Incubator firm failure or graduation?: The role of university linkages

Abstract

One of the theoretically important factors for incubator firm performance is the strength of their linkages to the research university sponsoring the technology incubator. Herein, we focus on two types of university linkages to the sponsoring institution: a license obtained from the university and a link to university faculty, while controlling for incubator firm linkages to non-sponsoring research universities, among other factors. We propose that a university link to the sponsoring institution reduces the probability of new venture failure and, at the same time, retards timely graduation. Further, we suggest that these effects are more pronounced the stronger the university link. Due to the difficulty of obtaining fine-grained longitudinal data, the incubation literature is characterized by a dearth of studies focusing on incubator firm differential performance. We attempt to take a first step towards closing this gap by testing these hypotheses through following 79 start-up firms incubated in the Advanced Technology Development Center at the Georgia Institute of Technology over the 6-year period between 1998 and 2003. We find broad support for the hypotheses advanced. © 2005 Elsevier B.V. All rights reserved.