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The Silicon Valley Syndrome

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  • Doris Kwon
  • Olav Sorenson

Abstract

How does expansion in the high-tech sector influence the broader economy of a region? We demonstrate that an infusion of venture capital in a region leads to: (i) declines in the number of establishments and in employment in non–high-tech industries in the tradable sector; (ii) increases in entry and in employment in the non-tradable sector; and (iii) a rise in income inequality in the non-tradable sector. Expansion in the high-tech sector therefore leads to a less diverse tradable sector and to increasing inequality in the region.

Suggested Citation

  • Doris Kwon & Olav Sorenson, 2023. "The Silicon Valley Syndrome," Entrepreneurship Theory and Practice, , vol. 47(2), pages 344-368, March.
    • Handle: RePEc:sae:entthe:v:47:y:2023:i:2:p:344-368
    DOI: 10.1177/10422587211050892
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