Whither modern business incubation? Definitions, evolution, theory, and evaluation

Abstract

As chronicled by Adkins (2002), the first business incubator started in early 1959 in Batavia, New York, when Joseph Mancuso acquired an abandoned 850 000 square foot factory from Massey-Ferguson. Due to the closure of the factory, 2,000 people lost their jobs, and Mancuso undertook the task of trying to reduce unemployment by filling the old factory premises with small businesses; this came to be known as Batavia Industrial Center. For a fee, Mancuso offered office space, shared service, help with financing, and some business coaching. Among the first tenants was a company that developed an egg hatchery to artificially produce chickens, which led to the facility being jokingly referred to as the ‘incubator’. Shortly, thereafter in 1964, University City Science Center (UCSC), the nation’s first urban research park and incubator was set up in downtown Philadelphia, in collaboration with a consortium of the area’s 28 academic institutions. The UCSC accepted startup firms, providing them with supportive environment throughout the 1970s and beyond, under the leadership of Randall Whaley. The National Business Incubation Association (NBIA) recognized Mancuso and Whaley as incubation industry founders by honoring them with an award in 1998. They were credited for the initiation and firmly rooting of the business incubation concept respectively through formal programs where new companies in the startup phase were supported to improve their chances of success (Adkins 2002; Bruneel et al. 2012). Application of the concept, however, did not become widespread in the country until well into the 1970s and 1980s. The origin of the technology-oriented business incubation support is generally linked to universities’ involvement in technology development and commercialization efforts undertaken in the US in the post-WWII period, the pioneering example of which is the Stanford Research Park near Silicon Valley in California, which was established in 1951. Affiliated with Stanford University, the Park housed R&D units of large technology firms, university spin-offs, and promising startups, specific to the contemporary research park model. Second, are the concerted efforts at MIT during the post-WWII period, where its president Karl Compton led the drive of university technology transfer through spin-offs to benefit from the commercial use of prior military developments. During this period, the support of spin-offs predominantly originated from MIT’s research labs, many of which were located in MIT owned facilities in the surrounding areas, by early venture capital firms such as the American Research and Development (ARD) corporation, the ‘brainchild’ of Compton. ARD offered business advice and funds to these spin-offs, which shows that MIT had a key role in seeding the technology-based firm creation; some of these startups were later located to the Boston Route 128 (Roberts 1991). This, apparently, was a regionally distributed model of technology business incubation.