In Search Of Silicon.

• Author: ROWEN, HENRY S.
• Position: Author examines what makes for thriving high tech centers like Silicon Valley, California - Brief Article

Many visitors come to Stanford University and elsewhere in Silicon Valley asking, "What makes this place so amazingly dynamic?" and "What do we have to do to make our country/region more like this?"

I don't know what most of these visitors are told. (I tell them to read our book, The Silicon Valley Edge, Stanford University Press, 2000). Perhaps they hear about Stanford as a source of talent and ideas; how Bill Hewlett and David Packard were early and important role models; how the scientist William Shockley brought silicon to the Valley in the 1950's via his company; and how this place became the world center of venture capitalism. All true. But my guess is that they aren't usually reminded of the fact that the Valley is but the largest among many American high tech clusters that include Boston/Route 128, Austin, San Diego, and Northern Virginia.

There are some such clusters elsewhere, including Hsinchu Science City in Taiwan; the Tel-Aviv-Haifa corridor; Cambridge, England, and Bangalore, India. But they are few. So perhaps a better question for the visitors to ask is: "Why are there no major entrepreneurial, high tech centers in large parts of the world, including Japan, France, Italy--or for that matter most of continental Europe?" These countries are certainly not technologically backward but they have lagged in commercializing the enormously important technologies of information, biology, and new materials.

The most successful high tech clusters have evolved ecosystems that specialize in helping firms get started, grow, and go public. They have venture capitalists, lawyers with specialized know-how, headhunters, equipment leasing firms, investment bankers, and much more. Once some entrepreneur gets started, often through some chance event, if the environment is favorable, more firms get going. This, in turn, leads to the strengthening of the local business infrastructure, and so on in a virtuous, upward spiral.

Recently, a venture capitalist who is looking for deals in Japan told me how hard it is to get Japanese engineers to leave their companies for startups. Is this because of some innate Japanese aversion to risk? Perhaps, but contributing to this unwillingness to move is a system in which workers retire at age 55 with a pension based on the last, several high-income years and get the money in the form of a (largely untaxed) lump sum. Faced with that alternative, maybe not many 40-year-old America engineers would move either.

This...