The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&D8.2 A Dynamic High-Technology State and Region8.2.1 What Is Silicon Valley?Silicon Valley, as defined by the Joint Venture Silicon Valley Network, encompasses aregion of the Santa Clara County and adjacent parts of San Mateo, Alameda and SantaCruz Counties in northern California (part of the Bay Area). Often referred to as an“industry cluster,” this area is well-known for having commercialized many of theimportant electronics and biotechnologies developed during the last 50 years.The region has a population of 2.4 million, of which 40 percent is foreign-born (JVSV2005). One-third of Silicon Valley’s high-skilled workforce consists of immigrants,and more than half of these immigrant professionals have founded or work in startupcompanies (Saxenian 1999, Saxenian 2005).The Bay Area hosts a large number of world-class public and private universities andresearch institutions, including Stanford University, University of California, Berkeley,University of California, Davis and University of California, San Francisco. It is alsohome to a number of interdisciplinary research centers, including Stanford’s Bio-X, theCenter for Information Technology Research in the Interest of Society (CITRIS) andthe Center for Quantitative Biomedical Research (QB 3 ).Silicon Valley has the largest concentration of information technology and biotechnologycompanies in the U.S. 1 (Zhang 2003). More than 25 percent of the software industry and40 percent of the biotechnology industry in the U.S. is located in California. Some ofthese companies have grown to become industry leaders, including Hewlett Packard,Cisco, Sun Microsystems, Intel, e-Bay, Yahoo and Google (BAEF 2005).In terms of percentage of sales, Silicon Valley companies have invested about threeand a half times more in R&D (11 percent) than the national average (3 percent) (JVSV2005). Six percent of the employment in the Bay Area is involved in research, developmentand innovation. This is two and a half times more than the national average(BJSA 2004). The dominance of large and small high-technology and research-intensivecompanies in Silicon Valley is one reason that the effects of internationalization ofcorporate R&D are more noticeable in this region.8.2.2 Success Factors and Signs of RecoveryCalifornia is the seventh-largest economy in the world in terms of GDP (LAEDC2005). About 45 percent of all venture capital in the U.S. is invested in California companies2 and approximately 80 percent of that money ends up in the Bay Area and/or1 In 2001, 26,000 biotechnology companies were concentrated in Silicon Valley.2 Venture capital firms invested 9.3 billion dollars in California companies in 2004.186