Incubators help ideas grow—but not always the companies

Incubators are supposed to help young companies grow, survive, and create jobs. At least, that’s the common perception. But when researchers conduct a comprehensive review of previous studies, a more nuanced picture emerges: the clearest strength of incubators isn’t survival—it’s innovation.

The data set is large: 39 studies involving a total of over 55,000 companies. The results suggest that participation in an incubator may contribute to slightly better business performance. Overall, the effect is small, but it varies significantly depending on what is being measured.

When Ideas Get the Biggest Boost

It is in the field of innovation that incubators seem to make the greatest impact. This is particularly evident early in the innovation process, for example in research and development. When the results become more concrete—such as patents or new product launches—the impact is weaker. Incubators thus seem to function primarily as a place where ideas can be tested.

When it comes to survival, however, the researchers find no clear correlation. Growth is positively affected, but only to a small extent. The results regarding profitability are weak, and there is a weak negative correlation with regard to employment.

The researchers therefore describe incubators more as catalysts for innovation than as guarantees that incubator companies will survive and hire employees. Survival, profitability, and the ability to begin hiring also depend on factors such as demand, competition, and the company’s ability to grow once its time in the incubator is over.

The outward-opening doors make all the difference

The study also shows that the type of support matters. The researchers distinguish between support that protects companies in the early stages—affordable office space, shared services, and administrative assistance—and support that opens doors to the outside world—to investors, customers, mentors, and other networks. When multiple factors are weighed together, it is the networks that stand out. These connections are important not simply because they exist, but because they lead to further opportunities: knowledge, capital, customers, feedback, and new business opportunities.

However, this protective support can have a downside if it lasts too long. Companies that become accustomed to subsidized office space, administrative assistance, and other internal resources may find it harder to adapt when the support is withdrawn.

Who runs the incubator also matters. In the analysis, private and university-based incubators generally fare better than public ones. At the same time, the researchers point out that the data on private incubators is limited.

3 Things Incubators Should Keep in Mind

According to the researchers, incubators and those who support them should take the following into account:

• Do not evaluate incubators solely on the basis of survival rates and job creation. Innovation may be a more relevant measure.

• Avoid making protective measures permanent. Gradually strengthen companies’ ties to the market.

• Let the incubator’s mission guide the resources, contacts, and services it offers.

A key lesson, according to the researchers, is therefore that incubators are not a one-size-fits-all solution. If the goal is innovation, they can be valuable. If the goal is survival, profitability, or new jobs, the support must be designed and evaluated based on those specific goals. The question, then, is not just whether incubators work, but what they work best for—and how the support is structured.

More about the article and the authors
The article Hatching and Fledging? A Meta-Analysis of the Performance Effects of Business Incubators (free to download) has been published in the academic journal *Strategic Entrepreneurship Journal*.

The authors are Jorge-Vinicio Murillo-Rojas, INCAE Business School, Costa Rica; Jan Brinckmann, Ramon Llull University and ESADE Business School, Spain; and Marc van Essen, emlyon business school, France, and the University of South Carolina, USA.