University Incubators May Be Socially Valuable, but How Effective Are They? A Case Study on Business Incubators at Universities

Abstract

To counter the high failure rate of small entrepreneurial start-up companies, many universities set up business incubators that nurture start-ups until they are prepared to stand on their own. There are many different types of incubator, and while the evidence of their success is inconsistent, some research suggests that they do succeed in one of their primary goals because start-ups that begin in incubators have a higher survival rate (c.f. J Technol Transf 48(5):692–710, 2004) compared to non-incubator companies. Traditional definitions of incubators (J Technol Transf 29(1):55–82, 2004) generally include: (a) Shared office space rented at favourable rates, (b) Shared support services that reduce overhead costs, (c) Professional business support, advice and mentoring, and (d) Professional and trade networking. While each of these aspects has been studied by academics, the general consensus is that the most important factor for start-up success is the final factor—organized networking (Int J Entrepreneur Innovat Manage 4(2–3):248–270, 2004). Recent work has shifted the focus of research on the role played by incubators as a mechanism for embedding a company within networks, recognizing that much of the entrepreneurial literature stresses that access to networks plays a crucial role for start-ups and small companies. In recent years, the business world has seen major changes in the way that organizations manage their network interactions and interactions with customers. One of the main factors in this change is new technology and data transmission capabilities. However little research has yet looked at networking and cooperation activities within incubators or how entrepreneurs use these technology-enabled networks to support development and growth. The aim of this chapter is to examine non-profit university-based incubators focusing on their role in business networking and cooperative activities. The study is exploratory and focuses on incubators at two large public universities in Spain and the UK. The main contribution of this chapter is to confirm that effectiveness assessment of incubators is so far un-systematic. This is dangerous because the lack of rigorous assessment tools and methodologies feeds the uncertainty surrounding business incubator effectiveness and ultimately threatens their ability to make meaningful contributions to the success of the companies they nurture.