“There is no better place to start or grow a technology-based business than Silicon Valley.”
- www.siliconvalleyonline.org

The success of the Silicon Valley is owed to the high concentration of clusters and networks of high-technology systems, resources, and people. In Silicon Valley, clusters and networks have great influence on labor activity and the actual production of innovation.

One of the most important aspects of the Silicon Valley is its ability to restructure it’s labor force through rapid changes. This can be explained through Mark Granovetter’s social network theory, the “strength of weak ties”. This theory explains that close friends will know the same people as you do, however acquaintances give you access (or bridges) to new ties; thus, employers benefit from their employee’s social networks. It is also found that employees hired through social networks tend to quit less, experience faster mobility inside an organization, and perform better than those recruited through other means.

This social network allows firms within Silicon Valley to transmit information and knowledge among each other to produce innovation. A new product and the time of it’s release is crucial to the survival and growth of a firm in a rapidly changing environment. The Silicon Valley’s networks enhance the ability of firms to do this by using it’s networks to mobilize capital, gather information, and link all the above to the most effective source for production.

An example of a Silicon Valley network is illustrated below. This figure represents the founders of the semiconductor industry in Silicon Valley. Each node represents a person, and the lines connecting the points represents the ties. So a tie between two people means that they were co-founders of at least one Silicon Valley semiconductor company.

The success of Silicon Valley may seem straightfoward and “recreatable”, however the process of building a network and technology cluster like Silicon Valley’s takes decades. As the authors of ‘Silicon Valley North’ precisely state, “technology clusters are started and achieved when the fundamentals are right. The presence of a world-class research institution, with its innovative capacities and its magnetic attraction for highly talented people — including visionary entrepreneurs — is the essential condition”, which are all sources not easily attained.