High Tech Specialization:
A Comparison on Metropolitan High Technology Centers

A number of mid-sized metropolitan areas throughout the United States have frequently been identified as current or emerging centers for high technology business.  This paper presents a comparison of many of the important features of these economies, including their overall size and recent growth rates, an analysis of employment in certain high technology industries, an identification of large high technology firms in each region, and an examination of patent data.  While the term “high technology” is broadly used to describe these metropolitan areas, this analysis shows that each area tends to have its own distinctive specializations.  Specialization and differentiation are inherent qualities of high technology. There appear to be durable and persistent tendencies for metropolitan high tech development that are unique to each region.

A comparative analysis of attributes of high technology industry clusters in fourteen frequently mentioned “high tech” metropolitan areas shows that:

·        High technology is diverse:  by their very nature, high tech products and services are highly differentiated, and neither end products, nor production processes are widely interchangeable among firms. While broad categories of skill may be applicable in a wide range of firms and situations, much of the technical knowledge workers have is specific to a small industry segment or even a particular firm.  Despite outward similarities—large spending on research and development, many scientists and engineers in the workforce, a strong reliance on proprietary intellectual capital—high tech firms are an extraordinarily diverse lot; any effort to study high tech must address this diversity.

·        Places specialize:  High technology varies dramatically from place to place.  Different areas tend to specialize in certain technologies and have major concentrations of firms and employment in relatively few product categories.  A few places, like Silicon Valley, excel in many areas.  Most metro areas, even those labeled high tech centers, usually concentrate in relatively few products or technologies.  An area that is strong in one area, say medical devices, doesn’t necessarily have an edge in another area, like telecommunications, or semiconductors or software.

Principal Product Specializations for Selected Metropolitan Areas

Note:  SME: Semiconductor Manufacturing Equipment, EDA: Electronic Design Automation software.  Specializations listed in parentheses are outside the definition of high technology used in this report.  

·        Innovation, as evidenced by patent activity within metropolitan areas, is even more specialized than employment.  Research and development efforts, a key to high tech growth, closely parallel the industrial specializations of metro areas.

·        Venture capital investment is more concentrated and more specialized than overall high technology industry activity.  Because venture capital drives the creation of new enterprises and the growth of high tech employment, it tends to accentuate existing technological differences among metropolitan areas.

·        There is a strong cumulative character to high technology development in metropolitan areas—the existing industry base creates a skilled labor force with certain technological specializations; new firms, started by local entrepreneurs, draw on this knowledge base and skill pool to form new firms, frequently in closely related technologies or products.

·        The tendency toward high tech specialization works against generic development strategies.  Successful high tech development is usually an indigenous process, building most critically on the distinctive knowledge and existing industrial base of a region.  Moreover, prowess in one high tech field doesn’t necessarily qualify an area to succeed in others.  Economic development efforts should be tailored to build on or extend existing strengths or emerging local competence; trying to create a totally new high tech center where none now exists is likely to be a lengthy, and probably fruitless endeavor.