The Journal of Technology Transfer

, Volume 38, Issue 3, pp 302–331 | Cite as

A control group study of incubators’ impact to promote firm survival

Article

Abstract

It is widely unclear as to whether start-up firms supported by publicly-initiated incubator initiatives have higher survival rates than comparable start-up firms that have not received support by such initiatives. This paper contributes to the underlying discussion by performing a large-scale matched-pairs analysis of the long-term survival of 371 incubator firms (after their graduation) from five German incubators and a control group of 371 comparable non-incubated firms. The analysis covers a 10-year time span. To account for the problem of selection bias, a non-parametric matching approach is applied to identify an appropriate control group. For neither of the five incubator locations, we find statistically significant higher survival probabilities for firms located in incubators compared to firms located outside those incubator organizations. For three incubator locations the analysis reveals statistically significant lower chances of survival for those start-ups receiving support by an incubator. The empirical results, therefore, raise some doubts regarding the impacts of incubation on long-term firm survival.

Keywords

Incubation Business incubators Firm survival Hazard rates Control group Technology policy 

JEL classification

L26 O38 

References

  1. Acs, Z. J., Armington, C., & Zhang, T. (2007). The determinants of new-firm survival across regional economies: The role of human capital stock and knowledge spillover. Papers in Regional Science, 86, 367–391.CrossRefGoogle Scholar
  2. Aernoudt, R. (2004). Incubator: Tool for entrepreneurship? Small Business Economics, 23, 127–135.CrossRefGoogle Scholar
  3. Aerts, K., Matthyssens, P., & Vandenbempt, K. (2007). Critical role and screening practices of European business incubators. Technovation, 27, 254–267.CrossRefGoogle Scholar
  4. Aldrich, H. E., & Auster, E. (1986). Even dwarfs started small: Liabilities of size and age and their strategic implications. Research in Organizational Behavior, 8, 165–198.Google Scholar
  5. Allen, D. N., & McCluskey, R. (1990). Structure, policy, services, and performances in the business incubator industry. Entrepreneurship Theory and Practice, 15, 61–77.Google Scholar
  6. Almus, M., & Nerlinger, E. (1999). Growth of new technology-based firms: Which factors matter. Small Business Economics, 13, 141–154.CrossRefGoogle Scholar
  7. Autio, E., & Kauranen, I. (1992). The effectiveness of science parks as a tool of technology policy. Working Paper, Helsinki University of Technology.Google Scholar
  8. Baranowski, G., Dressel, B., & Glaser, A. (2008). Innovationszentren in Deutschland 2007/08. Berlin.Google Scholar
  9. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.CrossRefGoogle Scholar
  10. Bearse, P. (1998). A question of evaluation: NBIA’s impact assessment of business incubators. Economic Development Quarterly, 12, 322–333.CrossRefGoogle Scholar
  11. Bergek, A., & Norrman, C. (2008). Incubator best practice: A framework. Technovation, 28, 20–28.CrossRefGoogle Scholar
  12. Bøllingtoft, A., & Ulhøi, J. P. (2005). The networked business incubator-leveraging entrepreneurial agency. Journal of Business Venturing, 20, 265–290.CrossRefGoogle Scholar
  13. Brüderl, J., & Schüssler, R. (1990). Organizational mortality: The liabilities of newness and adolescence. Administrative Science Quarterly, 35, 530–547.CrossRefGoogle Scholar
  14. Caliendo, M., & Kopeinig, S. (2005). Some practical guidance for the implementation of propensity score matching. Discussion Paper Series 1588, Institute for the Study of Labor.Google Scholar
  15. Cefis, E., & Marsili, O. (2006). Survivor: The role of innovation in firms’ survival. Research Policy, 35, 626–641.CrossRefGoogle Scholar
  16. Chan, K. F., & Lau, T. (2005). Assessing technology incubator programs in the science park: The good, the bad and the ugly. Technovation, 25, 1215–1228.CrossRefGoogle Scholar
  17. Cleves, M. A., Gould, W. W., & Gutierrez, R. G. (2004). An introduction to survival analysis using Stata (revised ed.). Stata Press: College Station.Google Scholar
  18. Colombo, M., & Delmastro, M. (2002). How effective are technology incubators? Evidence from Italy. Research Policy, 31, 1103–1122.CrossRefGoogle Scholar
  19. Elle, H. D., Huckestein, B., Karnbrock-Elle, P., & Roentgen, F. (1997). Technologiezentren in Nordrhein-Westfalen. Ergebnisse einer Studie zu Entwicklung, Leistungen und Perspektiven. Düsseldorf.Google Scholar
  20. Ensley, M. D., Pearson, A. W., & Amason, A. C. (2002). Understanding the dynamics of new venture top management teams: cohesion, conflict, and new venture performance. Journal of Business Venturing, 17, 365–386.CrossRefGoogle Scholar
  21. European Commission. (2002). Benchmarking of business incubators: Final Report. Centre for Strategy & Evaluation Services.Google Scholar
  22. Ferguson, R., & Olofsson, C. (2004). Science Parks and the Development of NTBFs-Location, Survival and Growth. Journal of Technology Transfer, 29, 5–17.CrossRefGoogle Scholar
  23. Fischer, E., & Reuber, R. (2007). The good, the bad, and the unfamiliar: The challenges of reputation formation facing new firms. Entrepreneurship Theory and Practice, 31, 53–75.CrossRefGoogle Scholar
  24. Freeman, J., Carroll, G. R., & Hannan, M. T. (1983). The liability of newness: Age dependence in organizational death rates. American Sociological Review, 48, 692–710.CrossRefGoogle Scholar
  25. Fritsch, M., & Mueller, P. (2004). Effects of new business formation on regional development over time. Regional Studies, 38, 961–975.CrossRefGoogle Scholar
  26. Fukugawa, N. (2006). Science parks in Japan and their value-added contributions to new technology-based firms. International Journal of Industrial Organization, 24, 381–400.CrossRefGoogle Scholar
  27. Geroski, P. (1995). What do we know about entry? International Journal of Industrial Organization, 13, 421–440.CrossRefGoogle Scholar
  28. Geroski, P. A., Mata, J., & Portugal, P. (2009). Founding conditions and the survival of new firms. Strategic Management Journal, 31, 510–529.Google Scholar
  29. Glaser, A. (2005). Innovations-, Technologie- und Gründerzentren. In B. Falk (Ed.), Handbuch Gewerbe- und Spezialimmobilien (pp. 431–445). Köln: Müller.Google Scholar
  30. Granovetter, M. S. (1985). Economic action and social structure: A theory of embeddedness. American Journal of Sociology, 91, 481–510.CrossRefGoogle Scholar
  31. Grimaldi, R., & Grandi, A. (2005). Business incubators and new venture creation: an assessment of incubating models. Technovation, 25, 111–121.CrossRefGoogle Scholar
  32. Gulati, R. (2007). Managing network resources: alliances, affiliations, and other relational assets. Oxford University Press, Oxford.Google Scholar
  33. Hackett, S. M., & Dilts, D. M. (2004). A systematik review of business incubation literature. Journal of Technology Transfer, 29, 55–82.CrossRefGoogle Scholar
  34. Hackett, S. M., & Dilts, D. M. (2008). Inside the black box of business incubation: Study B-scale assessment, model refinement, and incubation outcomes. Journal of Technology Transfer, 33, 439–471.CrossRefGoogle Scholar
  35. Hannan, M. T., & Freeman, J. (1984). Structural Inertia and Organizational Change. American Sociological Review, 49, 149–164.CrossRefGoogle Scholar
  36. Hannon, P. D., & Chaplin, P. (2003). Are incubators good for business? Understanding incubation practice—the challenges for policy. Environment and Planning C, 21, 861–881.CrossRefGoogle Scholar
  37. Heckman, J., LaRonde, R., & Smith, J. (1999). The economics and economometrics of active labor market programs. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics (Vol. III, pp. 1865–2097). Elsevier: Amsterdam.Google Scholar
  38. Kaplan, E. L., & Meier, P. (1958). Nonparametric estimation from incomplete observations. Journal of the American Statistical Association, 53, 457–481.CrossRefGoogle Scholar
  39. Kleinbaum, D. G. (1996). Survival analysis: A self-learning text. New York: Springer.Google Scholar
  40. Lalkaka, R. (1996). Technology business incubators: Critical determinants of success. Annals of the New York Academy of Sciences, 798, 270–290.CrossRefGoogle Scholar
  41. Lawless, J.-F. (1982). Statistical models and methods for lifetime data. Chichester: Whiley.Google Scholar
  42. Leuven, E., & Sianesi, B. (2003). PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing. http://ideas.repec.org/c/boc/bocode/s432001.html.
  43. Lindelöf, P., & Löfsten, H. (2004). Proximity as a resource base for competitive advantage: University-industry links for technology transfer. Journal of Technology Transfer, 29, 311–326.CrossRefGoogle Scholar
  44. Link, A. N., & Scott, J. T. (2003). US science parks: The diffusion of an innovation and its effects on the academic mission of universities. International Journal of Industrial Organization, 21, 1323–1356.CrossRefGoogle Scholar
  45. Link, A. N., Siegel, D. S., & Bozeman, B. (2007). An empirical analysis of the propensity of academics to engage in informal university technology transfer. Industrial and Corporate Change, 16, 641–655.CrossRefGoogle Scholar
  46. Löfsten, H., & Lindelöf, P. (2002). Science Parks and the growth of new technology-based firms—academic-industry links, innovation and markets. Research Policy, 31, 859–876.CrossRefGoogle Scholar
  47. Mahoney, J. Z. (1995). The Management of Resources and the Resource of Management. Journal of Business Research, 33, 91–101.CrossRefGoogle Scholar
  48. McAdam, M., & Marlow, S. (2007). Building futures or stealing secrets? Entrepreneurial cooperation and conflict within business incubators. International Small Business Journal, 25, 361–379.CrossRefGoogle Scholar
  49. McAdam, M., & McAdam, R. (2008). High tech start-ups in University Science Park incubators: The relationship between the start-ups′s lifecycle progression and the use of the incubator′s resources. Technovation, 28, 277–290.CrossRefGoogle Scholar
  50. Monck, C. S. P., Porter, R. B., Quintas, P., Storey, D. J., & Wynarczyk, P. (1988). Science parks and the growth of high technology firms. London: Croom Helm.Google Scholar
  51. National Business Incubation Association (NBIA) (2007). http://www.nbia.org/impact/index.php. Last Accessed February 29, 2012.
  52. Organisation for Economic Co-Operation and Development (OECD). (1997). Technology incubators: Nurturing small firms. Paris: OECD.Google Scholar
  53. Phan, P. H., Siegel, D. S., & Wright, M. (2005). Science parks and incubators: Observations, synthesis and future research. Journal of Business Venturing, 20, 165–182.CrossRefGoogle Scholar
  54. Pleschak, F., & Werner, H. (1999). Junge Technologieunternehmen in den neuen Bundesländern. Karlsruhe: Fraunhofer Institute for Systems and Innovation Research.Google Scholar
  55. Radosevic, S., & Myrzakhmet, M. (2009). Between vision and reality: Promoting innovation through technoparks in an emerging economy. Technovation, 29, 645–656.CrossRefGoogle Scholar
  56. Ratinho, T., & Henriques, E. (2010). The role of science parks and business incubators in converging countries: Evidence from Portugal. Technovation, 30, 278–290.CrossRefGoogle Scholar
  57. Rice, M. P. (2002). Co-production of business assistance in business incubators: an explorative study. Journal of Business Venturing, 17, 163–187.CrossRefGoogle Scholar
  58. Roper, S. (1999). Policy review section. Regional Studies, 33, 175–180.Google Scholar
  59. Rosenbaum, P. R., & Rubin, D. B. (1983). The central role of the propensity score in observational studies for causal effects. Biometrika, 70, 41–55.CrossRefGoogle Scholar
  60. Rosenbaum, P. R., & Rubin, D. B. (1985). Constructing a control group using multivariate matched sampling methods that incorporate the propensity score. The American Statistician, 39, 33–38.Google Scholar
  61. Rothaermel, F. T., & Thursby, M. (2005). Incubator firm failure or graduation? The role of university linkages. Research Policy, 34, 1076–1090.CrossRefGoogle Scholar
  62. Schwartz, M. (2009). Beyond incubation: An analysis of firm survival and exit dynamics in the post-graduation period. Journal of Technology Transfer, 23, 403–421.CrossRefGoogle Scholar
  63. Schwartz, M., & Göthner, M. (2009). A multidimensional evaluation of the effectiveness of business incubators—An application of the PROMETHEE outranking method. Environment and Planning C: Government and Policy, 27, 1072–1087.CrossRefGoogle Scholar
  64. Schwartz, M., & Hornych, C. (2010). Cooperation patterns of incubator firms and the impact of incubator specialization: Empirical evidence from Germany. Technovation, 30, 485–495.CrossRefGoogle Scholar
  65. Scillitoe, J. L., & Chakrabarti, A. K. (2010). The role of incubator interactions in assisting new ventures. Technovation, 30, 155–167.CrossRefGoogle Scholar
  66. Seeger, H. (1997). Ex-Post-Bewertung der Technologie- und Gründerzentren durch die erfolgreich ausgezogenen Unternehmen und Analyse der einzel- und regionalwirtschaftlichen Effekte. Münster/Hamburg: Lit-Verlag.Google Scholar
  67. Shane, S., & Stuart, T. (2002). Organizational endowments and the performance of university start-ups. Management Science, 48, 154–170.CrossRefGoogle Scholar
  68. Sherman, H., & Chappell, D. S. (1998). Methodological challenges in evaluating business incubator outcomes. Economic Development Quarterly, 12, 313–321.CrossRefGoogle Scholar
  69. Siegel, D. S., Westhead, P., & Wright, M. (2003). Science parks and the performance of new technology-based firms: A review of recent U.K. evidence and an agenda for future research. Small Business Economics, 20, 177–184.CrossRefGoogle Scholar
  70. Squicciarini, M. (2008). Science Parks′ tenants versus out-of-Park firms: who innovates more? A duration model. Journal of Technology Transfer, 33, 45–71.CrossRefGoogle Scholar
  71. Sternberg, R. (1992). Methoden und Ergebnisse der Erfolgskontrolle von Technologie- und Gründerzentren, In NIW (Eds.), Erfolgskontrollen in der Technologiepolitik. Hannover.Google Scholar
  72. Sternberg, R. (2004). Technology centres in Germany: Economic justification, effectiveness and impact on high-tech regions. International Journal of Technology Management, 28, 444–469.CrossRefGoogle Scholar
  73. Sternberg, R., Behrendt, H., Seeger, H., & Tamásy, C. (1997). Bilanz eines Booms—Wirkungsanalyse von Technologie- und Gründerzentren in Deutschland. Dortmund: Dortmunder Vertrieb für Bau- und Planungsliteratur.Google Scholar
  74. Stinchcomb, A. L. (1965). Social Structure and Organisations. In J. G. March (Ed.), Handbook of Organizations (pp. 142–193). Chicago: Garland.Google Scholar
  75. Storey, D. J., & Strange, A. (1992). Where are they now? Some changes in firms located on UK Science Parks in 1986. New Technology, Work and Employment, 1, 15–28.CrossRefGoogle Scholar
  76. Strotmann, H. (2007). Entrepreneurial survival. Small Business Economics, 28, 87–104.CrossRefGoogle Scholar
  77. Tamásy, C. (2001). Evaluating innovation centres in Germany: Issues of methodology, empirical results and international comparison. In D. Felsenstein & M. Taylor (Eds.) Promoting local growth (pp. 109–126). Process, Practice and Policy. Ashgate, Ashgate.Google Scholar
  78. Tamásy, C. (2005). Determinanten des regionalen Gründungsgeschehens. Münster: Lit-Verlag.Google Scholar
  79. United Kingdom Business Incubation (UKBI). (2009). http://www.ukbi.co.uk/resources/the-framework.aspx. Last Accessed February 29, 2012.
  80. Uzzi, B. (1997). Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42, 35–67.CrossRefGoogle Scholar
  81. Von Zedtwitz, M., & Grimaldi, R. (2006). Are service profiles incubator-specific? Results from an empirical investigation in Italy. Journal of Technology Transfer, 31, 459–468.Google Scholar
  82. Wagner, S., & Cockburn, I. (2010). Patents and the survival of Internet-related IPOs. Research Policy, 39, 214–228.CrossRefGoogle Scholar
  83. Westhead, P. (1997). R&D `inputs′ and `outputs′ of technology-based firms located on and off Science Parks. R&D Management, 27, 45–62.CrossRefGoogle Scholar
  84. Westhead, P., & Storey, D. J. (1994). An assessment of firms located on and off science parks in the United Kingdom. Main Report. HMSO, London.Google Scholar
  85. Willms, W., & Sünner, I. (2004). Langfristige regionalwirtschaftliche Effekte von Technologie- und Gründerzentren. Neues Archiv, 1(2004), 27–38.Google Scholar
  86. Woywode, M. (2004). Wege aus der Erfolgslosigkeit der Erfolgsfaktorenforschung. In K. F. W. Bankengruppe (Ed.), Was erfolgreiche Unternehmen ausmacht: Erkenntnisse aus Wissenschaft und Praxis (pp. 15–47). Heidelberg: Physica.CrossRefGoogle Scholar
  87. Yang, C.-H., Motohashi, K., & Chen, J.-R. (2009). Are new technology-based firms located on science parks really more innovative? Evidence from Taiwan. Research Policy, 38, 77–85.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.Department of Urban EconomicsHalle Institute for Economic ResearchHalle (Saale)Germany

Personalised recommendations