California Dreaming? Cross-Cluster Embeddedness and the Systematic Non-Emergence of the 'Next Silicon Valley'

Abstract

The importance of social embeddedness in economic activity is now widely accepted. Embeddedness has been shown to be particularly significant in explaining the trajectory of regional development. Nonetheless, most studies of embeddeddness and its impacts have treated each locale as an independent unit. Following recent calls for the study of cross-cluster social interactions, we look at the consistent failure of numerous localities in the United States with high potential to emulate Silicon Valley and achieve sustained success in the ICT industry. The paper contends that the answer lies in high-technology clusters being part of a larger system. Therefore, we must include in our analysis of their social structure the influence of cross-cluster embeddedness of firms and entrepreneurs. These cross-clusters dynamics lead to self-reinforcing social fragmentation in the aspiring clusters and, in time, to the creation of an industrial system in the United States based on stable dominant and subordinate (feeder) clusters. The paper expands theories of industrial clusters, focusing on social capital, networks, and embeddedness arguments, to explain a world with one predominant cluster region. It utilizes a multimethod analysis of the ICT industry centered in Atlanta, Georgia, as an empirical example to elaborate and hone these theoretical arguments.