The added value of business incubators : how do they impact new ventures’ success ?

Details

Supervisors

Gailly, Benoît

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

Business incubators are actors playing an essential role in the promotion of innovation, economic growth, and job creation. Define as entities supporting and nurturing new ventures through infrastructure, services and supports such as logistic, facility and administration, they appear as the perfect economical tool helping entrepreneurs. However, the phenomenon implies problems such as the clarity of the definition and the confusion regarding the various typology of an incubator. These classifications can be grouped under similar or different characteristics specific to certain types of incubation program, based on its incubation period, its objective, or its specific clients/industry, its source of finance, its location, or its partnership. The real issue lies on how can we assess of the business incubators efficiency and with which instrument or metrics should be use. The first step implies defining what is a successful venture and with which metrics can we tell if a nascent company failed, or not, after its exit of the program. The model conceived by Voisey and al. (2006) offers a sufficient approach to assess of a venture’s success, although other models exist and tend to conceptualize the mechanism, with however inevitable flaws, emphasizing the fact there is no consensus regarding the measure of success. The second step is to list the benefits and limits of a business incubator by assessing its existence in literature and comparing it with what is observe during fieldwork. The outcome of this assessment refers to the overall benefits such access to network, economical tools for job creation, technology transfer enabler, provider of working environment with peers, business knowledge, financial support, exposure, and finally support such as logistic, administrative and physique. Whereas for the the limits, business incubator dilutes the profit of new ventures by asking for equity, restricts the freedom of the entrepreneur, too much oriented towards early-stage ventures, their selection process is costly, they provoke analysis paralysis, and incite internal competition. There is a positive correlation between business incubators and new venture’s success and this explain by the fact, prior entrance, a screening selection are made to focus on the most potential ventures, in due to their admission, the tenants reduce their overheads and are provided with necessary infrastructure and material. Moreover, due to regular feedbacks and monitoring, the venture is guided in the right direction at every step. Lastly, the support provided are inclusively countering start-ups common issues, offering appropriate advices and solutions. Finally, it is important to keep in mind that ventures evolving outside incubation program can be successful as well. BI provide tools and support providing a guidance on the road of success, whether the start-up follows the path or not, depends entirely on it. Business incubators are, therefore, valuable tools to nurture and support new ventures in their growth, as well as boosting the economy. Although no standardize measure can evaluate their impact on graduate’s success, the correlation is positive and varies according to several aspects.