . 1988 . op. cit , : 64 Ref 1
  • Vernon . 1988 . op. cit , Ref 41
  • Teece . 1988 . op. cit , : 285 Ref 11
  • 1993 . cited in Business Week , January : 50
  • 1993 . Fortune , March : 20

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