Untitled - socium.ge

60 Pekka Himanen and Manuel CastellsPeople from around the world have come to Silicon Valley because it issuch an open environment within which ideas can flourish. This should notbe understood to mean that Silicon Valley just turns the ideas of others intobusiness. This would be quite untrue. Much of the innovation still takes placeamong the “locals.” Nor is it the case that immigrant innovators had theirideas in place before they came to Silicon Valley and came here just to realizethem. That is not the situation either. It is Silicon Valley’s open culture ofinnovation that nurtures people’s ideas. Often, they have also gone throughthe innovation-encouraging education of universities such as Stanford orBerkeley. But the role of immigrants is clearly increasing. In the 1990s, theUnited States granted, on average, 215,000 H1 special visas to highly qualifiedprofessionals every year. Anna Lee Saxenian has shown that almost athird of Silicon Valley engineers are immigrants and a quarter of Valleycompanies are run by Indian or Chinese chief executives alone (Saxenian,1999, 2002). Nowadays it is still said that the success of Silicon Valley isbased on ICs: not integrated circuits but Indians and Chinese. If we focus onnew companies that have been created recently, and include other immigrants,we probably come to a figure close to 40 percent of companies inSilicon Valley run by immigrants.Let us try now to analyze the process from the point of view of the firm, thekey unit in the Silicon Valley model of innovation.The Process of Innovation and the New Economy in Silicon ValleyWhat came to be labeled the “new economy,” first in Silicon Valley, and thenin the world, was not the dot-com business. This new economy, as all neweconomies in history, is characterized by a new process of production thatunderlies a substantial and sustained increase in the rate of productivitygrowth. This has clearly been the case in Silicon Valley and in the UnitedStates since the mid-1990s. From 1996 to 2002, labor productivity in the USgrew at an annual average of 2.8 percent, doubling the performance of1985–1995. Furthermore, productivity growth continued in 2001–2003 duringthe downturn of the cycle, and increased at a whopping 6.8 percent annual ratein the second quarter of 2003.Productivity measured by output per man hour grew by 4.1 percent frommid-2002 to mid-2003. Productivity growth was much higher in the informationtechnology industries. A number of studies, including those of the FederalReserve Board, have pinpointed the critical role played by investment in informationand communication technologies in the surge of productivity (Sichel,1997; Jorgenson and Stiroh, 2000; Jorgenson and Yip, 2000). However, someof these studies also show that it is only under the conditions of organizationalchange (networking) and the development of human resources (talented labor)