On the structure and internal mechanisms of business incubators: A comparative case study

It is an established economic development paradigm that entrepreneurship promotes innovation and encourages the creation of high quality jobs. In order to enhance entrepreneurial activity, the focus in Ireland to date has been on public-sector venture creation programmes. Of such programmes, business incubators, over the years, politically and in terms of public funding, have received perhaps the highest level of attention. Thus, incubators in Ireland have become important policy instruments for promoting early stage entrepreneurship. The research project outlined in this thesis to investigate this important phenomenon began with an extensive review of the incubator-incubation literature. This review showed that given the importance attributed to incubators, surprisingly little is known about how they function, or, the internal process of incubation. In other words, what is not understood completely are the dynamics of an incubator’s internal processes, normative environment and structural properties which enable human activity. Researching these aspects is important due to their important link with incubation “success”. A more sophisticated understanding of how incubators incubate will allow us to exercise more control over the quality of incubation programs, thereby, influencing the likelihood of incubated firms surviving after the incubation period. In order to investigate the incubation process and incubators’ normative environment and structural properties, a qualitative, multi-site case study approach was utilised. A pragmatist-interpretivist philosophy and the social mechanisms literature informed the research’s meta-theoretical lens. Data was collected during 2009-2010 at two different types of incubation facilities in Dublin; a ‘community enterprise centre’ and a ‘university campus-based hightech incubator’. The research’s most significant finding is that incubation is primarily relational in nature, and the process is co-produced by both the incubator manager (IM) and a specific client in independent dyads. A number of factors influence the development of IM-Client, Client-Client, Client-IM-Client and Client-Third Party relationships, chief of which are the leadership style of the IM, the physical design of the incubator facility, the incubator’s client mix and the incubation ethos. It was also determined that the scale, scope, intensity, frequency and thus the quality of incubation is dependent on, what has been termed, an incubation click. This is a bond based on the understanding that incubation assistance can be competently provided, and that such mentoring, coaching or developmental assistance is also proactively sought. Incubation is triggered in a sophisticated normative environment under the prevalence of ground rules, subtle signals, the interplay of personal histories, hidden agendas, perceptions of value and human biases. As a result of this research our knowledge of various aspects of incubators’ structure and their status as complex hybrid organisations has also increased. Incubators’ structural attributes such as de-coupling, mis-alignment of managerial incentives and sources of internal coordination and control uncertainty suggest why it continues to be difficult to evaluate their performance and socio-economic impact. Overall, the research has raised the profile of incubation research in the incubator-incubation discourse. Although modelling the incubation process is difficult due to high levels of randomness inherent in the internal incubator environment, the increased understanding of process variables, normative patterns and structural properties developed as a result of this research will allow the introduction of efficiencies to improve the chances of incubation “success”.