9.3 The need for new models
Saxenian could see that the standard economic models of regional success and comparative advantage did not adequately describe the success of places such as Silicon Valley. In her first book Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (1996), Saxenian explored this challenge by contrasting the region’s characteristics with those of its US east coast counterpart in Boston, Route 128.
Silicon Valley has a regional network-based industrial system that promotes collective learning and flexible adjustment among specialist producers of a complex of related technologies. The region’s dense social networks and open labor markets encourage experimentation and entrepreneurship. Companies compete intensely while at the same time learning from one another about changing markets and technologies through informal communication and collaborative practices; and loosely linked team structures encourage horizontal communication among firm divisions and with outside suppliers and customers. The functional boundaries within firms are porous in a network system, as are the boundaries between firms themselves and between firms and local institutions such as trade associations and universities.
Saxenian suggests that Silicon Valley started to change from agriculture to high technology when the Second World War brought military activity to the San Francisco bay area. During the Cold War, funding flowed to Silicon Valley’s fledgling industries. Those who came to Silicon Valley during the 1960s and 1970s felt like outsiders. Power was concentrated in the US east coast, and – in Saxenian’s assessment – the engineers who came ‘hung together’. They shared more information than their counterparts on the east coast and elsewhere, and had less time for hierarchies. Within and between firms there was a more open network. Despite perennial predictions about its demise, Silicon Valley’s entrepreneurs have continued to create innovative ways of doing things (Saxenian, 2006b).
Although there has been a widespread willingness to assume that Silicon Valley is the ‘core’ and other less prosperous places are the ‘periphery’, brain circulation is contributing to a different picture. China, India and other places that might once have been pronounced peripheral have benefitted from those who have returned from the putative core. Brain circulation can span boundaries, as those who become fluent in different cultures – according to Khanna’s arguments about contextual intelligence – move between contexts.