Unpacking incubation :factors affecting incubation processes and their effects on new venture creation

Abstract

Despite the increasing recognition of the importance of the incubation process for new venture creation, the main focal point for scholars has been on other areas such as the outputs of incubation. Little attention has been given to unpacking how the incubation process functions and the variables associated with the incubation process. In this thesis, five important questions central to this gap in understanding are addressed: (1) how does the incubation process function?; (2) how do incubation processes differ?; (3) how does an incubator’s objectives and resources affect how the incubation process functions and influence potential new venture creation?; (4) how does an entrepreneur’s experience and background (e.g. entrepreneurial experience, industrial experience, education and family background) affect their ability to start a new venture in the context of the incubation process?; and (5) how and in what ways do the principal elements of the regional innovation system (RIS) play a role in the incubation process and influence potential new venture creation? These questions are addressed in two steps. First, key literatures on incubation, technology transfer, entrepreneurship education, entrepreneurship and RIS are integrated to position the study and form a conceptual framework for the investigation. Second, in-depth qualitative empirical investigations of three different incubation processes (a regional incubation process, a student incubation process, and a university incubation process) within the same RIS (the North East of the UK) are utilised to unpack these central issues and address the research questions. The thesis’ central contribution is to the incubation literature providing new insights on how the incubation process functions. By adopting an integrated approach, which includes analysing how the process is affected by the objectives and resources of the organisation offering the incubation support, the experience and background of the entrepreneur, the role of the RIS, and the process components, the empirical analysis presents key findings. The empirical analysis highlights the importance of the degree of involvement of incubator managers and the importance of using multiple selection criteria in the effective selection of incubatees to improve the likelihood of new venture creation. It was also found that the broader range of co-production modalities utilised by incubator managers who themselves had entrepreneurial experience, the more effective the business support process, and the more likely new venture creation. In relation to objectives and resources, the findings suggest that the higher degree of resources the incubation process provides to achieve its objectives, the more effective the business support process, and the more likely new venture creation. Entrepreneurial characteristics such as prior entrepreneurial experience, industrial experience, education and family background were found to positively affect the entrepreneur during the incubation process and increased the likelihood of new venture creation. In relation to the RIS, it was found that its principal elements, specifically regional organisations and actors and the socio-economic and cultural setting, play a role in the incubation process and influence potential new venture creation. It was also found that there are clear differences between different incubation process types. Five other inductively-derived constructs (e.g. risk aversion, incubator management learning, duty of care, entrepreneurial knowledge and social capital) were also found to further explain how the incubation process functions which also represents a main contribution of the study. A theoretical model of incubation is presented that better specifies the inter- relationships between the internal and external constructs relating to the form of the incubation process, the entrepreneurs themselves, and the RIS. These insights are articulated as a series of propositions to guide future research. Policy implications are also discussed to provide practitioners with the means to improve the incubation process.