The Replicability of the Technological & IT Sector Model of Silicon Valley, USA in the City of Birmingham, UK - Dissertation Example

? The Study of the Replicability of the Technological & IT Sector Model of Silicon Valley, USA in the of Birmingham, UK: Research Design This is a research design for an enquiry into the feasibility and possibility of replicating the model of Silicon Valley, USA in Birmingham in the United Kingdom. From the literature review, it was identified that the research could be conducted through deduction. The deductive research is to proceed through the falsification of four hypotheses. They hypotheses seek to examine the factors that led to the development of Silicon Valley, the factors that led to the success of the replication of Silicon Valley in Israel and Dubai, the existence of critical success factors in Birmingham and the threat of Silicon Fen, the replica of Silicon Valley in Cambridge, England. The research however has some ethical challenges like the tendency towards bias, subjectivity and sampling risks Background Silicon Valley is the name of the popular section of northern California just south of San Francisco Bay which has an extremely high concentration of hi-tech research centres and offices of the largest innovative companies in the world. Silicon Valley represents the hub of America's innovation sector. It has a global reach and is the concentration of the best brains in the IT and technology industry. However, in spite of the extremely high concentration of minds and capital in Silicon Valley, it came from very modest beginnings. Lee (2000) recalls that two classmates began a major electronic device manufacturing company from a one-car garage and six decades later, in 1999 the company, then known as Hewlett-Packard led Silicon Valley in revenue with $47.1 billion. Yahoo, another brand with its operations in Silicon Valley had a market capitalization of $70 billion in 1999. Silicon Valley is a leader in the technology and innovation industry. The following hi-tech hardware and software have companies that have their primary operations located in Silicon Valley: 1. Integrated Circuits (Intel) 2. Personal Computers (Apple) 3. Work Stations (HP, Sun Microsystems) 4. 3D Graphics (Silicon Graphics) 5. Database Software (Oracle) 6. Network Computing (3Com, Cisco Systems) 7. Internet (Excite, Yahoo, Ebay & PayPal) (Lee, 2000). In terms of output, each worker at Silicon Valley accounted for $115,000 in 1999 and this represented 30% higher output per head than the average in the United States (Lee 2000). Also, Venture Capitalists invested $13 billion in Silicon Valley alone in 1999 representing a third of all venture capital investments in America (Lee, 2000). Ironically, Silicon Valley was just a piece of agricultural land in the Southwest of America a century ago (Shueh & Wyman, 2009). This therefore shows that any fallow land could potentially be rebuilt to become like Silicon Valley, provided some important facts exist. This forms the crux of this research. Research is a quest to acquire knowledge on a given topic through the use of systematic tools and techniques (Kothari, 2005). This research is therefore initiated to answer important questions about how and why Silicon Valley developed into a multi-billion dollar concentration of top-notch research entities. The enquiry will therefore move further to identify the possibility of replicating the main initiators of the development of Silicon Valley in Birmingham, UK. It will seek to identify if the replication can be done and/or the role other significant factors are likely to play in the replicated model of Silicon Valley in Birmingham. Research Aim The research question will therefore be the assessment of the relevant factors that will be significant in the replication of the Silicon Valley Model in Birmingham, UK. In arriving at this end, the following objectives will have to be addressed: 1. An examination of the evolution of Silicon Valley USA and the identification of the roles of key stakeholders in the process. 2. A critical evaluation of how other replicas of Silicon Valley sprung up around the world. 3. An assessment of the possible factors and stakeholders in Birmingham that can play roles similar to what the key stakeholders did in the evolution of Silicon Valley in the United States and 4. The evaluation of major competitors to Birmingham's quest for the establishment of a replica of Silicon Valley. Motivation for Research & Institutional/Commercial Value of Study This research design is in partial fulfilment of my degree in International Business with Ashton University, Birmingham. It therefore enables me to draw into the key aspects of research methods and how it relates to International Business. The study of a major thriving business community like Silicon Valley and comparing it to the business environment of Birmingham gives me a lot of models to build on my knowledge. Thus, it would help me in my future career as an international manager. The research design can prompt a research that will be of immense value not only to me and Ashton University but to various stakeholders who can draw upon it to make significant commercial gains. These stakeholders include the city authorities of Birmingham in their quest to make Birmingham a competitive city that attracts investments. If the research is carried out, it can enable the city to draw up a strategy that will enable it to build a thriving technology and IT innovation business community that can make Birmingham a prosperous place. In other words, if an obscure agricultural hotbed became the site of a multi-billion dollar innovation industry, then a city as exposed and industrialised like Birmingham has a good chance of building such an industry. Secondly, the proposed research can be used by the UK government to build or develop a Silicon Valley type of industry anywhere it desires. Since the assumptions are going to be applicable in other parts of the UK, it can be modified and implemented elsewhere in Britain. In my own case, I could modify the assumptions and present it to my country's government and support the establishment of a Silicon Valley type of community in my home country. Also, components of the technological and innovation sectors of Britain can use this research as a blueprint for the establishment of a thriving innovation community in Birmingham. Preliminary Literature Review The evolution of Silicon Valley from an agricultural land to a world-class technological centre is one that seem to follow a logical patter. “It all began with the appearance of Stanford University which focused on innovation and leadership in technology” (Shueh & Wyman, 2009 p3). Then came the establishment of Hewlett-Packard in Palo Alto which provided cutting edge solutions in office electronic and other equipment. “The concentration of earliest firms in Silicon Valley successfully attracted professionals like engineers and scientists and together, they provided research and innovation services that had a global demand” (Laws, 2003). Britain's history and international contacts over the years makes it a privileged country in terms of location and business transactions (Stone & McCall, 2004). This therefore means that the establishment of a Silicon Valley can benefit from trade routes between Britain and the Commonwealth as well as the European Union. This therefore means that factors like capital, market and labour can be sourced from the many countries with which Britain maintains strong links. This means that the prospects of the establishment of a replica of Silicon Valley in Birmingham could be profitable if the relevant authorities venture into it. Hall & Pfeiffer present the idea of a competitive city (2008). The main factors that makes a city competitive include, but is not limited to: city dynamism, facilities, infrastructure, financial incentives, volume of trade and infrastructure (Hall & Pfeiffer, 2008). Based on these factors, businesses might choose to either invest in a given city or invest elsewhere. Birmingham has several advantages as a competitive city. First of all, it has a long-standing history spanning from the days of the Roman Empire. Secondly, there are more modern advantages like industrialisation, state and policy intervention, environmental regulations, promotion of 'city living' concept which has brought a lot of professionals to reside in it, as well as a thriving migrant community (Mustard, 2010). The OECD reports that between 1981 and 1990, the Birmingham city council voted as much as ?599 million into the development of education and housing in Birmingham (2007). All these factors come to play to make Birmingham a very ideal city within which scientists and researchers from all over the world would want to settle and support the replication of a Silicon Valley type of environment. However, some setbacks like gang violence could potentially stand in the way of this development. Elsewhere around the world, there exist a number of communities that have successfully replicated the Silicon Valley model. In Israel, the Silicon Wadi is the name given to the concentration of high-tech research and development centres in Haifa and Tel Aviv (Bresnahan, 2004). All these different concentrations of technological centres are supported by universities and the migration of American-Israeli professionals from all over the world to work in these sectors. Silicon Wadi can boast of some Israeli brands like Checkpoint and Elon as well as global brands like Intel, Microsoft, and IBM (Bresnahan, 2004). The various universities in Israel produce a lot of skilled people to feed these industries as well as the Israeli Army which nurtures graduates from these institutions. The development of Silicon Wadi is more or less related to the specialisation of the Israeli IT and technology sectors (Rosenbaum, 2010). “Over 90% of the world's security software and a large percentage of anti-hacking software are developed in Israel” (Rosenbaum, 2010). Due to the fact that Israel thrives in a sea of hostile nations, its ability to develop its competence in security has seeped into the Silicon Valley and granted it an international repute. In Dubai, the story is a bit different. Although Dubai Internet and Media City is not named like other replicas of Silicon Valley (which is normally 'Silicon' and some unique geographical feature in the country) Dubai Internet and Media city are replications of Silicon Valley (Saperstein & Rouach, 2008). Dubai Internet and Media City was developed by government legislation and intervention through laws and other incentives. It is part of Dubai's government's plan to make the country a geostrategic location to link the developed and developing worlds (Oxford Business Group, 2008). In this wise, Dubai's replication of Silicon Valley is through partnerships with American and other international technological brands and the import of technological innovation and IT professionals from the developing world, particularly India to support its plans (Yigitcanlar et al, 2008). However, the biggest competitor that is likely to stand in the way of a future 'Silicon Valley' in Birmingham is the Silicon Fen. Silicon Fen is the UK's version of the Silicon Valley (MacDonald et al, 2002). Silicon Fen is located in Cambridge in the East of England. It has high quality research and development centre and utilizes the services of intelligent graduates from Cambridge University and other top-class universities in the world (Saperstein and Rouach, 2008). Silicon Fen receives the second largest venture capital funding after Silicon Valley (MacDonald, 2002). In spite of this, Silicon Fen is not free of weaknesses. It is much smaller than Silicon Valley and is more conservative in its approach to business (Saperstein and Rouach, 2008). This gives hope that the future 'Silicon Valley in Birmingham could potentially overtake it. Hypotheses The research will be a deductive one. It will aim at falsifying hypotheses that would help to identify the whether it will be possible to replicate the Silicon Valley model in Birmingham or not. A hypothesis is a tentative statement that is tested for its truthfulness of falsity (Kothari, 2005). Falsification refers to the process through which a hypothesis is scrutinized, assessed and evaluated to find out whether it is valid or not (Kothari, 2005). In studying the replicability of Silicon Valley in Birmingham, I propose that the following hypotheses should be tested: 1. Silicon valley evolved from an collective effort of private IT entrepreneurs, venture capitalists and the global demand for services provided there rather than a conscious effort of the US government or the Californian State government 2. Silicon Wadi in Israel and Dubai Internet City are two major IT concentrated areas outside USA that successfully copied the Silicon Valley model. 3. Birmingham has the potential to attract the critical success factors that led to the development of Silicon Valley to build a replica. 4. The existence of Silicon Fen in Cambridge, England will stand in the way of replicating the Silicon Valley in Birmingham. Data Collection Data will be collected sequentially to test the hypotheses identified. Phase 1: Data will be collected on the role of the private sector and that of the public sector in Silicon Valley over the past thirty years. We will gather data on the business investment efforts of a number of professionals over the period identified. The investment of venture capitalists will be examined through charts and graphs of some selected venture firms in the area. Also, the numbers of professionals who moved into Silicon Valley will be examined. The sales of three or four businesses in Silicon Valley will be examined over a period of time and the geographical spread of sales will be noted. On the other hand, there will be a study of the role played by the US government and the Californian State government. This will be done through an interview with two representatives of these two arms of government. The respondents will be asked about the role played by the Federal and State governments in the development of Silicon Valley. Phase 2: This will involve the study of Silicon Wadi, Israel and Dubai Media and Internet City through secondary sources. We will examine journals and other secondary sources for information about how they developed. Phase 3: Birmingham's position as a competitive city will be examined through interviews with authorities in British urban development industry. Two interviews will be conducted with an authority in independent practice and another in the public sector. Questions will be asked about how realistic it is for land to be demarcated for a 'Silicon Valley' project in Birmingham and possible investment appetite from outsiders. Also, the ratings of Birmingham for investments by venture capitalists will be examined in polls and rankings. Finally, a survey will be conducted to find the perceptions of R&D and IT professionals in relation to moving to Birmingham. The survey will collect views from participants in Britain (10), The Commonwealth (15, with at least 5* each from India and Africa), The European Union (15 with at least 5* from Germany) and 10 from the rest of the world (with at least 5* from America). These surveys will find out what the professionals think about Birmingham and the prospect of working in a 'Silicon Valley' there as well as expected motivation. Phase 4: This will include the collection of secondary information from books, journals, reports and academic sources about the strength of Silicon Fen in Cambridge. * These top priority countries (TPCs) are chosen because they have high concentrations of IT professionals and research experts who might be targeted by Birmingham because of reasons like cost effectiveness (India and Africa) and expertise (USA and Germany). Data Analysis Phase 1: Data from the private sector will be plotted into graphs and diagrams. These statistical representations will be compared on a year-by-year basis and industry-to-industry basis. This will include entrepreneur inputs, venture capitalists' investments and sales by Silicon Valley businesses. The results of interviews will be summarized to provide facts about the role of the US government and the Californian State government in the development of the Valley over the past 30 years. Phase 2: Elements of Silicon Wadi and Dubai Media and Internet City that are common with the development of Silicon Valley will be noted. Unique elements that apply only to the two technology hubs only will also be summarized Phase 3: The responses of the two interviewees about the competitive nature of Birmingham will be collated and key points will be established. Also, the popular view of venture capitalists about Birmingham as an investment centre in general will be summarized verbally. The results of the surveys will be summarized and presented diagrammatically. There will also be special diagrams about responses from the top priority countries (TPCs). These will give the views and opinions of prospective professionals and experts can be deduced from the diagrams Phase 4: A SWOT analysis of Silicon Fen will be put together from the secondary sources. This will show where Silicon Fen is strong and where it is weaker. Interpretation & Theorization Phase 1: The research will deduce the extent of effort that was put into the businesses of silicon valley by private investors and the support they gained from venture capitalists. The contribution made by the Federal and State Governments will be compared and we will conclude on whether the private sector initiated and sustained the growth of Silicon Valley or the public sector. They key factors that created the Silicon Valley will be established and presented as yardsticks to Birmingham. Phase 2: The elements of Silicon Valley that were replicated in Israel and Dubai will be identified and those that related to local conditions would also be identified. This will show whether the two centres were a replication or a distinct centre of IT and innovation. The finding will conclude by stating whether it will be wise for Birmingham to replicate or set up a distinct IT or innovative sector or forget all about setting up a new high-tech industry. Phase 3: The realistic view of the appropriateness of Birmingham for a project like a Silicon Valley will be stated. The sentiments of investors and professionals from within and out of Britain towards supporting a Silicon Valley in Birmingham will be established. Phase 4: A conclusion will be drawn on whether Silicon Fen will overshadow a 'Silicon Valley' in Birmingham or not. Recommendations The research will conclude with a recommendation on whether a 'Silicon Valley' can be established in Birmingham or not based on the findings. The recommendation will include an opinion of one of two choices about a subject. This will be supported by a statement of the risks and possibilities that are attached to the choice. Ethical Considerations & Limitation of Research There are three main ethical issues that I notice about this research. First of all, there could be a major sampling risk in this quest. Sampling risk is the risk that a given sample might not reflect the reality of the larger population. The sampling of businesses in Silicon Valley could be quite problematic because the businesses provide very different services and the technological environment is so volatile that the Silicon Valley can change within hours through mergers, acquisition, fold ups and research discoveries. Secondly, there is a risk of bias. This is because although I plan to remain as objective as possible. However, this research might need an external sponsor since it might require a lot of funding to complete the research. I might therefore find myself concentrating on certain elements of the research based on who sponsors the research. This can potentially lead to bias. Finally, the research is mainly qualitative. This means that there could be a lot of opinions that could make the research more subjective. This might defeat every effort to remain objective. References Bresnahan Timothy F. (2004) Building High-Tech Clusters Silicon Valley & Beyond Capleton Press Hall, Geoffrey Peter & Pfeiffer Ulrich (2008) Urban Future 21: A Global Agenda for 21st Century Cities London: Taylor & Francis Group. Kothari, C. R. (2005) Research Methodology Delhi: New Age Publishing. Laws, David, A. (2003) Silicon Valley: Exploring the Communities Behind the Digital Revolution Menlo Park, CA: Windy Hill Publishing. Lee, Chong-Moon (2000) The Silicon Valley Edge: A Habitat for Innovation & Entrepreneurship Stanford University Press MacDonald Frank, Burton Fred & Bowling Peter (2002) International Business Mason, OH: Cengage. Mustard Sako (2010) Making Competitive Cities Hoboken, NJ: John Wiley & Sons Organization of Economic Community Development (2007) Territorial Records New York: OECD Press. Oxford Business Group (2009) The Report: Dubai 2008 Oxford Business Group Publishing Rosenbaum David (2010) 'Hot Times in Silicon Wadi' CIO Magazine Vol 12 No 15 CIO Publishing Saperstein Jeff & Rouach Danie (2008) Creating Regular Wealth in the Innovative Economy FT Press. Shueh Sam & Wyman Beth (2009) Silicon Valley Arcadia Publishing. Stone, Manlyn A & McCall, J. B. (2004) International Strategic Marketing: An European Perspective London: Kogan Page Yigitcanlar Tan & Velibeyoglei Koray& Baum Scott (2008) Knowledge-Based Urban Development: Planning & Approaches IGI Publishing. Read More