The Incubator as a Strategy Component

Key Point: The incubator must be a component of a local economic development strategy.

A number of researchers have confirmed the positive impact of business incubators in increasing a new enterprise’s chances of survival. Additionally, incubators have been found to be more cost-effective than programs that attempt to attract existing firms to a region (Markley and McNamara 1995). However, a common caveat among these findings is that a business incubator should not be seen as an independent solution. Scott-Kemmis et al. (2004) state that “the level of impact [of an incubator] will be dependent on…its ‘fit’ with the region” while Hackett and Dilts (2004b) state that in order for an incubator to be effective, there has to be something that it can effectively incubate given its capabilities and the needs of the community to which it belongs. As an analogy, the incubator may be viewed as a bridge that connects two geographically separate points. One point represents the inputs to the incubation process (i.e. candidate firm) while the other represents the incubatee’s target market. If any of these points are missing, then the bridge (incubator) will be ineffective.

For a backgrounder on the incubator-incubation concept, see my earlier post.

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