How should the issue of power be treated in the study of entrepreneurship? Much of the recent literature explores legacy firms strong-arming start-ups, the tug-of-war between providers of and users of digital platforms, and, more generally, the phenomenon of asymmetric information. Focusing on such issues, important as they are, gives the appearance that the exercise of power tends to be a zero-sum game within the ecosystem, pitting start-ups against established firms.
There is another lens through which to examine power and entrepreneurship: looking at the nodes of the entrepreneurial ecosystem rather than entrepreneurs. Using this lens, I explore the development of Silicon Valley and its early cluster formation. Significantly, key aspects of the ecosystem were established and enhanced by individuals with access to, and the ability to influence, those with power or resources.
In this paper, I show the exercise of such power and influence in action. During the period before 1971 (when the region was dubbed Silicon Valley), targets of that power ranged from philanthropic foundations (regarding the funding of Stanford University) to the federal government (regarding funding of the San Francisco airport) to the state government (regarding the expansion of branch banking) to litigants before the United States Court of Appeals for the Ninth Circuit (regarding patent litigation). The outcomes each strengthened, directly or indirectly, the region’s entrepreneurial prospects. This was part of a virtuous cycle that began with an initial creation of wealth (from the Gold Rush, other extractive industry, agriculture and shipping). With wealth came power. By the late 1950s, local exercise of power had strengthened institutions that would enable creation of hundreds of tech firms within a decade.