Recovery Following Disruption to an Ecosystem

Using data on all organizations operating in California from 1993 to 2006, this article explores the evolution of industries and communities before and after a disruption to the region (the dot-com bust). Our results indicate that an association with the Silicon Valley’s high-tech industry clusters explains more of the variance in organizational foundings in communities located in California after the disruption as compared with the predisruption time period. In contrast, the benefits of a Silicon Valley location for nascent organizations erode postdisruption. The findings also demonstrate that, pre and post the dot-com bust, organizational foundings are explained more by an organization’s high-tech industry affiliation than by its Silicon Valley location.