ABSTRACT
This chapter analyzes the factors that cause paradigm shift in comparative advantage: business strategies of Silicon Valley firms during growth period, industry fragmentation, and inconsistent industry/government relationship. To accommodate the growing worldwide demand for its products, Silicon Valley firms adopted business strategies that, on the surface, seemed appropriate for the market conditions at that time. The industry is both horizontally and vertically fragmented. Horizontal fragmentation splits the business into various core businesses, thus forcing many firms to rely on a single core product. Vertical fragmentation means that various functions of the organization are decentralized or located in other regions. Protectionist policy involves creating government rules and guidelines that improve the competitive situation of the industry. Dumping is characterized as charging a lower price for a product in an export market than in the home market, or as generally characterized, selling a product for less than the cost of its production.
