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Social network is a dominant ，distinguishing characteristic of Silicon Valley. Because innovation entails coping with a highdegree of uncertainty ， such innovation is particularlydependent on networks.

In Silicon Valley，networks havespecial importance in the movement of labor， the evolution of influence and power， and the actual production of innovation.

One of the most important aspects ofSilicon Valley is the way its labor market works. Extensive labormobilitycreatesrapidly shiftingand permeablefirm and institutional boundariesand dense personal networks across the technical and professional population. The ability of Silicon Valley to restructure itself when conditions change through rapid and frequent reshuffling of organizational and institutional boundaries and members is one of the factors that underlie the dominance of Silicon Valley in the new economy.

Recruitment often occurs not through close friends， but from the strength of weak ties. Close friendsknowthesamepeopleyoudo，whereasacquaintancesarebetter bridges to new contacts and non-redundant information. Firms benefit from employees'socialnetworks， and employers are thus willing to pay monetary bonuses to them for successful referrals. Workers' social connections are considered resources that yieldeconomic returns in the form of better hiring outcomes.Employees hired though social networks tend to quitless， experience faster mobility inside an organization，andperformbetterthanthoserecruited through other means.

Commenting on Silicon Valley's exceptionally high rates of inter-firm mobility， some scientists said that the region'sengineersdevelopedloyaltiesto each other and to advancing technology， rather thantoindividualfirms or even industries. While most microelectronics firms have company secrecy policies，individualsand firms utilize variousinformation strategies to circumvent such mandated secrecy．Job mobility of RD workers among semiconductor firms is one means of technological information-exchange， and，in somecases， information-exchange may be one reason for job mobility．The close location of the firms facilitates freewheeling information-exchangeinSiliconValley． The easy information exchange here is like the scientists who feel that their technology belongs to the world. It's very important to keep this technical information to oneself or one's firm．

Engineers not only hop around firms in the same industry; they also move from one industry and/or institutional sector to another-from technical firms to venture capital firms or to university research centers-creating cross-institutional ties and loosely integrating different institutional nodes in Silicon Valley. Many venture capitalists， for example， once worked in technical sectors of the Valley.

Secondly， networks are an important source of power and influence. Research on interlocking directorates among financial and industrial corporations shows how influence can flow from financial institutions to the industrial corporations to which they lend. In Silicon Valley， venture capitalists and lawyers play more than their conventional roles; they influence the structure and future development of their client companies. The lawyers are dealmakers as well as counselors. As dealmakers， \"Silicon Valley attorneys employ their connections in the local business community to link clients with various transactional partners\". For example， lawyers help by providing connections to venture capital， giving Valley firms access to their accumulated knowledge about the region and high-technology industries， and offering general business advice， like conventional business consultants.

Venture capitalists not only provide necessary financial resources to startups and spin-offs， but often play the multiple roles of broker， management consultant， and recruiter. Their vested interest in the firms for which they provide financial resources makes them more likely to intervene in the operations of their start-ups. From the knowledge of high technology that they have accumulated from their broad portfolios of successes and failures， venture capitalists offer invaluable advice as to what does and does not work. Many startups and spin-offs are founded by engineers who are naive about management; venture capitalists can access an informal and formal network of experts to further the long-term viability of newly created firms. Further， venture capitalists often organize the boards of directors of their start-ups， sometimes reducing the role of original founders and even severing the original founders from their own creation.

Thirdly， social networks work as a distinct governance mechanism， a \"social glue\" that binds actors and firms together into a coherent system. In high-technology industries in particular， social networks help transmit information and knowledge among different firms and individuals and produce innovation. In Silicon Valley， getting the right product out at the right time has become crucial for the survival and growth of a firm in a rapidly changing environment. Networks enhance the capacity to do this by enabling people to mobilize capital， find relevant and reliable information quickly， and link to appropriate outlets. Innovation is so central to high-technology industry that it is not an exaggeration to say that effective social networks determine a firm's chance for survival.

Such a network governance structure is a typical way to regulate the inter-firm alliance practices， such as collaborative manufacturing， found in industrial districts. To meet the demands of this changing marketplace， firms adopt new modes of organization that spread production across diversified inter-firm linkages of suppliers， subcontractors， and end users. In the regions of north central Italy and southwestern Germany， for example， a complex division of labor among small and medium-sized companies has developed， supported by local political， financial， and educational institutions， which allows firms to produce a wide range of industrial products. Silicon Valley shares many of the characteristics of European industrial districts， and thus promotes collective learning among specialist producers of interrelated technologies. In this decentralized system， dense social networks and open labor markets encourage entrepreneurship and the ongoing mobilization of resources. Companies compete intensely， but simultaneously learn about changing markets and technologies through informal communications， collaborative projects， and common ties to research associations and universities. High rates of job mobility spread technology， promote the recombination of skills and capital， and aid the region's development. Silicon Valley companies， just as those in Germany and Italy， trade with the whole world， but the core of knowledge and production remains local. One way the Valley accomplishes this recombination of knowledge and capital is through spin-offs， which have contributed to the construction of dense social networks of entrepreneurs， inventors， and other institutional actors.