Klingler-Vidra, Robyn
(2014)
All politics is local: sources of variance in the diffusion of venture capital policies.
PhD thesis, London School of Economics and Political Science.
Abstract
The diffusion of the neoliberal Silicon Valley venture capital (“VC”) model seems to be another case of convergence on neoliberal orthodoxy as the spread of Silicon Valley replication ambitions is ubiquitous. But, when looking under the veneer of the Silicon Valley VC policy diffusion trend, I find that VC policy diffusion is not a story of “universal convergence.” Though more than 40 states deployed VC policies in an attempt to create local Silicon Valleys, the policies they implemented took different, and interventionist, forms. This thesis seeks explain why variance, rather than convergence, characterizes the diffusion of this clear, successful model.
Diffusion scholarship has made initial attempts at theorizing why and how diffusion does not lead to complete convergence. This thesis contributes to this growing body of work by conceptualizing and investigating how bounded rationality drives incomplete convergence. To do this, the thesis extends Kurt Weyland’s work on cognitive biases to by testing how five economic management norms shape the Silicon Valley VC policy diffusion: (1) pre-existing norms guiding state intervention, (2) private sector financing norms, (3) preferences for supporting large or small companies, (4) international versus local company support preferences and (5) bank or capital market preferences. The five economic management norms are drawn on to develop East Asian comparative typologies (Nightwatch-man State, Private Sector Promoter, Financier and Director and Command Economy) to test the impact of the norms in specific cases. This thesis also tests state-of-the-art diffusion literature’s hypotheses about the sources of variance in the diffusion process, namely: the impact of multiple diffusion items, diffusion items’ levels of specificity and diffusion mechanisms.
Empirically, this thesis provides a large-N dataset of forty-six countries' VC policies and four East Asian case study analyses (Hong Kong, Taiwan, Singapore and Vietnam). The case studies reveal how, in the face of competitive pressures, three of the five economic management norms propelled policymakers to choose unique policy formula. As a result, this thesis concludes that Tip O’Neill’s presumption that “all politics is local” rings true in policy diffusion.
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