Company Growth, Acquisitions and Access to Complementary Assets in Israel's Data Security Sector

This article analyses aspects of high-tech cluster emergence in Israel during the 1990s with focuses on the data security software industry and on strategies of very successful companies dominating such an industry. Most of the industry is concentrated in Tel Aviv and close-by Hertzliya and to a lesser extent Haifa and Jerusalem. It starts by characterizing the industry as a whole and the universe of 19 companies comprising it. It then proceeds with an in-depth analysis of the growth trajectories of very successful companies, some of which are listed in NASDAQ or have been acquired by large multinational corporations. A fast 'IPO' and a 'fast M&A' track have been identified and characterized. The analysis suggests that while globalization could be beneficial to skill intensive peripheral economies like Israel, a significant economic impact may require an appropriate balance between start-up activity and downstream production and marketing activities.