What Makes Some Cities and Regions Hotspots of Innovation

Why Do Silicon Valley and Bangalore Score over Regions and Cities?

Silicon Valley in California State in the United States and Bangalore in India, as well as Shanghai in China, are known to be hotspots of innovation wherein they attract the best talent and the most number of startups as well as entrepreneurs compared to the other regions and cities in the same country or even worldwide.

Indeed, Silicon Valley and Bangalore are household names for anyone who is remotely associated with the Tech Industry given their reputations for being innovation hotspots.

While there are other regions in the world that are also in the race to become innovation clusters, there are some regions such as these that continue to thrive and prosper as far as innovation is concerned.

So, what makes these cities and regions emerge as innovation hubs whereas other regions and cities fail to become like them? More importantly, are there some differentiating aspects that distinguish these regions and cities that can be copied or emulated by other regions and cities in their quest to emerge as clusters of innovation? In addition, is there something we can learn from the experiences of these cities and regions that can be used as a template by others?

The Factors behind the Emergence of These Regions

The answers to these questions lie in a complex matrix of history, geography, politics, economic aspects, and most importantly, people. To start with, Silicon Valley has become what it is now due to conscious and deliberate policies followed by the state of California to attract the best talent from around the world to invest and work there.

Further, its proximity to world-class universities meant that students graduating from those universities saw it as a natural progression from academia to working arrangements wherein they flocked to Silicon Valley to seek their fortunes.

Moreover, the fact that the initial drive of computerization and automation were driven by entrepreneurs such as Bill Gates of Microsoft and the Late Steve Jobs of Apple meant that others who wanted to follow in their footsteps automatically chose to be closer to the action and hence, set up their firms in Silicon Valley.

Similar is the case with Bangalore where the pioneers of the Indian IT (Information Technology) Industry such as NR Narayana Murthy and Azim Premji setup their base here which meant that after their success, there were others who wanted to do so likewise and hence, flocked to Bangalore.

How Other Regions and Cities Can Emulate Them

Next, what these regions have and other regions find it hard to emulate is that all of them have entrepreneurial ecosystems that are capable of incubating, nurturing, and fulfilling the dreams and aspirations of entrepreneurs.

In other words, the combination of investors who can fund their ventures and incubate their dreams to become realities as well as the needed infrastructure and logistics apart from human resources that are needed to nurture them, and more importantly, the fact that these regions have the extra edge that helps them fulfill the conditions needed to successfully run and manage the ventures meant that these regions succeeded whereas others either failed or struggled.

In addition, the political stakeholders also played an important part wherein they provided the incentives and the tax breaks as well as the subsidies in the form of cheap land and other aspects to actively encourage investors and entrepreneurs as well as topnotch talent from premier universities to come and settle in these regions to pursue their ambitions.

Indeed, the fact that there is a competition underway in India between cities and regions wishing to replicate the Bangalore experience means that there definitely are political drivers behind the emergence of any region or city to become innovation hubs.

The Wisdom of Crowds Effect

While all these aspects are important, a crucial and perhaps one of the most important reasons why these regions and cities emerged as innovation hubs has to do with the people component.

In other words, the Wisdom of Crowds effect wherein once people start flocking to a particular region; others would follow suit meant that both Silicon Valley and Bangalore scored heavily in this respect wherein the initial impetus became a stampede among both investors and potential employees to live and work there.

Indeed, while there are many reasons for people and talent to congregate in these regions, one of the most commonly cited reason is geography, and climate wherein Westerners started to congregate in Bangalore because of its proximity to important institutions of excellence as well as its salubrious climate.

Even Silicon Valley is known for its hospitable weather and tolerance to other cultures that makes Asians prefer to live and work there due to the prevailing liberal environment and favorable climate.

Apart from this, the fact that California has some of the most liberal laws that encourage multicultural living means that this is yet another factor behind its emergence as an innovation hub.


Having said that, there are Dark Clouds on the Horizon in these clusters of innovation wherein due to extreme income and class inequalities, social unrest and friction between the locals and those who have come there is threatening to make them lose their edge and hence, the challenge for the present generation of leaders is to ensure that these divisions are quickly resolved.

Lastly, with the emergence of anti-immigrant sentiments worldwide, the other challenge is to ensure that global hotspots of innovation do not become local stagnating centers where innovation is forgotten thereby endangering their reputation as centers of global excellence.

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