The analysis has shown that the clusterings of collaborative institutions are important
mechanisms catalysing the economic development at Silicon Valley. Silicon Valley has
benefited greatly from an effective use of university resources, venture capital and a large
pool of scientists, engineers, and skilled technicians. Silicon Valley’s success can be a
prototype economic engine for other countries. The study provides policy implications
for business strategists and government policy makers as follows.
Silicon Valley represents a risk taking, California style of growth through
entrepreneurship. The culture of Silicon Valley does not shun the entrepreneurs who fail.
Silicon Valley portrays an opportunistic corporate culture that entrepreneurs are the main
driving force for business success. The culture of taking entrepreneurial risk represents
the local context that fosters competition, according to Porter’s Diamond Model.
An important lesson learned from the success of Silicon Valley is the availability of
financial resources needed to support entrepreneurial growth. Other governments
planning to clone Silicon Valley should overcome the critical obstacles of small business
startups with regard to lack of funds, by establishing public institutions and providing the
infrastructure to help entrepreneurs to take advantage of emerging ventures and establish
new businesses.
The US model shows that there is no government intervention. Nevertheless, the
government helps foster a favourable business environment while the companies and
industries mainly perform business functions to achieve and sustain competitive
advantage. The US venture capital firms generally focus on equity financing with the
offer of stock options to attract skilled managers. The success of the US Silicon Valley
reflects the entrepreneurs’ cowboy mentality to recognise risks and return opportunities.
The lessons for the other countries are that caution should be exercised when the
government acts as a major catalyst to accelerate the early stage investments. Policy
makers should consider whether it would provide the right incentives when the public
sector acts as a major venture capital investor. To put it another way, the government
programmes should be a complement to, not a replacement for, conventional equity
financing. The public funds should not crowd out private funds which might cause a
reduction in overall industry returns. The case of the US Silicon Valley has shown that
the funding and equity stakes undertaken by the private sectors highly motivate the
entrepreneurs to perform their best in fuelling growth and innovation.
The US model can be a benchmark for other nations. Strong and competitive clusters
are a critical component of effective factor (inputs) conditions according to Porter’s
competitive Diamond Model. The analysis shows that clusters are the driving force
behind innovation and rising productivity in a region. Figure 3 shows the dense networks
of commercialisation accelerators which are the building blocks of competitiveness. The
US federal and state governments have formulated policies to fund the university
research and support private sector investment continuously. An important lesson for the
governments and policy makers of the countries around the world seeking to replicate
Silicon Valley is that the national competitiveness is likely to hinge on the capacity to
foster clusters of innovation in regions throughout the country. It is the efforts of the
regional government to forge closer cooperation that would help achieve a highly
competitive market environment. An attempt to replicate Silicon Valley is unlikely to
succeed unless dense networks among actors that promote cooperation and accelerate
technology commercialisation are developed.
212 J. Wonglimpiyarat
In the context of national policy frameworks, the cluster development at Silicon
Valley represents a unique set of characteristics which may not easily be replicable
elsewhere. It is argued that there is no one single model which alone could be able to
deliver successful economic performance. For example, in Canada, the Labour Sponsored
Venture Capital Corporations are the key government policy approach, playing a
significant role in the structure and development of the VC industry. The Hsinchu
Science-based Industrial Park in Taiwan and Bangalore’s Software Cluster in India are
successful in replicating Silicon Valley by forming technology incubator programmes to
pool resources and create networks that facilitate regional development. The success of
these countries is the result of the government’s policy approach to build incubators and
technology parks in order to create technology connections and knowledge/intellectual
networking. An interesting lesson is that connecting and integrating the companies into
regional clusters appear to produce considerably tangible economic development
outcomes for the national economy
The analysis has shown that the clusterings of collaborative institutions are importantmechanisms catalysing the economic development at Silicon Valley. Silicon Valley hasbenefited greatly from an effective use of university resources, venture capital and a largepool of scientists, engineers, and skilled technicians. Silicon Valley’s success can be aprototype economic engine for other countries. The study provides policy implicationsfor business strategists and government policy makers as follows. Silicon Valley represents a risk taking, California style of growth throughentrepreneurship. The culture of Silicon Valley does not shun the entrepreneurs who fail.Silicon Valley portrays an opportunistic corporate culture that entrepreneurs are the maindriving force for business success. The culture of taking entrepreneurial risk representsthe local context that fosters competition, according to Porter’s Diamond Model. An important lesson learned from the success of Silicon Valley is the availability offinancial resources needed to support entrepreneurial growth. Other governmentsplanning to clone Silicon Valley should overcome the critical obstacles of small businessstartups with regard to lack of funds, by establishing public institutions and providing theinfrastructure to help entrepreneurs to take advantage of emerging ventures and establishnew businesses. The US model shows that there is no government intervention. Nevertheless, thegovernment helps foster a favourable business environment while the companies and
industries mainly perform business functions to achieve and sustain competitive
advantage. The US venture capital firms generally focus on equity financing with the
offer of stock options to attract skilled managers. The success of the US Silicon Valley
reflects the entrepreneurs’ cowboy mentality to recognise risks and return opportunities.
The lessons for the other countries are that caution should be exercised when the
government acts as a major catalyst to accelerate the early stage investments. Policy
makers should consider whether it would provide the right incentives when the public
sector acts as a major venture capital investor. To put it another way, the government
programmes should be a complement to, not a replacement for, conventional equity
financing. The public funds should not crowd out private funds which might cause a
reduction in overall industry returns. The case of the US Silicon Valley has shown that
the funding and equity stakes undertaken by the private sectors highly motivate the
entrepreneurs to perform their best in fuelling growth and innovation.
The US model can be a benchmark for other nations. Strong and competitive clusters
are a critical component of effective factor (inputs) conditions according to Porter’s
competitive Diamond Model. The analysis shows that clusters are the driving force
behind innovation and rising productivity in a region. Figure 3 shows the dense networks
of commercialisation accelerators which are the building blocks of competitiveness. The
US federal and state governments have formulated policies to fund the university
research and support private sector investment continuously. An important lesson for the
governments and policy makers of the countries around the world seeking to replicate
Silicon Valley is that the national competitiveness is likely to hinge on the capacity to
foster clusters of innovation in regions throughout the country. It is the efforts of the
regional government to forge closer cooperation that would help achieve a highly
competitive market environment. An attempt to replicate Silicon Valley is unlikely to
succeed unless dense networks among actors that promote cooperation and accelerate
technology commercialisation are developed.
212 J. Wonglimpiyarat
In the context of national policy frameworks, the cluster development at Silicon
Valley represents a unique set of characteristics which may not easily be replicable
elsewhere. It is argued that there is no one single model which alone could be able to
deliver successful economic performance. For example, in Canada, the Labour Sponsored
Venture Capital Corporations are the key government policy approach, playing a
significant role in the structure and development of the VC industry. The Hsinchu
Science-based Industrial Park in Taiwan and Bangalore’s Software Cluster in India are
successful in replicating Silicon Valley by forming technology incubator programmes to
pool resources and create networks that facilitate regional development. The success of
these countries is the result of the government’s policy approach to build incubators and
technology parks in order to create technology connections and knowledge/intellectual
networking. An interesting lesson is that connecting and integrating the companies into
regional clusters appear to produce considerably tangible economic development
outcomes for the national economy
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