in search of power: the organization of business interests in silicon valley and route 128

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In search of power: the organization of businessinterests in Silicon Valley and Route 128AnnaLee SaxenianPublished online: 25 May 2006.

To cite this article: AnnaLee Saxenian (1989) In search of power: the organization of business interests in Silicon Valley andRoute 128, Economy and Society, 18:1, 25-70, DOI: 10.1080/03085148900000002

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In search of power: the organization of business interests in Silicon Valley and Route 128

AnnaLee Saxenian

Abstract

The entrepreneurs of Silicon Valley and Route 128 -America's leading centers of technological innovation - organized politically in the late 1970s. This paper seeks to explain why high tech business associations in these two regions have adopted widely divergent political stances and behavior. It argues that business interests are defined through the process of organization, and that the attitudes of these groups of industrialists were shaped by distinctive political environments, in turn a result of the different industrial and social histories of the two regions. While much scholarly interest has been devoted to the ways in which business affects political outcomes, the paper suggests that the reciprocal causation is equally important: the political environment is an important determinant of business interests.

Introduction

T h e entrepreneurs of Silicon Valley and Route 128 - America's leading centers of technological innovation - initiated a far-reaching transformation of the American economy in the early 1950s. They did not enter the political arena, however, until the late 1970s, nearly three decades later. Faced with shortages of skilled labor and intensifling international competition, the creators of a new industrial sector turned to the State to insure the conditions for continued growth. Economic competitors quickly became political allies under the pressure of a common threat. Deliberately eschewing both traditional partisan politics and existing trade and business associations, these industrialists rapidly formed their own organizations. Through this process of mobilization, they began to define and articulate shared political identities and interests as 'high tech' producers.' Less than a decade later, these engineers- turned-entrepreneurs who once shunned political involvement have become active participants in local, regional and national policy debates.

Economy and Society Volume 18 Number I Febma y 1989 0 Routledge 1989 0308-5147/89/1801-0025 $3.00

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26 AnnaLee Saxenian

Political organization began at the local level. The mobilization oj' America's innovative entrepreneurs occurred simultaneously but separatel!, on both coasts. This paper examines the formation and evolution of two associations of high tech businessmen - one in California's Silicon Valley, thr: other in the Route 128 region of Massachusetts - focusing on their role in shaping the political identities and interests of their members.

The Santa Clara County Manufacturing Group and the Massachusetts High Technology Council have much in common. They were both formed in the late seventies and both are concerned exclusively with regional polic!i issues. Both have maintained strict political and organizational autonom!i from existing business groups, both have confined membership to the Chief Executive Officers (CEOs) of local firms, and both are acutely publieici conscious, relying on highly visible professional middlemen and actively seeking media attention to publicize their concerns. These organizations now rank among the most powerful political actors in their respective regions.

There are also important differences between these two groups. While both represent technologically innovative companies, the content of their demands, their positions on particular policy issues, and their broader political stances are dissimilar. The Silicon Valley business community is explicitly committed to cooperation with local government and has consistently supported an activ': state role in planning regional development. By contrast, the industrialists of Route 128 have repeatedly clashed with the local public sector, often threatening investment strikes, and they remain ideologically opposed t c ~ government intervention of almost any sort. In short, these two business communities, which are economically and technologically similar, have articulated widely divergent political world views and demand^.^

This paper examines the process of politicization among these innovative industrialists. Its aim is to account for the divergences in political ideas and behavior of these two business communities. The dominant traditions in social science research provide little theoretical guidance in this task. P1urali:it theory focuses primarily on the mechanics of the political system and the process of group competition, not on the substance of group demands; while Marxist theory treats capitalists' interests and ideologies as direct reflectior s of underlying economic structures.

Organizations of businessmen have thus received attention in the literature of American political science almost exclusively in their role as pressure groups. There are accounts of the activities of the national associations which represent business as a whole, such as the National Association of Manufac- turers, the Chamber of Commerce, and the Committee for Economic Development (Mcquaid 1982; Ziegler 1964; Key 1964; Wilson 1981); these are pluralist case studies of the role of businessmen and their organizations in influencing particular policy decisions (Schattschneider 1960; Bauer, Pooie and Dexter 1964; McConnell 1966); and there are descriptions of the informal social and organizational networks which unify a national class-wicie corporate elite (Domhoff 1967; Useem 1984). However there is little

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In search ofpower 27

discussion of the determinants of the ideologies and political demands of American businessmen.

This neglect is rooted in the underlying assumptions of classical liberal theory.3 Pluralist theorists since Bentley have accepted the notion that interests are predetermined. In interest group theory, individuals are presumed to have fixed interests which derive from their social and economic position in the world. Groups arise on the basis of common interests, group demands are simply expressions of these underlying interests. Truman, for example, referred to 'potential' groups, which are collections of individuals with shared attitudes (not yet organized interests), and he concluded that: 'The existence of neither the group nor the interest is dependent upon formal organization . . . organization in the formal sense represents merely a stage or degree of interaction' (Truman 195 1: 5 1). In short, interests exist prior to and independent of organkation.

The pluralist framework is thus ill-equipped to explain the divergent political demands of high tech industrialists in Silicon Valley and Route 128. From a pluralist perspective, the organization of regional associations of high tech industrialists would be regarded as an almost automatic, natural stage in the evolution of a new sector. Since interests are presumed to precede organization, and the underlying economic conditions in which these entrepreneurs operate are virtually identical, pluralist theory would predict comparable business organizations and demands.'

Similar assumptions recur throughout the literature under different guises. The political economists emphasize the economic determinants of political behavior. Accordinng to the Olsonian logic of collective action for example, group formation is far from automatic: the decision to join a group is based on the rational economic calculations of utility maximizing individuals (Olson 1965). In this view, interests and behavior are reducible to the economic calculation of expected costs and returns. Thus while businessmen might be more likely to form groups than others because of their small numbers and superior ability to provide selective incentives they, like everyone else in Olson's world, act on the basis of a fixed utility structure, and their organizations are simply collective expressions of predetermined economic interests.'

Analysts of the politics of industrial sectors (Kurth 1979; Ferguson 1984) share Olson's methodological assumptions. These political-economists stress the importance of political conflicts and coalitions between different segments ofbusiness, each ofwhich is positioned differently in the world market. This is a clear advance over the pluralist approach for our purposes: It would explicitly link the high tech mobilization to the intensification of foreign competition, it would predict a sectoral basis of organization, and it could help to explain specific economic areas of policy concern among high tech industrialists. However, it too accepts a purely utilitarian logic by linking political demands to the economic characteristics of a sector (such as its capital needs, labor force requirements, and product characteristics). This

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28 AnnaLee Saxenian

approach is of little use in explaining contradictory political stances and demands of businessmen from the same industrial sector.

In a striking parallel to their liberal counterparts, neo-Marxist theorists have looked to the economic determinants of businessmen's interests and behavior, although, curiously, many of them see organization as a critical determinant of working class attitudes and behavior. In this view, non- utilitarian forms of collective action are necessaly for workers as a means of overcoming the individuality of interests - which are highly ambiguous and variable - and for creating the solidarity that is necessary for political action. Capitalists on the other hand, are regarded as rational economic actors with unambiguous interests who can thus rely on purely instrumental forms ot collective action. According to Offe and Wiesenthal:

The logic of collective action of the relatively powerless differs from that of the relatively powerful in that the former implies a paradox that is absent from the latter - the paradox that interests can only be met to the exten1 that thgl arepartly redefined. Therefore, the organizations in which the collective action of the relatively powerless takes place must always be - and, in fact, always are -construed in such a way that they simultaneously express and define the interests of the members.

1; sharp contrast, capital associations are confined to the function of aggregating and specifying the interests of those members which, from thc point of view of the organization, have to be defined as given and fixed, thc formation of which lies beyond the legitimate range of functions of the organization. (Offe and Wiesenthal 1980)

If business associations merely serve to aggregate and specify predetermine^ interests, we are once again left without a solution to the puzzle of the high tech industrialists.

In this paper I will assume that businessmen's interests are indeterminate: that as individuals, businessmen do not discover their political interests, ancl hence that they often face considerable ambiguity in selecting a course of action. Such ambiguity is particularly evident with the emergence of a new industrial sector. When a new group of actors enters the political arena, lacking either experience or relevant precedents, the range of potential behaviors is quite wide. A similar ambiguity exists in times of crisis - like tht: present - when once fixed identities and interests are rendered more flexible by the political and economic uncertainties of the era. In these cases, organization serves as a means of collectively defining as well as expressin!; business interests.

This is not to deny that businessmen are economic actors whose primary aim is profits. It is rather to suggest that there is far more variability and ambiguity involved in selecting the means to achieving this end than is commonly acknowledged. There are often a variety of different calculi which could be deemed as producing the optimal (rational) strategy for a firm, or an entire ~ e c t o r . ~ The political behavior of businessmen, in particular, is rarely

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the result of individual (or corporate) calculation of expected costs and benefits; it is instead based on socially formed expectations, perceptions of risk, and world views.

In this view, the appropriate unit of analysis is neither the individual business or firm, nor is it the entire capitalist class or even necessarily the sector; rather it is the self-defined group of businessmen who, through association, develop shared identities and world views. And the appropriate focus of analysis is the process of political organization which brings businessmen together in response to an external threat.

Businessmen organize in response to threats to their competitive position to which individual response - either market or political - is perceived as insufficient. Business organization has traditionally been viewed as a response to either domestic structural challenges: the formation of trade unions or the growth of state regulations; or to the threat of mutually destructive competition (Schmitter and Streek 1983). The case of Silicon Valley and Route 128 - where unions are weak, state regulation is non-existent, and markets continue to grow - suggests alternative impulses for political organization among businessmen: the perceived deterioration of regional conditions for investment and the threat of intensifying international competition.

Collective action among businessmen in turn assumes an importance that transcends observable pressure group activities. It is through the process of association and consultation that shared understandings of both the nature of the threat and of the appropriate economic and political response are forged among economic competitors. As shared identities are formed, a diversity of individual perceptions of interest are transformed into a single collective interest definition, which forms the basis for collective political demands and strategies. This coalition of identity and interest transforms a collection of economic adversaries into powerful political actors. Leadership and ideology often assume great importance in this process. The political struggles and the strategic choices made by the group over time in turn serve to define and redefine the contours of these interests.

Relative to all other groups in advanced industrial societies, businessmen enjoy disproportionate power as a result of their superior economic and organizational resources and their central role as employment-creators (Dahl 1982; Lindblom 1977). But they - like all other groups - must organize to define and articulate a collective program. Yet in the literature of American politics, even when the privileged position of business in the political economy is recognized, the determinants of businessmen's world views and interests remain largely unexamined.'

This undertaking follows the theoretical lead of researchers who have rejected a purely utilitarian, 'objectivist', interest-based approach to the study of social classes (Pizzorno 1978). These scholars have fruitfully explored the evolution of working class identities, interests and consciousness (Gallie 1978; Mann 1973; Sabel 1982) and the organization of a variety of different

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group interests in Western Europe (Berger (ed.) 1982). Similar ideas are also echoed in recent research on international regimes (Krasner 1982).

This paper traces the process of political organization among the two leading communities of high tech businessmen in the US during the past decade. It focuses on the formation of shared identities, interests and ideologies in each region. The industrialists of Silicon Valley and Route 128 mobilized in response to similar problems - perceived deterioration of the regional environment for production and intensifying international competition. In neither instance did they begin with a coherent agenda for action. Typically these engineers-turned-entrepreneurs lacked prior experience with or interest in politics. Through their newly formed associations, they collectively defined both the source of the problem and a set of policy solutions, which they in turn proceeded to articulate in the political arena. The striking fact is the extent to which this process of unification has resulted in divergent interest definitions, political ideas and demands in the two regions.

These divergences can only be accounted for by the differences in the political context in which mobilization has occurred. The two regions have markedly different political and economic histories. Unique patterns of industrialization account for the distinctive political environments which characterize these two regions - particularly the existence of other organized groups of businessmen as well as organized labor, and the orientation and nature of state legislative initiatives. As high tech businessmen in these two regions organized to address issues of common concern, these contextual conditions shaped the evolution of their political attitudes and behavior. These differences are in turn reflected in markedly different political stances and programs.'

The structure of the argument that follows reflects this logic. The process of organization in Silicon Valley and the 128 region is described in two separate sections. Each begins with a brief overview of the region's economic history and then details the formation of the relevant local association of high tech producers, the Santa Clara County Manufacturing Group and the Massachusetts High Technology Council. The focus is on the group's early political struggles, during which a collective purpose is defined and a shared identity begins to develop among the members. This early phase lays the groundwork for the group's future demands and its relationship to local government.

The focus of the second section is the process of interest definition. Here each group is considered within a broader political and institutional context in order to demonstrate how the world views and interests of a group are shaped through confrontation or accommodation with other organized interests in the region. It focuses particular attention on the group's evolving relationship to the state and to other business organizations, as well as organized labor and community groups when relevant. In each case, policy-forming commissions initiated by the state government played a crucial role in invoking and broadening the group's political stance and behavior. The California

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In search ofpower 3 1

Commission on Industrial Innovation and the Massachusetts Commission on the Future of Mature Industries each brought high tech industrialists onto the state-wide political stage, accorded them with both visibility and access to the public agenda, involved them in discussions of economic development policy, and accelerated their ideological and organizational coalescence.

Each of these accounts then concludes with an examination of the political programs and recent histories of these organizations. High tech businessmen in both California and Massachusetts have recorded only political victories in recent years. However, the former have achieved these victories through the ongoing mobilization of an ideological consensus in the broader community, which is also reflected in the group's continued internal unity and organizational integration. The latter, by contrast, appear increasingly narrow and self-interested, and face growing problems of isolation and internal fragmen- t a t i ~ n . ~

The political attitudes and behavior of these two groups of businessmen are described in this paper as a product of both the interactions among individual industrialists (or firms) through their associational activities, and of the collective relationship to the broader political environment in which they operate. Within broad limits set by economic and technological conditions, the range of political views and interests that industrialists will espouse, is significant. This paper highlights the sources and potential range of variation within this economically-defined terrain. In short, it is an argument for more attention to the political determinants of businessmen? interests and behavior.

Silicon Valley: home of the high tech paradigm

When William Hewlett and David Packard started the Hewlett-Packard Company in the thirties, Santa Clara County was still a peaceful agricultural valley. This did not change until the Second World War, when electronics firms began to locate in Palo Alto to gain access to Stanford University's engineering laboratories. After the war's end, the fortuitous combination of a substantial flow of federal research funds and military contracts dedicated to winning the Cold War and the space race, and Stanford's knowledge base and growing supply of engineering talent provided the foundation for Silicon Valley's rapid innovation-based industrialization. With the increased availability of venture capital, and the emergence of a network of specialized suppliers, servicers, professionals and training institutions during the 1950s and 1960s, a self-reinforcing process of entrepreneurial spin-offs and start-ups gained momentum. By the 1970s these new firms had produced the major breakthroughs in semiconductor technology which transformed Santa Clara County into a now legendary seed-bed for successive waves of microelectronics-based growth."

For decades the Silicon Valley business community abstained from political activity. As founders of a new industrial sector, the valley's entrepreneurs

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32 AnnaLee Saxenian

enjoyed unchallenged dominance of continually expanding world markets for their new products and they faced none of the domestic constraints on their expansion that might have triggered political organization: skilled and unskilled labor was plentiful in the region, there was no serious threat of unionization to contend with, and local governments eagerly courted new industry with both physical infrastructure and flexible land use policies.

This all changed in the late 1970s. Two problems confronted Silicon Valley's firms simultaneously, spurring their search for solutions. For the first time the region's producers started to feel the effects of growing international competition. As Japanese semiconductor producers became internationally competitive during the 1970s, they began to gain shares of markets which American firms had formerly monopolized. In response, a few of Silicon Valley's largest semiconductor firms sent representatives to Washington in 1977 under the auspices of the newly formed Semiconductor Industry Association (SIA). Through this trade association they lobbied for government action concerning what they saw as unfair trade practices on the part of the Japanese.

At the same time, the American Electronics Association (AEA), a broad-based organization of electronics companies made its first foray into the national political arena. Their 1978 victory in the fight to lower the capital gains tax - spearheaded by Silicon Valley entrepreneur Ed Zschau - was predicated on the argument that lower rates would encourage venture capital formation in the US. The AEA sought to ameliorate the perceived competitike disadvantage American firms faced vis i vis their industrial trading partners, most ofwhich had lower capital gains tax rates (Johnson 1980).

Meanwhile more immediate concerns were bringing the industrialists of Silicon Valley to political life. After nearly four decades of explosive and unconstrained growth, the physical and social limits of the valley were being reached. Rapidly inflating housing prices, severely congested roadways, and environmental degradation threatened the activities of local manufacturers and led community groups to call for a halt to industrial expansion in the region (Saxenian 1983). Faced with pressure from local governments and community activists to control their growth on one hand, and shortages of labor on the other, high tech industrialists formed a regionally-based business association - the Santa Clara County Manufacturing Group.

The politicization of Silicon Valley's business community thus had tvo sources: they organized in response to both regional and international threats. Yet the issues closer to home received sustained attention by a broader group of entrepreneurs. Unlike the trade issue, which still seemed distant and affected only semiconductor producers directly, the threat of labor shortages and the impending imposition of growth controls by the local government demanded the attention of every manufacturer in Santa Clara County. Initial successes at the local and state levels during this period in turn strengthened their regional activities, while the AEA victory still seemed an isolated incident and the SIA appeals to the federal government repeatedly fell upon deaf ears.

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In tracing the process of identity formation and interest organization among these industrialists, the focus here is on their activities at the state and local level - in particular on the evolution of the regional association, the Santa Clara County Manufacturing Group. This process is connected to the other high tech business associations in the area - the Semiconductor Industry Association and the American Electronics Association - and their federally- oriented policy agendas only secondarily. This separation is obviously somewhat artificial as the actors are often the same in both cases. This reflects the fact that the concerns of the high tech industrialists themselves have been directed at both national and regional levels, often simultaneously. Further- more, there is clear interaction between the two levels. However analytical clarity will not be sacrificed as these organizations do operate independently and normally manage to operate within their own functional jurisidictions.

I The formative years: the Santa Clara County Manufacturing Group

David Packard initiated the formation of the Santa Clara County Manufac- turing Group (SCCMG) in the late seventies. Unlike the typical engineer- turned-entrepreneur, Packard was no newcomer to politics. In fact Packard was among the founders of the American Electronics Association in 1943 - known at that time as the West Coast Electronic Manufacturers Association. His international reputation earned during four years as deputy Secretary of Defense under &chard Nixon and his connections, political savvy and personal wealth set Packard apart from the rest of the local business community. As the chairman of Hewlett-Packard he retained an intense interest in regional and local issues. Summoning the help of his friend Robert C. Wilson, chairman of Memorex Corporation, Packard proceeded to enlist the largest manufacturing and financial corporations in the area to join in his project: the formation of an umbrella association that would be the voice of industry in Silicon Valley.

The formation of the Manufacturing Group was announced in July 1977. Its membership included twenty-six of Santa Clara County's largest manufacturing employers and four major banks. The founding members of the Santa Clara County Manufacturing Group included larger older electronics companies like GTE Sylvania, IBM and Hewlett-Packard, new innovative firms like Intel, Rolm, Memorex, and Signetics, non-electronics employers like Lockheed and Watson-Johnson, as well as the Bank of America, Wells Fargo Bank, Crocker National Bank, and the First National Bank of San Jose (Elder 1977).

The Group's stated purpose was to pool their resources and expertise to help solve problems that 'affect living, working and business conditions in the area' (Trounstine and Christensen 1982). Asserting that the only other

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34 AnnaLee Saxenian

significant local business group, the Greater San Jose Chamber of Com- merce, was too provincial for the needs of large manufacturers, the SCCMG sought to distinguish itself from traditional business associations in sever'il ways. It set out an explicitly county-wide focus and its board consists primarily of chief executive officers 'so that when they decide on something, it's very likely to carry the weight of their companies' (SJM 29 July 1977). The SCCMG also differs from a traditional business lobby because even though it takes positions on issues, it never endorses candidates. In fact, irs membership cuts across partisan lines, reflecting the division of the Silicon Valley business community between strong advocates of both Republican and Democratic parties. The Group's original intentions were also broader than most business organizations: it was formed to work 'side-by-side' with representatives of county government in solving social and political problems (SJM 29 July 1977).

Santa Clara County Manufacturing Group members soon came to share Packard's conviction that the future of their industry was directly related to the future of Silicon Valley. In his early public statements, Packard noted that the most pressing problems for the county's fast-growing high technology companies were finding skilled technical workers and then finding affordable housing for them (SJM 19 July 1979). In his words, 'San Jose and the South Bay have one overriding problem - how to manage growth in this area to provide an attractive environment for people to live in and an attractive environment for business and industry' (Trounstine and Christensen 1982).

A model for the Group's relationship to the local government and the community was set with its first major foray into politics. Spurred to action by the threat of local controls over industrial growth, the issue was urban development. By the mid-1970s, the costs of several decades of uncontrolled industrialization were becoming apparent in Silicon Valley. The region suffered from a shortage of housing, rapidly inflating housing prices, serious traffic congestion, overburdened physical infrastructure such as wells and sewers, and mounting environmental damage. These problems affected local residents and producers alike. Residents of the valley suffered from a deteriorating quality of life, while manufacturers feared declining competitiveness as a result of the escalating cost of living in the region. Housing prices in the county, for example, were 50 per cent above those in other Western states and close to double those in the rest of the US by 1980 (Saxenian 1983).

An extensive statement of the problem was issued by the Counn's Housing Task Force in October 1977 (SCC Housing Task Force 1977). Two years later, its successor, the Industry and Housing Management Task Froce, issued a path-breaking report calling for limits to industrial growth in Santa Clara County (SCC Industry and Housing Management Task Force 1979). The latter group, which consisted of representatives of government, business and community organizations, concluded that the only way to

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ameliorate these inter-related urban problems was to control the pace of job creation. In their words: 'Industrial expansion, rather than being encouraged, needs to be curtailed' (SJM 16 August 1984).

Growing public opposition to industrial development was central to the decision to form the Manufacturing Group. Yet there was more: local firms were feeling the strains in their business activities. By the late 1970s Silicon Valley's industrialists were complaining publicly that the region's high priced housing and transportation congestion was causing labor shortages, and that rising salaries threatened to make local products less cost-competitive (SJM 10 October 1979). The fear that they would no longer be able to attract experienced engineers and top calibre scientists from outside the region, in particular, helps to explain the speed with which these businessmen responded to Packard's initiative.

Taking the offensive, in 1980 the Manufacturing Group initiated a survey of local industry's future growth plans. This was an unusual step in an industry where growth plans are highly guarded secrets. When the results (which covered sixty of the largest firms in the county) were made public, they alarmed not only city and county planners, but also local industrialists: they indicated that the surveyed firms alone, which already provided more than half of the county's manufacturing jobs, were planning to increase their local employment by more than 50 per cent by 1985 (SCCMG 1980). That level of job growth would, according to all observers, seriously overburden the already strained local housing supply and transportation networks.

The Group issued a policy statement setting forth their position on the jobs-housing imbalance. This marked the first time the county's business community had collectively evaluated their impact on the region. They concluded that:

With prosperity and growth . . . have come problems that if not correctly defined and constructively dealt with, could seriously threaten the long-term health and the quality of life in the county. . . . The uneven distribution of jobs and housing, coupled with rapid job growth, has created a level of traffic congestion and air pollution that threatens the very quality of life that has made this area so attractive for industry. (SJM 16 August 1979)

While their analysis of the problem was substantively identical to that of the county planners, the SCCMG's recommendations explicitly rejected the notion of controlling job growth. They claimed that 'actions aimed at curtailing or legislating job growth would . . . be seriously detrimental to the favorable economic conditions of the county' (SJM 16 August 1979). Their proposals encouraged local firms to alter their building plans and expand outside of Santa Clara County or, if expanding within the county, to locate in the underdeveloped regions to the south. Finally, the SCCMG began work on a study that would map vacant land, zoning and ownership throughout the D

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county in order to pinpoint possible residential, commercial and industri.11 sites.

In the final phase of the negotiations over controlled-growth planning, the Manufacturing Group prevailed. Responding to the county's draft gener~l plan which called for a mandatory ceiling on job growth (to keep it in line with local housing and transportation, environmental, water and sewage systems), Giles proposed a 'growth planning contract'. Under such an agreement between the Manufacturing Group, county and city governments, l oc~ l industry would periodically supply accurate information concerning their growth plans by city, thus enabling more rational planning of new facilities and land use to accommodate job growth in the county. In addition, the SCCMG called for rezoning of industrial land if necessary to accommodate more residential development, providing strong development incentives to redirect growth in certain geographic areas, and encouraging local firms to expand outside of the county. They also supported the other recommendations in the general plan for expanded employer efforts to increase ride-sharing and car pooling, improve transit systems and encourage higher density housing development.

This solution, once implemented, provided a model for the future relationship between the business community and local government in Silicon Valley. Business and government were to engage in collaborative regional planning based on indicative plans and voluntary rather than mandatory targets. Local industry, under the auspices of the Manufacturing Group, would provide expertise, divulge corporate information, and conduct studies on the major problems facing the community. Industry would make proposals and participate in negotiations with the public sector to devise mutually satisfactory solutions and they would in turn commit resources and alter corporate plans in order to comply. Within years of the jobs-housing discussions, for example, local businesses had substantially altered their growth plans, with a majority choosing to locate all major new expansions outside of the valley. The county, for its part, actively worked to provide space and facilities for the necessary local expansions (SJM 19 July 1979).

This accommodation was based on a recognition of mutual interdepen- dence. Local manufacturers and governments share an interest in preserving the urban and physical environment of Santa Clara County. High tech business is dependent on the region's technical resources, particularly the pool of highly skilled scientific and engineering talent, and on the desirable quality of life needed to attract and retain this professional workforce (Saxenian 1983). Lacking that dependence, and recognition of it, these firms would simply follow Atari's footsteps and leave the valley, rather than committing time and resources devising solutions to regional problems. Local governments, on the other hand, are committed to retaining the tax base and job growth provided by high tech firms, while not sacrificing the local environment.

Cooperation between industry - represented by the Manufacturing Group - and local government thus became the model for policy-making in Silicon D

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Valley. When faced with a crisis in their budget and accounting system in 1979, the Santa Clara County supervisors called upon the Manufacturing Group for help (SJM 19 December 1979). Their response was to sponsor a three month donation of the time of a high level Silicon Valley executive who helped to improve the troubled accounting system, while continuing to collect full salary from his firm, a local semiconductor producer. This collaborative approach was also repeated in defining solutions to the region's transportation and energy conservation problems. In 1979 the Manufacturing Group formed a local government committee to formalize those relationships. According to a Hewlett-Packard executive, 'We can't grow in an orderly way if we don't cooperate and work together with government' (SJM 17 August 1980).

While the ongoing activities of the Santa Clara County Manufacturing Group promote and reinforce this cooperative outlook, the group's President Peter Giles has played a crucial role in the process. Acting as the middle-man between Silicon Valley manufacturers and local government, Giles has maintained a high profile, actively promoting the need for a cooperative relationship between government and business. Beyond that, and perhaps more importantly, observers report that Giles has prodded corporate executives - many whom have sharp rivalries among themselves - into recognizing the need to deal with the regions' jobs, housing, transportation, and environmental problems.

Five years after its founding, 85 of the region's largest employers were members of the Santa Clara County Manufacturing Group (SJM 15 May 1982). Through these early political experiences, a shared identity was formed among Silicon Valley's industrialists. This group of engineers- turned-entrepreneurs was beginning to articulate a common understanding of the region's problems and the desired solutions. As they played an increasingly active role in the local planning process, members of the business community increasingly voiced their commitment to active promotion of the conditions for growth at the local level and to the need for business government cooperation in these efforts. With this emerging vision the SCCMG was on its way to becoming the most powerful political actor in the county.

I1 Shaping interests and ideas

A The political and economic context

The ease with which Silicon Valley's business community has achieved political unity and pre-eminence in the region, like its accommodation with the local state, can only be understood within the context of the region's political and economic history. The economic health of Silicon Valley is directly attributable to the growth of its advanced technology companies, which by 1980 accounted for more than three-quarters of the manufacturing D

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jobs in the region. The Manufacturing Group represents not only the largest of these manufacturers (who collectively employ over half of the county's total workforce), but also the financial community and older non-high technology companies like Coming Glass Co. and Gilroy Foods, Inc.

Given the minimal prior history of industrial production in the region, local Chambers of Commerce are the county's only other business associations. These Chambers, which represent primarily the old-line retail sector and local developers, were at the center of pro-growth alliances with their city governments during the 1950s and 1960s. By the 1970s, however, they represented a small and rapidly shrinking proportion of the Silicon Valley business community. They have posed virtually no resistance to the activities of this new organization whose base is in the growing high tech sectors (Trounstine and Christensen 1982). This political abdication is perhaps best illustrated by the silence of these traditionally growth-oriented groups in the face of the recent conciliation between the Manufacturing Group and the county government in the interest of limited, planned development.

Organized labor is also weak in Silicon Valley. Not a single one of the new high technology firms in the region is unionized. After scores of organizing drives by a range of different unions - all hoping to draw high tech workers into their ranks - Silicon Valleys electronics and semiconductor firms all remain non-union (WSJ 13 November 1984). Of the forty-five recorded organizing drives in California electronics firms between 1977 and 1982, only twelve actually culminated in NLRB sponsored elections. The companies won in every case (AEA 1982). Labor failures were recorded even in the seemingly most ideal environments for organizing. The workforce of Atari Inc., for example, the company which gained national publicity by precipitou- sly laying off over 1,500 production workers without warning and shifting its assembly work to Asia, rejected representation by the San Jose glaziers union by a 5 to 1 margin (WSJ 13 November 1984).11

Union presence in Silicon Valley today is restricted primarily to public and service employees, workers in conventional industry and building trades workers. Rather than providing resistance to the activities of the business community, the labor movement has often supported high tech development in the interest of more jobs. As the business manager of the local Central Labor Council, Peter Cervantes-Gautschi, put it: 'They represent the cornerstone of the economy. We can't take a position that will threaten their existence' (SJM 12 October 1984). Even in those cases where the interests of workers appear to conflict most directly with those of the Manufacturing Group, organized labor has been unable to mobilize the institutional, ideological or political support to provide effective opposition. Labor and community groups have mobilized such groups as the Silicon Valley Toxics Coalition and the Santa Clara County Occupational Safety and Health Group (SCCOSH) to fight the contamination of the region's groundwater by the chemicals used in electronics production and to promote workplace health and safety in high tech firms. Due in part to the lack of membership and

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resources, and in part to the timely and effective response by Manufacturing Group, these efforts have had only limited success.

High tech business thus emerged during the early 1980s as a formidable and unchallenged force in Silicon Valley politics. Through the formation and activities of the Santa Clara County Manufacturing Group this conglome- ration of individual executives now shares a common understanding of their relationship to local government and of the need for managed growth and protection of the urban environment. Their commitment to corporate participation in local governance has been widely accepted among the broader Santa Clara County community.

B The California Commission on Industrial Innovation

While the Santa Clara County Manufacturing Group organized business at the county level, an initiative from the state government broadened the political awareness of Silicon Valley's industrialists. During his two terms as Governor of California, Edmund G. Brown, Jr oversaw a high profile effort to promote the growth of the California's technologically innovative firms, which already provided one-quarter of the total employment in the state. Seeking a constituency for his 'new industrial vision for the 1980s' - and, not coincidentally, reelection - Brown called for collaboration among leaders of government, business, labor and academia in promoting California's emerging industries and growth sectors. Silicon Valley's entrepreneurs were the first target of Brown's project. As a result of these initiatives, the high tech businessmen began to articulate a more ambitiods and wide-ranging political vision, one that extended beyond the local governance of Santa Clara County.

Jerry Brown convened the California Commission on Industrial Innovation in November 1981. Its mandate'was to enshrine Brown's vision of an innovation-led industrial policy in a long-term blueprint for the state's economy. The executive order establishing the commission asserted that:

The continued prosperity of California depends upon our fundamental reordering of priorities. The challenge of foreign competition and domestic industrial obsolescence requires that our genius for technological innovation become the guiding concept of the next decade.

A California Commission of Industrial Innovation is hereby established in the Governor's Office . . . The Commission shall provide a forum for discussion, debate, and policy guidance for the Governor and the Legislature on the role of technological innovation in maintaining California's leadership in the national economy and in retaining its international competitive position. (CCII 1982)

Forming the Commission was not easy. The membership was to reflect Brown's vision of a partnership between labor, academic, government and business leaders. Yet the industrial representatives were initially quite D

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40 AnnaLee Saxenian

skeptical of the Commission: it took concerted lobbying efforts to overcome their mistrust of the public sector. Brown reportedly took Intel's CEO Robert Noyce out to dinner six times and even appointed him to the University of California Regents, but Noyce never joined the Commission. After extensive wooing, Brown did succeed in recruiting three of Silicon Valleys leading industrialists: CEO's David Packard of Hewlett-Packard, Stephen Jobs ot Apple Computer, and Charles Sporck of National Semiconductor, along with two leading consultants to high tech, Regis McKenna and Don Gervitz. The final business member was the chairman of the board of the Bank ofAmerica. There were also four labor leaders, three academics and three government representatives on the Comission (CCII 1982).

The intensification of foreign competition in many sectors of electronics production provided an impetus to action. Japan, in particular, served as both a threat and a model for these entrepreneurs. Semiconductor companies, for example, which had dominated world markets for many years faced the growth of powerful Japanese producers during the 1970s. If the rest of Silicon Valley was not as vulnerable as the chip-makers, many firms were beginning to feel the effects of growing foreign competition. Yet they found virtually no support for their programs at the national level.'2 As a result, members of the Silicon Valley business community were more receptive to Jerry Brown's appeals than the prevalence of laissez-faire attitudes and their prior support of' Ronald Reagan would suggest.

IfJapan's growing edge in high tech markets loomed as a threat, the positive role of the state in the Japanese economy also served as a model for these industrialists. Silicon Valley's businessmen soon began to identify a range of domestic constraints on their competitiveness. They complained of excess- ively steep capital costs, insufficient resources for long range technological research, and shortages of engineers and skilled workers. In all of these areas the high tech executives - who had previously rejected any government involvement in their affairs - began to identify the need for an increased government role in their industry.

John A. Young, President of Hewlett-Packard Co. represented a growing sentiments in the region when he suggested: 'There are some things only governments can do and only other governments can neutralize.' A fellow industrialist concurred: 'We can compete against any company. We can't compete against countries' (NYT 27 February 1983). And, in the memorable words of Charles Sporck, president of National Semiconductor Corporation:

We all believe in motherhood and the open market. I dig the laissez-faire, free market approach myself but the world isn't going along with it. Back three years ago, I was anti-government and viewed all politicians as a bunch ofbastards. I have to say that is not the case now. (LAT 15 November 1981)

Jerry Brown's Commission on Industrial Innovation was perfectly timed to both exploit and shape this growing recognition of the need for attention to D

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government policy among Silicon Valley's executives. If the national government was distant and reluctant to provide support, here at least was a sympathetic state government ready to promote their cause. The Commission met regularly from November 1981 through November 1982. The members quickly accepted Brown's overall vision of support for innovation and modernization of the California economy based on 'winning technologies'. Three subcommittees were created to formulate specific initiatives to address obstacles to California's growth: (i) the problem of financing technological innovation; (ii) the problem of improving education and training to increase the supply of technically skilled labor; and (iii) the problem of improving human productivity through new management styles and cooperative labor- relations.

This Commission sewed as a highly visible forum for Silicon Valley's industrialists to develop policy demands and to create a consensus concerning their political interests. As outside experts were drawn in and discussions progressed, a shared conception of the problem and its solutions emerged. In keeping with its commitment to a targeted industrial policy which 'supports technological winners, not losers', the CCII commissioned studies on the semiconductor industry and its international trade position, the future of the robotics, computer software, and photovoltaic industries in California, the financing needs of the high technology sector and the need for a California industrial strategy. Reports were also completed on the K-12 educational system, the training of California's workforce, and the need for employee- management cooperation to enhance productivity.

The particulars of this policy vision were presented in the Commission's final report entitled 'Winning Technologies: A New Industrial Strategy for California and the Nation' (CCII 1982). The first of the fifty specific recommendations of the report call for the development of 'national and state-wide industrial strategies to accelerate the invention and utilization of winning technologies' (CCII 1982). Thirteen recommendations concern investment policy for innovation, including the call for national pressure to reduce trade barriers, the adoption of R & D tax credits, anti-trust exemptions for joint research by high tech companies, elimination of capital gains taxes, accelerated depreciation provisions, and targeted governmental assistance to growth sectors.

Well over half of the recommendations - thirty-two to be exact - address the need for public promotion of education, job training and research programs. They call for increased intra-industry cooperation, collaborative research efforts and joint university/industry research and training centers, on one hand; and, on the other, for expanded math, science, computer, engineering, and technical education at all levels.

Finally, three recommendations deal with employee-management productivity for innovation, calling for Tripartite Boards to promote increased worker participation and productivity, employee stock ownership plans and incentive stock options for both workers and managers. D

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The California Commission on Industrial Innovation thus provided the high tech business community with both credibility and expanded access to the public agenda. It also broadened the world views of Silicon Valley's industrialists. Through involvement in this Commission - alongside the simultaneous growth of other organized business activities sponsored by the AEA in particular - the leaders of the business community began to focus attention on the development of state and national level policy to foster technological innovation and international competiti~eness.'~ A majority of the ,region's high tech executives now articulate a commitment to cooperative relations with government and to a policy agenda which includes incentives to increase investment through reduction of the cost of capital, support for long term research and development activities, and expanded technical training and science and engineering education programs.

C The high tech agenda

Infrastructural policy - public promotion of the conditions for innovative investment - became the political program of the Silicon Valley business community in the early 1980s. This program is easily distinguished from the national economic agenda forged during the New Deal, which accords a positive role to the federal government in managing macroeconomic growth through aggregate demand stimulation and monetary policy. Infrastructural policy, by contrast, is directed towards enhancing the micro-level conditions for production. In the words of Peter Giles, President of the Santa Clara County Manufacturing Group:

Five or eight years ago, most people only cared about reducing regulations and taxes. For the first time I can remember, there's a real merger of interests in this state. We all realize that improving the infrastructure is the key to our long-run health. (Kotkin 1984)

This consensus both reflects and reinforces the growing attention to state and local level policy: most elements of this technical infrastructure - from education, training, research promotion, and capital availability to the quality of the physical infrastructure and the regional environment - are best provided by state and local governments.

This focus on state-level promotion of economic development is also a response to Reagan's 'new federalism.' The withdrawal of the federal government from economic development efforts during the early 1980s has left the initiative in the hands of state governments. According to the Chief Operating Officer at Hewlett Packard Co., Dean 0 . Morton, 'The action is all at the state level these days, and it'll remain that way until the next resurgence of national activism' (Interview 1 August 1986).

As Silicon Valley's industrialists continue to garner political support for their demands in California, they have also consolidated their distinctive

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relationship with the local community. This was reflected in the 1984 success of Measure A, a corporate sponsored plan for highway improvement in Santa Clara County. In campaigning for the Measure, which called for an increased sales tax to finance the rebuilding program, the Manufacturing Group initiated a novel strategy of 'educating' county voters in their workplaces. Member companies funneled hundreds of thousands of dollars into this effort: this was the first time that the Group had tested their strength directly with the voting population, rather than through politicians. The overwhelming success of Measure A testifies to the strength of the political support for high tech business not merely in the seats of government, but also within the wider Silicon Valley community.

As Silicon Valley's industrialists become increasingly powerful political actors at local and state levels, one aspect of their political ideology is clear: organized labor has no role in their vision of a high tech future. Unions are regarded as arcane holdovers from a less enlightened industrial epoch. Despite the language of cooperation between labor, business, government and academia, these industrialists do not believe that labor's participation should be through its own separate institutions. Rather, the firm itself should define the conditions and provide the forum for the expression of workers' interests.

Labor, in turn, has barely responded to the high tech agenda. There were four representatives of organized labor on the California Commission on Industrial Innovation. They represented old line industries however, and they came to the Commission lacking either a program of their own or the credibility that would derive from a membership base in the industry. They did not attempt to focus the Commission's attention on issues of concern to wage workers in the high tech workforce - such as the need for affordable housing, adequate wages, prevention of occupational hazards at work or the need for child care - not did they extract any visible quid pro quos for their support of programs to promote business interests.

Labor's lack of an independent vision or program is reflected in the final report of the Commission. Only three of its fifty recommendations are related to labor relations - under the heading of Employee-Management Programs for Innovation - and they have all been subsequently ignored by the state legislature. The labor representatives failed to address the extreme disparities in wages and salaries between the industry's professional and technical workforce and its less skilled workers, or the tension between the Commis- sion's recommendations for increasing human productivity and the potential implications ofthis process for job loss. No discussion emerged over the actual power and involvement of workers in proposed or existing participatory management schemes, nor of the extent to which the innovative profit sharing, stock ownership and benefits programs in high tech firms apply to the blue collar work force.

There are enlightened employers in Silicon Valley. Many firms provide high salaries, excellent fringe benefits, recreation facilities, and some form of participatory management. Others have no-layoff policies and financial

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incentives such as profit sharing and stock options. These policies have served to pre-empt the wage and working condition demands upon which the American labor movement built its post-war success, and they help to account for the lack of trade union success in organizing Silicon Valley firms. Yet the limitations of these programs for the region's workforce have also become apparent with widespread lay-offs that affected a majority of Silicon Valley's firms during the mid 1980s. Crippled by an outdated program, declining resources and memberships, and active union-busting on the part ofhigh tech firms, however, the labor movement has been unable to take advantage of such openings.

In the absence of such external conflict as might have arisen out of a concerted challenge from labor, or from other business organizations, Silicon Valley's entrepreneurs have successfully built and promulgated a vision of cooperation and public promotion of the conditions for technological innovation. They have gained support for this program both within Silicon Valley and throughout the state of California. In their growing efforts to promote this political program at the national level, however, they will encounter greater difficulties as they confront the power of entrenched political interests. Here the experience of the high tech community in Massachusetts may prove illustrative.

Route 128: the new confronts the old

The political organization of the Massachusetts high tech business community can only be understood in the context of the region's extensive prior history of industrial production. While Silicon Valley remained predominantly agricultural until the Second World War, Massachusetts was the site of the first industrial revolution in the US. The regional economy flourished during the nineteenth century with the production of textiles and the necessary capital equipment and machine tools. As the mill towns like Lowell and Lawrence boomed, surrounding areas soon grew and diversified into apparel, shoe making and leather goods, as well as such unrelated sectors as food processing, lumber, furniture, paper, printing and publishing, rubber and chemicals, and electrical equipment.

This old manufacturing base began to deteriorate during the 1950s. Core sectors of the region's economy - including textiles, apparel and shoes -began to suffer from changing patterns of international competition. As some relocated to lower cost production sites and others went out of business, serious economic decline set in. Between 1950 and 1965, for example, employment in the region's textile industry declined by two-thirds; today the sector provides only one-sixth of its 1950 employment. While all of the old sectors did not experience such precipitous declines an overall trend produced a serious recession in the state of Massachusetts by the 1960s.

The birth and rapid growth of the minicomputer industry - the core of the

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Massachusetts high tech sector, and counterpart to the semiconductor industry in California - took place against this backdrop. The evolution of an agglomeration of technologically innovative firms, entrepreneurs, suppliers, services, and highly skilled technical workers in the Route 128 region during the 1950s, 1960s and 1970s directly paralleled the Silicon Valley experience.I4 The Massachusetts Institure of Technology supplied a nucleus of scientific and engineering education and expertise in the region. Like its West Coast counterpart, Stanford University, MITs research and development laboratories expanded dramatically during the war years to accommodate the development of military electronics and missile systems. They continued to grow rapidly in the post-war years, supported by the ongoing federal spending on space systems, weapons and missiles research. And, as in Silicon Valley, scientists occasionally broke away to start their own companies, research laboratories and firms producing components and services for each other co-located, and cross-fertilizations between the academic world, the federal government and local industry fuelled an ongoing expansion of technologically innovative activity in the region. By the 1970s, technology-based firms were the fastest growing manufacturing employers in Massachusetts; and they had already expanded well beyond their original concentration along Boston's legendary circumferential highway, Route 128, into the wider Northeastern region of Mas~achusetts.'~

The industrialists of Route 128 have attained a position of political predominance which mirrors that of their West coast counterparts. This is no doubt linked to their role in pulling Massachusetts out of a long recession. Yet even today technology-based firms account for less than 15 per cent of total employment, and only 30 per cent of all manufacturing jobs in the state. Their political successes cannot be attributed solely to success in job creation, since they are not alone in this process. Organization has been critical to the process of both defining and promoting high tech business interests in the region.

As in Silicon Valley, businessmen in Massachusetts organized in order to enhance those aspects of the regional environment which were beyond the control of any individual high tech company. Yet while in Silicon Valley the high tech business community successfully presented itself as the representative of the entire community and cooperated easily with local government in devising solutions to regional problems; in Massachusetts, high tech business - only one among many highly organized interests -has increasingly taken on the appearance of a narrowly self-interested faction in its attempts to improve the regional investment climate.

I The formative years: the Massachusetts High Technology Council

Politicization of the Route 128 industrialists began in the late 1970s. Ray Stata, chairman of Analog Devices, Inc. and Edson de Castro, president of

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46 AnnaLee Saxenian

Data General Corporation, conceived of organizing high tech executives in 1977 in order to express their frustration with then Governor Michael Dukakis, who they claimed had 'little or no interest' in their point of view. Observing that 'high technology industry did not have a way to voice its concerns', they gathered a small group of CEOs together to discuss their respective companies' problems. This group in turn began to recruit other high tech CEOs - stressing that they could have an impact only through involvement of CEOs, not their subordinates. The Massachusetts High Technology Council (MHTC) was formed in October 1977 by thirty-six executives from the state's advanced technology firms.

The Mass High Tech Council, like its counterpart in Santa Clara County, has addressed regional issues exclusively. And like the industrialists of Silicon Valley, their primary concern was creating a regional environment to insure the ability to attract an ongoing supply of skilled labor which is so critical to the growth of technologically innovative industry. In the words of the group's pamphlet entitled 'Why a High Technology Council? "Because We Needed One"' the MHTC:

exists to nurture the profitable growth of high technology industries in Massachusetts . . . and bases its positions and programs on two fundamental principles: (1.) Massachusetts competes with other states for growth industries and jobs; and (2.) Member companies compete with other companies in other states and countries for a scarce supply of technical talent that is vital to the future profitable growth of Massachusetts-based high technology companies. (MHTC 1978)

Yet in contrast with the Santa Clara County Manufacturing Group, the main areas of policy concern for the MHTC were the local tax burden, state spending and services, and the quality and relevance of education and training in the state. They claimed that taxes and spending must be reduced and education and training programs expanded if Massachusetts was to preserve its edge in high technology industry over other rapidly growing regions - particularly the sunbelt states.

The fear that local firms were losing the ability to compete effectively for professional and skilled technical manpower was thus a common force behind mobilization of both business communities. This threat posed itself to Silicon Valley's producers in the form of exorbitant housing prices and environmental degradation; while for Route 128 firms the problem lay in Massachusetts reputation as an 'overtaxed, broken down economy' (Stata 1985). As the MHTC pamphlet puts it:

High total tax burdens and poor service delivery work to drive top-notch people of all ages away and limit the success of high technology company recruitment programs aimed at attracting people from out of state. Inadequate and improperly focused education and training curricula cripple the industry's most vital 'home grown' resources over time -fresh faces and new ideas. (MHTC 1978)

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T h e High Tech Council's first major foray into politics - dedicated to reduction of the personal tax burden - was to set them in direct opposition to organized labor, the state administration, and most of the region's business community. In 1979, they drafted an initiative petition for a Constitutional Amendment to limit the total personal tax burden to a level competitive with that of other states. As early proponents of supply-side economics, they claimed that tax cuts would insure the long run growth of the private sector, and thus the economic health of the state. After this proposed Constitutional Amemdment died out of neglect by the General Court in 1980, the M H T C threw its support behind Proposition 2 1/2, a major tax cutting measure.

Proposition 2 1/2 would never have passed in Massachusetts without the financial support of the High Tech Council. Council members collected voter signatures for the referendum and contributed almost $250,000 -a full 88 per cent of the entire Proposition 1 1/2 campaign fund. While the tax cutting measure was initiated by Citizens for Limited Taxation (CLT), a small conservative group, it faced enormous odds. It was vigorously opposed by a major public employee union-led coalition and, perhaps more significantly, no other business associations in Massachusetts supported Proposition 2 1/2. By the time the Proposition was ultimately signed into law in 1982, the Mass High Tech Council had established an antagonistic relationship with a wide range of organized interests in the state.

The next item on the M H T C agenda was the state's education and manpower training programs. Since the impact of Prop 2 1/2 on the state's public school system was severe, this was not support for education in general. They were interested in schools for a very specific purpose: to help them better meet their particular needs for skilled personnel. The Council began to demand massive increases in state funding of higher education, to be channelled to meet the needs of growth sectors like computers and electronics. During this period, members of the High Tech Council were instrumental in the creation of several institutions to increase the supply skilled workers for high tech industry.Ih They also devised programs to redesign engineering departments in the public universities. Their increasing influence in the state's educational system is perhaps best manifested in the appointment of three members of the High Technology Council, including Ray Stata, to the Massachusetts Board of Regents.

By 1982 many of the executives of Route 128's high technology firms had united behind a common political agenda. Through the activities of the Massachusetts High Technology Council, they had formed a collective identity as high tech producers and boasted a track record of substantial political successes. Their contention - that the only way for innovative firms in Massachusetts to remain competitive was through the reduction of state taxes and spending, on one hand, and increased spending on technical education and training, on the other - had proved extremely powerful. Despite strong economic evidence to suggest that tax levels do not influence business location decisions, and virtually no evidence that directly links changes in tax levels

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to high tech employment creation, the High Tech Council has ably used their companies' records as job creators to mobilize political support for their policy agenda. Their success in reducing taxes, for example, is reflected in the fact that the state and local tax burden for residents of Massachusetts, while still above the national average, dropped a full twenty per cent between 1973 and 1983 (BG 19 March 1985). Their success is also reflected in the emergence of several publicly-funded education and training programs which insure an ongoing supply of skilled labor for the industry.

Membership has increased in pace with the growing political influence and visibility of the Massachusetts High Technology Council. Today the group represents CEO's from 160 companies, accounting for about half of the total high tech employment in the state, and it ranks among the most powerful organizations in the state. As Council President Howard Foley noted in 1982: 'Three years ago legislators would say "What's high tech?" Today they say, "What's high tech want?'' ' (BG 4 May 1982).

II Shaping interests and ideas

A The political and economic context

Electronics and computer manufacturers are newcomers to the Massa- chusetts economy. The region's prior history of industrial growth left institutional and political legacies which these newly mobilized entrepreneurs soon confronted; and which shaped their political ideas and interest definitions. A well developed network of financial and industrial business associations represent the state's corporate community both sectorally and functionally. Organized labor, while currently experiencing a retrenchment as old industries decline, still maintains the political support in the state legislature which it developed during the first half of the century. And community groups representing the interests of consumers and tenants have successfully mobilized their constituencies around specific legislative issues and programs - often in alliance with labor.

As Route 128's industrialists attempted to negotiate their way through the web of political alignments and interests that pre-date their existence, they increasingly took on the appearance of a selfish, self-interested minority. Their demands for the radical reduction of both state spending and the requisite taxes to fund state programs strike at the heart of the shared social democratic policy agenda of organized labor, community groups and the Democratic administration, and even that of the liberal business associations like the Massachusetts Business Roundtable. Furthermore, in their ideological opposition to state intervention, they have clashed directly with industrialists from declining old-line manufacturing sectors who are now turning to the state for economic and technical assistance.

From its inception, the MHTC courted public attention. Howard Foley,

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chief lobbyist and President of the Council, aggressively sought media coverage. While his Silicon Valley counterpart, Peter Giles, has been described as having a subtle, low-key, persuasive style and operating with caution, Foley is known for his hard bargaining and unwillingness to compromise. His style is described as acerbic, arrogant and sometimes insulting (Goodman 1984). These two professional middlemen aptly reflect the different styles of their respective organizations, as well as the divergent political stances of the business communities they represent.

The most revealing phase of the Massachusetts High Technology Council's activities began in the early 1980s. During this period, the Council engaged in highly public confrontations with both labor and community groups, and clashed repeatedly with newly re-elected Democratic Governor Michael Dukakis. Conflicts between the high tech industrialists and the rest of the state business community also became increasingly frequent and visible, while fragmentation within the MHTC itself weakened the organization internally.

On the defensive and highly visible to the public eye, the high tech businessmen in Massachusetts were forced to redefine their political demands and ideology. The power of the M H T C during this period derived almost entirely from their use of threats to either leave the state altogether, or to locate their future expansions elsewhere. According to De Castro put it: 'The opportunity is really very straightforward. We (the CEOs) are not absolutely committed to the state of Massachusetts' (Goodman 1984). As conflicts with other organized interests as well as with the state government worsened, the MHTC vociferously promulgated its commitment to traditional laissez-faire principles, harshly denouncing state involvement in the economy.

Two initiatives from a coalition of labor, community and environmental groups during 1983 jolted high tech businessmen into action. The first, 'right-to-know' legislation, would have provided workers with the right to be fully informed of the health hazards associated with handling industrial chemicals and equipment. This was ofparticular concern to an industry which makes extensive use of many allegedly hazardous chemicals. This initiative, supported by the Dukakis administration, drew opposition from various sectors of the Boston manufacturing community. The Associated Industries of Massachusetts (AIM), which led the opposition, ultimately settled on a compromise which significantly weakened the bill's coverage. The M H T C opposed the measure altogether, however, angrily protesting even the weakened version.

Pre-notification ofworkers affected by plant closings proved to be still more controversial. This provision, widely used in European nations, would provide workers with an early-warning system to cushion the blow of precipitous job loss due to plant closures or mass layoffs. In 1983, Representative Tom Gallagher of Boston and ninety-two other legislators submitted a plant closing bill that tied the notification period to the size of the firm: the maximum was

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one year for companies with a thousand or more workers. In a state where traditional manufacturing was in serious decline and plant closings a very real and immediate problem, this issue evoked intense emotional and political controversy. The strength of community support for the bill was matched by the vehemence of the business opposition: the AIM branded the bill 'industrial ransom' and the MHTC threatened to locate all further growth outside of the state if it passed. Faced with a highly politicized battle, Governor Dukakis formed a special state-wide commission to negotiate a settlement.

B The Governor's Commission on the Future ofMature Industries

The Commission on the Future of Mature Industries was assembled in 1983. Like the California Commission on Industrial Innovation, it brought together representatives ofbusiness, labor, academia, and local goverment to meet with senior members of the administration and key legislators. And like the CCII, this gubernatorial initiative was dedicated to the notion that the state government had an important role to play in insuring the economic future of its jurisdiction. Their purposes differed dramatically, however, reflecting the regions' vastly different economic histories. The Massachusetts Commission was formed: 'to address one of the most important problems facing this state's economic future: the condition of our traditional manufacturing industries' (Governor's Commission 1984).

Recognizing that a full two-thirds of the state's manufacturing workforce was still employed in 'mature industries', the commission was asked to devise recommendations and goals for addressing the long-run problems of declining regions in transition from an old industrial base to a newer, revitalized one. This was a far cry from Jerry Brown's vision of an industrial policy to guide the growth of emerging high technology sectors. Yet as in California, the Commission on the Future of Mature Industries brought high tech industrialists into the political arena and forced them to redefine their policy agendas. (A parallel commission on the future of high technology industry was also announced by Governor Dukakis. It never materialized).

The conflicts within the Commission ran deep. The theme underlying most battles was the appropriate role for the public sector in managing economic change. Both organized labor and the representatives of mature industries supported a positive role for the state in promoting economic adjustment and cushioning/compensating the losers; while the high tech representatives remained opposed to any sort of state involvement.

The group met regularly for a year, dividing into the three committees mandated by the Governor: an Industry Analysis Committee, a Labor Market Policies Committee, and a Worker and Community Assistance Committee. These committees considered a variety of proposals, ranging from provision of health benefits for the unemployed and an Industrial Service to assist

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troubled but viable firms to the development of new mechanisms for financing industrial modernization. Debate focused most prominently, however, on the issue of mandatory pre-notification of plant closures or mass layoffs.

Plant closing provisions were the core of a detailed proposal presented to the Commission by the group's labor representatives (Executive Office of Labor 1983). A parallel proposal submitted by two liberal legislators, Representative Tom Gallagher and Senator Gerard D'Amico, entitled 'For a Just Prosperity' called for state economic development planning inspired by 'a vision of equity alongside its vision of growth'. In addition to provisions for advance notification of plant closings, both proposals called for the formation of: (1) a quasi-public Massachusetts Industrial Policy Board, run by representatives of labor, business, finance, government and community groups; (2) an Industrial Extension Service to provide technical assistance, education and outreach, financing and brokering for individuals and businesses; (3) wage and health care maintenance programs; (4) linkages between the state's economic development and training programs; ( 5 ) a centralized data collection and industrial monitoring program; and (6) the authorization of no-raiding compacts with other states (D'Amico and Gallagher 1983).

High tech opposition to plant closure legislation was led by commission- member Charles A. McKay. McKay is the Executive Vice President of Foxboro Corporation - an electronics instrument company which, although founded in 1908, has managed to remain competitive by adapting successfully to changing markets. His firm thus represents the successful transition from mature to high tech industry. He is also a member of the Executive Committee of the Massachusetts High Technology Council. McKay proposed that the mandatory notice requirement be replaced with a voluntary compact whereby businesses would pledge to provide as much notice of a plant shutdown as 'practicable'.

This proposal from the high tech representative to the Commission on Mature Industries was dubbed the 'social compact'. After much heated debate, it carried the day, and voluntarism became the centrepiece of the commission's final recommendations (Loth 1985). In order to put some teeth in the compromise, the commission recommended making signature to the 'social compact' a prerequisite for financing from quasi-public agencies such as the Massachusetts Industrial Finance Agency, the Massachusetts Tech- nology Development Corporation, the Community Development Finance Corporation and the new Massachusetts Product Development Corporation. These programs provide funds for struggling mature industries, new product development, and high risk financing.

In response to the addition of this quid pro quo, McKay and the other high tech member of the commission, Fred Van Veen of Teradyn, both publicly dissented from the commission's final report. They roundly denounced 'the use of coercion in the "voluntary" compact'. The MHTC subsequently issued its own set of guidelines for companies to follow when layoffs or plant closing occur. While they rely on the good intentions of employers and thus do not D

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differ greatly from the requirements set out by the commission, they explicitly reject the use of public sanctions (Goodman 1985).

Community groups, labor and liberal legislators were also displeased with the Commission's compromise. These groups continued to argue that it provided no guarantee that the sanctions would be effective. According to the state's Secretary of Economic Development, the only enforcement mechan- ism was a 'good-faith effort to give advance notice of a layoff to workers and continue income and health insurance benefits for 90 days' (BG 27 October 1984).

A bill reflecting the voluntary standards set forth in the proposal was ultimately submitted by Dukakis and has since become law, yet there was little sense of political resolution in Massachusetts. The Commission's final recommendations were accompanied by official letters of dissent from eight of its members. They covered the political and occupational spectrum represented by the group, and reflected the antagonism which permeated thc Commission's efforts.

While the high tech businessmen emerged victorious from the plant closing battle, their increasingly antagonistic posture and laissez-faire attitude has weakened them politically. The tightly knit fabric of organized constituencies and opposing public and private interests has greatly limited the space for manoeuver among high tech executives, and repeatedly placed them on the defensive. Charles Baker, director of communications for the MHTC: ex~ressed their frustration with the situation:

The bottom line is that the primary mission of high tech companies is to run their operations. Instead, they find themselves devoting an increasing number of man-hours to convincing state economic planners that their legislation is bad. That accomplished, they then have to put in overtime to hammer out alternative legislation that ensures representation of their interests. (Berney 1984)

This increasingly combative stance has exacerbated the political isolation of the high tech business community in Massachusetts. As subsequent battles unfolded, both the fragility of their relationship to the rest of the Boston business community and their internal organizational weaknesses became increasingly apparent.

Tensions within the Route 128 community began to emerge as early as 1980. Prominent technology-based firms such as Digital Equipment Corpor- ation (DEC), Raytheon Corporation, and Western Electric failed to support Proposition 2 1/2. DEC, one of the largest computer companies in the state, has been only minimally committed to the high tech alliance from the beginning. The long-standing tensions between DEC management and MHTC founder de Castro, who left DEC to start Data General, have scarred the council's internal harmony. DEC founder Ken Olsen refused to join the MHTC, and only after extensive persuasion was a token representative sent to maintain the image of unity in the high tech community. DEC is now the only

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In search ofpomer 5 3

local company in the MHTC that is not represented by a CEO; and according to vice president Albert E. Mullin, Jr., DEC views the MHTC as 'highly visible, highly aggressive . . . potentially harmful' (Goodman 1984).

Similar sentiments are increasingly being voiced by other high tech executives as well. Two original members of the High Technology Council resigned because of this perceived narrowness, including Clark Abt, of .4bt Associates in Cambridge. He remains highly critical of the group today:

They're a splinter group. They're a good example of narrow selfishness that doesn't even represent enlightened self-interest. The council members are arrogating to themselves the position of leaders of technology in the state, but they don't represent the largest or most technologically sophisticated industries in the state. (Goodman 1984)

Indeed, a number of the older technology related companies do not belong to the MHTC, including Polaroid, Western Electric, IBM, Gillette and Raytheon. One of the initial founders of the group, Herb Roth of LFE, also resigned from the council in 1981. He argued then that the shortage of technically skilled employees in the state had more to do with the high tech firms' practice of pirating high and mid-level talent from each other than with the shortcomings of the state's educational system (Goodman 1984).

Internal dissent and fragmentation has been accompanied by external isolation. The High Tech Council withdrew from the Massachusetts Business Roundtable (MBR) in January 1983. The Business Roundtable is a relatively new organization (1979), composed of the CEOs of the sixty largest businesses in Massachusetts. It attempts to act as the state's business umbrella group. Like its parent, the national Business Roundtable, the MBR aims to build consensus on state-wide issues among diverse segments of the business community. Founded by representatives of the First National Bank of Boston, New England Mutual Life, and Raytheon - all of whom sit on the national organization - the MBR represents large financial and manufacturing interests in the state, including General Motors, Gillette, Polaroid, IBM, the Bank of Boston and the Boston Globe. The High Tech Council rejected the Business Roundtable's programmatic breadth. In keeping with their commitment to a limited state, these high tech executives saw little of interest in the broad, public spending and regulative priorities of the MBR, which ranged from infrastructure provision to control of hazardous wastes (Loth 1985). It is notable, however, that several leading high tech firms, including DEC, U'ang, and Prime Computer still remain on the Roundtable.

The most acrid confrontations between the High Technology Council, the state, and the rest of the business community erupted during 1984. As a series of unrelated issues became politically interconnected, new fault lines were exposed within the high tech community as well.

The MHTC isolated itself once again from the rest of the state's business community over the issue of MassBank, an infrastructural improvement program. In early 1984, Governor Dukakis presented a proposal for the D

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establishment of the Massachusetts Development Bank (known as Mass- Bank), to depoliticize and simplify the funding of the sorely needed infrastructure renewal in the state. This agency was to float revenue bonds that would be repaid out of a special fund created by a small increase in corporate taxes; it would use the revenues to rebuild the state's severely deteriorated bridges, roads, sewers, and waterworks. Despite almost universal support for Mass- Bank from the rest of the business community, the executive board of the High Technology Council voted unanimously to oppose it. The endorse- ments for MassBank from the Associated Industries of Massachusetts, the Small Business Association of Massachusetts, the Massachusetts Business Roundtable and the Savings Banks Association of Massachusetts, were no deterrent to this blanket rejection voiced by the MHTC.

The controversy over another issue, unitary taxation, was soon linked to the fate of MassBank. The High Technology Council announced that the business climate in the state had deteriorated seriously as a result of both unitary taxation - which assesses corporate income taxes on the basis of income earned outside of the state to prevent companies from shifting profits to states where corporate taxes are lower - and the proposed plant closing legislation. In January 1984 the president of the MHTC, Howard Foley, announced that there would be no local expansions by high tech firms until the unitary tax and the plant closure legislation had been settled, as indications of the Dukakis administration's 'committment, or lack thereof, to continued direct high tech job creation' (BG 4 March 1984). FoIey went on to claim that unless resolved, these two issues would 'be a major factor in every plant-siting decision made by a high tech company in the 1980s' (BG 17 January 1984).17

In a final attempt to sell the MassBank infrastructure program to the MHTC, Governor Dukakis proposed a compromise solution: a weakening of the unitary tax in exchange for high tech support of MassBank. But the MHTC once again refused to compromise, claiming that forty of their member companies were postponing expansions in the state until there was a favorable resolution of both issues. The words of Edson de Castro capture their threatening stance:

There is nothing good about the business climate for high tech industries in Massachusetts . . . With these issues before us, it will be difficult for any industrial firm to explore further expansion in Massachusetts or to locate here for the first time. (Electronics 3 May 1984)

This new aggressive posture also led the Council to reevaluate its relationship with yet another important business association - the Associated Industries of Massachusetts (AIM). Three prominent high tech executives cancelled their firms' memberships in AIM out of contempt for the group's ineffectiveness in lobbying against MassBank and plant closure legislation; and the group is considering a similar move to protest the weakness of AIM'S lobbying efforts (MH'T 9 December 1984). Having killed MassBank, while still gaining concessions on the unitary tax, the MHTC launched yet another

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battle with the Dukakis administration, this time over the location of the new Massachusetts Microelectronics Center. The Center, a $40 million training facility to be run by the Massachusetts Technology Park Corporation, is jointly financed with public and private capital. Dukakis actively promoted a site in Taunton, an economically depressed area of the state, hoping that the training facility would serve as a magnet to industry. Unemployment in Taunton lingers near 13 per cent, compared to only 5 per cent in Westborough, the alternative site, which lies in the heart ofhigh tech territory. The High Technology Council supported the Westborough site, and several high tech leaders threatened to withdraw their support of the Center should it go to Taunton. After five months of highly emotional public debate, Dukakis was forced to accept the Westborough site (BG 21 May 1984).

This string of victories dramatized the political strength of the Massa- chusetts High Technology Council, but it also revealed conflicts among its members and called into question the limits to their arguments about the business climate. In a highly publicized defection, Wang Laboratories Inc., one of the state's largest employers and computer manufacturers, broke with the MHTC when Chairman and CEO An Wang, personally endorsed Dukakis' MassBank proposal (BG 21 April 1984). During the debates over the location of the Microelectronics Center, Wang openly opposed the MHTC once again by supporting the Taunton site. While the MHTC's main objection to Taunton was its distance from high tech companies, no major firm is located farther from Taunton than Wang (BG 21 May 1984)

In stark contrast to their Silicon Valley counterparts, members of the Massachusetts High Technology Council repeatedly argue that a good business climate permits nothing less than laissez-faire government. Virtually anything that government does (other than protect or directly subsidize their ventures) seems to disenchant the MHTC -or in Foley's language, to destroy the positive attitudes and opinions of key business people. In their letter of dissent to the final report of the Mature Industries Commission, Charles McKay (Foxboro) and Fred Van Veen (Teradyne) expressed these anti-state sentiments bluntly:

We generally support the Commission's recommendations involving improving the climate for the creation of new enterprises. . . . However, we oppose those recommendations (e.g. the proposed New Product Development Fund) that provide public funds to assist failing but 'potentially viable' companies and industries. Such proposals constitute an industrial policy that substitutes political judgement for market judgement. . . . The knowledge necessary to determine the viability of the firm, as well as the responsibility and accountability for its performance, must be presumed to lie with the company's management and its board of directors. This premise is so fundamental to our free enterprise system that we cannot support any proposals that contradict it. (Governor's Commission 1984) D

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C A new agenda?

The Massachusetts High Technology Council took the offensive once again in late 1984, announcing a 'new political agenda' for the Eighties. Conceding that they had been on the defensive and in disarray, the MHTC executive committee produced a five-year program intended to regroup, unify and strengthen the ranks of a weakened organization. International competitiveness was the focus of this new agenda: it called for a Massachusetts that is 'the world's most attractive location for creating, operating and expanding high technology businesses' (MHTC 1985). For the first time, the Route 128 businessmen explicitly addressed the threat of increasing foreign competiton. According to Ray Stata:

The challenge for Massachusetts in the 1970s was to restore its standing among competing industrial states and to live down its reputation as an overtaxed, broken-down economy.

Now we are faced with a more formidable challenge in the 1980s: how to compete, not with California and Texas, but with Japan, West Germany and emerging industrial nations in the Pacific Basin. Our once preemptive lead in technology and productivity has all but vanished, and we are faced with determined and competent competitors. (Stata 1985)

In line with this agenda, the Council began developing criteria for measuring the state's performance on taxes, regulation, education and other high tech priorities against an international yardstick, instead of the previously used seventeen-state comparison. They suggested, for example, such fiscal measures as a cap on state and local spending and further reduction of both corporate and personal income tax burdens (BG 13 November 1984). But they also described a broader mandate.

As in Silicon Valley, Japan lurks behind the scenes not only as a threat but also as a model. This document ascribes to government a role which was not formerly part of the High Tech Council's political agenda: 'The role of government . . . is to provide the environment and incentives to encourage innovation' (Stata 1985). In addition to simply insuring fiscal competitiveness, it envisions a positive role for Massachusetts' state and local governments in supporting the process of innovation and facilitating technological change (MHTC 1984).

The scope for government is carefully limited however. According to this document, the important determinants of the long-term pace of innovation are the cost of capital and the rate of investment in higher education and university-based research. Public policy should address these issues; all other forms of government involvement are rejected as sources of competitive disadvantage. The MHTC agenda thus blasts state-directed industrial policies. It states: 'Government should refrain from direct intervention to influence or control free-market forces. This includes permitting non- competitive firms to lose and successful firms to win' (MHTC 1984). D

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There is a new language in this agenda as well. The notion of industry- government partnership and of cooperation between local groups appears for the first time in this High Tech Council publication. Apparently recognizing the high costs of years of suspicion and misunderstanding, the MHTC calls for a strategy that will unite the previously divided factions in Massachusetts behind the common cause of strengthening competitiveness. There is a striking silence, however, on the role of one important group: workers. This partnership is always described as one between the representatives of business, government, and academia. One must presume that - like the industrialists of Silicon Valley - the high tech community in Massachusetts sees no role for organized labor in their vision of the future.

Despite the fanfare of a new agenda and its new language of cooperation, however, in reality little has changed. The Mass High Tech Council has clung to the same issues, allies, political stances and tactics which characterized its first half-decade of existence. During 1985 and 1986 the Council focused its energies almost exclusively on initiatives to put caps on state tax levels. Despite their previous victories in lowering Massachusetts tax levels to below the national average, members reportedly spent thousands of hours during 1986 working to enact tax cap legislation (MHT 2 1 July 1986). And in August 1986 the Council's leaders voted unanimously to join forces once again with Citizens for Limited Taxation - their allies in the fight for Proposition 1 1/2 - agreeing to provide logistical and financial support to a referendum which would enact a tax cap through the legislative process. MHTC's Howard Foley proclaimed 1986 to be: 'the year for achieving a fundamental change in the Commonwealth's approach to fiscal reforms', and called for a state tax limit, a stabilization fund, and tighter fiscal controls immediately (Foley, 1986).

The Council's deep distrust of government remains similarly unchanged. By late 1986 when most of the Massachusetts business community had come to view Dukakis as a born-again ally, Foley characteristically commented: 'He has an undying belief in the potential of government. People like us don't feel that way' (WSJ 30 September 1986).

And behind this 'new' agenda lies the ever present threat that has become the trademark of the Massachusetts High Technology Council: 'Those states that create and sustain an environment where innovation flourishes will attract and retain successful high technology companies, at the expense of states whose policies are regarded as less supportive' (MHTC 1984). Or in the words of Roger Wellington, the group's Chairman, 'The threats are not idle. Would you prefer we say nothing and just leave?' (BG 13 November 1984).

Conclusion

High tech industrialists in California and Massachusetts organized politically in the late seventies. Less than a decade later, the same industrialists are collectively redefining the substance of policy debates in their regions. They D

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face similar problems, but dissimilar conditions. Their responses have thus differed. The evolution of the high tech organizations in Silicon Valley and Route 128 highlights the extent to which businessmen's interests are politically and contextually determined.

This paper set out to explain why the political demands, attitudes, and strategies of these two high tech business communities diverge. This divergence cannot be explained in terms of the economic characteristics of their firms and their products, as suggested in the industrial sector literature, since the two regions are economically and technologically comparable. Nor is the divergence attributable to the characteristics of the individuals themselves or their 'potential' interests, as suggested by a simple pluralist or neo-Marxist view, since the entrepreneurs in both regions share social, educational and generational backgrounds and occupy virtually identical positions in the division of labor. The explanation lies in the political environment in which the process of interest organization and identity formation has occurred.

Silicon Valley, which remained predominantly agricultural until the onset of the Second World War, presented a highly permissive terrain for high tech political organization. When local firms joined forces under the auspices of the Santa Clara County Manufacturing Group, they encountered virtually no organized resistance. The only other business organization in the region, the Chamber of Commerce, was weak and in decline. The old line manufacturers, who were never more than a minority in the Group, are now in serious decline." Organized labor consistently supported high tech, despite its anti-union ideology, in the interest of job growth and development. Both city councils and local governments quickly became willing partners in the business community's cooperative approach to regional problem-solving.

High tech businessmen rapidly attained a hegemonic position in Silicon Valley and their political stances reflect the uncontested nature of their rise to power. These industrialists articulate a strong belief in the need for business-government collaboration in planning for local and regional development. Through the activities of the Santa Clara County Manufac- turing Group, they have committed both financial resources and time to devising solutions to the county's housing, transportation and environmental problems. As their world views expanded over time, under the positive tutelage ofthe Commission on Industrial Innovation and the growing threat of international competition, they started to articulate a broader vision of infrastructural policy based on public promotion of innovation and investment.

The political environment in Massachusetts, by contast, reflects the region's long prior history of industrial production. When the industrialists of Route 128 formed the Massachusetts High Technology Council, they confronted a well-entrenched network of organized interests whose political power and policy agendas derived from an earlier era. There were several powerful organizations of businessmen representing both the state's older manufacturing sectors and the Boston financial community. Organized labor

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still had a constituency in the older sectors and was able to formulate an independent policy vision of its own. And the commitment of state politicians to meeting the needs of the declining industries was reflected in the formation of the Massachusetts Commission on the Future of Mature Industries.

The Route 128 business community defined their political stances in opposition to these existing groups. They have explicitly opposed state intervention in the economy and they have waged a protracted battle against the public spending and taxation priorities of a prior era. This has been a highly conflictual process. These businessmen have based their power almost entirely on threats; and their combative and uncompromising stance has left the High Tech Council appearing narrow and self-interested in the eyes of the broader public. Even by the mid-1980s, when state taxes had fallen below the national average and the Democratic administration was widely regarded as the champion of the state's high-tech led recovery, the MHTC clung to its antagonist style and established political attitudes.

The responses of these two high tech business groups to comparable regional problems underscores their differences. Silicon Valley's industrialists initiated measures to promote improvement of the local highways. Their east coast counterparts, facing equally severe congestion problems, have vigorously opposed public infrastructure programs such as MassBank.Iy The Silicon Valley business community actively participated in the formulation and drafting of hazardous wastes storage and 'right-to-know' legislation, while the high tech community in Massachusetts threatened investment strikes when faced with similar issues. The Santa Clara County Manufac- turing Group has committed both resources and executives' time to local and county governments to assist in regional planning, while the guiding principle of the Massachusetts High Technology Council has been to reduce taxes and government activity.

To summarize, the argument of this paper is two-fold. First, the high tech industrialists of Silicon Valley and Route 128 defined their interests through organization. The divergence in the world views and political demands of these two groups is not explicable by their position in the division of labor, by the technical characteristics of their products or industrial sector, or by some individual (or corporate) calculus of expected costs and benefits. The Mass High Tech Council and the Santa Clara County Manufacturing Group were thus more than a means for jointly articulating predetermined interests. These organizations were forums for the creation of 'high tech' identities and for the definition of the source and desired solutions to common problems. Lobbying was thus the end-point, but not the sole end, of organization.

This suggests the need for greater attention to the ways in which business interests are defined, as well as expressed, through organization. While united by a common desire for profit, businessmen face considerable ambiguity in selecting the means to that end. It is through association that businessmen - like all other groups -develop shared outlooks and define common interests. Thus the appropriate unit of analysis in the study of business in politics is

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rarely the entire sector or the individual businessman (or firm), rather it is the self-defined groups of businessmen who, through the process of organization develop common world views and define their political interests and strategies.

Secondly, the attitudes and demands of these groups of businessmen evolved in response to the environment in which they organized. Distinctive political environments in the Silicon Valley and Route 128 regions, a result of different industrial and social histories, shaped the divergent behavior and ideology of the high tech business organizations. A permissive political environment in Silicon Valley - characterized by an accommodative local government and the absence of challenges from other organized interests - produced a conciliatory high tech community committed to business- government collaboration in the preservation of the regional environment and productive infrastructure. The crowded political landscape of Massachusetts - characterized by an already highly organized business sector and a state administration with political allegiances to these existing groups - produced an antagonistic and divided high tech organization deeply hostile to most forms of state activity.

While much scholarly attention has been devoted to the ways in which business affects political outcomes, the reciprocal causation is equally important. The political environment is an important determinant of business interests. Businessmen organize and define their political stances in opposition to - or alliance with - other organized groups in their immediate environment. This includes other business groups as well as organized workers and state institutions. Conflicts with other sectors of business can be as significant in shaping business interests as conflicts with either unions or state actors.

This research also suggests several emerging trends in the political- economies of industrial societies. The formation of the regional business associations studied here was a response to common problems - overburdened regional infrastructure and shortages of skilled labor in the context of and intensifying competitive pressures. While the focus has been on explaining their divergent interest definitions and political attitudes, the experience of these high tech regions also highlights the growing importance of the regional arena in economic development policy in the US.

State and local politics is increasingly seen as crucial terrain for responding to international competition. This regionalization of policy has two sources. On one hand, the Reagan administration's withdrawal of the federal support for economic development programs has left the responsibility for industrial policy in the hands of states and localities. A myriad of state strategies has thus been designed to promote and attract the growth of high tech industry, for example (OTA 1984).

Alongside state actors seeking to promote growth in their localities, business groups l i e MHTC and SCCMG are fighting to protect and enhance the productive infrastructure of their regions. Rather than choosing

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In search of power 61

simply to leave Route 128 and Silicon Valley the high tech industrialists tuned to politics to preserve the regional investment climate.20 This suggests their recognition of the growing importance of the regional environment for innovation.

Scholars have began to identify the formation of localized technology- based complexes as a distinctive feature of the industrial landscape of capitalist societies. Silicon Valley and Route 128 are prototypical of these regional agglomerations of specialized, vertically-disintegrated firms which are organizationally linked through information exchange, subcontracting relationships, and flows of services and supplies as well as through the shared dependence on technically specific labor markets (Piore and Sabel 1985; Scott and Storper 1986). The time and resources local industrialists have committed to preserving the conditions for production in Silicon Valley and Route 128 underscores their sense of dependence on their region's unique economic, technical and social infrastructure.

Finally, while business has historically organized in response to the organization of labor unions or intervention by the state, the threat of international competition is the force driving high tech political mobilization in the current era. Unions rarely command their political attention, and the state is increasingly seen as a potential ally in their industrial battles with foreign producers.

The political energies of America's high tech businessmen have now shifted towards the federal arena. Faced with a negative balance of trade in electronics for the first time in 1985, entrepreneurs who once shunned politics altogether turned to the state for help. They began to target international trade policy, export control and promotion, tax reform, antitrust law, education policy, and even the federal budget deficit as critical determinants of their competitiveness in global markets. During the late 1980s, positions on each of these controversial issues were hammered out in debates within their trade associations2'. As they entered national politics these firms also sought coalitions with other industrial sectors. This process of alliance building opened a new chapter in the evolution of 'high tech' interests.

Department ofPolitica1 Science Massachusetts Institute of Technology

Cambridge Massa~husetts

USA

Notes

1 As this paper will demonstrate, it is more accurate to regard 'high tech' as a political and ideological category than as an empirical economic phenomenon. When one tries to define the 'high tech' sector the ambiguity of the term becomes clear. While it plainly

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includes semiconductor and computer companies, what about the steel mill that has modernized by incorporating microelectronic technology?

State development agencies and academic researchers have proliferated definitions of 'high tech' based on such diverse criteria as the age of the firm, the level of R & D expenditures, or the skill composition of the workforce. Each of these definitions produces a sector with widely differing contours.

Inclusion in 'high tech' is, in reality, either a matter of self-definition -often a result of organization - or the result of government policies which define the boundaries of the group through force of the law. (The definition of 'white collar workers' is similarly political. For a fascinating discussion of the national and historical variability of the category, see J. Kocka 'Class formation, interest articulation, and public policy: the origins of the German white-collar class in the late nineteenth and early twentieth centuries' in Berger (ed.) 1981.) Throughout this paper 'high tech' is thus understood as a political as well as an economic category. 2 While Silicon Valley is distinguished by its semiconductor producers and Route 128 by its mini-computer manufacturers, the socio-economic and technological characteristics of the two regions are virtually identical. According to data from the US Bureau of Census, both represent a similar range of firm sizes, including several very large companies - Hewlett Packard, National Semiconductor, Intel and AMD in Silicon Valley and Digital Equipment, Wang Laboratories, Data General and Polaroid in Route 128 - a variety of medium-sized enterprises, and a proliferation of small firms.

In addition to a similar mix of firm sizes, one finds a comparable product mix in the two regions. Each includes capital goods manufacturers, producers of electronic components, like semiconductors, and makers of final products like computerized instruments or communications equipment. Both Silicon Valley and Route 128 also have software companies, R & D laboratories, suppliers of manufacturing inputs, and industry data processing services designed to serve the needs of advanced electronics manufacturers. While the absolute level of 'high-tech' employment is higher in Silicon Valley and the Route 128 region, and while the exact mix of products and firm sizes is different, these regions are both diversified technological complexes which have generated the technical infrastructure needed for an independent and ongoing agglomeration process. For current data on firm sizes and product mixes in the two regions, see US Bureau of the Census, County Business Patterns (California anti Massachusetts). For a discussion of the evolution of technological complexes, see OTA (1984). 3 Liberal theory begins with the individual as the unit of analysis. It assumes that the self exists prior to its ends and independent of social attachments. This liberal view of the 'unencumbered self - of the separateness of individuals - has been challenged by modern theorists working in the civic republican tradition who see identities and interests as partly constituted by (rather than independent of) social attachments and aims. See (Sandel 1984) for a comparison of these traditions. 4 For a true test of the pluralist perspective, one would want to compare identical industrial sectors facing identical political problems and responding differently. The real world rarely presents social scientists with such ideal conditions. This case serves as an unusually good approximation, however: the industrial mix in the two regions is comparable and they suffer from similar problems. Industrialists in both regions face severe infrastructural problems, difficulties attracting skilled labor, and increasing levels of foreign competition, As we will see, their responses to these problems have been quite different. 5. In the most sophisticated recent contribution to the literature on interest organization from the liberal perspective, Terry Moe (1980) proposes a compromise between the pluralist emphasis on political goals as the key to group membership and the Olsonian treatment of groups as exclusively economically based. Moe is certainly correct

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in his attempt to include both political and non-political considerations in the analysis of group formation. His solution - adding to an Olsonian rational choice model the roles of imperfect information and values other than economic self-interest - however fails to adequately address the determinants of identity. Although he offers an organizational explanation of group political goals, his approach neglects the role of ideology and organization in the process of identity formation and interest definition. 6 An example from the semiconductor industry makes this point apparent. During the 1960s and 1970s, intense domestic competition among American semiconductor producers dictated the need to cut costs. There were two plausible alternatives: to shift the low-skilled assembly and standardized manufacturing aspects of the process to low wage sites overseas (primarily in the Third World), or to automate those aspects of the production process. After several major firms - including industn leader Fairchild - chose to internationalize production, the rest followed almost immediately. This reaction was a process of mass imitation more than a rationally calculated strategy. Japanese semiconductor makers, faced with similar pressures, chose the opposite strategy of automation over off-shoring.

Today, as international competition intensifies, the same US firms are recon- sidering this unilateral move offshore. Many have pursued a hedging strategy of automating some operations while simultaneously keeping others offshore. Others have turned to re-organization of production as a means of cutting costs. In addition to cutting costs through market strategies such as internationalization, automation, or work reorganization, these firms have also started promoting political strategies to increase competitiveness.

In the political arena they again face a range of strategic choices: some support fighting for tax cuts, others desire subsidies for production, public funding of collective R & D or even collaborative manufacturing, and some have mobilized to gain protection of the domestic market. While these are not mutually exclusive strategies, all are means of cutting costs and increasing competitiveness. None is self-evidently the best choice. 7 There are a few sensitive studies by historians which provide valuable insights into the flexibility of the ideologies and interests of American businessmen and the formative role played by their associative activities (Collins 1981; Galambos 1966). I look forward to the findings of a group of scholars currently engaged in a research project which examines the associative activities of businessmen in Western Europe (Schmitter and Streek 1983). 8 One might, of course, account for these differences in political behavior and attitudes as a function of systematic differences between the individual businessmen in each area. There is ample evidence, however, that the backgrounds of high tech entrepreneurs is comparable in these communities. 'They have often trained as engineers at one of a small number of universities including hlIT and Stanford and they tend to share common entrepreneurial experiences and generation-specific social and cultural attitudes. One would presume that these shared backgrounds and experiences would produce common, rather than divergent, world views and political ideas. While I know of no comprehensive data on the backgrounds of the high-tech entrepreneurs of Silicon Valley and Route 128, my interviews in both regions revealed a widespread belief in these similarities - as do such popular accounts as Tracy Kidder's The Soul ofu Nm hluchine (Boston: Little Brown 1981) and Rogers and Larsen's Silicon I'ullq Fecer (NY: Basic Books 1984). 9 Research for this study was conducted during the 1984-5 period in both Silicon Valley, California and the Route 128 region in Massachusetts. The p r i m a ~ source material on the political stances ofbusinessmen was drawn from the publications of the Santa Clara County Manufacturing Group and the hlassachusetts High Technology Council as well as other related industry associations, the local business press, trade journals, and state and local go\ernment publications and legislative records. In

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64 AnnaLee Saxenian

addition, corporate reports to investors and annual reports were consulted. For the historical backgrounds of the two regions, there is a very limited secondary literature and thus my main source was local newspapers, journalistic accounts and government studies. Data on the industrial and economic characteristics of the regions is drawn from both state and local planning documents and the relevant materials from the U S Census.

I have drawn heavily o : ~ the insights and findings of my prior research on the industrialization and urbanization of both regions (Saxenian 1981, 1985). This research involved a series of in-depth open-ended interviews with a large number of high level executives, local labor leaders, politicians, and representatives of c o m m u n i ~ groups in each region. These interviews were guided by a different set of theoretical concerns, but there is much from these sessions which has indirectly come to bear in this study. A systematic set of such interviews was not feasible given the constraints of' the project, although informal discussions were conducted with local politicians, industrialists and unionists when possible.

T o document the observed trends more definitively, such interviews would bt. critical. In particular, it would be the only ,means of ascertaining the extent to which the political stands being publicly articulated by the industrialists in these communities represent deep and well-elaborated world views - what might be described as ideologies -or a more temporary and transient set of commitments that could changc rather quickly. The evidence I have available at present supports the notion that the political attitudes and stances described here lie somewhere in between ideology anci opiniodmoud swing: they represent a set of ideas which have been consistently articulated in public and private statements, and which have in turn served as guides to the activities and demands of the respective business communities. 10 Despite the proliferation of popularized accounts of the role of particular firms or individuals in the genesis of Silicon Valley, no comprehensive analysis of the political, economic and social history of this region's phenomenal growth has emerged. For tht: best of the mass-market genre, see Rogers and Larsen (1984) Silicon Vallg Fmer. 011

the more scholarly side, see Tilton (1971) for data on the substantial role played by the federal government in stimulating the semiconductor industry in its early years. See Borrus, Millstein and Zysman (1982) for a detailed case study ofthe development and changing structure and competitiveness of the US semiconductor industry. The Association of Bay Area Governments report (1981) on the region and the Office of Technology Assessment (1984) study of technolop and regional economic development all provide useful background data and insights into the development of Silicon Valley. See also my account of the role of Stanford University in the region's early development and Oakley's discussion of agglomeration economies, both in Hall and Varkusen (eds) (1985). 11 A complete explanation of the failure of unions to successfully organize in Silicon Valley lies beyond the scope of this paper. It remains striking evidence of the current weaknesses of the American labor movement that the blue-collar workforce in :lectronics which is - in comparison with the rest of manufacturing - poorly paid and acking in decent job protection and benefits, remains outside of its grasp. Active and ~ggressive union-busting on the part of high tech firms and a rightward shift in NLRB qulings have certainly undermined organizing efforts. Yet this is an incomplete xplanation: there is much evidence that traditional union org~nizing techniques and itrategies designed by conservative industrial unions for heavy industries and their nale workforces are no longer relevant, especially for the predominantly female, often mmigrant, production workers of Silicon Valley. 12 In 1981, for the first time, US semiconductor firms recorded a trade deficit w i ~ h heir competitors in Japan (Arnold 1983). Although US shipments of semiconductors :ontinued to grow an impressive 15-20% annually and the real threats to the long run ievelopment of the US industry still lay in the future, the largest chip-makers saw the

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need to defend their position in international markets (Borrus et al. 1982). They turned to Washington under the auspices of the SIA. Faced with the penetration of U S markets on one hand, and the inaccessibility of Japan's apparently protected markets on the other, they argued that the US government should restore the conditions of 'vigorous open competition' including free international trade and reciprocal market access (US Dept of Commerce 1983; AEA 1983). While the SIA initiated lobbying efforts in 1977, it was not until 1985 that any actions were taken on this front by the federal government. (See Yoffie (1988)

While not as directly threatened as the semiconductor companies, many Silicon Valley firms felt the growth of competitive pressures to some degrees. The Carter administration was seen in as broadly sympathetic to the concerns of growth industries, however they soon faced an unresponsive Republican administration. High tech leaders in Silicon Valley saw Reagan's 1981 tax legislation as dominated by the concerns of 'smokestack industries' and he i r allies in the financial community (LAT 15 November 1981). 13 Many of the Commission's proposals for innovation promotion have been embo- died in !egislation in California. The California Innovation Development Loan Pro- gram, established in 1981, provides $2 million annually in public financing for product development to prpmising technology-based entrepreneurs and inventors who have had difficulty finding funding from other sources. The Microelectronics Innovation and Computer Research Operation (MICRO) at the University of California at Berkeley, another state-funded program is intended to promote industry-university collaboration in innovative microelectronics and computer research. It aims to assist California's high tech industry in maintaining its competitive edge. The state also funds major training programs. The California Employment Training Panel (ETP), for example. uses the interest on the state Unemployment Insurance fund to finance the retraining of displaced workers, primarily for technical jobs. Started in 1983, ETP is run by three representatives from labor, two from business (including SCCMG's Peter Giles) and an attorney. It supplements the older California Worksite Education and Training Act (CWETA), which spends $10 million in state funding annually to subsidize local programs that provide training for employees in fields including electronics. 14 For a description of the early evolution of the scientific and technological agglomeration around MIT, and of the subsequent construction and development of Route 128 during the 1950s, see Lampe (1988), Rand (1964) and Shimshoni (1967). See Dorfman (1982, 1983) for a detailed enumeration of the causes of the region's high technology boom, focusing on the 1970s growth of the minicomputer industry. 15 References to the Route 128 region thus include the broader area which includes the other circumferential highway, Route 495, and Route 3, which connects Burlington and Lowell. While high technology development initially concentrated along Route 128 in the Fifties, it rapidly spread throughout the entire region and by the mid-1980s it encompassed a large margin of Southern New Hampshire as well. 16 In 1981 the h l H T C oversaw the formation of the Bay State Skills Corporation (BSSC), a joint public-private job skills training program. With $5 million annual state funding, and leveraged funds froni the private sector, BSSC directs its training programs and educational activities towards the employment needs of growing sectors and occupations. The M H T C also engineered the formation in 1982 of the h4assachusetts Technology Park Corporation - a $20 million program to increase post-secondary scientific and technical training in emerging areas of science and technology. Its first project is the establishment of a state-of-the-art microelectronics training center. 17 The ideological rather than objective economic foundation ofbusiness claims that plant closure legislation severely damages the investment climate was highlighted recently. Roger D. Wellington, the Chairman of the Massachusetts High Technology Council, and CEO of Augut, Inc., announced in early 1984 that because of his

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displeasure with Massachusetts state tax policies, his company had cancelled a planned in-state expansion. The irony is that in the midst of the acrimonious plant-closure debate, Wellington chose to locate his new facility in Maine - the only state in the nation with substantial and enforced 'advance notification' requirements for plant closings (BG 29 January 1984).

The fate of plant closure legislation in Silicon Valley underscores the divergent political attitudes and style of the two business communities under study. The SCCMG, like the MHTC, initially opposed such legislation. But in July 1984, in a little noticed turn, the San Jose City Council passed an amendment to a local Hazardous Materials Ordinance that requires employers who use toxic substances to provide the city with 90 days advance notification of their intention to substantially reduce or cease operations. Interested third parties will he notified by the city. Although this ordinance (like most plant closure legislation), is difficult to enforce, it represented a quiet compromise between the Manufacturer's Group and the Santa Clara County Central Labor Council. Labor had previously attempted to achieve the same goal by requiring to require large companies to file environmental impact reports on the social consequences of a plant closure.

It should be noted that high tech business in California has also fought unitan taxation. While there is no question about their opposition, they have never gone so far as to threaten investment strikes. 18 Ford Motor Co. went from 25,000 to 3 workers between 1980 and 1986, Kaiser Aluminum has similarly slashed its Silicon Valley workforce to virtually nothing. Thc remaining old-line firms like Corning and Burket face flat employment trends, at best. 19 There is ample evidence that the urban problems that the Manufacturing Group has addressed in Silicon Valley - particularly congested highways - afflict the 128 region as well. A recent cartoon in Mass High Tech portrays a dazed and distraught commuter on 'Gulliver's Commute' along a congested roadway. The accompanying editorial entitled 'High Tech Giantism Clogs Route 3' complains of the immense costs in terms of commute time, disruption of work, and increasing stress (MHT 21 Januan, 1985). Similar complaints have appeared in Boston Globe editorials bemoaning the congestion on Route 128 (BG 9 May 1985). And by 1986 housing prices in Massachusetts were among the highest in the country. Yet thus far the Mass High Tech Council has totally rejected involvement in devising solutions to these problems. 20 In both regions the development of infrastructure problems and labor shortages did lead to a decentralization of manufacturing operations: large firms have chosen to locate standardized production facilities outside of their home regions. Yet they maintain their headquarters and the most sophisticated R & D and product development facilities in Silicon Valley or Route 128. In addition, new start-up firms continue to locate in these regions. 21 See Yoffie (1988), for a detailed discussion of the mobilization and political success of the Semiconductor Industry Association during the late 1980s.

References

I Books andjournal arlicles

Bauer, R., Pool, I. and Dexter, L. A. Collins, R. M. (1981) The Business (1 964) Anrerrcun Business and Public Response lo Keynes, New York, Columbia Policy: The Politics ofForeign Trude, New University Press. York: Atherton Press. Dahl, R. (1982) Dilemmas ofPluralist Berger, S. (ed.) (1981) Organizing Democrag New Haven: Yale University Interests in Western Ezrrope, New York: Press. Cambridge University Press. Domhoff, W, (1 967) M o Rules

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America?, New Jersey: Prentice Hall. Dorfman, N. (1983) 'Route 128: the development of a regional high technology center', Research Polig Vol. 12. Ferguson, T. (1984) 'From normalcy to New Deal', International Organization 38, 1, Winter. Galambos, L. (1966) Cornpetition and Cooperation: The Emergence of a National TrudeAssociation, Baltimore: Johns Hopkins University Press. Gallie, D. (1978) In Search of the 'Yew Working Class, New York: Cambridge C'niversiq Press. Gervitz, D. (1984) Bzrsiness Plart For America: A n Entrcpret~rtir's Manifesto, New York: Putnam Press. Hall, P. and Markusen, A. (1985) Silicon Landscapes, Boston: Allen & Unwin. Johnson, R. (1980) 'The passage of the Investment Act of 1978: a case study of business influencing public policy', unpublished doctoral dissertation, Harvard Business School. Krasner, S. (1982) 'Regimes and the limits of realism: Regimes as autonomous variables', Intrrnutioncrl Organization 36,2, Spring. Kurth, J. R. (1979) 'The political consequences of the product cycle' International Organization 33, 1, \Gnter. Lampe, D. (ed.) (1988) The Massachzlsets Miracle, Cambridge, KIA: MIT Press. Lindblom, C. (1977) Politics and Markrts, New York: Basic Books.' Lowi, T. J. (1964) 'American business, public policy, case studies, and political theory', World Politics. Mann, M . (1973) Consc.iousness and Action Among the M2strrtr Working Class, London: Macmillan Press. McConnell, G. (1 966) Pricate Power andAmerican Democrag*, New York: Alfred A. Knopf. McQuaid, K. (1982) Big Biisiness crt~d Presidential Power, New York: William Morrow & Co. Moe, T. (1980) The Organizarion of Interests, Chicago: University of Chicago Press. Offe, C. and Wiesenthal, J. (1980) 'Two logics of collective action', Political

Power and Social Theory Vol. 1, London: JAI Press. Okimoto, D. (ed.) (1984) Competitive Ed@: The Semicondt~ctor Industry in the US. andJapan, Stanford: Stanford University Press. Olson, M. (1965) The Logic of Collecti~e Adion, Cambridge, Massachusetts: Harvard University Press. Piore, M. and Sabel, C. (1985) The Second Indz~strial Dicide, New York: Basic Books. Pizzorno, A. (1978) 'Political exchange and collective identity in industrial conflict' in C. Crouch and .4. Pizzorno (eds) The Resurgence of Clczss Confict in Ezrrope Since 1969, New York: Wolmes & hleyer. Rand, C. (1964) Cambridge, U.S.A, New Yorli: Oxford University Press. Rogers, E. and Larsen, J. (1984) Silicon Va l l e~ F t ~ e r , New York: Basic Books. Sabel, C. (1 982) Work and Politics, New York: Cambridge University Press. Sandel, M. (en.) (1984) Liberalisnl and its Critics, New York: New York Universiy Press. Saxenian, A. (1981) 'Silicon chips and spatial structure: the industrial basis of urbanization in Santa Clara County, California', \%'orking Paper 345, Institute of Urban and Regional Development, University of California, Berkeley. - (1983) 'The urban contradictions of Silicon Valley', Intt~vzationa1301~rnal of' C-rban and Regioncrl Rcrcurch 7, 2. - (1985) 'Silicon Valley and Route 128: regional prototypes or historical exceptions', in M. Castells (ed.) Trchnolom, Space and Society, Urban Affairs ,Annual Review, Vol. 28, Los .4ngeles: Sage Publications. Schattschneider, E. E. (1960) The Setni-Sorereign People, New York: Holt, Kinehart and Winston. Schmitter, P. and Streek, W. (1983) 'A research proposal to study the associative activities of business in advanced industrial societies of Western Europe', unpublished proposal. Schumpeter, J. (1942) Capitalism, Socialistn urrd Denrocvary, New York: Harper and Row.

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Scott, A. and Storper, M. (1986) 'High technology industry and regional development: a theoretical critique and reconstruction', unpublished paper, UCLA Graduate School of Architecture and Planning. Shimshoni, D. (1967) 'Regional development and science-based industry' in Meyer and Kain (eds) Essa )~ in Regioizal Economics, Cambridge: Harvard University Press. Tilton, J. (1971) International Diffusion of Technology: The Case ofSemiconducton Washington, D.C.: Brookings Institution. Trounstine, P. and Christensen, T. (1982) Mmers and Shaken, New York: St. Martin's Press. Truman, D. (195 1) The Governmental Process, New York: A. A. Knopf. Useem, M. (1984) The Inner Circle, New York: Oxford University'Press. Wilson, G. K. (198 1) Intert.st Groups in the United States, Oxford: Clarendon Press. Wilson, J. Q. (1973) Political Organizations, New York: Basic Books. Yoffie, D. (1988) 'How an Industry Builds Political Advantage,' Haward Business Review May-June. Ziegler, H . (1964) Interest Groups in American Society, New Jersey: Prentice- Hall.

II Documents, pamphlets and magazine articles

American Electronics Association (1982) 'The trade union interface', Palo Alto, California: AEA. - 'Update', selected monthly issues 1975-84, Palo Alto, California: AEA. Arnold, W. (1983) 'Chip makers see continued good times', Electronic Business, December. Association of Bay Area Governments (1981) 'Silicon Valley and beyond', Berkeley, California: ABAG. Berney, K. (1984) 'Bay state firms ponder their future', Electronics 3 May. Borrus, M., Millstein, J. and Zysman, J. (1982) 'International competition in

advanced industrial sectors: trade and development in the semiconductor industry', prepared for the Joint 1-conomic Committee, 97th Congress, Washington, D.C.: US Government Printing Office. Boston Urban Studies Group (1984) 'Who rules Boston?', Boston, Massachusetts: Institute for Democratic Socialism. California Commission on Industrial Innovation (1982) 'Winning technologies: a new industrial strategy for California and the nation', Sacramento, California: CCII. California Employment Training Panel (1983) 'California's employment training panel and organized labor', Sacramento, California: ETP. D'Amico, G. and Gallagher, T. (1983) 'For a just prosperity: a draft discussion paper', submitted to the Governor's Commission on the Future of Mature Industries, 23 December. Dorfman, N. (1982) 'Massachusetts high technology boom in perspective', CPA 82-2, Cambridge, MA: MIT Center for Policy Alternatives. Executive Office of labor, Commonwealth of Massachusetts (1983), Labor proposal to the Governor's Commission on the Future of Mature Industries. Foley, H. (1986) 'Locking in a fiscal plan that works', Mass High Tech 26 May-8 June. Goodman, D. (1984) 'High tech on a low road?', Boston Magazine, November. The Governor's Commission on the Future of Mature Industries (1984) 'Final report', Boston, Massachusetts: Governor's Office. Kotkin, J. (1984) 'Racing to stay in place', Inc. October. Loth, R. (1985) 'The unelected governments', Nem England Monthly January. Massachusetts High Technology Council (1978,1984) 'Why a High Technology Council? "Because we needed one" ', Boston, Massachusetts: MHTC. - 'Membership List, 1984'. - 'The high tech agenda, 1985- 1990'.

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Mass Tech Times, inc. Mass High Tech 'Three high tech firms cancel AIM membership' 26 November-9 December 1984; 'Xew year agendas' 7-20 January 19Sj; 'High tech giantism clogs Route 3' 2 1 January-3 February 1985; 'The council goes on the war path' 21 July-3August 1986; and selected bi- weekly issues, 1982-6, Burlfhgton, MA. Office of Technology Assessment (1984) 'Technology, development, and regional economic development', OTA- ST1-238, Washington, D.C.: OTA. Santa Clara County Housing Task Force (1977) 'Housing: a call for action', Planning Department, Santa Clara County, CA. Santa Clara County Industry & Housing Management Task Force (1979) 'Living within our limits', Planning Department, Santa Clara County, CA. Santa Clara County Manufacturing Group (1980) 'Vacant land in Santa Clara County: implications for job gr0v.h and housing in the 1980s', SCCMG: Sunnyvale, CA. - (1984) 'Job creation in Silicon Valley, 1983-7', SCCMG: San Jose, CA. Santa Clara Valley Business Journal Inc. The BusinessJournal, selected weekly issues, 1980-4, San Jose, CA. Semiconductor Industry Association (1981) 'The international microelectronics challenge', Cupertino, California: SIA. US Department of Commerce (1983) 'High technology industries: profiles and outlooks', Washington, D.C.: International Trade Administration.

III Netuspaper articles and letters (listed in chronological order by publication)

Boston Globe (BG) French, D. 'Data General head criticizes Dukakis on state economy', 18 January 1983. Foley, H. P. 'Two issues will help determine state business climate', 7 January 1984.

Gallagher, T. 'Business climate? Workers views count too' 24 January 1984. Mohl, B. 'High tech versus the Governor' 28 February 1984. - 'High tech leader issues warning to the state', 1 March 1984. Baker, C. 'Industry argues against unitary taxation', 3 April 1984. Lockman, N. 'High tech says no to MassBank', 8 April 1984. Mohl. B. 'High tech panel balks on MassBank', 13 April 1984. Menzies, I. 'MassBank gets my vote', 19 April 1984. Lockman, N. 'Wang gives MassBank a high tech endorsement', 21 April 1984. Moskovitch, E. 'Despite the opposition, MassBank is a good plan for Massachusetts', 25 April 1984. Blake, A. 'Dukakis warns: no MassBank, no safety', 26 April 1984. French, D. 'Council favors Westborough', 5 May 1984. Guzzi, P. 'Wang believes Taunton best site for new high tech center' 21 May 1984. Goldman, M. 'Industry threats can't be ignored' 29 May 1984. Ross, R. 'They want too much for too little' 29 May 1984. Mohl, B. 'What makes Wang different?' 28 May 1984. Adams, J. 'Westborough picked for high tech center' 3 1 May 1984. Mohl. B. 'High tech issues its own guide on closings', 27 October 1984. -- 'The New Agenda: high tech sets new course', 13 November 1984. - 'Tax burden in Mass fell', 19 March 1985. Stata, R. 'Competing with Japan', 23 April 1985.

Los .lngeles Times (LAT)

Gervitz, D. 'Democrats as economic copycats', 16 October 1981. Redburn, T. and Magnuson, R. 'Electronic firms seek broader political base', 15 November 198 1. Will, G. 'A California toxic for political lethargy', 6 December 1981.

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New York Times (NYT) Lueck, T. 'Gov. Brown seeks business aid', 12 February 198 1. Pollack, A. 'The birth of silicon statesmanship', 27 February 1983. Jackson, A. 'High tech: the Massachusetts advantage', 6 August 1984.

San Francisco Chronicle (SFC) Eckhouse, J. 'Silicon Valley plays its political chips', 19 July 1984. - 'Congressmen learn about Silicon Valley magic', 28 August 1984.

San Jose Mercury News (SJM) Elder, R. 'Top area executives organizing to deal with county issues', 29 July 1977. Herhold, S. 'Industrial group backs highway, bus expansion', 23 February 1979. Saylor, M. and Swan, G. 'County firms map massive job spurt', 13 July 1979. Buxton, C. 'County plants may have to e x ~ a n d elsewhere, state told', 19 July 1979. Trounstine, P. 'Business leaders take wary look at county's future', 16 August 1979. Gruber, S. 'Executive says high labor costs hurt area firms competitiveness', 10 October 1979. Herhold, S. 'Supervisors ask outside

opinion on budget system', 19 December 1979. - 'Execs on loan: Private industry puts its expertise to work for local governments', 17 August 1980. - 'Manufacturers' leader speaks softly, carries clout', 17 August 1984. Trounstine, P. 'Industrial group tackles the commute dilemma', 19 September 1980. - 'County modifies jobs goal', 18 November 1980. - 'Jobs-housing pact offered', 24 November 1980. Entin, B. 'Silicon Valley's patience on Reaganomics wears thin', 22 March 1982. Hoffman, D. 'High tech gaining influence' 15 hlay 1982. Trounstine, P. 'Make San Jose better before we make it bigger', 20 December 1982. Oppenheimer, C. 'High tech's alter ego in Congress', 12 March 1984. Robinson, B. 'Road tax plan is acid test for Manufacturing Group' 12 October 1984.

Wall Street Journal (WSJ) Miller, M. 'Unions curtail organizing in high tech', 13 November 1985. Shribman, D. 'Massachusetts turnaround turns Dukakis into business ally', 3 September 1986.

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