Post-incubation of technology-based firms: a case study on the effects of business incubators on growth patterns

Iacono, Antonio; Nagano, Marcelo Seido

doi:10.1590/0104-530X1357-16

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Original Article • Gest. Prod. 24 (3) • Jul-Sep 2017 • https://doi.org/10.1590/0104-530X1357-16 copy

Post-incubation of technology-based firms: a case study on the effects of business incubators on growth patterns

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract:

This study aims to evaluate the effects of business incubators’ support on growth patterns of previously incubated firms that graduated at least three years prior the study. To this end, an exploratory study was carried out with five technology-based firms belonging to two incubators linked to the Universidade Estadual Campinas. Concerning the pre-incubation period, this study focused on their founding partners’ technical and managerial attributes. As to the incubation period, the researchers sought to evaluate how successful the incubators had been in promoting the firms under investigation. Finally, the study investigates the incubators’ performance, potential, and impact and the major barriers to growth on the post-incubation period. The main results suggest that the incubation process as well as the incubators’ support system had little effect on the different growth patterns identified.

Keywords:
Technology-based firms; Growth patterns; Incubator; Post-incubation period

	Variables	Description	Indicators
INDIVIDUAL/ PRE-INCUBATION	Attributes of founder/entrepreneur and characteristics of firm	Assess managerial attributes regarding previous work experience and technical knowledge of management team.	Education; professional history; experience in the sector; business experience; managerial competence; technical competence.
INCUBATOR/INCUBATION PROCESS	Acquisition of knowledge via incubator	Because firm is in incubator, how much has it contributed to obtaining knowledge needed for business development?	Necessary technical knowledge; necessary knowledge of business; necessary marketing knowledge; necessary knowledge in the financial area; knowledge about innovation.
	Support provided by incubator	Evaluation of assistance provided by incubator concerning several areas.	Technical monitoring; interaction between firm and incubator; actual business knowledge; management support; technological support; marketing support; market support.
	Competencies of incubator	Capacity of incubator to provide services in several areas	Access to sources of capital; legal support; accounting support; consulting; marketing; contact with university; interaction with industry/industry sector; training in entrepreneurship.
	Contribution of incubator in each incubation year	Evaluate how incubator acted and contributed in specific ways to solving main problems presented by firm every year throughout incubation.	Adequacy of incubation time; preparation for market; resources or infrastructure not offered and deemed important for promotion of firms; performance and contribution in each incubation year.
POST-INCUBATION PERIOD	Performance of firm	Assess current performance of firm.	Sales growth rate over post-incubation period; employment growth rate; profitability; time-to-market; amount of funds obtained from funding sources; financial performance, technological performance.
	Potential of firm	Assess qualities and competencies of firm to add value to product/service.	Qualification of management team; sophistication of firm’s product; investment in R&D; profit potential; potential to attract capital investments; short-term balance.
	Present effect of incubator on business	Assess benefits of incubator and its impact on business.	Growth rhythm; level of competitiveness; business knowledge; self-confidence; incubator image; financial and infrastructure feasibility for business; personal and professional growth.
	Present needs and difficulties	Assess needs and difficulties encountered by firm after being incubated for several years.	Market information; working capital; training of management team; commercialization; technology development; fund-raising; partnerships; financing.

Code	Indicators	Average	CV (%)
A	Knowledge acquisition via incubator	Average	CV (%)
A1	Technical (product design, manufacturing, etc.)	1.20	37.3
A2	Managerial (accounting, personnel, strategic planning, etc.)	2.60	34.4
A3	Marketing (sales, service provision, market conditions, etc.)	2.60	63.2
A4	Financial (risk capital, subsidies, angel investors, banks, etc.)	2.20	59.3
A5	Innovation (innovation process, project management, technology, etc.)	1.80	72.4
B	Support provided by incubator	Average	CV (%)
B1	Time devoted to monitoring firm from a business point of view	2.60	51.6
B2	Time devoted to monitoring firm from a technological point of view	1.20	37.3
B3	Interaction time between firm and incubator managers	3.80	28.8
B4	Time devoted to getting to know the firm’s real problem	2.40	81.2
B5	Support and advice in management	3.20	51.6
B6	Support and advice in technology	1.80	39.1
B7	Support and advice in marketing	2.60	43.9
B8	Support and advice about the market	2.60	43.9
C	Incubator’s competencies	Average	CV (%)
C1	Provision of administrative support services	2.60	43.9
C2	Provision of management knowledge	3.20	26.1
C3	Provision of access to sources of capital (banks, venture capitalists, and angels)	2.60	69.9
C4	Provision of legal support services	2.60	69.9
C5	Provision of accounting support services	2.00	86.6
C6	Provision of consulting services	4.20	19.9
C7	Provision of specialized marketing services	2.80	53.0
C8	Provision of contacts with universities	2.60	53.0
C9	Development of professional training	3.00	52.7
C10	Development of business as a whole	2.20	59.3
C11	Interaction with industry and/or industry sector	1.40	39.1
D	Contribution of incubator to development of business	Average	CV (%)
D1	First incubation year	2.8	29.9
D2	Second incubation year	2.6	43.9
D3	Third incubation year	2.5	51.6

Code	Indicators	Average	CV (%)
A	Firm’s performance	Average	CV (%)
A1	Sales growth	3.25	25.5
A2	Profitability	3.25	13.3
A3	Global (finances, projects, sales, technologies)	3.25	25.5
A4	Time-to-market: from product conception to launch on the market	2.75	30.2
B	Firm’s Potential	Average	CV (%)
B1	Firm’s product/service is better than its competitors’	4.80	9.3
B2	Competitive edge strongly based on firm’s product/service	4.80	9.3
B3	Firm invests heavily in research and development	4.00	50.0
B4	Firm’s product/service is highly sophisticated and complex	4.80	9.3
B5	Management team is highly qualified	4.20	19.9
B6	Firm’s profit potential	4.60	11.9
B7	Probability of firm achieving financial balance in the short run	3.40	33.5
B8	Firm’s potential to attract venture capital investments	3.00	66.7
C	Needs/Difficulties	Average	CV (%)
C1	Market information	1.80	72.4
C2	Working capital	2.00	52.7
C3	Training of firm’s managers	2.00	50.0
C4	Marketing mechanism	3.20	51.3
C5	Partnerships (universities, research centers, suppliers, etc.)	2.00	50.0
C6	Firm’s capital	3.80	54.1
C6	Financing	3.60	31.7
C7	Business management	2.00	61.2
C8	Development of technology	2.00	35.4

Universidade Federal de São Carlos Departamento de Engenharia de Produção , Caixa Postal 676 , 13.565-905 São Carlos SP Brazil, Tel.: +55 16 3351 8471 - São Carlos - SP - Brazil
E-mail: gp@dep.ufscar.br

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[1] Source: Devised by authors.