What Gives a Region a Large-Scale Competitive Advantage?

What Gives a Region a Large-Scale Competitive Advantage?The paper call The Limits of Autarky, written by AnnaLee Saxenian (1994)1, considers the discerns surrounding clusters of industries specifically those seen in atomic number 14 vale and on drive counsel 128. By studying the two areas the causation aims to discoer why hotshot division can be advantageously to a great extent successful than an separate, despite having the said(prenominal) mix of technologies. It has long been treasure that in that location is competitive advantage to having clusters of companies working together in the same geographic region. However, what is non so clear is exactly why nigh areas experience consider open competitive advantage while vernal(prenominal)s see superficial or no nonable benefits. By taking a expatiate look at silicon Valley and comparing it directly with bridle-path 128, the cause aims to answer this blusher question, namely, what exactly gives a region such(pren ominal) large-scale competitive advantage over early(a) regions?Underlying this analysis, the rootage makes the in-chief(postnominal) decision to rebut earlier presumptions made by other scholars in relation to the boundaries between internal and outside(a) economies. The creator n champions that in previous research there has been a tendency for scholars to draw warm distinctions and boundaries in relation to where the internal firm ends and the external economy begins. By suggesting that there is no clear-cut point between internal and external and that the region is, in fact, a great deal akin to a social meshing with blurred boundaries, the indite is able to take a novel and arguably more useful position when it comes to explaining differences in regions (Powell, 1996)2.The first area of research that the author undertakes is looking at the traditional limits of external economies and the analysis that has traditionally been done on the impact of such external econom ies and localised industrialisation. On a basic level of external economy of scale, analysis explains why firms will tend to cluster together so they can share resources such as transport or crimson talent this is not disputed by the author and, in fact, is given greater grandeur by the author than it has by other modern researchers. The author does not dispute that both atomic number 14 Valley and despatch 128 are mere examples of external economies and even reinforces this concept by recognising that they are similar to nineteenth century industrial districts. However, the author states that there are limits to this analysis which prune the potential use of external economies as a means of find out why one region would be so oft more successful than another. Both atomic number 14 Valley and Route 128 benefited from the self-reinforcing position that they build themselves in, due to these external economies. For example, as new firms joined the area there was greater ventu re capital available allowing yet more firms to join. This in turn attracted some of the beat out talent in the country which allowed the areas to inflate (Piore Sabel, 1984)3. However, the real question that the author is focusing on is how ti Valley became so much more successful than Route 128, despite apparently having the same underlying situation. Starting at the same position, between the age 1975 and 1990 Silicon Valley expanded offering 150,000 new jobs in the engineering field, whereas on Route 128 single 50,000 jobs were created (Saxenian, 1994)4. By 1990, Silicon Valley produced one third of all electronic products from the USA, with a total value of $11 billion. By which time, Route 128 had seen considerably less growth producing just $4.6 billion. It is this diversion that the author focuses on how did two areas that were so similar in 1975 pass away so different?One of the first concepts that the author explores is that of a cyberspace approach. This furthe rs the concept stated earlier by the author that firms are not separate, autonomous entities and that the boundary between internal factors and external factors is considerably more blurred than previous research might suggest. The author success to the full argues that one of the key differences between Silicon Valley and Route 128 is their approach to the way in which individual administrations network with each other in spite of appearance the region. precedent researchers have alluded to this difference, but the author notes that they tend to be disregarded more often than not as cultural differences, e.g. with California being known for its particularly set(p) back approach and Massachusetts for being much more luck averse. Whilst the author agrees with this and believes it may have had a bearing on the differences, she feels ending alone is not the main issue. By taking a precise look at the culture of Silicon Valley, the author identifies that one of the central diffe rences between this region and Route 128 is that Silicon Valley actively further firms to learn jointly and to share experiences. This type of mutual adjustment is something that the author believes is fundamental to the competitive advantage that Silicon Valley has established. Not only has this allowed Silicon Valley to develop some of the most complex expert products, but it has also encouraged very free labour markets ensuring that the rightfield people are commonly lay down in the right jobs. severalise this with Route 128, the author notes that there was commodious more concealment amongst the firms and much less in the way of sharing. These cultural differences and the way in which the networks escape in these two regions have been noted by the author to be the main reason that Silicon Valley became so much more successful than Route 128. The way in which the individual firms perceive themselves within the Route 128 region and the way in which they keep themselves dis tinct from other similar companies has been developed as a way of ensuring that each individual firm maintains corporate secrecy. Whilst this protective approach may seem logical, it has inadvertently caused the region to stagnate with smaller in terms of job movements and itty-bitty or no sharing of knowledge between firms (Florida Kenney, 1990)5.Capturing this, the author identifies Silicon Valley as being a regional network- bastardlyd dodge sooner than being an independent firm-based system. In establishing this analysis, the author questions why Route 128 firms would engagement such a strategy for victory when it was clear to see that the diametrically opposed strategy was working so well in Silicon Valley. Having neckd that this is the fundamental difference between Silicon Valley and Route 128, the author explores this competitive advantage further. It is identified that the rigidity seen within Route 128 was tout ensemble suitable when technology was not moving quick ly. Where there was no submit to conciliate rapidly, maintaining individual firms with their own internal knowledge base was key to maintaining a competitive advantage. However, during the 1970s, proficient developments were moving rapidly and the need to share resources between firms became critical this was not something that the firms within Route 128 were able to correct to, primarily down to the systems that they had established and the high levels of corporate secrecy that were inherent in their business coordinates (DeBresson Walker, 1991)6.In order to confirm what the author suspects may be the reason for Silicon Valleys competitive advantage, the author looked at Japanese industry (Imai, 1989)7. Networking is recognised as critical for all Japanese industries. Moreover, many smaller medium enterprises are linked together, either with agreements or joint ownership structures in order to share a greater variety of resources. This often results in geographical clusters b ut is not essential. What is clear, however, is that these types of cooperative clusters produce considerable efficiencies. For example, the Japanese car market is one of the best in the world and uses this network-based structure to remain competitively advantaged.Having seemingly found the reasons for Silicon Valleys success, the author then moves on to study and counterpoint two specific companies in order to see if the hypothesis holds up in practice. The author chose to consider Apollo Computer and lie Microsystems as the two companies were essentially similar in the 1970s they were both technology-based start-ups with Apollo calculating machine being established on Route 128 and Sun Microsystems established in Silicon Valley. In keeping with Route 128 culture, Apollo established itself as a very independent company even in so farthermost as actually producing the workstations, not simply designing them. Whilst this initially offered considerable competitive advantage ov er competitors, it did mean that they developed systems that were entirely clashing with any other. In contrast, Sun Microsystems, which was established in Silicon Valley, operates a very open policy for sharing information with neighbouring companies and establishing a system that is fully compatible with all other available systems. Sun Microsystems also looks at other companies actually to produce the systems as sticking to the unalloyed design prototype building enables them to concentrate their efforts and expertise. Initially, there was very little difference in the actual performance of the two companies, but over time, Sun became considerably more profitable, as it was able to adapt much more quickly to changes in the industry. By keeping everything internally, Apollo was unable(p) to adapt and this caused considerable decline in sales (Granovetter, 1985)8.These structural differences were clearly important to the relative success of the two organisations. The author then takes this one trample further by stating that she actually believes the differences lie in the management elbow room and not in the physical structure of the organisation. Apollo, for example, was very strict more or less business dress codes and very tight on quality controls the new manager of Apollo, in 1984, was Thomas Vanderslice and he brought in an exceptionally strict regime which was entirely opposite to the casual and relaxed atmosphere seen in Sun Microsystems (Schein, 1985)9. Although this in itself should not indicate the relative success of the organisation, it was indicative of the willingness to adapt and change that Sun Microsystems had and Apollo did not. This again is typical of Silicon Valley companies in contrast with Route 128 companies. In fact, Suns success was so substantial that many Apollo managers left during the 1980s to join the rival company. This caused even further splits between the two regions as expertise began to collect in the Silicon Valle y area (Nohria Eccles, 1992)10.Hewlett Packard was another example that the author cited as being a success for Silicon Valley. Despite being a huge organisation, it did not fall foul of becoming rigid and unable to adapt to this ever-changing industry. It maintained a nexus of almost entirely independent departments all working together but maintaining sufficient liberty to enable them to react rapidly to any necessary changes (Sabel, 1988)11. The author draws contrast with DEC a large technological company based on Route 128, which was highly hierarchical in structure and failed to compete at this game due to its unwieldy and rigid internal structures.ConclusionsBy bill of exchange together both the case studies mentioned above as well as previous research, the author has successfully demonstrated that the way in which an organisation views itself and the way in which it views its relationships with other firms in the same geographical region is critical to the ultimate success of the firm and the region in which it exists.The author concludes, correctly in my opinion, that network-based approaches offer considerable competitive advantage to a firm and the region, in particular, in industries where rapid adaptation is necessary. Collaboration vertically is essential to the success of the industry, as a whole. Corporate secrecy as is seen on Route 128 is a substantial barrier to the development of the technological industries and this has been proven to be the case. Although the author recognises that the physical structure is important to get wind openness and networking between firms, companies should also understand that management style of key firms is more influential than was originally thought. It should be noted that the author does recognise that this network-based approach may not always be suitable and that whilst it is ostensible that the network-based approach worked very well in the technology industry, in laggard moving industries where f irms must closely guard their corporate secrets, a much more individual firm-based approach is likely to be more successful. comparing and contrasting Silicon Valley with Route 128 has allowed the author to explore fully and to explain successfully the potential impact of a network-based approach. The value of this analogy is immensely important for the understanding of the network-based approach and has provided valuable insight for other industries moving forwards.BibliographyDeBresson, C. Walker, R. eds. (1991). Special issue on networks of innovators. Research Policy, 20 (5).Florida, R. Kenney M. (1990). Silicon Valley and Route 128 routine save us. California Management Review, 33 (1), 68-88.Granovetter, M. (1985). Economic action and social structure the problem of embeddedness. American daybook of Sociology, 91 (3), 481-510.Imai, K. (1989). Evolution of Japans corporate and industrial networks. In B. Carlsson, ed. industrial dynamics Boston, MA Kluwer.Nohria, N. Eccles , R., eds. (1992). Networks and organizations Structure, form, and action. Boston, MA Harvard Business School Press.Piore, M. Sabel, C. (1984). The second industrial distinguish Possibilities for prosperity. impudently York Basic Books.Powell,W., (1996). Trust-Based Forms of Governance in Kramer, R,M. Tyler,T.R. eds, Trust in Organizations. capital of the United Kingdom Sage.Sabel, C. (1988). Flexible specialization and the reemergence of regional economies. In Hirst, P. and Zeitlin, J., eds. Reversing industrial decline? industrial structure and policy in Britain and her competitors. Oxford, UK Berg.Saxenian, A. (1994). Regional advantage Culture and disceptation in Silicon Valley and Route 128. Cambridge, MA Harvard University Press.Saxenian, A., (1994). The limits of Autarky beyond Networks and Industrial Adaptation in Silicon Valley and Route 128. easy at http//people.ischool.berkeley.edu/anno/.Schein, E. (1985). Organizational culture and leadership. San Francisco, CA Jos sey-Bass.Footnotes1 Saxenian, A., (1994). The limits of Autarky Beyond Networks and Industrial Adaptation in Silicon Valley and Route 128.2 Powell,W., (1996). Trust-Based Forms of Governance in Kramer, R,M. Tyler,T.R. eds, Trust in Organizations. London Sage.3 Piore, M. Sabel, C. (1984). The second industrial divide Possibilities for prosperity. New York Basic Books.4 Saxenian, A. (1994) Regional advantage Culture and competition in Silicon Valley and Route 128. Cambridge, MA Harvard University Press.5 Florida, R. Kenney M. (1990). Silicon Valley and Route 128 wont save us. California Management Review 33 (1), 68-88.6 DeBresson, C. Walker, R. eds. (1991). Special issue on networks of innovators. Research Policy. 20 (5).7 Imai, K. (1989). Evolution of Japans corporate and industrial networks. In B. Carlsson, ed. Industrial Dynamics Boston, MA Kluwer.8 Granovetter, M. (1985). Economic action and social structure the problem of embeddedness. American Journal of Sociology 91 (3), 48 1-510.9 Schein, E. (1985). Organizational culture and leadership. San Francisco, CA Jossey-Bass.10 Nohria, N. Eccles, R., eds. (1992). Networks and organizations Structure, form, and action. Boston, MA Harvard Business School Press.11 Sabel, C. (1988). Flexible specialization and the reemergence of regional economies. In Hirst, P. and Zeitlin, J., eds. Reversing industrial decline? Industrial structure and policy in Britain and her competitors. Oxford, UK Berg.