According to a recent report from Booz & Co, there may be some truth to the theory that companies in the Bay Area have a distinct advantage in terms of cultivating innovation. The research Booz's team conducted showed, "[These companies] are almost three times as likely to say their innovation strategies are tightly aligned with their overall corporate business strategies." More than double the number of Bay Area companies in the normal population indicated their corporate cultures supported their strategies.
On closer examination, the evidence does not suggest that the reason is really geographically based, however, there are regional trends that seem to support the trend. As noted in the study, the Bay Area is home to some of the nation’s greatest scientific research capacity. In addition, the Bay Area accounts for more than a third of the venture capital investment.
While investment and infrastructure certainly are foundational to ensure innovation has a chance, the report emphasizes that culture is really the deciding factor in perpetuating a company's bias towards innovation. The Bay Area, it turns out, leads the nation in companies that follow the Need Seeker model of innovation, which Booz highlights as a significant differentiator.
You can read more about this study here.