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OM in the News: Move Over, Silicon Valley

January 29, 2015

In Chapter 8, Location Analysis, we discuss the interesting topic of clustering (see Table 8.3). Clustering is basically locating near competitors so as to take advantage of major resources found in that area. The perfect example is how software and high-tech firms head to Silicon Valley, Boston’s Route 123, and Bangalore (India). Our colleague, David Greenberg, just emailed from India that Tel Aviv belongs near the top of the list and sent the adjacent graphic. He adds: “Aside from Israel as No 2, what I found interesting is that Waterloo, Ontario is on the list. There’s an implication here that a single successful startup (Blackberry, Microsoft) is enough to build a cluster (Waterloo, Seattle)”.

Like the U.S., Israel puts entrepreneurs, successful or not, on pedestals, which allows them to attract the best minds to work with. Some Israeli high-tech innovations:  voice mail (1984), multislice CD scanners and cardiac stents (1992), ICQ instant messaging and VoIP “voice over internet” (1995), USB flash drives and computer vision software for road navigation (1999), the pillcam (2001), and Intel mobile technology (2003). More than 90 Israeli firms are listed on NASDAQ–2nd only to the U.S.

Israel high techClassroom discussion questions:
1. What ecosystem is needed for success in high-tech?

2. Name several other clusters that are not high-tech.

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