While examining Victorian manufacturing in the late 19th century, Alfred Marshall noticed the tendency of firms to flock together geographically. The idea was true to that time, still noticeable among the information technology companies of the 2010s. For instance, Silicon Valley is occupied by some of the industry’s biggest companies. Other areas that experience this proximity factor include London, Berlin, New York, and Moscow. The economic theory suggests reasons for increased proximity among companies in the same industry. These include natural resources, the concentration of specialized labor, the supply of specialized inputs, and the development of new ideas. These areas have witnessed the pooling of skilled labor; hence companies are moving to exploit this advantage.
The concentration of companies in one area and especially in the tech industry, is due to the magnet factor. Workers prefer working in areas with available jobs such as Silicon Valley or lively cities such as London and New York. For instance, Zimride had to relocate to San Francisco from Palo since most of his employees lived. The concentration of firms together is also evident in Silicon Valley, whereby small startups are flocked together. It is postulated that for these young firms, money and advice is critical in addition to labor. Mr. Goldbloom, who moved his company from Melbourne to SOMA district, explains that its proximity helps face-to-face meetings with employees, hence increasing productivity. Also, it is essential in enabling serendipity. In Silicon Valley, it helps in recycling people by hiring from competitors and has aided in the development of ideas. People’s closeness means they are exposed to the latest ideas, which has greatly developed Silicon Valley.
Silicon Valley is considered to be more advanced than New York, London, and Berlin. However, these places also have their advantages. For instance, they are bigger and livelier, which enhances their attractiveness to young people. They also have a wider pool of industries, and therefore skilled workers for companies. For instance, New York’s programming pool development has been developed since Google deployed engineers in its office. It has resulted in these employees starting or joining startups in the area. These industries’ development is also based on capital from New York, London, and even Silicon Valley funds. There is also the tendency of capital from past successes being channeled back to the industries.
In conclusion, Silicon Valley has shown unmatched resilience over the years. It has witnessed a major cycle of investments, success, failure, and regeneration of ideas. We can only hope that young ecosystems will arise and develop like Silicon Valley. The Big Cities and London do not match Silicon Valley but possess inherent strengths. The increased advancement in technology suggests that the next big thing will be based on data.