Boon or Boondoggle? Business Incubation as Entrepreneurship Policy

Business incubators—organizations created to help small and young firms become stable and profitable—are a mainstay of economic development programs. This study looks at whether having been incubated helps new ventures survive and grow in the long-run using a nationally representative sample of incubated firms and a matched control group of non-incubated firms. New venture performance is measured as survival, employment growth, and sales growth and outcomes are used to test predictions from organizational evolutionary theory. Results reveal that the effect of incubation on new venture performance hurts the lifespan of new ventures while it helps them grow at faster rates in terms of employment and sales. Contact: Alejandro S. Amezcua; [email protected]; (T) 315-373-3539; Whitman School of Management, 721 University Avenue, Syracuse University, Syracuse, NY 13244-2450 Acknowledgements: The author would like to thank Stuart Bretschneider, Bruce Kingma, David Popp, Johan Wiklund, and Peter Wilcoxen, all of Syracuse University, for their comments and suggestions on this paper. In addition, the author thanks the Kauffman Foundation for its generous support of this study.