The Silicon Success Formul Bunching Up Firms And The Involvement Of Universities

1627 WordsApr 25, 20177 Pages
The Silicon Success Formula: Bunching-up Firms and the Involvement of Universities in a Global Market Introduction The spatial clustering of public universities and top technology firms in Silicon Valley raises a lot of interesting questions as to the local economic development within that region. The massive agglomeration economies and positive externalities from public institutions to private business has aid rapid expansion of Silicon Valley for the past 50 years. Technology is constantly growing in the new millennia, as people use smartphones to manage bank accounts or data is managed and secured by the cloud. Silicon Valley is a huge pioneer for emerging tech firms, as these businesses utilize the talents of graduating students…show more content…
A universal underlying theme of the sources indicate that firms that agglomerate are most likely to rely on academic talent to develop their businesses to expansionary heights. In this literature review, we will discuss other components of the Silicon Valley success formula, partnership and business links to universities, and agglomeration economies present between clustering of firms within this region. Human Capital Externalities, Agglomeration Economies, and Non-Compete Agreements First, we will begin discussing the economics of clustering and tie it into non-compete agreements between firms in Silicon Valley. We rely heavily upon Acemoglu’s (1997) analysis of innovation in a labor market with inefficient job search. Acemoglu’s model establishes a number of important results regarding knowledge spillovers (Acemoglu 1997). It also offers a parsimonious framework for understanding how modular design and “job hopping” can produce external economies of scale in a computer cluster. For the innovation process described to be a source of agglomeration economies, it needs somehow to be localized (Rotemberg & Saloner 2000). Agglomeration patterns and externalities are an important element of the regional innovation system context. Specialized firms dominate the region, making way for knowledge to spill over vertically within the value

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