Institutions and the Growth of Silicon Valley

Abstract

The success ofSilicon Valley is generally explained with refer ence to free-market competition or to government conlracls. Proponents of these explanations overlook the critical role of informal and formal relationships among the region's engi neers and executives and among its firms. This artide desribes the growth and evolution of Silicon Valleyasan indus trial district, from an early phase characterized by private networks to one characterized by more formal otganizations. The existing institutional infrastructure, however, is found to be inadequate in the face of emetging threats to the "'Bion's industry. New collective institutions and public forums are required if local companies are to meet the growing chal lenge of international competition, if they are to secure a skilled work-force, and if they are to solve the transportation, housing, and environmental problems which affect them. Abstract The success of Silicon Va lley is generally explained with refer­ ence to free-market competition or to government conlracls. Proponents of these explanations overlook the critical role of informal and formal relationships among the region's engi­ neers and executives and among its firms. This artide des­ cribes the growth and evolution of Silicon Valley as an indus­ trial district, from an early phase characterized by private networks to one characterized by more fo rmal otganizations. The existing institutional infrastructure, however, is found to be inadequate in the face of emetging threats to the "'Bion's industry. New collective institutions and public fo rums are required if local companies are to meet the growing chal­ lenge of international competition, if they are to secure a skilled work-force, and if they are to solve the transportation, housing, and environmental problems which affect them.