Why Doesn't Silicon Fen Create Big Companies?

Notice has often been taken of the striking differences between the technology-based companies launched in Silicon Valley and Silicon Fen and, in particular, commentators have pointed out that Silicon Fen has lagged far behind Silicon Valley with respect to creation of large companies or serving as the birthplace of entire new industries.  In most cases, Cambridge entrepreneurs chose, and often successfully followed, niche strategies that are bound on special purpose technologies that are generally not suitable for mass markets and achieving high levels of sales revenues and, in fact, local surveys taken during the late 1990s indicated a distinct preference for maintaining a manageable size of the enterprises and that no more than 3% of the local firms at that time had more than 200 employees.  Pfeifer et al. (The Golden Triangle: A Comparative Perspective—Silicon Fen (UK) and Campinas (Brazil)) found that about two-thirds of the technology-based companies in Cambridge had been founded by “locals” (i.e., from the University, another local research establishment or former employees of a larger local company that provided support to the founders in spinning off a new business) and that a majority of the companies remained locally headquartered businesses with small staffs as they matured.  Ejler et al. (Managing the Knowledge-Intensive Firm) argued that many technology companies in Cambridge realized that growth is often counterproductive for continuous innovation and opted for a strategy of pursuing interesting new projects by “spinning out” the necessary people and assets into new business units or companies that could be organized in a project-based form that was more hospitable to the low levels of formalization and decentralized decision making thought to be best for knowledge-intensive firms.

While governmental restrictions on commercial and residential developments in Cambridge, as well as infrastructure issues such as poor transportation planning, have certainly contributed to the comparatively modest growth of Silicon Fen technology companies, another possible explanation for the direction the Cambridge Phenomenon has taken is the personality characteristics of the local entrepreneurs themselves.  It has been suggested that the founders of new businesses in Silicon Fen do so not to create a global monolith, no matter how badly the politician may want that, but instead will be content to nurture small-scale enterprises that cater to the needs of an identifiable and manageable market niche that does not draw the attention of large competitors.  In fact, Cambridge entrepreneurs have often been criticized based on the perception that they are only interested in creating “lifestyle companies” that allow them to pursue their fascination in a particular technology while avoiding strategies and activities that might result in the firm growing to a size that is beyond their immediate control.  On the other hand, however, a significant portion of the new companies in Cambridge are spin-offs of other firms and the founders of these new companies have been praised for their “strong pedigrees” in research and management based on the experience they have accumulated during their previous ventures.  It has also been suggested that the relatively cautious approach to growth among Cambridge firms contributed to impressive survival rates in comparison to Silicon Valley and other UK innovation centers: in one study of 53 companies launched through the St. John’s Innovation Center in Cambridge over a ten-year period (The Golden Triangle: A Comparative Perspective—Silicon Fen (UK) and Campinas (Brazil)), only five of them ceased trading and, of those, failure of the business was not the reason for shutting down for two of them.

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