How incubation creates value for early-stage entrepreneurs
Entrepreneurial support organizations (ESOs), such as university business incubators, are a ubiquitous part of local and regional entrepreneurial ecosystems. They facilitate early-stage entrepreneurial activity by offering tangible resources (e.g., equipment, office/labs) and intangible resources (e.g., knowledge, connections) to start-ups. Prior research has relied heavily on survey-based data to test hypotheses about how different types of resources independently benefit entrepreneurs. However, this approach tells only part of the story because it provides limited insight about how value is created during incubation, from the entrepreneurs’ perspective. Our study addressed this issue by interviewing 44 incubated entrepreneurs involved in ten university incubation programmes in Toronto, Canada. We sought deeper understanding about their lived experience and how incubation helped them move their ventures forward.
Our results suggest that the incubator’s physical environment (Place) serves as a space for engaging in meaningful interactions among peers, coaches, volunteers and interns (People). Value is created when incubators weave together People and Place in a manner that helps entrepreneurs pivot, learn, and embed themselves in the incubator community and with external stakeholders. Thus, incubators establish an organizational context that creates value for entrepreneurs in three ways: it supports venture development through entrepreneurial learning, which helps the entrepreneur refine the opportunity and start-up the business; it creates community, which fosters collaboration and mutual support for entrepreneurs as they address start-up challenges; and it signals legitimacy to external stakeholders, which facilitates access to resources.
ESOs, such as incubators, are proliferating geographically and across industry and disciplinary domains. It is an important time to take stock of how we conceptualize providing support to early-stage entrepreneurs. While incubators display great homogeneity in their offerings of tangible and intangible resources, they differ in their ability to translate these offerings into performance. Our study offers new insight about why these differences may exist and how they can be managed. The findings suggest that providing resources to incubated entrepreneurs is necessary, but not sufficient to support venture development. How these resources are woven together, and the extent to which entrepreneurs participate in making this happen, also matters. From a public policy perspective, our findings suggest that the success of an incubator may depend less on what resources it can avail, than on how those resources are integrated.
To learn more, see the full article:
Nicholls-Nixon, C. L., Valliere, D., Singh, R. M. & Zohreh Hassannezhad Chavoushi, Z. (2022). How incubation creates value for early-stage entrepreneurs: the People-Place nexus. Entrepreneurship & Regional Development, 34:9-10, 868-889 DOI: 10.1080/08985626.2022.2121858
