Reading :: Regional Advantage

Regional Advantage: Culture and Competition in Silicon Valley and Route 128
By Annalee Saxenian

My IC2 colleagues have been recommending this book to me for a while, and I finally got to read it near the end of the fall 2021 semester. Written by a professor of city and regional planning, the book answers the question posed on the back cover: "Why is it that business in Silicon Valley is again flourishing while within Route 128 in Massachusetts it continues to decline?" The answer of 1994—the book's original publishing date—is that "Silicon Valley developed a decentralized but cooperative industrial system while Route 128 came to be dominated by independent, self-sufficient corporations" (again via the back cover). 

Saxenian comes to this conclusion by comparing the regions historically, arguing that Silicon Valley developed "competition and community" (Ch.2), while Route 128 developed "independence and hierarchy" (Ch.3). Saxenian argues that to understand this comparison, we have to think in terms of regions, not cities or individual companies. "It is helpful to think of a region's industrial system as having three dimensions: local institutions and culture, industrial structure, and corporate organization" (p.7). 

In terms of culture, she notes that Silicon Valley's "culture encouraged risk and accepted failure" (p.38), while SV's firms "blurred the boundaries between firms" and eliminated "traditional boundaries between employers and employees and between corporate functions within the firm," replacing them with "independent confederations of project teams that were linked by intense, informal communications and that mirrored the region's decentralized industrial structure" (p.50). Unfortunately, she says, these entrepreneurs lacked the language to "describe this unusual mix of cooperation and competition," instead seeing themselves as rugged individualists: "They attributed their spectacular growth and unchallenged dominance of world markets to individual technical prowess and entrepreneurial risk-taking." And "Assuming that the dynamism of free markets would be self-perpetuating and self-governing, they saw no need to attend to the institutional foundations of their vitality," leading them to make choices that would eventually threaten the region (p.57).

Meanwhile, although Saxenian sees some examples of similar community-oriented networks in MIT's hackers, these were atypical in Massachusetts' Route 128 (p.59). Along Route 128, people were reluctant to take risks; business and personal life were separate; and business associations were merely sources of information, not integrative sources of enduring networks (p.69). Route 128 developed its own "combination of decentralized authority and continuous negotiation," the matrix (p.75), which generated conflict while masking centralization of authority (p.76). Matrix organizations tended to be indecisive (p.117). 

Consequently, Route 128's capabilities "were internalized within large firms and thus not available to start-ups or to other local producers"; they did not develop the combination of competition and collaboration that yielded Silicon Valley's innovation (p.111). 

In her conclusion, Saxenian argues that regions must shake off autarkic mindsets and instead construct more decentralized industrial systems (p.165). She argues that a regional strategy must be tailored to the problems and conditions of particular locations (p.167).

Overall, I found this book to be well worth reading. It helped me to think through units larger than the organization but smaller than overall "culture." If you're interested in doing the same, definitely check it out!