Geography Reference
In-Depth Information
Brittain and Freeman (1986) and Moore and Davis (2001) argue that entrepreneurial
spinof s were the main engine behind the rapid growth in Silicon Valley. In the early
years, the semiconductor i rms faced novel organisational challenges in aligning goals
and designing the organisational structure that could establish and reach the technologi-
cal demands of the industry. Working for incumbent i rms was the best way to learn how
to tackle those challenges. The most well known case is the many i rms that spun of
from Fairchild Semiconductor, often called the 'Fairchildren', such as Intel and AMD.
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In general, engineers left established incumbents and started new i rms that produced the
capital goods and materials needed for semiconductor design and manufacturing.
Simard and West (2003) analyse the emergence of the wireless communications cluster
in San Diego. Linkabit was founded in 1968 initially doing general military consult-
ing, but later it diversii ed into secure military communications. In the 1980s, Linkabit
spawned four spinof s, Radyne, Tiernan, PCSI and Qualcomm. The latter was founded
in 1985 and the founders saw an opportunity to adapt military communications tech-
nologies for civilian use. The timing of the market diversii cation coincided with the take-
of in the mobile communications market. Qualcomm successfully developed CDMA
technology that was approved as one of three standards for digital mobile communica-
tions in US in 1990. Qualcomm experienced high growth during the 1990s. However,
the increased market opportunities were coupled with a spinof process from the i rst
few i rms in the emerging cluster. During the 1990s, the cluster became visible and in the
late 1990s the major players in the industry was attracted to the region, such as Nokia,
Ericsson, Siemens, Samsung, and Sony.
Studies of the evolution of the US automobile industry and the emergence of the
cluster in Detroit also emphasise the importance of spinof s (Carroll et al., 1996;
Klepper, 2002b). The industry was characterised by a high rate of entry with more than
500 i rms entering in its i rst 20 years. Eventually, the industry evolved to be an oligopoly
dominated by three relatively late entering Detroit i rms, Ford, General Motors and
Chrysler. These three were all related to the i rst successful i rm in the industry, Olds
Motor Works, which was located in Detroit (Klepper, 2002b). These i rms spawned 22
spinof s. This growth in the number of i rms and the emergence of a cluster were sup-
ported by the high growth in the market for automobiles. By the 1930s, Detroit i rms
dominated the industry.
Buenstorf and Klepper (2005) analysed the evolution of the US tyre industry.
They found that the location and background of the entrants caused the industry to
become regionally concentrated around Akron, Ohio. The tyre industry evolved to be
an oligopoly dominated by Goodyear, Goodrich, Firestone, and U.S. Rubber. These
four i rms accounted for more than 70 per cent of the market in the 1930s. Goodrich,
Goodyear and Firestone were all located in Akron. The Ohio i rms were distinctly suc-
cessful and the production of tyres and inner tubes in Ohio accounted for two-thirds of
total US production in 1935. The Akron tyre cluster emerged through a spinof process
as the market grew. The leading Akron i rms spawned the most spinof s and the perform-
ance of these was very much related to the performance of their parent. From a few early
Akron i rms related to the successful Goodrich, the Akron tyre cluster grew primarily
through a spinof process rather than through agglomeration economies (Buenstorf and
Klepper, 2005).
The evolution of the semiconductor industry in Silicon Valley, the wireless communi-
