The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DSilicon Valley. According to the California Labor and Workforce DevelopmentAgency, California, which invested 50 billion dollars in industrial and academic R&Din 2004, devotes more resources to R&D than any other state.There are many different theories to explain the success of Silicon Valley. In the book“Understanding Silicon Valley,” for example, Martin Kenney presented three differentperspectives. In the first perspective, Silicon Valley is considered an eco-system composedof interacting institutions, individuals and a culture that nurtures and encouragesentrepreneurship. In the second perspective it is argued that in Silicon Valley, relationshipsare based on trust, which is based on performance, which in turn creates a nurturingenvironment for new ideas and talented individuals. And finally, in the third perspectiveit is argued that institutions specializing in creation of new companies are responsible forSilicon Valley’s unique ability to foster technological advances (Kenney 2000).Despite major economic success in the late 1990s, in 2001 the region entered a deeprecession that lasted until late 2003, losing approximately 20 percent of its employmentbase. Starting in 2004, however, there were signs of businesses thriving again, entrepreneursre-emerging, and increased venture capital investments in the region. Thisrecovery has come after what renowned economist Joseph Schumpeter would describeas a period of “creative destruction” (Schumpeter 1942/1975).8.2.3 The Next Big ThingEven though Silicon Valley is recovering, there are new challenges facing the region.The technology industry has become more global and competitive since 2000 (BAEF2005). The region’s economic structure is shifting. The industry cluster that once consistedof semiconductor and software companies is transforming and new clusters (e.g.clusters of biotechnology companies) emerge.Over the previous decades, as the region has gone through different “waves” of innovation,it has shown an ability to constantly innovate and create new businesses.“Silicon Valley has been shaped by past waves of innovation, including the commercializationof the integrated circuit (1960s–70s), the development of the microprocessorand personal computer (1980s), and the application of the Internet (1990s). Each time,these waves of innovation produced the ‘next’ Silicon Valley economy and changedthe structure and mix of industries in the region” (JVSV 2002).Many analysts consider the convergence of biotechnology, information technology andnanotechnology to be the “Next Big Thing” in Silicon Valley that will create new technologicalbreakthroughs and new high-paying jobs for the region.187