by Tim J. Sturgeon
Originally written as a Masters Thesis, this is the ninth and final of a sequence of pages adapted from the full thesis. For the bibliographic references in the text go here.
Hewlett-Packard 200 BR oscillator, c. 1940.
Saxenian (1989) argues that the high mobility of engineers between Silicon Valley electronics companies, along with extensive socializing and information sharing led to an extraordinary level of cooperation among firms in Silicon Valley as compared to firms in the eastern United States. But when did these practices take root in the region? Let us compare two remarkably similar stories from the region, this first taking place in the early 1940s and the second taking place in the 1970s.
He [Litton] got pretty completely burned out. Hewlett-Packard was a smallish company, with maybe 20 to 30 employees and had a shop in Palo Alto. And so the next morning Dave Packard heard about this fire, called Charlie up on the phone, and said, 'Look, we have a shop down here and all these machine tools, and you can do most anything with it. Nobody is using them in the evenings. If it would be any help to you, you can come down and take possession of them.' He knew that Charlie always worked at night anyway. (Terman, 1978).
Charles V. Litton at early Model F lathe, about 1936.
Photo: believed to be by Harold Elliott, Perham Collection of Early Electronics, History San Jose
According to Terman (1978), Charles Litton never charged Hewlett-Packard for services rendered from that point on. Compare the spirit of the above story to this series of stories told by Saxenian (1989):
Technical workers inside of the semiconductor manufacturing facilities were often openly cooperative. The technicians in competing factories helped each other out, often because they had worked together previously: 'when the gas line stopped at 2 a.m., you just called your buddies at the companies across the street and shared their gas. Or, if the epi-reactor was down, your friend did your chips on his second shift and you helped him out next week with his ion implants. This all happened without any legal paperwork.' This was cooperation in the spirit of being neighborly, like lending a cup of sugar. Even at the lowest levels of semiconductor assembly, one funds such cooperation. An executive reports of a whole batch of Intel chips coming back to the factory in AMD plastic casings; and he describes how when there was a fire at one assembly plant, workers at surrounding firms helped out by lending equipment and helping with the backlog of assembly.
Frederick Terman (1978) points out that prior to World War II the differences in organization between the west and east coast electronics industries was already apparent:
Now there was a lot of that [cooperation among electronics companies]. There was a small group and the people tended to work together. Western Electronics Manufacturers Association [WEMA, a professional organization devoted to the growth and development of electronics], began as a cooperative venture, and there's a spirit of cooperation even when your in the same business. The semiconductor people still compete, but they have an organization, and get together and lobby as a unit when they go to Washington about questions of tariffs on offshore assembly. They may compete in the marketplace for customers, but they cooperate where there's a common interest. Now this started, you see, with this community that existed here before the war, Packard and McCullough and so on. Jack Kaufman [of Heintz and Kaufman] rounded them up, provided the leadership during the war to do some lobbying in Washington to get the people in Washington to realize that the West Coast had some electronics [manufacturers]."
I think they were 'every man for himself' much more back [east]. There never was a pre-war organization like WEMA. ...[East Coast] manufacturers would never cooperate [on standards for vacuum tubes], partly because of the patent situation. RCA dominated the patents and you couldn't leave RCA out, and if RCA was brought in, it wanted to boss everything. The group out here was involved in military production, instruments, and specialized stuff, where RCA patents weren't such a dominating feature. RCA wasn't trying to build a monopoly in the instrumentation business, for example." (Terman, 1978)
A Theoretical Critique and Deconstruction—Locational Windows
Storper and Walker (1989), Scott and Storper (1987), and Henderson and Scott (1987) make attempts to generalize about the patterns of development for industries based on new technologies, including conceptions of initial location, subsequent growth, and eventual dispersal that resemble the stages of development in product cycle, or 'industrial life-cycle' models, but with critical differences. According to these authors, when the technological basis for a new industry emerges, production is often manifested away from the old industrial center. Because input requirements, especially labor skills, are said to be novel in a new industry, a "window of locational opportunity" is opened allowing a "macro-regional shift in the location of a new industrial ensemble" (Storper and Walker 1989; Scott and Storper, 1987). In its new surroundings the industry begins to develop unique patterns of inter-firm linkages. Given an expanding market, these linkages come to carry more information as the number of firms in the region multiplies. Agglomeration economies lead to the creation of labor markets, the accumulation of tacit knowledge about production, specialized suppliers, and eventually, to the emergence of reproductive social institutions such as educational and financial institutions that help accelerate further growth. Pools of industry-specific finance capital are collected and used for the start up of new firms.
The theoretical framework supplied by these authors avoids the deterministic pitfalls of classic product cycle theory by allowing the cycle to be broken and restarted at any stage of development. After initial location and clustering of a new industry, growth is attributed to an elaboration in the division of labor, not simply a mechanistic shift into mass production as set out in product cycle theory (Vernon, 1966). The subsequent geographic spread of the new industry is not achieved simply through the establishment of branch plants, but as an integral part of the expanding spatial division of labor in the industry. The argument in this thesis is not with the authors' conception of growth in new industries, which is quite supple, but with their insistence that industries tend to re-locate to "greenfield" sites when some magical point of technological discontinuity is reached.
When the "window of locational opportunity" model is applied to the case of the electronics industry, the invention of the transistor in 1947 by Bell Laboratories represents a fundamental shift in the production process in terms of the industry's material input and labor requirements. Firms fabricating semiconductors, new switching devices for the expanding phone system, defense related components for the cold war, and the like, were driven to locate away from established industrial centers by the embedded industrial practices associated with vacuum tube technology that inhibited growth based on solid state technology. Self-sufficient in terms of supply linkages and labor, the incipient semiconductor industry became functionally separate from the agglomerative economies of the East Coast electronics production. Able to grow faster in new areas in the absence of restraints associated with outmoded east coast production practices, the industry coalesced into discrete sectors and settled in the little-unionized southwest (Los Angeles—aerospace and computers; Silicon Valley—semiconductors; Dallas and Phoenix—defense and consumer electronics)(30) (Scott and Storper, 1987).
I must stress that in this analysis, pre-existing social and spatial contexts in the new locations simply serve to "channel the precise ways in which the [labor- capital] relation is realized in specific circumstances." "...locational trends have been played out in different ways in different areas, depending on many varying local and contingent circumstances." "They are in short, contingent (even if empirically important) circumstances" (Scott and Storper, 1987). In this model, the industrial structure of the San Francisco Bay Area during the late 1950s, upon which the new organization of semiconductor production was to be expressed, had no real structural effect on the region’s subsequent growth. With an effectively unlimited market based on the integrated circuit, the industry was able to elaborate its division of labor between firms in the form of a finely differentiated web of market linkages, and develop discrete, locationally separable labor processes that concentrated the labor force into groups of high and low skilled workers.
This vastly misrepresents the way in which industrial growth and regional development occur. It is not enough to say that an industry, liberated by radical technical change and expanding markets, constitutes a self-contained seed of growth that is unaffected by the existing conditions in the location that it chances to find itself. Industrial growth in place is, ultimately, dependant on the nature of social relations among key actors and other social practices endemic to specific locations, which form an irreducible matrix that is spatially and historically situated.
Scott and Storper (1987) argue that once the seeds for an electronics industry based on solid state semiconductor technology were sown in various places in the West, endogenous forces of agglomeration took over to create the characteristics of the different centers. These authors do not otherwise account for the relative success of the different places. This argument is made in opposition to classic Weberian location theory that posits the attraction of industry to "factors" of production, classically land, labor, and markets, but expanded to a laundry list by followers. (Weber, 1909). Scott, Storper, and Walker want to stress that capitalism can be a very dynamic system, one that creates its own "factors" through its powers of labor exploitation, urban growth, and technical change. The argument is also made in opposition to export base theory that ties a region's economic development to the scale of its exports to other regions (North, 1955). Growing regions create internal dynamos of demand that are often fulfilled by local production. In a rush to stress the role of endogenous growth, however, antecedent industrial structures and social relations are ignored. To my mind, these authors do not take their own notion of endogenous development seriously enough.
Scott and Storper (1987) state:
We might say, then, that some time in the 1950s, a window of locational opportunity opened up as high technology industry, in the form we know it, appeared on the scene. As a corollary, this new production activity began to localize in places like Santa Clara County, Orange County, Phoenix, the Denver-Boulder region, Dallas-Fort Worth, and so on. Some of these initial locational decisions then led to spatially-concentrated growth via process of vertical and horizontal disintegration (spin-off), specialization, diversification, and the externalization of the transactional structure of production. In this manner, numerous centers emerged as major magnets for various kinds of high technology industry, and what in many cases may have begun as an essentially arbitrary locational event (within a very nonarbitrary macro-spatial context) was over the course of time transformed into a self-confirming focus of growth and development. ...Note, too, that not every initial location of high technology industry ultimately flourishes in quite this way. For example, Motorola began semiconductor manufacture in Phoenix, and Texas Instruments began in Dallas, more or less at the same time when Shockley Laboratories was first established in Santa Clara County in the 1950s. But in neither case did the local area become (as it did in Santa Clara County) a center of attraction for large numbers of other semiconductor producers. How and why some places develop expanding industrial complexes while others move along different developmental trajectories or even remain stillborn is largely an unresolved puzzle in contemporary economic geography. [italics mine]
Because the initial location of an industry in a new region as well as the subsequent success of that region go unaccounted for, the model these authors create lacks explanatory power. What remains is a rather elegant theoretical justification of the 'something from nothing' development policy followed by countless government agencies across the globe. The mistake these authors make is in grafting an ahistorical, overly stylized depiction of changes in the United States electronics industry onto a story of regional development in Silicon Valley and other western United States centers of electronics production.
The electronics industry did not "locate," per se, in Silicon Valley. Industries do not often simply pick up their skirts, relocate, and create new regions in their image.(31) Places have histories, no matter how humble, and these historical patterns matter. San Francisco Bay Area electronics companies had established themselves at the forefront of rapidly advancing electronics technologies well prior to World War II. Therefore, the location of the electronics industry in Santa Clara County was not an accident, but a direct outgrowth of this industrial development. The San Francisco Bay Area was not a passive recipient of new technologies through the relocation of an industry recently unshackled from locational fixity by radical technological change. San Francisco Bay Area electronics technology developed indigenously. Since the very birth of electronics as an industry, San Francisco Bay Area electronics firms had grown through traditions of collaboration, information and resource sharing, university/ industry cooperation, spin-off, and rapid market adjustment that were to become the hallmarks of Silicon Valley’s industrial organization. These characteristics, ideally suited to the fast pace of development in electronics, particularly with the invention of the integrated circuit and microprocessor, explain the relative success of Silicon Valley.
The real theoretical work to be done, then, is a careful working out of how peculiar regional characteristics are created and subsequently woven onto new firms as they emerge in the region. All of the electronics employees in the San Francisco Bay Area prior to the dramatic expansion that occurred with production for World War II could likely fit within one division of Hewlett-Packard today. Yet the practices worked out by the early pioneers have become known the world over as representative of the way things work in Silicon Valley.
The Innovative Milieu
A better theoretical fit for the nature of early electronics in the San Francisco Bay Area can be found in the concept of the innovative milieu as put forward by Philippe Aydalot (Aydalot, 1986; Aydalot and Keeble, 1988; see Hall, 1990, for a review). Aydalot defines three organizational forms that act as a nexus for innovative activity: 1) in-house innovation within a large firm; 2) the revitalization of innovative activity in an old industrial center with the introduction of new technology; and 3) the application of new technology to new products directly by researcher-entrepreneurs. The third mode of innovation is seen as the most fruitful. Furthermore, Aydalot stresses the importance of the geographical context for innovation: "The central concern is to understand the firm in its local and regional context, and to ascertain what conditions external to the enterprise are necessary both for the creation of new firms and the adoption of innovations by existing ones" (Aydalot and Keeble, 1988, quoted in Hall, 1990).
Anderson and Strömquist (1988), take Aydalot's conception of the innovative milieu a step further, stating that areas rich in fundamental knowledge and competence, able to rapidly disseminate information both within and outside the region, that contain a diverse set of small organizations that tend to hive off new ones as the region grows instead of developing into large individual units, that have an abundance of adventurous capital, tend to emerge through "a process of dynamic synergy" at historical moments when there is a high degree of uncertainty as to the future course of technical and scientific development. Examples given are Athens in the Fourth Century B.C., Florence from the 13th to the 15th Centuries, Vienna from 1880 to 1927, New York during the 1950s and 1960s, and the San Francisco Bay Area today. Johansson and Westin (1987) tie this idea to the work of geographer James Vance (1970), who argues that innovative industries tend to cluster in "entrepôt" cities that are situated as the liaison between the developed world and the frontier. New products are produced in these cities to substitute for imported goods that may be unsuited to conditions the frontier (Hall, 1990).
Certainly the above criteria fit electronics development in the San Francisco Bay Area like a glove. In the popular press Silicon Valley has been referred to as "the New Athens" (Malone, 1984), whose semiconductor engineers are "New Alchemists" presided over by a "Silicon Priesthood" of electronics entrepreneurs (Hanson, 1982). As I have argued, the San Francisco Bay Area's geographical isolation from the developed East and its peculiar mix of resource abundance and shortage had an impact on the technologies that were developed and the organization of the industries that were developing those technologies. The region was at once a frontier and a booming industrial center awash in finance capital. Its role as the gateway to the West, and later, the Pacific Basin, gave a huge boost to the region's manufacturing activities. Further, the San Francisco Bay Area's initial surge of industrialization came at a time of international technological ferment in fields such as electric power and radio, technologies that would prove crucial to the region’s overcoming problems of geographic isolation and resource shortage.
It is important to get the story of the origins of Silicon Valley right. The shadows of Frederick Terman and William Shockley loom large, not just in Silicon Valley, where they have honored places as the region’s founding fathers, but in countless other regions throughout the world that are trying to emulate Silicon Valley’s success. Development schemes include the incubation of “sunrise” technologies (following the William Shockley theme), and/ or the encouragement of cooperation between universities and industry in “high-tech” commercial ventures (following the Frederick Terman theme), and/ or the provision of "high tech" industrial parks (following the model of Stanford Industrial Park). These development models have met with very limited success (Mackali, 1981; Taylor, 1983; Saxenian, 1988b) but continue to absorb the resources of planning agencies and educational institutions in countless locations (for examples in the United States, see Table [, appendix).
Stripped of its tabula rasa antecedents, Silicon Valley retains its millionaires, its legacy of boom-bust, cowboy entrepreneurialism, its record of astonishing urbanization, its polluted air and groundwater, its daily traffic snarls, and its reputation as the hearth of inventions that have transformed the way humans relate to nature and to each other. What is lost is the possibility that anyplace can be Silicon Valley. The fact that electronics in the Bay Area began at the turn of the Nineteenth Century destroys the notion that by planning, investment, and luck, industrialization and urbanization on the scale of Silicon Valley can be induced in other areas. The characteristics of economic and social development in California during the late nineteenth and early twentieth centuries were unique. Silicon Valley grew out a historically and geographically specific context that cannot be recreated.
The lesson for planners and economic developers here is one of long developmental trajectories, not short ones. An assessment of local skills and manufacturing traditions is clearly an important first step toward any efforts in economic development. Silicon Valley was the fastest growing region in the United States during the early 1980s; but that growth came out of a place, not simply a technology; it was based on a long history of industrial development and innovation in the larger San Francisco Bay Area Area.
Considered in isolation, any one of the stories of the early electronics industry in the San Francisco Bay Area told in this thesis has little significance, as interesting, funny, or surprising as they may or may not be. But when viewed as a whole, with all of the interrelationships between them in plain view, a picture of historical and regional development emerges that is truly astonishing. Conversely, in light of the long and fertile history of electronics on the west coast, the image of east coast electronics manufacturing prior to World War II, with the exception of Route 128, Boston, recedes in importance, from a center of industrial leadership in Fordist America, to a collection of behemoth firms selling relatively low technology products in high volumes, more interested in conspiring to retain monopoly markets that were handed to them by the government following World War I than in advancing the art of electronics.
Such early inventions as the telephone repeater, the single-dial tuner, and the glass-blowing lathe were as important to the growth of the nascent electronics industry as the integrated circuit, microprocessor, and microcomputer have been to today's industry. Furthermore, when these little known stories of west coast electronics are added to better known ones, such as the development of the klystron (radar tube) at Stanford, the invention of the graphical user interface at Xerox PARC in Palo Alto, the invention of computer networking by 3Com in Sunnyvale, the invention of the disk drive by IBM in San Jose, and the development of the first commercially successful personal computer by Apple Computer in Los Altos, what emerges is a continuous lineage of leading edge innovation in electronics dating from the very birth of the industry to the present.
29. Notably, while it is generally agreed that Kilby produced a working prototype slightly ahead of Noyce, it was Noyce that first developed a cost effective production process for the integrated circuit (planar process), allowing the technology to be applied to a wide range of uses, including commercial products. This suggests that the success of electronics in the San Francisco Bay Area may be as dependant on innovations in cost effective production processes for critical components (the glass-blowing lathe by Charles Litton and planar process by Robert Noyce), as on the development of the basic technology itself.
30. The stylization of Western United States electronics centers according to discrete electronics sectors is problematic in itself. Both Dallas and Phoenix are very important centers of semiconductor production, while the military formed the primary market for San Francisco Bay Area electronics until the invention of in microprocessor in 1971 and the Apple II personal computer in 1977. In any case, the semiconductor sector was essentially indivisible from the defense sector prior to 1971.
31. The location of Motorola's solid state division in Phoenix is an example that may come close to fitting the "window of locational opportunity" model.
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