By Martin Kenney
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Sample text
The institutions that constitute this second economy are examined and their operation and interaction are detailed in the chapter. These chapters explain the institutional and organizational mechanisms that make possible Silicon Valley's remarkable ability to find new, fast-growing economic spaces and fill them with new firms. They treat Silicon Valley systemically by integrating the immense variety of institutions, such as venture capital, specialty law firms, headhunters, marketing firms, and the myriad of other institutional actors that nurture and draw sustenance from these start-ups.
Stephen Cohen and Gary Fields critique the notion that Silicon Valley's elan vital can be understood through the concepts of "social capital" and "trust" distilled from studies of Northern Italian industrial districts. They dispute Robert Putnam's assertion that communities must be civic to become prosperous. For them, Silicon Valley, though having many small firms, is not predicated on small firms remaining small. In fact, the entire objective of Silicon Valley firms is to grow to be large firms as rapidly as possible—capital gains are the objective.
As the authors in this book explain, a good deal of Silicon Valley's strength lies in the way it helps you deal with these matters, effectively helping you both take risk and share risk. Some of these tasks you will want to take on in your firm—so you need to hire the right risk-taking folks to join your firm. But many of these tasks you will want to out source to experts or consultants well seasoned in the challenges you face and perhaps willing in one way or another to help you spread your risk.