How do localized industries adapt to not only changing technological environments but also to an ever-changing economy? In today’s market this is especially vital to clustered industries and their communities, such as those found in Silicon Valley. Dr. Nydia MacGregor and Dr. Tammy L. Madsen with Santa Clara University explore how Silicon Valley evolved after a drastic change — the dot-com bust — in their newly published article, “Recovery Following Disruption to an Ecosystem: The Effects of the Internet Bust on Community Evolution,” in the Journal of Leadership and Organizational Studies.
Using data on all organizations operating in California from 1993 to 2006, this article explores the evolution of industries and communities before and after a disruption to the region (the dot-com bust). Our results indicate that an association with the Silicon Valley’s high-tech industry clusters explains more of the variance in organizational foundings in communities located in California after the disruption as compared with the predisruption time period. In contrast, the benefits of a Silicon Valley location for nascent organizations erode postdisruption. The findings also demonstrate that, pre and post the dot-com bust, organizational foundings are explained more by an organization’s high-tech industry affiliation than by its Silicon Valley location.