Structure, Policy, Services, and Performance in the Business Incubator Industry

Abstract

Business incubators are one of the newest tools on the enterprise development scene; nearly 400 are now in operation. A business incubator is a facility that provides affordable space, shared office services, and business development assistance in an environment conducive to new venture creation, survival, and early-stage growth. This article is a preliminary examination of the relationships among incubator structure, policy, services, and performance. A value-added continuum model is used to describe various kinds of incubators and aspects of their operations. Managers of 127 incubators were surveyed to examine features of the value-added continuum. Surrogate measures for the concepts that anchor either end of the continuum—property development and business development—are empirically examined. Incubators are found to be poor real estate ventures. Age and size of facility are found to be important determinants of jobs created and firms graduated. Only one other structure, policy, or services variable is important for explaining business development outcomes.