There has been growing attention to labor mobility in Japan. However, the voluntary inter-firm mobility rate among full-time workers has not significantly changed in the past ten years. The rate for engineers with general skills is not an exception. In contrast, it is widely recognized that in Silicon Valley, where high technology companies agglomerate, the job mobility rate among engineers is extremely high. This article, first and foremost, analyzes what environmental factors facilitate the frequent job changes in Silicon Valley and incentives for engineers' inter-firm mobility. Secondly, we focus on human resource management in Japanese companies in Silicon Valley. Interviews conducted in 1999 with employees of Japanese companies clarify what policies they have for their job demarcations, recruitment of prospective engineers, education and training, and compensation to retain employees.
The main factor that brings about the high mobility rate is the agglomeration of small high technology firms that provide a wealth of employment opportunities for engineers. In Silicon Valley, high technology industries like semiconductors, computer systems, software, peripherals, and telecommunications equipment are highly developed and fragmented. Each firm is specialized in particular products, process technology and applications with a distinctive market or technical focus. In other words, companies in Silicon Valley concentrate their resources on what they can do best and purchase the remainder from other specialized firms. The knowledge required for engineers working in those specialized firms is "the functional knowledge" about particular components and disciplines. It is not organization-specific and the work for creating new functional knowledge can be divided into narrowly defined jobs. Therefore, each engineer, even if he / she is recruited from other firms, can individually conduct a piece of the segmented work with clearly defined authority and responsibility.
In addition, this region's small specialized firms collaborate and support mutually demanding continuous innovation. Engineers in Silicon Valley informally exchange information and consult one another on technical matters beyond the boundaries between firms. Through this informal communication and cooperation, existing skill and know-how gets recombined with new ideas and technology, then, innovation is created. That is to say, engineers blur the boundaries between firms and create interdependent confederations of project teams. Therefore, inter-firm mobility in Silicon Valley is as easy as a transfer between departments within a firm.
Employment agencies, headhunters, and educational institutions also play a crucial role in the region's mobile labor market. Educational institutions provide continuing education and training needed in a fast-changing technological environment and help engineers gain the qualifications needed to move to higher salary jobs. Developed service infrastructures such as venture capitalists, law firms, consultants, advertising and public relations firms, etc. support start-up firms, which create opportunities for employed engineers to become independent entrepreneurs.
Engineers who have innovative ideas but can't realize them in their current organizations due to resource constraints start new companies or move to other organizations with members of their project teams. Engineers also change companies, demanding career advancement and better compensation packages that include pay increases, generous benefits and stock options. The stock option that offers opportunity to become very rich is a significantly important incentive for job change in Silicon Valley.
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