It is unlikely that any industrialregionofthe world has received as much scrutiny and study as Silicon Valley. Despitetherecent crashofInternetand telecommunications stocks， SiliconValleyremainstheworld'sengineofgrowthfor numeroushigh-technologysectors. Gloomy prognostications notwithstanding， the Silicon Valley ecosystem is truly unique in its makeup and in its ability tocreate new wealth throughinnovation. Indeed， innovation leading to commercialization is at the heart of Silicon Valley. To a large degree， Silicon Valley innovation is a function of inter-firm and interpersonal networks that spread the costs and risks of developing new technologies. Newcomers are the lifeblood of the region， coming from around the worldtorisktheirabilitiesandfutures. Supporting institutions such as venture capitalists， lawyers， accountants， and executive search firms play key roles in shaping the unique social capital of Silicon Valley.

The emergence ofSilicon Valley powerhousessuch as Intel， Oracle， and Sun did not happen overnight. A remarkably diversesetof individuals， institutions， andeventsmust converge for true innovation to flower. As a result， one cannot help thinking that any government trying to use policy to create a new Silicon Valley is doomed to fail. Much of the success of Silicon Valley must surely be attributable to what economists describe as an organic， path dependent evolution replete with learning-by-doing， learning-by-example， and most especially， learning-by-failure. It is highly unlikely that governments will succeed in trying to plan and mandate a Silicon Valley ecosystem in which failure is a key ingredient although governments really play an important role in the ecosystem.

The infrastructure for any regional economy is a complex set of institutions and practices. Critical institutions includelawfirms，venturecapitalists，accountingfirms， consultants， executive search firms， research institutions， and banks. Together， these institutions have established a set of routines that have come to be known as the Silicon Valleywayof doingbusiness，which is unlike any other regional business environment. The historical role of lawyers is particularly intriguing， and often overlooked. Lawyers have a multifaceted role that is much deeper than simply providing legal advice. This role requires extensive interaction with entrepreneurs and other institutions and is a key element in the innovation process. The various researches on venture capital illustrate that innovations in financing played a critical role in creating Silicon Valley and shaping a unique venture capital environment.

Although Silicon Valley is just famous for technological innovation， innovations in management approaches， policies， and investment strategies - in short， business models - are equally responsible for the Valley's extraordinary economic performance. These innovations are relevant beyond the confine of Silicon Valley. Valley executives are leading the way in developing new business models. For managers interested in innovation， the Silicon Valley ecosystem provides a wealth of ideas about how knowledge， entrepreneurs， and networks interact to create radical new products and services. Since every manager should be interested in innovation， every manager should strive to understand how innovation is created in the Valley. Silicon Valley entrepreneurs also have created a business culture in which the rapid pace of technical change compels a higher level of risk-taking; an unusual degree of connection and cooperation with competitors， investors， suppliers， outsourcers， and customer; and a stronger orientation toward the value of individual employees rather than the team. The dynamic environment also engenders more acceptance of business failure as an integral part of the business creation process， and produces highly flexible professionals that can move easily from failed companies to new opportunities.

Another part that we should not ignore in the Silicon Valley ecosystem is the immigrants from other places of the world. The role of high-skilled immigrants is of growing importance to policymakers in California because foreign-born scientists and engineers account for a significant and growing proportion of the state's workforce. Asian immigrant engineers and scientists in Silicon Valley are given the most attention. When local technologists claim \"Silicon Valley is built on ICs\"， they refer not to the integrated circuit but to Indian and Chinese engineers. Skilled immigrants account for at least one-third of the engineering workforce in many of the region's technology firms and they are increasingly visible as entrepreneurs and investors. Foreign-born engineers in Silicon Valley's technology industry make a substantial and growing contribution to regional job and wealth creation. In 1990， immigrants accounted for 32 percent of the region's total scientific and engineering workforce. Two thirds of the region's foreign-born engineers were from Asia. Of these， Chinese and Indian immigrants accounted for 74 percent of the total Asian-born engineering workforce. The entrepreneurial contributions of these skilled immigrants are impressive. In 1998， Chinese and Indian engineers， most of whom arrived in the United States after 1970 to pursue graduate studies， were senior executives at one-quarter of Silicon Valley's new technology businesses. These immigrant-run companies collectively accounted for more than $16.8 billion in sales and 58，282 jobs in 1998. Moreover， Chinese and Indian immigrants started companies at an accelerating rate in the 1990s.