Dynamics of High-Technology Firms in the Silicon Valley

The pace of technological innovation since World War II is dramatically accelerating following the commercial exploitation of the Internet. Since the mid 90’s fiber optics capacity (infrastructure for transmission of information including voice and data) has incremented over one hundred times thanks to a new technology, dense wave division multiplexing, and Internet traffic has increased over 1.000 times. The dramatic advances in information technology provide excellent examples of the critical relevance of the knowledge in the development of competitive advantages. The Silicon Valley (SV) that about fifty years ago was an agricultural region became the center of dramatic technological and organizational transformations. In fact, most of the present high-tech companies did not exist twenty years ago. Venture capital contribution to the local economy is quite important not only due to the magnitude of the financial investment (venture investment in SV during 2000 surpassed 25.000 millions of dollars) but also because the extent and quality of networks (management teams, senior employees, customers, providers, etc.) that bring to emerging companies. How do new technologies develop? What is the role of private and public investment in the financing of R&D? Which are the most dynamical agents and how do they interact? How are new companies created and how do they evolve? The discussion of these questions is the focus of the current work.