A Systematic Review of Business Incubation Research free essay sample

This article systematically reviews the literature on business incubators and business incubation. Focusing on the primary research orientations—i. e. studies centering on incubator development, incubator con? gurations, incubatee development, incubator-incubation impacts, and theorizing about incubators-incubation—problems with extant research are analyzed and opportunities for future research are identi? ed. From our review, it is clear that research has just begun to scratch the surface of the incubator-incubation phenomenon. While much attention has been devoted to the description of incubator facilities, less attention has been focused on the incubatees, the innovations they seek to diffuse, and the incubation outcomes that have been achieved. As interest in the incubator-incubation concept continues to grow, new research efforts should focus not only on these under-researched units of analysis, but also on the incubation process itself. JEL Classi? cation: M13, O2, O31, O32, O38 1. Introduction Incubator-incubation research began in earnest in 1984 with the promulgation of the results of Business Incubator Pro? es: A National Survey (Temali and Campbell, 1984). Underscoring the enthusiasm of early researchers, only three years passed before two literature reviews were generated (i. e. , Campbell and Allen, 1987; Kuratko and LaFollette, 1987). However, since these early efforts to synthesize and analyze the state of incubator-incubation science, and despite the fact that the body of research has grown considerably 1 Vanderbilt University Management of Technology Program Box 1518, Station B, Nashville, TN 37235 USA E-mail: sean. m. [emailprotected] vanderbilt. du 2 Vanderbilt University Management of Technology Program Box 1518, Station B, Nashville, TN 37235 USA E-mail: david. m. [emailprotected] edu in the intervening years, a systematic review of the literature remains conspicuously absent. The primary objectives of this article are to systematically review the incubator-incubation literature and to provide direction for fruitful future research. Ultimately 38 studies were included in our review. We included a study in our review if it viewed the incubator as an enterprise that facilitates the early-stage development of ? ms by providing of? ce space, sharedservices and business assistance. When examining the literature chronologically, ? ve primary research orientations are evident: incubator development studies, incubator con? guration studies, incubatee development studies, incubator-incubation impact studies, and studies that theorize about incubators-incubation. While these orientations are not necessarily orthogonal, we employ them as classi? cations of convenience that we hope will facilitate a discussion of the literature. We have limited the review in several ways. First, we con? ne our coverage of the literature to studies devoted explicitly to incubators and/or incubation. Although the locus of the incubatorincubation concept is the nexus of forces involving new venture formation and development, new product conceptualization and development, and business assistance (each of which has an established body of research), to expand the scope of the review beyond research explicitly focused on incubators-incubation would make this research project impossible to complete on a timely basis. Second, although practitioner literature has in? uenced academic research, we center our review on the academic literature, except in cases where the practitioner literature has proven especially in? uential and has some intrinsic academic face validity. Third, with our long-term research interests in mind, we selected literature that conceptualizes incubators-incubation as a strategy Journal of Technology Transfer, 29, 55–82, 2004 # 2004 Kluwer Academic Publishers. Manufactured in The Netherlands. 56 Hackett and Dilts or facilitating new business development rather than as a strategy for developing real estate. While this review is primarily intended for researchers who are considering potential research topics, we also believe that it will be of use to incubation industry stakeholders who are interested in understanding the epistemological evolution of the incubator-incubation concept. Our contribution is a synthesis and analysis of concepts, empirical ? ndings, and problems related to extant incubator-incubation research, as well as an identi? ation of potential areas for future research. In this section, we have noted the need for a systematic review of the literature, provided a working de? nition of the incubator-incubation concept, and delimited the scope of our review. The remainder of the article is organized in the following manner. First, we describe the methodology we employed in identifying and selecting articles for review. Second, we provide a formal de? nition of the incubator-incubation concept, place incubator-incubation literature in its historical context and review the research along the ? e primary research orientations described above. Third, we identify several challenges within extant research and suggest new avenues for future research. Speci? cally, we note the need for future research to address the lack of convergence in the terms and concepts of discourse related to incubators-incubation, the lack of theoretically meaningful incubator classi? cations, the lack of a business incubation process model, and the longstanding challenges in the de? nition and measurement of incubator-incubatee ‘‘success’’. We conclude by emphasizing the need to identify and unpack the variables of business incubation with a view toward developing theories that help to explain how and why the incubation process leads to speci? c incubation outcomes. 2. Methodology for identifying articles for review To identify the population of publications for review, we conducted an electronic journal database search of ProQuest-ABI/Inform, Science Direct and UMI Dissertation Abstracts using the search terms ‘‘incubator’’ and ‘‘incubation’’. Our objective was to conduct a census of all published esearch on incubators-incubation written in English between 1984 and early 2002. After identifying and retrieving all articles archived electronically in the databases identi? ed above, we read the bibliographies of these articles to identify other articles on incubators-incubation published prior to electronic archiving or not archived in the electronic databases, and subse quently retrieved those articles. We reviewed those articles’ bibliographies and found yet more articles dealing with various aspects of incubators-incubation and repeated the process of retrieving articles and reading through the bibliographies. Reasonably con? dent that all extant articles on incubators-incubation had been identi? ed and retrieved, we then checked all of the retrieved articles against a bibliography created by the National Business Incubation Association (NBIA) in 2001 that lists all (peer-reviewed, non-peer reviewed and popular press) articles related to incubation in order to ensure to the best of our ability that the entire population of articles on incubators-incubation had been collected. The articles considered for review appear in the following journals: American Journal of Small Business, Economic Development Quarterly, Economic Development Review, Entrepreneurship Theory and Practice, Harvard Business Review, IEEE Transactions on Engineering Management, Journal of Business Research, Journal of Business Venturing, Journal of Developmental Entrepreneurship, Journal of Product Innovation Management, Journal of Property Management, Journal of Small Business Management, Policy Studies Journal, Public Administration Quarterly, Regional Studies, Research Policy, Technology Management, and Technovation. Ultimately 35 articles (26 empirical studies and nine non-empirical studies), two dissertations and one national survey were included in this literature review (a complete listing of the studies reviewed is included in Appendix A). The distribution of articles among journals was highly skewed toward journals with an economic development perspective: Six articles appeared i n Economic Development Quarterly and another four articles appeared in Economic Development Review. Considering the high number of often-cited publications appearing in these two periodicals, it is clear that the economic development perspective has in? enced the ? eld of published business incubation studies. A Systematic Review of Business Incubation Research 57 The complete distribution of research perspectives applied to business incubation studies is detailed in Appendix B. 3. Primary research orientations In this section, we offer a formal de? nition of the incubator-incubation concept. Next we brie? y describe the historical context in the United States in which incubator-incubation research has evolved. Then we review the literature, using the ? ve primary research orientations mentioned above as our organizing principle. When reporting key ? ndings of each research orientation, we stratify the results based on their relevance to three different units of analysis: community, incubator, or incubatee. Figure 1. Incubator-incubation concept map. graphically depicts the incubator-incubation concept de? ned here. What is the incubator-incubation concept? Based on insights gleaned from reviewing the literature as well as from conducting ? eldwork in Asia and North America, we offer the following de? nition: A business incubator is a shared of? cespace facility that seeks to provide its incubatees (i. . ‘‘portfolio-’’ or ‘‘client-’’ or ‘‘tenant-companies’’) with a strategic, value-adding intervention system (i. e. business incubation) of monitoring and business assistance. This system controls and links resources with the objective of facilitating the successful new venture development of the incubatees while simultaneously contain ing the cost of their potential failure. Additionally, we offer the following corollary: When discussing the incubator, it is important to keep in mind the totality of the incubator. Speci? cally, much as a ? rm is not just an of? e building, infrastructure and articles of incorporation, the incubator is not simply a shared-space of? ce facility, infrastructure and mission statement. Rather, the incubator is also a network of individuals and organizations including the incubator manager and staff, incubator advisory board, incubatee companies and employees, local universities and university community members, industry contacts, and professional services providers such as lawyers, accountants, consultants, marketing specialists, venture capitalists, angel investors, and volunteers. Figure 1 Historical context of ncubator-incubation development in the USA It is generally accepted that the ? rst incubator was established as the Batavia Industrial Center in 1959 at Batavia, New York (Lewis, 2002). A local real estate developer acquired an 850,000 ft2 building left vacant after a large corporation exited the area (Adkins, 2001). Unable to ? nd a tenant capable of leasing the entire facility, the developer opted to sublet subdivided partitions of the building to a variety of tenants, some of whom requested business advice and/or assistance with raising capital (Adkins, 2001). Thus was the ? rst business incubator born. In the 1960s and 1970s incubation programs diffused slowly, and typically as governmentsponsored responses to the need for urban/Midwestern economic revitalization. Notably, in the 1960s interest in incubators-incubation was piqued by the development of University City Science Center (UCSC), a collaborative effort at rationalizing the process of commercializing basic research outputs (Adkins, 2001). In the 1970s interest in the incubator-incubation concept was further catalyzed through the operation of the National Science Foundation’s Innovation Centers Program, an effort to stimulate and institutionalize best practices in the processes of evaluating and 58 Hackett and Dilts commercializing selected technological inventions (Bowman-Upton et al. , 1989; Scheirer, 1985). In the 1980s and 1990s the rate of incubator diffusion increased signi? cantly when (a) the passage of the Bayh-Dole Act in the U. S. Congress in 1980 decreased the u ncertainty associated with commercializing the fruits of federally funded basic research, (b) the U. S. legal system increasingly recognized the importance of innovation and intellectual property rights protection, and (c) pro? t opportunities derived from the commercialization of biomedical research expanded. In this environment several incubator development guides4 as well as non-academic reports and articles5 with a geographic and normative focus on current or potential business incubation efforts were generated. This surge in report-generating activity in the early 1980s and the formation of the NBIA in 1985 underscore the growth in popular interest in business incubation in the 1980s. Concurrent to these and other local efforts at studying and unleashing the potential of business incubation to foster economic development, academic incubation studies began in earnest. Much of this early research addresses the questions ‘‘What is an Incubator? ’’ and ‘‘What do we need in order to develop an effective incubator? ’’ Business Incubator Pro? les: A National Survey (Temali and Campbell, 1984), a ground-breaking survey of 55 business incubators, is the ? rst academic attempt to address these questions by describing in detail the incubators operating in the United States. It is comprehensive in scope, taking the incubator, the incubator manager, the incubatees, and the services provided by the incubator as various units of analysis. Although this survey does not test hypotheses or attempt to build theory, its rich descriptive data and insightful perspective established a platform upon which much subsequent incubator development research is based. In the late 1990s, fueled by irrationally exuberant stock valuations of several for-pro? t incubators and/or their incubatees, the media popularized a fantasy of business incubators as innovation hatcheries capable of incubating and taking public ‘‘in? itely scaleable, dot-com ebusiness start-ups’’ less than a year after entering the incubator. This fantasy and the incubatorincubation concept were largely abandoned and left for dead by the popular press after the collapse of the United States’ stock market bubble. 6 However, rumors of the demise of the incubatorincubation conc ept are ‘‘greatly exaggerated’’. The media reached its negative conclusions regarding incubators-incubation while ? xated on forpro? t incubators, a relatively small segment of the total incubator population. The vast majority of incubators are non-pro? t entities that continue to incubate below the ‘‘radar screens’’ of most journalists. Since the establishment of the ? rst business incubator, most incubators have been established as publicly funded vehicles for job creation, urban economic revitalization, and the commercialization of university innovations, or as privately funded organizations for the incubation of highpotential new ventures (Campbell and Allen, 1987). The fact that most incubators are publicly funded is not trivial. Despite normative incubation industry association positions asserting the importance of operating incubators as enterprises that should become self-suf? cient, pro? t-oriented intentionality has not been translated into pro? tability for the majority of publicly funded incubators (Bearse, 1998). Financial dependency forces incubators to operate in a politically charged environment where they must constantly demonstrate the ‘‘success’’ of the incubator and its incubatees in order to justify continued subsidization of incubator operations with public funds. Such a politically charged environment can tempt incubator-incubation industry stakeholders to underreport incubator-incubation failures and over-report successes. 8 For the researcher interested in understanding, explaining and building models of incubator-incubation phenomena, the politically charged environment and the state of subsidy-dependency in which many non-pro? t incubators operate cannot be ignored. Overview of research orientations We review the literature along the following ? ve primary research orientations: incubator development studies, incubator con? uration studies, incubatee development studies, incubator-incubation impact studies, and studies theorizing about incubators-incubation.