Governance and performance in multiple sponsored business incubators: a case study of business incubation centres of the European space agency (ESA BICs)

Abstract

Corporations, universities, governments, and other large organisations sponsor business incubation centres to support entrepreneurship and new venturing. These organisations expect certain performance outcomes from their incubation centres. Incubator programmes can be established through partnerships or as part of a Triple Helix approach, involving multiple sponsorship organisations. However, it is still unclear how the governance of a multiple sponsorship configuration affects business incubation performance and design.

This paper examines the governance of business incubation centres by multiple sponsors through the lens of agency theory. This theory is frequently used to understand the governance of principals and agents in transaction cost economics and political sciences. We apply agency theory to business incubation to investigate: “How does governance by multiple sponsorship organisations affect business incubation performance outcomes for sponsors?” We distinguish three underlying variables of business incubation governance: the formation process of sponsors who team up to start a business incubator, the coordination process among sponsors, and the relationship between each sponsor and the business incubator in terms of control versus trust. We distinguish four performance outcomes for the sponsor: learning, earning, returning, and branding. Furthermore, as part of our research approach, we distinguish between internal sponsors (who host or own the incubator) and external sponsors (i.e., the European Space Agency).

Our findings suggest that a joint formation relates to a higher coordination level than a sequential formation. Furthermore, higher levels of coordination lead to better performance outcomes for all sponsors, whereas lower levels may result in some sponsors obtaining better performance outcomes than others. Differences in the relationship between each sponsor and the business incubator have a positive effect when coordination is high and a negative effect when coordination is low. We conclude with a tentative theoretical model to express the impact of governance on business incubation performance in terms of formation, coordination, and type of relationship.