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Table 1 Incubators: evidence from the literature

From: Challenges and opportunities of innovation and incubators as a tool for knowledge-based economy

Year Citations, year of publication Findings
1988–2000 • Hisrich, 1988 Incubators in each community should be designed in consideration of the community’s cultural values and in dialogue with community leaders to provide value.
• Campbell et al., 1985 The value of the incubator to the incubatee relies on a needs analysis of incubatees, incubatee selecting and monitoring, access to capital, availability of network expert/support help, and more immediate learning for solutions to problems.
• Smilor, 1987
• Autio & Kloftsen, 1998
• Smilor, 1987 The value of the incubatee to the community and incubator includes technology diversification, economic development, job creation, viable firms, and profits from successful products.
• Smilor, 1987 There are several success factors from different perspectives, such as from the community standpoint: entrepreneurial community support, networking, education and linkage with universities; the incubator perspective: success indicators, finance, follow-up for incubatees, managerial support, clear policies of entry/exit; and for the incubatee: business awareness and success rate.
• Campbell et al., 1985
• Merrifield, 1987
• Culp, 1996 These authors highlight the importance of appropriate incubatee selection, which is viewed as a process.
• Lumpkin & Ireland, 1988
• Merrifield, 1987
• Kuratko & LaFollette, 1987
• Bearse 1998a
• Allen & Rahman, 1985 The value at the community level lies in a protected environment where new ventures are able to develop, provided by incubators, and this leads to economic growth and investment in local communities. BIs will be part of a larger economic development plan, and although incubator net job creation is low, it is still significant.
• Campbell, 1989
• Temali & Campbell, 1984 The focus of incubators could be a classification based on the nature of their primary sponsors or the focus of the incubatees. The key characteristics of incubators are low-priced rents, shared services, and the existence of entry/exit policies and university networking and support.
• Plosila & Allen, 1985
• Brooks, 1986
• Temali & Campbell, 1984 The benefits from the incubatee from the incubator’s perspective include the importance of incubatees paying rent at below-market prices for office space, incubatees supporting each other, including purchasing, as each of the incubatees must have all aspects of business consulting services available to them. Incubatees in university technology businesses incubators are influenced positively by that environment.
• Allen & Rahman, 1985
• Mian, 1994b
• Allen & Rahman, 1985 Although 87% of entrepreneurs would have embarked on their enterprise, they agree on the usefulness of physical services, advertising and marketing, and risk management, insurance, and government grants that are available in an incubator.
• Fry, 1987 There are several services offered by incubator management such as planning, for example, business planning, mission statements, strategic plans and budgets, and only half of the incubator managers participate in the planning process.
• Allen & McCluskey, 1990 The occupancy rates show that 50% of incubators do not present as real estate ventures. Incubators with established expertise are the most successful. Incubators whose focus is light manufacturing tend to have more success in job creation. Job creation and firms that have graduated were not significantly impacted by the business support services.
• Mian, 1996a Tangible services such as shared offices are more successful. Less useful services include assistance grants, marketing, accounting, etc. Due to the availability of student employees, university labs, and infrastructure, a university’s image is a significant benefit to incubator firms. Added value contributions are influenced by incubator services.
• Mian, 1996b Within four years, firms’ sales increased approximately tenfold and hiring increased fourfold. The university infrastructure offers many benefits such as employing students part-time and faculty consultations. Growth and survival of tenant firms are positively influenced by the provided university incubator services.
• Mian, 1997 The four incubation programs indicate a high rate of sales and a high rate of employment (150% and 35%, respectively). A university’s image enhances incubator firms and press coverage and university campus visits impact public attention. The most beneficial aspect for firms is the availability of student employees.
• Autio & Kloftsen, 1998 The analysis of success stories will be helpful in future implementation and practitioners should adopt the policies based on the landscape of the country.
2001–2012 • Thierstein & Wilhelm, 2001 The main goal of incubators is economic development, for example, in Switzerland, incubators are mostly privately owned.
• Adegbite, 2001 The primary goals were not met in business or technology incubators. Insufficient support services and lack of objectivity in admission contributed to weaknesses in incubators operating under the Ministry and poor funding added to their organizational hardship.
• Shefer & Frenkel, 2002 In the last three years, 86.4% of the projects graduated from the program and the success rate shows that 78% obtained financial support after graduation. Managing the selection and overseeing of projects and the skills of the incubator are critical for success.
• Colombo & Delmastro, 2002 The incubator case studies in Italy represent highly skilled entrepreneurs. The case study shows no significant differences between on- and off-incubator firms regarding their innovative output. The outcomes were job creation, education, support of EU-sponsored projects, and networking.
• Hsu, Shyu, Yu, You, & Lo, 2003 In comparison, tenants in ITRI incubators are more satisfied than firms in other offices. The development of incubators is reflected in industrial development leading to economic development.
• Abetti, 2004 The study obtained survival rates of around 95% in Finland. The study shows the cost per job is €6450, with average sales growth rising by 160% per year during and after incubation. The government contribution will be less for funding incubators.
• Chan & Lau, 2005 What are essential for entrepreneurs are rental subsidies for office space in addition to training programs. However, clustering does not benefit firms.
2001–2012 • Pena, 2004 The significant impact of incubators will be reflected in high sales and employment growth. Most services offered by incubators have no impact on the performance indicators.
• Lee & Osteryoung, 2004 The comparative study between US and Korean respondents shows the role of incubator strategies such as goals, management, entry/exit policies, and business plans. The US respondents give more importance to these factors. The critical two factors are financial support and business networking.
• Peters, Rice & Sundararajan, 2004 The rates for the graduation of companies are higher in incubators that offer coaching such as training, and in those that provide access to networking, e.g., consultants, scientists, customers, and other business firms. The number of graduation companies in the non-profit incubator type will be higher than in for-profit incubators.
• Rothschild & Darr, 2005 Entrepreneurs’ benefits from the incubators include reputation, credibility to the firm, and access to funding and business networking.
• Etzkowitz, Carvalho de Mello, & Almedia, 2005 The incubators in Brazil create a low establishment-development cost and utilize the advantages of academic resources.
• Totterman & Sten, 2005 The incubator offered services such as support and networking. The incubator management team should focus on strategic business networking rather than on providing tangible services.
• Rothaermel & Thursby, 2005a The failure rate will be decreased when linked to a university providing services such as licensed technology, faculty as senior management and informal links. The impact will affect the inventor positively.
• Rothaermel & Thursby, 2005b This study focused on two mechanisms: transfer by a license to a university and backward citations of incubator firm patents to university patents or publications. The firm survival rate will be higher when holding a license. The firm absorptive capacity is measured by backward citations rather than firm performance.
• Wynarczyk & Raine, 2005 The incubators play an active role in nurturing businesses and creating jobs. The managerial advisors’ support will provide strong options for survival during the early stages of the start-up companies.
• Von Zedtwitz & Grimaldi, 2006 The relationship between the incubator objectives and incubator services should be clear to obtain the desired outcomes. The experience of the incubator manager is an essential support for the incubatee.
• Kim & Ames, 2006 The qualifications of incubator managers should match with the requirements of the client companies such as support services and networking. Increments in incubator growth could negatively affect the success of incubators.
• Studdard, 2006 The incubator manager requires knowledge to interact with new product development, technological competence, and sales cost awareness. The firm’s reputation requires increased credibility and marketing avenues.
• Gassmann & Becker, 2006 In the incubator’s initial phase, information flow is essential for both the incubator and the ventures. In the second phase, from the intangible services, knowledge comes from the for-profit incubators and the firms.
• Chandra and Fealey 2009 The government funds most large incubators and high-tech-oriented incubators are dependent on government funding, which weakens their capability toward market-oriented incubation.
• Avnimelech, Schwartz, & Bar-El, 2007 Closure rates for firms are less (19% compared with 36%) for firms that received seed funding and were established in an incubator. The failure rate of VC firms is lower than for incubator firms.
• Aerts, Matthyssens, & Vandenbempt, 2007 The survival rate of tenants is positively correlated with the availability of a more balanced screening process. The screening process consists of market, financial, and management screening and it contributes positively with respect to failure rate. The critical role of incubators is to support the survival of the entrepreneurial spirit.
• Hytti & Maki, 2007 Younger firms demonstrate more growth-potential benefit from incubator services. However, older firms demonstrate less satisfaction with services. The tenancy duration for incubation must be optimal and flexible with respect to firm needs.
• Hughes et al., 2007 The study classified firms into four groups based on their capabilities, determination to access resources, to acquire knowledge, and strategic networking. The most critical aspect is strategic networking.
• McAdam & Marlow, 2007 Of importance for tenants are the facilities offered by the incubator, its credibility, and networking opportunities. A critical factor is the trust that allows information exchange. In some cases, firms were hesitant in sharing sensitive information, such as secrecy and copying ideas, due to their close proximity to each other.
• Akçomak & Taymaz, 2007 The main differences between on- and off-incubator firms are the sales and employment, but not innovation. The tangible services offered by incubators and funding can explain the differences.
• McAdam & McAdam, 2008 The most important element of incubators in the early stages is tangible incubator services. Networking and clustering are the most important factors behind firm success.
• Schwartz & Hornych, 2008 The survival of media firms depends on the availability of specialized equipment and facilities including knowledge and know-how. The competition between companies in the same sectors leads to limitations in networking.
2001–2012 • Frenkel et al., 2008 In the USA, private and public technology incubator firms promoted technological entrepreneurship among the immigrants in the USA and those from the former USSR. In private incubators, firms tend to benefit more from networking with international strategic partners and academia. However, the private incubator firms cannot fully replace public incubators.
• Duff, 2004 This study looks in depth at eight case studies of leading BI programs to provide a detailed appreciation of program design and incubator operations. Four of these programs are Australian and four are drawn from the United States.
The study finds that incubation programs that add value most effectively are those that adopt a pro-active business-development stance based on a sound appreciation of the business needs of their clients’ characteristics in these pro-active, direct intervention systems.
• Chandra & Fealey, 2009 This study describes the incubation landscapes of the United States, China, and Brazil, noting the similarities and differences in incubation approaches among the three countries. The key performance indicators for the comparison are based on the incubator’s sponsorship/financial model and its impact on strategy, its service mix with an emphasis on financial services, along with key environmental/contextual influences. The role of governments and their impact on incubator strategy in the three country contexts is discussed along with policy implications.
• Akçomak, 2009 Drawing lessons from country experiences, the appropriateness of incubators as a tool for entrepreneurship promotion in developing countries is assessed. The main weaknesses of incubators in developing countries are: (1) their focus on tangible services rather than intangible services; (2) their dependence on governments; (3) a lack of management and qualified personnel; and (4) a lack of incubator planning and creativity in solving problems.
• Atherton & Hannon, 2006 Seven generic incubation strategies were identified and developed. Four focus on a premises-driven approach to incubation and three on a more process-based approach. All seven strategies represent opportunities for tailored, and hence, targeted approaches to the development of incubators and incubation services.
• Schwartz and Hornych 2008 This study examines the survival of 352 firms from five German BIs after their graduation. The findings suggest that graduation causes an immediate negative effect on survivability that lasts up to three years after leaving the incubators. Furthermore, heterogeneous patterns of post-graduation exit dynamics between the BIs were observed. It was also found that performance during the incubation period is an indicator of the propensity for business closure after graduation.
• Voisey, Gomall, Jones, & Thomas, 2006 The study finds that if incubation facilities are to receive continuing support, the measurement of success needs to be broader than a set of statistical outputs. Applications for public funding in support of BIs as part of an overall economic regeneration strategy should be able to provide a wider evaluation of effectiveness and the paper seeks to develop a model for this purpose to assist the ongoing development of incubator facilities in Wales.
• Al-Mubaraki & Busler, 2010a The study indicated BIs can help young firms to survive and grow during their start-up years, and can play a key role in the economic development of a community or region. In developing countries, including Kuwait and the other GCC member states, BIs can be particularly valuable in helping to develop local economies, promote technology transfer, create new enterprises, and generate jobs. In addition, the survey results are used to make recommendations for how to maximize the success of incubators, including matching services offered to the needs of clients and involving a range of community stakeholders in the development of their programs. A number of options are proposed for developing and expanding the BI concept in Kuwait and the GCC member states.
• Al-Mubaraki & Busler, 2010b Three practical business incubation European models are discussed based on their adoption as case study examples: the UK, France, and Germany. These three countries contain approximately 83% of all the incubators located throughout Europe today. This study focused on: (1) the nature of incubator financing; (2) the incubator’s mission and strategy; and (3) graduation that it, in turn, offers its incubatee clients. The SWOT analysis of each case study reflects the strengths of each program and complies with its mission and objectives, showing great opportunity with the future plans and performance of each program. BIs contribute to the international economy and play a vital role not only in economic recovery, but also in economic development. International adaptation leads to the support of diverse economies, the commercialization of new technologies, job creation, and wealth building. In addition, more than 7000 incubation programs worldwide are engaged in supporting the development of new high-growth businesses. Today, Europe has funding in incubators with the goal of job creation and economic recovery.
• Al-Mubaraki & Busler, 2011b The case study of ten incubator organizations in developing countries is examined. The findings of this study indicate BIs are an effective and innovative tool for supporting start-up businesses. The empirical results highlight some implications for successfully developing and implementing the best practices of business incubation programs. This study makes a contribution to knowledge about the process of business incubation.
• Al-Mubaraki & Busler, 2011c This paper is based on a mixed-methods approach. This study has clearly stated that business incubation is tool for economic development based on economic indicators from incubation outcomes such as: (1) entrepreneurs; (2) companies created; (3) jobs created; and (4) incubator companies. This is evident in both the United States and the developed countries, but is still taking shape in the developing countries such as the GCC member states.
  • Al-Mubaraki & Busler, 2012b The results show quantitative and qualitative responses used to determine success rates and key indicators of incubators in various countries. The best practice model based on the lessons learned from case studies indicates that the success of incubatees in terms of sustainable graduation is reliant upon: (1) clear objectives; (2) incubator location; (3) access to services; (4) employment creation; and (5) an economic development strategy. When accomplished, the best practice model can lead to a 90% survival rate for companies and reflects sustainability in the market.
• Al-Mubaraki, & Busler, 2012c The four strategic outcomes of the research findings are: (1) entrepreneurial climate (62%) was the primary purpose of the incubator, (2) commercialization technologies stood at 55.5%; (3) employment at 51.6%; and (4) innovation and diversifying local economies at 46.1%. The research adds value to the current literature on the sustainability of incubators and on outcomes. It provides a useful roadmap to both academicians and practitioners through experiences of worldwide incubator implementations.
• Al-Mubaraki, & Schrödl, 2012a The study proposed measurement models in the international context. The four measured indicators are: 1) the graduation of businesses that were incubated; (2) the success of businesses that were incubated; (3) jobs created by incubation; and (4) salaries paid by incubator clients. The recommendations from the study could help to develop business incubation guidelines for best practices in the GCC, which will lead to economic development worldwide and in the GCC.
• Al-Mubaraki & Schrödl, 2012b The four dimensions discussed in the study determined the effectiveness of BIs individually and as an industry. The study recommended that:
1. Further research in this area should focus on the four dimensions discussed in this paper: (1) the number of businesses that have graduated over a period of time; (2) the number of businesses still in business over a period of time; (3) jobs created by incubator clients; and (4) salaries paid by incubator clients.
2. As the industry grows, new and existing incubators around the world should continue to track these measures of effectiveness in order to empirically demonstrate the value of business incubation.
3. Independent researchers, incubator funders, and governments should cooperate with practitioners in obtaining data related to these four measures of success.
• Al-Mubaraki & Busler, 2012d The authors investigate the incubation models in Europe and the Middle East. The study finding concludes that incubators play an important role in nurturing businesses, creating jobs, and producing high graduation rates of incubatee firms, especially from programs that offered strong tangible and intangible services. Within this landscape, incubator firms are able to achieve their primary goal of economic development, technology transfer, fostering entrepreneurship, and job creation.
• Al-Mubaraki & Busler, 2012e This study has clearly stated that innovation programs are designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services. The adaptation leads to: (1) the age of the innovation program producing a high rate of networking and outcomes; (2) the government as a stakeholder giving high potential financing, strategic planning, and international marketing services; (3) a clear program goal fostering entrepreneurship and innovation, research commercialization, and support for technological entrepreneurship; (4) a high number of jobs being created, which leads to economic growth; and (5) advisory and mentoring services producing successful start-up companies with high survival rates.