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Title:Understanding the Silicon Valley phenomena PDF Logo
Authors:Aoki, Masahiko
Takizawa, Hirokazu
Issue Date:2002
Series/Report no.:WIDER Discussion Papers // World Institute for Development Economics (UNU-WIDER) 2002/11
Abstract:This paper analyzes the ‘Silicon Valley model’ as a novel economic institution in the domain of technological product system innovation such as computers. We focus on the information structural relationship as well as governance relationships between venture capitalists and a cluster of entrepreneurial firms. The informational conditions under which the Silicon Valley model is efficient are identified, leading to understanding the significance of standardization of interfaces, modularization and information encapsulation. We then examine the governance/incentive aspect of the model by integrating the models by Aoki, and Baldwin and Clark to give comparative statics results regarding the optimal number of entrepreneurial firms competing in the same component product. The analyses enable us to evaluate the applicability of the model beyond specific localities and industries.
Subjects:Silicon Valley
innovation enterprises
tournament games
Document Type:Working Paper
Appears in Collections:WIDER Discussion Papers, United Nations University (UNU)

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