The current issue and full text archive of this journal is available at www.emeraldinsight.com/1756-1418.htm Small business incubators in the USA: a historical review and preliminary research findings Jeffrey M. Shepard Small business incubators 213 Xavier University, Cincinnati, Ohio, USA Abstract Purpose – The aim of this study was to discuss the historical evolution of business incubators from 1959 to the present. Three cohort periods were defined: 1959-1979, 1980-1999 and 2000-2012. The business characteristics of corporate mission, plans and strategies, leadership/management, staff competence and expertise, facilities and resources and technology were described for each generation. Design/methodology/approach – The approach of this research was to gain an understanding of potential best practices and study what has been characteristically significant in small business incubators over the past 50 years. Findings – The historical study findings indicate that the basic premise of business incubators remained unchanged across time. The idea of nurturing a new and fledgling business until it can manage on its own, much like an incubator does for premature and newborn babies, still provides the impetus for business incubators today. However, business characteristics have evolved and grown more sophisticated over the years in response to situational and contextual forces. Certain characteristics have been retained, while others have undergone change. Research limitations/implications – In light of the discussion in this research, it is clear that comprehensive and systematic historical review from literature on small business incubators reveals that past incubators have provided many lessons for future models. The model has evolved dramatically but questions still revolve around the current state, and what is essential for future models. Practical implications – Although various models have been developed to explain the trajectories of such growth, it is clear that access to a network of business and financial forms of support, patented knowledge creation, and inter-firm partnerships are crucial. Originality/value – The value of this research is it defines three periods in small business incubator history in the USA defining what are consistent best practices for success. In addition, this research concerning small business incubators serves as a clear comprehensive and systematic historical review from literature revealing that past incubators have provided many lessons for future models. Keywords Entrepreneurship, Small business creation, Small business incubators Paper type Research paper Introduction This study discussed the historical evolution of business incubators from 1959 to the present. Three cohort periods were defined: (1) 1959-1979; (2) 1980-1999; and (3) 2000-2012. The business characteristics of corporate mission, plans and strategies, leadership/management, staff competence and expertise, facilities and resources and technology were described for each generation. Journal of Knowledge-based Innovation in China Vol. 5 No. 3, 2013 pp. 213-233 q Emerald Group Publishing Limited 1756-1418 DOI 10.1108/JKIC-07-2013-0013 JKIC 5,3 214 The historical study findings indicate that the basic premise of business incubators remained unchanged across time. The idea of nurturing a new and fledgling business until it can manage on its own, much like an incubator does for premature and newborn babies, still provides the impetus for business incubators today. However, business characteristics have evolved and grown more sophisticated over the years in response to situational and contextual forces. Certain characteristics have been retained, while others have undergone change. Additionally, the study surveyed 54 incubator managers in the USA to provide a profile of business incubators and business incubatees today. This profile attempted to delineate and capture relevant factors in modern business incubation. General findings from both the historical review and the survey indicate that while the mission, personnel, facilities/resources and technology has become more cultivated and refined, human interaction and learning has been rated as of paramount importance. In other words, even with increased technological advancement and innovation, this has not replaced the interactive learning process between incubators and incubatees. Entrepreneurship and innovation need nurturing. Businesses, like children, are more likely to thrive when given due care at their earliest stages of development. White and McLaughlin (2006) stated that one can think of a business incubator as having a function similar to that of a premature infant incubator. While an infant’s incubator helps a premature child become strong enough to survive on its own, a business incubator makes a fledgling company strong enough to survive beyond the first few years. Although an influential study in 1979 demonstrated that SMEs in the USA created the majority of jobs in the economy, 85 percent of new SMEs failed within their first five years of operation. Hence, incubators came to be seen as a means by which SMEs could be helped to succeed (Birch, 1979; Lalkaka, 2002). Business incubators offer shared administrative services, management support, linkages to capital funding sources, and an environment conducive to small business cooperation and growth. Haugen (1990) estimated that the survival rates of incubated SMEs may be as much as 85 percent – a direct reversal of the overall trends. Former executive director of the National Business Incubation Association (NBIA) (USA), Dinah Adkins (Cofield, 2011), held that business incubation is simultaneously a practice and concept that defines the mutual habitation and growth of entrepreneurship by providing technical and financial assistance at the conception and early stages of a business. This modern definition developed from the needs and track records of SMEs over the years. Tracing the history of business incubators can contribute to our understanding of how they encouraged and facilitated innovative processes among SMEs amidst varying political and economic circumstances. Historical circumstances varied for different generations of business incubators. Three specific generations of business incubators located within the USA were identified for this study: the first generation of business incubator history occurred from 1959 to 1979; the second occurred from 1980 to 1999; and the third generation began in 2000-2012. In each of these generations, the essential business-incubator characteristics of mission, personnel, facilities/resources and technology are discussed. These time periods were chosen because they provided a logical demarcation in terms of historical events that have affected business, processes and systems. The first generation occurred after the harrowing war years, when the world had recovered and was experiencing resurgence in thinking and innovation. The second generation was the colorful and eclectic era, which saw history and business straddling between the “hippy” period and the emergence of new technologies. The current generation rests squarely in the technology era, with globalization and connectivity happening at an unprecedented scale. Results for this historical analysis of business incubators for each of the three generations begin with an overview of the historical context of the economy at that time and of business incubators in general. This overview is followed by a description of business incubator characteristics that influenced the thinking, infrastructure, and operations of business incubators. Generation 1: 1959-1979 Historical context Immediately following the Second World War, the USA economy was on the verge of returning to the pre-war Great Depression. Two million men in various branches of the military were due to be decommissioned and suddenly become unemployed, or return to jobs that displaced others into the ranks of unemployed (Adkins, 2002). After the war, the focus of agriculture in the economy of the USA reduced. In its place there formed a service economy with a large, educated labor force to supply it and consume from. In the USA, ideas behind what would become business incubators can easily be traced to Thomas Edison’s “inventions factory” and Frederick Terman’s business mentoring for Stanford University graduate students, notably including Hewlett and Packard of latter day computer fame (Lalkaka, 2002). First appearing formally in the USA in the middle of the twentieth century, business incubators have since grown rapidly across the USA and around the world (Brandt, 1991; Bruton, 1998; Hansen, 2000; Haugen, 1990). The first business incubator was founded by Joseph Mancuso in, 1958. He founded the Batavia Industrial center in New York at a large unused factory (NBIA, 2009). Before 1980, there were fewer than 100 business incubators in the USA (Lalkaka, 2002). According to Haugen (1990), the first incubators were established in the East and the Midwest due to the industrial heritage of this so-called “Rust Belt” of the USA. In the post-industrial era, business incubators were an economic development method aimed at reclaiming derelict buildings and reducing the unemployment created by suburbanization and the concomitant exit of large industries from city centers. In this context, the mission of business incubators started to take shape. Business incubator characteristics Mission. Suffering the privations of a decade of the depression and five more years of war, adult Americans had lost the experience of having and spending money, if indeed they had it before. The cultural break from “normalcy” was profound (Pursell, 2007). In many ways, the late 1940 and 1950s saw the beginning of a vibrant, centralized society and economy even though the changes occurred at different rates in different cities and regions (Cohen, 1996; Bartels, 2008). In 1953 the US Small Business Administration (SBA) was created specifically to aid small business entrepreneurs to start and grow their businesses. The SBA was charged with: . the responsibility of assisting, aiding, counseling, and protecting the interests of small businesses; and Small business incubators 215 JKIC 5,3 216 . to ensure that small businesses would have access to a share of government contracts and be given an opportunity to buy surplus government property on sale (Adkins, 2002). Though the first business incubator of record was a private family venture in 1958 to aid the region in which it was located (Adkins, 2002), it was universities that nurtured the nurturers, so to speak (Klein, 2012; Strahan, 2008). In the USA, business incubators generally came to have a partnership with a government body (federal, state, or local) and a university (Strahan, 2008). Through an amendment Act of 1958 that amended the initial 1953 act, the SBA was converted into a permanent agency after an initial provisional period. This decision helped form the mission of business incubators. Universities took center-stage, acting as the breeding areas for development over the next two decades (Smilor and Gill, 1986). The business incubator’s mission was to improve economic conditions by assisting SMEs develop viable business practices through consulting, education, and training. Personnel. According to Willing’s (1982) discussion on the beginnings of SBA’s management assistance programs, there were three reasons that contributed to SBA implementing volunteer training programs for small businesses. First, there was need to move the resources of the agency from counseling and instead utilize them for business loans. This however, was despite the fact that many business arguably failed due to poor management and not from the lack of credit. Second, the establishment of the volunteer scheme served to minimize the number of specialists in the areas of procurement and agency management. Third, the reason that contributed to the creation of volunteer counseling services for small entrepreneurships was the huge demand for management assistance, a need which the SBA could not meet adequately. In 1954, barely a year after its inception, the SBA received pleas for assistance at an average of 5,000 per month (SBA, 1954). According to SBA data, there were 4,000 business owners who attended training sessions conducted by the agency annually by 1957. Although the number rose to 16,000 by 1959, SBA staff contended that these figures were underreported (Brudney and Gazley, 2002). Facilities/resources. The first cohort of business incubators provided rental space at low cost and provided training in management skills to business people (Barrow, 2001; Lalkaka and Bishop, 1996). Generally, the first cohort of business incubators was offering dilapidated buildings at cheap rent and not much more (Bhabra-Remedios and Cornelius, 2003). The intention was ostensibly to put together commonly used resources (such as secretarial studies, office space, and telephones) and source for and bring in business advisors comprising of retired entrepreneurs. In 1980, only about a dozen incubators existed in the USA. These were mainly located in the Northeast which in the previous decade had been seriously affected by plant closures (NBIA, 2006). To keep the companies’ costs low, business incubators provided office space that nobody else wanted together with a few basic support services (Geiger, 2004). Technology. Technology in the form of hardware commonly used by business incubators included copy machines, adding machines, telephones, and eventually faxes machines which could be shared. Technology in this period was not the focus of businesses as it would be in the next two generations of incubators. This being the case, sharing the technology that they used was more of a cost savings mechanism. Generation 2: 1980-1999 Historical context A Washington Post (2011) retrospective on unemployment showed the economy of the USA entered into a recession in the early 1980s that led to double-digit unemployment rates. Unemployment hit a high of 10.8 percent under Reagan (The Washington Post, 2011). During the early 1980s, when unemployment was increasing in traditional sectors, policy makers decided to start using business incubators as economic development tools, as well as tools to help revitalize regions that were devastated by the unemployment rampage of the period (Lewis, 2001). Some people began to see the value of creating and expanding new business ventures in order to sustain local economies while more business incubators were established by communities to offer support to these new businesses. By the mid-1980s, the SBA strongly pushed for the promotion of incubator development by holding a number of conferences regionally in order to disseminate information and create awareness on the concept of business incubation. It is not surprising that there was a large increment in the number of business incubators rising from a low of 12 to 400 (Allen and McCluskey, 1990). In the wake of corporate retrenchment, Allen and McCluskey (1990) explained that small businesses assumed a prominent role in job creation, investment opportunity and innovation. In so doing, they became the unexpected backbone of the future USA economy. In 1982, the US Congress implemented the Small Business Innovation Research (SBIR) Program (Public Law 97-219) designed to assist small business and enabled high-technology small businesses to provide critical technologies and expertise to meet the research and development (R&D) needs of the government (Strahan, 2008). These second generation business incubators were already providing more developed services than the first generation, including marketing training and access to various financial resources (Lalkaka and Bishop, 1996). In the 1980s, research parks were a relatively new phenomenon. According to Geiger (2004, p. 205), the goal of university research parks was for faculty in the sciences and engineering to develop technology through expanded research relationships with industry. According to a survey conducted by The NBIA in 1998, second generation business incubators were generally successful. Technology incubators became popular in the late 1980s. They not only assisted client firms in research and development (R&D) and technology transfer through various means, but also helped reduce risk and enhanced the possibility of success. They fostered the growth of many companies involved in emerging technologies such as software, medical and bio-technologies, robotics, and instrumentation (Lee et al., 2000). Business incubator characteristics Mission. In the second generation of business incubators, entrepreneurship and innovation became important objectives of state, regional, and federal governments. Key elements related to high-tech companies include expertise and involvement in helping incubatees with their goals, marketing, R&D, finance, human resources, physical services, and law services (Lee et al., 2000). Creating long-term, sustainable jobs was the original focus of these new incubators. There are several key advantages that a business gains via the incubator approach. First, there is business synergy as all sections of a business must be on the same page in order to make it viable to exit the incubator and enter the “outside world”. Small business incubators 217 JKIC 5,3 218 Second, there is cost savings to be gained for a business in the incubator program through the services it receives. This includes specialized services such as administrative services, as well as the ability to gain networking opportunities and the access to venture capital. Third, a business can find out about the best practices being used in the industry since the business gains the assistance it needs to establish a solid footing in the industry before it graduates from the incubator. Fourth, a business in an incubator program gains the advantage of goal setting before it graduates from the incubator program. This helps the neophyte business to target all its resources on the goal it wants to achieve before it leaves the incubation program, which makes it more likely that it will survive and thrive in the long-term, as the 80 percent success ratio of all businesses in incubator programs shows (Doescher, 1988). A successful economic development strategy for many businesses was to utilize business incubation. According to Doescher (1988), businesses that are housed in business incubators have an 80 percent survival rate, whereas those businesses that are begun outside of incubators have only a 20 percent survival rate. Forrest (1990) suggested that among small technology-based firms (STBFs), strategic alliances with other firms play a crucial role in growth and success. STBFs are often characterized as having scientists and/or engineers with excellent innovative potential but little business acumen. As a result, STBFs struggled to properly market their products and generate a profit. Given this, STBFs’ competitive advantage stemmed from their ability to develop innovative products and processes by which to sustain technological leadership of the field. Forrest claimed that the central means by which this is most often achieved is through the creation of strategic alliances with other STBFs, for whom such strategies become a long-term business plan. Another notion applicable to carrying out the mission of second generation business incubator was the “interorganizational learning dilemma”. Larson et al. (1998) saw the learning dilemma faced by firms during the learning process as one that occurs when one partner exploits another partner in order to maliciously pursue individual business interests. The authors further warned that technology has increased the virtualness of organizational resourcing and operations leading to the situation where there is increasing risk associated with inter-organization learning. Many firms could no longer afford to ignore the risks involved. They suggested that organizations involved in entrepreneurial activities collaborate and compromise in ways that maximize transparency and receptivity. Personnel. Business incubators in this period came to hire administrators who were part of the program; they provided expertise in an institutional context rather than resting solely on the voluntary efforts of SCORE. Further, when congress created the US SBA in 1953, part of the authorized activities to fulfill its objectives included offering assistance in procurement, advocacy, and managerial assistance (SBA, 1977). In fulfilling this task, the SBA in 1975 formalized the volunteer efforts of dozens of retired executives by forming SCORE as a non-profit organization in connection with the SBA. Furthermore, attention was paid to the effectiveness and efficiency of business incubator managers. Markley and McNamara (1994) emphasized important skill set for the incubator managers include: . the ability to attract the right tenants; . the ability to assist the tenants as their businesses develop; and . the ability to enforce an appropriate set of operational rules for the facility. Another important skill pertains to the ability to assist small businesses with entrepreneurial thinking and business development. The incubator manager himself/herself must be an entrepreneur. Facilities/resources. Hernandez-Gantes et al. (1995) conducted a survey among entrepreneurs and incubator managers in 74 business incubators across the USA. They found that the majority of entrepreneurs suggested that they were attracted to business incubators because of the affordable business space and clerical support they offered, giving them the ability to focus on building their companies. Markley and McNamara (1994) discussed how networked incubators that encourage and facilitate the networking between tenants benefit the tenants and the facility itself. The networking can take a formal or informal form. Common formal methods would include educational sessions or organized training where tenants come together to discuss similar problems they face. Common informal methods would include tenants occupying a common space while doing another activity, such as collecting mail or messages from the receptionist and discussing their difficulties and challenges in a more informal setting. Tenants can share technical advice and business experiences with each other and make valuable business contacts that can benefit their individual businesses, and support each other as they attempt to build successful firms. Technology. During this period technological advances facilitated the efficiency of incubators. While the majority of machines used in the first generation such as photocopiers and telephones still existed, they were faster and more efficient. For instance, photocopiers became smaller and faster while telephones were increasingly automated and could handle a greater number of calls simultaneously. The overall effect was increase of operating efficiency of incubators and the degree of networking involved. This generation saw the rise and rise of computing power and speeds. The personal computer became increasingly common thanks to firms such as IBM at the beginning of the 1980s. By the end of the 1990s, computers had already revolutionized information technology through the increased power of personal computers and through the World Wide Web that was still growing at exponential rates. The overall effect was to usher in the third generation of business incubators through the revolution of communications technology marked by increased networking among tenants and industry professionals. Generation 3: 2000-2012 Historical context As of October 2006, there were more than 1,400 incubators in the USA, 20 percent of which were sponsored by academic institutions (Knopp, 2007). Research parks are relatively new initiatives in higher education. By the end of the 1980s, 80 percent of university-related research parks were less than ten years old. Between 1990 and 1996, five new research parks opened each year (Geiger, 2004). We are now in the third generation of business incubators, which provide a broader range of business support services including access to venture capital, networking, and consultancy (EC, 2002; Lalkaka and Bishop, 1996). By 2006, more than 90 percent of business incubators were not-for-profit entities that attended to clients from diverse industries. In this regard, clients from the technology industry formed the largest group where more than 37 percent of business incubators were created to attend to the needs of this industry. Regarding location, Small business incubators 219 JKIC 5,3 220 about 44, 31 and 16 percent of business incubators were drawn from urban, rural, and suburban communities, respectively. The incubator as a force in business – ebusiness – has arrived. This is largely due to the availability of present-day technology and increased globalization via the internet. According to the NBIA (2013), the prevalent types of business incubators in the USA are incubators for mixed-use comprising 54 percent and technology-based incubators forming 39 percent. These two constitute 93 percent of all incubators in the USA. Furthermore, modern incubation services offer a rich blend of services to successfully assist start-up businesses. This include assistance in product design and development, manufacturing, human resource, and financial management. Another notable difference has been the use of business incubation beyond the traditional technology and mixed-use incubators to a larger variety of specialized industries such as woodworking, environmental technology and ceramics (NBIA, 2013). Characteristics of business incubators Mission. Business incubators began providing professional business services in the second generation of business incubators but it has been in the third generation of business incubators that these services became an integral component (Lalkaka and Abetti, 1999; Lalkaka and Bishop, 1996). Some professional business services provided in business incubators include business plans, development support (Peña, 2004), counseling, coaching and mentoring (Chan and Lau, 2005; EC, 2002), and training (Aerts et al., 2007; Barrow, 2001). Business incubators also directly or indirectly provided venture capital to the business (Bollingtoft and Ulhoi, 2005; Sofouli and Vonortas, 2007). Virtual business support has recently emerged alongside the use of web-based technologies to give business incubators another service they can provide to new businesses (Carayannis and von Zedtwitz, 2005; Durão et al., 2005; Nowak and Grantham, 2000). Third generation business incubators provide access to networks of professional contacts. In fact, some authors define business incubators as “networks of individuals and organizations” (Hackett and Dilts, 2004, p. 61). Some empirical studies have shown that the networking among and between tenants and with graduates is crucial to both the successes of the individuals and of the companies in the incubator (Aernoudt, 2004; Grimaldi and Grandi, 2005). Business incubators help to facilitate linkages between tenants and the most appropriate networks for them to build their social capital (Bollingtoft and Ulhoi, 2005; Tötterman and Sten, 2005). Increasing social capital is vital for incubated companies within and without the technology sector (Vohora et al., 2004). Industry/university (I/U) partnerships for university-based incubator strategies can particularly help technology-based ventures. According to Santoro and Betts (2002), I/U partnerships offer powerful alternatives to inter-firm collaborations especially successful organizations that frequently engage in the highly competitive environment witnessed today. Through I/Us, firms are helped to generate knowledge and new technologies that they could never succeed in doing alone. One example that shows how I/U partnerships can benefit both the industry and the university is the partnership between Googlee and Stanford University. When Google Inc. was just an idea, Stanford took the risk of investing in it. That risk is definitely paid off for Stanford now as Google’s revenues reached $180 million in 2004 (Grimes, 2004). Personnel. Although this is not a direct formula for creating successful incubators and or developing the companies within them, the collection of companies in incubators does provide unstructured collaboration of people that are in similar situations. It is this collaboration that helps form a perspective of encouragement, networking, and information collection and sharing. This incubator environment encourages these activities by creating potential for success. A typical organizational format in the third generation of business incubators includes the executive and advisory boards, a CEO (or operations manager), and various support staff. Sources of selections for positions in the board can come from the government, educational institutions, private citizens, and private organizations among others (Zablocki, 2007). The CEO or manager of the third generation business incubator has the following major roles: . selection of tenant(s); . overseeing planning and policy implementation; . overseeing marketing activities; . staff recruitment; and . incubator operations management (Zablocki, 2007). The manager works with several constituent groups that represent the people who provide the funding (the sponsors) and the users. The advisory board members are selected by the manager and through them the manager is able to create and sustain networks that provide information and policies to these constituent groups (Zablocki, 2007). Facilities/resources. Starting as a place for inexpensive workspace, incubators have grown much in complexity in the past 50 years. Many business incubators provide office space, though some show different approaches such as “hot-desking”, a type of business set-up where space is shared via each work station having its own computer and each worker logging into a virtual desktop (Barrow, 2001). The set-up is to take advantage of office space as much as possible to maximize the output and the capabilities of the newly-formed and growing business. This is why reception, secretarial, meeting rooms, conference rooms, and car parking are services that are often provided in the office space given to those companies beginning in business incubators (Aerts et al., 2007; EC, 2002; McAdam and McAdam, 2008). Third generation business incubators provide access to networks of professional contacts. In fact, some authors actually define business incubators as “networks of individuals and organizations” (Hackett and Dilts, 2004). Some empirical studies have shown that the networking among tenants and between tenants and graduates is crucial to both the successes of the individuals and of the companies in the incubator (Aernoudt, 2004; Grimaldi and Grandi, 2005). Business incubators help to facilitate linkage between tenants and the most appropriate networks for them to build their social capital (Bollingtoft and Ulhoi, 2005; Totterman and Sten, 2005). Increasing social capital is vital for incubated companies within and without the technology sector (Vohora et al., 2004). Incubators are funded in many ways and have a series of funding sources. Incubator sponsoring organizations have come from public, private, and the not-for-profit sectors. These include governmental urban and regional development authorities, for-profit organizations such as the US-based Hotbank, CMGI, internet capital group, and Idealab! Others are not-for-profit organizations such as chambers of commerce and university research departments. Although the source of funding tends Small business incubators 221 JKIC 5,3 222 not to affect the kinds of services that incubators provide, some important differences do exist in terms of what kinds of SMEs may receive support, and how SMEs may develop in general. For example, in the USA, a number of business incubators have been established only to support firms growing from minority communities or other economically and socially disadvantaged groups. Others exist solely for high-tech firms, while still others make space for light manufacturing and artisan firms. Universities have used incubators to market product and service inventions, thus securing important revenue streams through the management and ownership of intellectual property. Technology. The kinds of technology available have changed just as rapidly and the sense of what is necessary has increased as well. For example, an incubator based in Pennsylvania offers diverse range of services ranging from switchboard services, voice mailbox, clerical services, and electronic mailbox to furniture rental, sports ticket purchasing, and providing conference room rental services (Lalkaka, 2006). According to Brandt (2000): As with traditional incubators, internet versions provide dot-com start-ups with office space, business information and advice, financial assistance (either directly or by connecting them to potential sources of seed money), and management, accounting, and other infrastructure services. According to internet incubators, these kinds of assistance can provide entrepreneurs with essential tools to accelerate their all-important “speed to market” in the fast-paced internet economy. In addition, this period has welcomed the likes of social media as a means for small companies located within an incubator to establish a larger presence in the marketplace. Social media such as Twitter and Facebook have enabled companies to communicate in real-time with their clients and share information ranging from product releases to key personal additions. Incubators will continue to watch these advancements and look for ways to provide additional solutions to their members. Looking forward, we will only see technology become more important in incubator development as it continues to evolve (Gale, 2012). Research findings and implications To further provide a picture of business incubators and the clientele they serve in its modern-day incarnation, survey answers of 54 business incubator managers were analyzed. Data collected from the survey could be open to different interpretations given that many questions on the survey were open-ended in format. My interpretation is in accordance with my background as an academic and practicing entrepreneur. The “temperature taking” or exploratory nature of the questions included on this survey provided but a general overview of what might be happening among today’s business incubators. Given this generality and the low response rate among incubator managers, the findings and corresponding conclusions drawn about this portion of the study are limited and may not be generalized to all business incubators across the nation. Nevertheless, the profile that emerged from data collected provides a good place to begin to envision what is occurring in these incubators with regard to who they are serving, how they carry out their work as incubators, and values important to building incubators. The profile that follows begins with a background on clients served by business manager respondents. This is followed by a description of the process of “incubating”, that centers on services provided, facilities and resources needed, and the impact technology has had on how small business and incubators carry out their work. Clients served The two most commonly cited “pre-incubation occupations” of clients served by manager respondents were “small business owner”, followed by “student”. These two occupations comprised about two-thirds of clients served. Other clients served included non-business clients and non-students, each of which represented less than 15 percent of the responses. Being a small business owner as a “pre-incubation occupation” suggests these clients had prior experiences in business practices and may be involved in the incubator process due to a new or innovative business endeavor. My experiences as an incubator manager and as an entrepreneurial small business owner has helped me understand the importance of being involved in an incubator when significant changes in business mission and productivity occur; innovation requires new, innovative business practices. As a seasoned entrepreneur with almost 20 years in small business ownership, I understood what was attractive to start-ups about an incubator. Getting expenses managed along with the collaborative environment helps the entrepreneur focus on what is important in the process of small business growth. Creating new mindsets Managers who responded to the survey identified new mindsets they center on as they work with clients in developing their entrepreneurial business. One mindset centers on comprehending the issues or details involved in developing and growing a business. There are concrete details involved in running a business that managers saw as vital to the training and education of their clients. For some clients, what is needed is a “reality check” that moves clients from being overly confident toward an understanding of not only how to build a new product and run a business, but of the “real” challenges one might face in the process. This requires attention not only to details but to big picture views of their business and how it might be situated in today’s markets. Managers hope that clients become conscious and pro-active in meeting these challenges, rather than being reactive in ways that can possibly damage relationships and diminish progress. Incubator managers are about building confidence and wisdom in decision-making and in taking risks. The majority of incubator managers observed that their incubatees were willing to take risks for this is what entrepreneurial requires. Risk is a part and parcel of any business. Having the propensity for risk-taking was crucial, as not all risks are equal. Successful business decision-making involves being able to correctly gauge risks to their outcomes. Several managers stressed the importance of helping clients become both reasonable and responsible in taking risks. Adaptability is another mindset incubator managers stressed as being important to running a successful small business in today’s world. Being adaptive means paying close attention to what is happening in one’s business in the other related business endeavors. I have witnessed many changes in businesses over the years and see change today is happening at a fast pace, especially as new technologies continue to evolve and the markets are increasingly global in nature. I have learned that what was good yesterday may not be good for today or tomorrow. A majority of the managers viewed their clients “high” Small business incubators 223 JKIC 5,3 224 in adaptability. Further, managers who saw their clients as being highly adaptive in their thinking also tended to see them having a higher propensity toward risk-taking. The survey question regarding the adaptive nature of incubatees has provided a perspective on how an incubator client might build a sustainable business in the dynamic and fluid business landscape. Related to risk-taking and adaptability is the mindset of overcoming challenges. Managers identified the willingness and ability to overcome challenges and to have the perseverance to do so as critical to entrepreneurial small business success. Profile of the incubation process Mission. The vast majority of managers who responded to the survey indicated they had a mission which was clearly stated and used for strategic planning for the incubator. Although the specifics of mission statements were not a focus for this study, having a mission statement that is considered to guide decision-making for the incubators is an important general characteristics of business incubators for it informs direction and processes for how the incubator work is to be carried out. Of interest to this study was how managers spent their time working with clients. Services provided. Incubator managers indicated that they spend much of their time providing what I called “direct services” to clients. Direct services mentioned by managers included “mentoring”, “training”, “counseling”, helping, and “working with” clients. The direct services mentioned by managers suggest a hands-on approach on how they serve clients. A point of focus mentioned by managers for providing such direct services to clients is to help them with problem situations and working with them on client specific challenges, strategic planning, and marketing plans and efforts, investor relations, investor “pitches”, and creating “mindsets or new ways of thinking about how they might best manage their business”. The majority of respondents reported that the advisory role played by incubators in the incubation process is “very important”, again showing the importance of the services that business incubators provide to their clients. Managers also spoke of what I called indirect services, that is, services that were not necessarily “hands-on” in nature, but were important to the education and training of entrepreneurial small businesses. The indirect services included networking activities, establishing partnerships, locating resources, managing and searching for strategic relationships with external parties, identifying economic partners, facilitating meetings with potential advisors, investors, and mentors. All of these indirect services were considered by managers to assure the success of their clients. Operational management also was a service managers addressed in the survey as being important to clients having a successful incubator experience. Operational management mentioned by managers included activities such as managing facilities, the building, and property. Further, it entailed day-to-day management activities that can enhance the services provided to the incubators’ clients. Staffing. Managers perceived their staff was highly qualified to both manage and run the incubators and to provide clients necessary services. Nearly, all of the managers rated their staff as being “highly” or “very” qualified to engage and assist clients. Managers of smaller-scale incubator operations, with 15 or fewer clients rated their staff to be “highly” qualified; whereas, managers of larger-scale incubators tended to rate their staff as “very” qualified. Facilities. The incubation process was a combination of providing both services and facilities for clients. Space was considered to be important to managers to carry out their work with small businesses since the space and corresponding resources can provide a climate for learning and growing. I have found that space needs to be convenient for clients and include amenities needed to learn and grow. This includes all amenities needed for running any business in today’s world as well as additional lab space for new product development. Managers indicated that “internet connectivity”, a good “office location”, “phone system” and “administrative support” were basic amenities for incubator clients. Technology. It is undeniable that advancement in computing technology and the internet have changed how we communicate nowadays. From high-powered computers to mobile devices such as Smartphones and Notebooks, these pieces of technological advancement have all contributed in making the way we interact more efficient. As business is actually a process of interaction between a provider of goods or services to a buyer, it is safe to say that the more effective the communication channel is, the more successful the interaction will be. As such, the survey took into account how technology factors into the success of a business start-up. Although the questions asked were broad-based, the answers provided seemed to indicate that technology’s main role in contributing to the success of business start-ups was by providing the incubatees with better and more efficient means of communication. Technology has provided us with new communication tools that were non-existent two decades ago. Today, video streaming technology and the increase of internet bandwidth have virtually brought video conferencing ability right to the doorsteps of every networked computer. The survey looked into the aspect of virtual incubation to see if it had increased in importance compared to the traditional model of incubation. To get a sense of the importance and the potential of virtual incubation, respondents were asked to rate the importance of co-location in the incubation process. The majority of managers considered co-location as being very important. This means that gathering business incubatees in the actual physical setting of a business incubator was deemed beneficial because of the direct and indirect services that can be immediately availed of. The chance of learning from the business incubator environment seemed to outweigh the benefits of cost reduction that were the touted as the main advantage of virtual incubators. Thus, while some managers consider virtual incubation as an option for businesses unable to transfer to a physical incubator, this will not replace the traditional ones. Rather, the virtual component will remain an adjunct service and technology that will aid all types of incubators. Summary of historical review The summary of the main highlights of this research can be appropriately done on a comparative basis by discussing several aspects mentioned earlier, namely the mission, personnel, resources and technology concerning the first, second and third generations discussed. Regarding the mission of the first generation business incubators in the USA, the main point brought out is that the main challenge at the time was to set-up the kind of business environment that would take advantage of the rapidly emerging service industry. There were many opportunities at the time but these were not evident to many people. Perhaps, the establishment of the USA SBA helped to act as a centralized focal point for what would eventually be the creation of successful business incubators Small business incubators 225 JKIC 5,3 226 that would follow afterwards. This was through the provision of the assistance which start-ups desperately needed in the areas of professional advice and linkage to government departments and contracts. An important point of note at this time is the important role played by universities in nurturing young businesses and entrepreneurs. The main highlight of the mission for the second generation was that entrepreneurship and innovation became important goals of state and regional governments as technological innovations increased. Incubatees received help in issues such as marketing, research and development, and law services. Further, long-term job creation became an important goal for the incubators. The mission of business incubators during the third generation expanded further. Provision of professional services expanded markedly in comparison to the second generation. These professional services include formulation of business plans, coaching and mentoring and training. Financial innovations also expanded through venture capitalism. Further, advanced technology has enabled virtual business support. For instance, the internet has facilitated inter-incubator services on a global scale. Therefore, the expectations of the modern incubator have gone beyond those of merely providing office space. Regarding resources/facilities, the main hallmark of the business incubators during the first generation was the provision of low-cost space and some management training to business people. The offices were situated in run-down buildings which attracted cheap rent without additional amenities. Support to small start-ups was minimal since the main concentration was on established businesses. Further, small-scale entrepreneurship was not predominantly taught in business schools. Regarding resources in the second generation, offering of relatively cheap space was important. However, the aspect of networking among incubators increased. For instance, tenants of a space would organize to have common training where they would share their experiences. Informally, they would collect mail for one another among other communal activities. Indeed, the main feature difference from the first generation was that networked incubators could form partnerships with other start-up teams and facilitate the flow of information or knowledge across firms. The second generation nurtured the view of the economy existing as a networked economy. The third generation saw increased complexity of incubators compared to the first two generations. The ideal workspace is still a cheap and large space but cheap spaces are increasingly hard to locate. Therefore, incubators have had to become innovative in the quest to maximize diminishing workspace available. One way this has happened is “hot-desking”. This is a type of business set-up where space is shared with each work station having its own computer and each worker logging into a virtual desktop so that little space is utilized by maximizing output. Further, tenants share many overhead costs such as conference rooms, internet connection, receptionist services, and laboratory services among others. Another notable difference is the degree of networking of professional contacts. As discussed in the main essay, the success of incubators lies in the degree of networking among tenants and among other professionals in the wider sphere. Technology during the first generation was much less advanced compared to the preceding two generations. This consisted of adding machines, telephones, fax machines and photocopiers which could be shared. Other facilities such as laboratories were also shared. However, technology was not of significant focus during this generation. Technology during the second generation was marked by the use of the same machines as the first generation but the machines were now smaller, faster and utilized less energy. The main feature however, is the growth of the personal computer and the World Wide Web. These brought about significant differences in the operations of second generation incubators compared to the first generation especially with regard to business networking. Further, innovations in information technology paved way for the emergence of the third generation of business incubators. Technology during the third generation is characterized with the increasing manner in which it is possible to communicate with contacts across different ends of the world in real time. In addition, social media tools such as Twitter and Facebook have become important components of communication where businesses can communicate with their customers all over the world in real-time. Furthermore, it is now easy to establish virtual communities where customers, peers, and professionals can meet and exchange ideas regarding a particular product or service. It is important to note that technological innovations are still emanating from inventors and developers alike. In light of the discussion in this chapter, it is clear that comprehensive and systematic historical review from literature on small business incubators reveals that past incubators have provided many lessons for future models. The model has evolved dramatically but questions still revolve around the current state, and what is essential for future models. Although various models have been developed to explain the trajectories of such growth, it is clear that access to a network of business and financial forms of support, patented knowledge creation, and inter-firm partnerships are crucial. Conclusion This study has achieved its objective – to create an exhaustive profile of business incubators by considering various aspects concerning the operations of the incubators through the three cohort periods mentioned. To achieve the objective, it was necessary, through a literature review, to trace the development of business incubators in the United States through three cohort periods or generations defined as first generation incubators (1959-1979); second generation (1980-1999); and third generation (2000-2012). Further, an open-ended survey filled by incubator managers to investigate incubator characteristics and to make a profile of business incubators in the USA was conducted. With the literature review providing the necessary background, the survey findings helped to develop an overall picture of the profile of business incubators in the USA. From the literature survey, it is evident that during the first generation, the business incubator’s mission was to improve economic conditions by assisting SMEs to develop viable business practices through consulting, education, and training. The second generation incubator’s mission was to foster entrepreneurships, innovation, and to create long-term and sustainable jobs by improving incubates skills in the areas of marketing R&D, finance, human resources, physical services, and law services. Third generation incubators offer services such as assistance in the writing of business plans, development support, counseling, coaching and mentoring, training, provision of venture capital for businesses, and to provide access to networks of professional contacts. Regarding survey findings, investigations were conducted along the lines of: . background of clients served, that is, the actual clients served and the creation of new mindsets; and Small business incubators 227 JKIC 5,3 228 . profile of business incubators which included the aspects of mission, services, staffing, facilities, and technology. Regarding the background of clients served, findings indicate that incubator managers mainly assist incubatees who are mainly the small business owner and students (comprising two-thirds of clients served). Other clients included non-business clients and non-students. Further, the survey findings suggests that these clients had prior experiences in business practices and may be involved in the incubator process due to a new or innovative business endeavor. Concerning the creation of new mindsets, the survey found that managers who responded to the survey identified new mindsets they center on as they work with clients in developing their entrepreneurial business. The first mindset concerns comprehending details involved in growing a business where managers surveyed indicated that clients need to be realistic in their expectations. The second mindset according to managers surveyed is that clients require being proactive rather than reactive in facing challenges that may arise. The second area surveyed is on the profile of business incubators. First, on incubator mission, most managers surveyed indicated that the incubators they manage have a mission statement. Second, on services provided by incubators, surveyed managers indicated that they offer “direct services” to clients such as mentoring, training, and coaching which were deemed as being very important services to incubatees. Incubators also provide “indirect services” such as networking activities, establishing partnerships, locating resources, managing and searching for strategic relationships with external parties, identifying economic partners, facilitating meetings with potential advisors, investors, and mentors. These services were pre-requisites to success of clients served. Incubators also provide operational management such as managing facilities, the building, property, and entailed day-to-day management activities that can enhance the services provided to the incubators’ clients. Third, on staffing, survey findings indicate that managers viewed their clients as highly qualified in attending to their designated tasks. Fourth, on facilities, survey findings showed that working space was important but in addition facilities such as lab space for new product development was vitally important. Here, important facilities include internet connectivity, phone system, and good office location. Fifth, on technology, findings indicate that technology played a main role of providing better and more efficient means of communication for instance, video conferencing. Here, findings indicate that the aspect of co-location was very important. Whereas virtual incubation is revolutionary by virtue of advanced communication technology (e.g. teleconferencing), actual physical setting of a business incubator is important due to the direct and indirect services that can be immediately availed and the chance of learning from the business incubator environment. This appears to outweigh the benefits of cost reduction associated with virtual incubators. In light of the above summarization, several observations can be deduced. First, business incubators have changed greatly in the last 50 years. However, it appears that incubators shall continue to change and evolve as time goes due to ongoing rapid technological changes that occur. Second, it appears that success on business incubation relies as much as on how incubatees are mentally tuned to handle their businesses as much as on how they are provided business and technical skills. Indeed mental preparation might even be equally important to incubatees as is the acquisition of technical and business skills. Third, co-location can never be completely ruled out even as virtual incubators are embraced due to technological capabilities. It is therefore of interest for more research needs to be conducted to determine the level to which actual business co-location shall remain relevant relative to virtual incubation. Whereas a good profile of business incubators has been achieved it is evident that there is room for more research to be conducted. For instance, more needs to be known concerning the nature of “indirect services” offered by incubators to incubatees and how these can be improved. The study proposes that more research needs to be done in this area. References Adkins, D. (2002), Brief History of Business Incubation in the United States, NBIA, Athens, OH. Aernoudt, R. (2004), “Incubators: tool for entrepreneurship?”, Small Business Economics, Vol. 23 No. 2, pp. 127-135. Aerts, K., Matthyssens, P. and Vandenbempt, K. (2007), “Critical role and screening practices of European business incubators”, Technovation, Vol. 27 No. 5, pp. 254-267. Allen, D.N. and McCluskey, R. (1990), “Structure, policy, services, and performance in the business incubator industry”, Entrepreneurship: Theory & Practice, Vol. 15 No. 2, pp. 61-77. Barrow, C. (2001), Incubator: A Realist’s Guide to the World’s New Business Accelerators, Wiley, Chichester. Bartels, L.M. (2008), Unequal Democracy: The Political Economy of the New Gilded Age, Russell Sage Foundation, New York, NY. Bhabra-Remedios, R.K. and Cornelius, B. (2003), “Cracks in the egg: improving performance measures in business incubator research”, paper presented at the Small Enterprise Association of Australia and New Zealand 16th Annual Conference, Ballarat, September. Birch, D.L. (1979), The Job Generation Process, MIT Program on Neighborhood and Regional Change, Cambridge, MA. Bollingtoft, A. and Ulhoi, J.P. (2005), “The networked business incubator-leveraging entrepreneurial agency?”, Journal of Business Venturing, Vol. 20 No. 2, pp. 265-290. Brandt, E. (1991), “Incubators: a safe haven for new businesses”, Journal of Property Management, January/February, pp. 52-59. Brandt, J. (2000), “To incubate or not to incubate, that is the question”, Los Angeles Business Journal, available at: http://los-angeles-business-journal.vlex.com/vid/incubate-or-not-thatquestion-54210973 Brudney, J.L. and Gazley, B. (2002), “Testing the conventional wisdom regarding volunteer programs: a longitudinal analysis of the service corps of retired executives and the US Small Business Administration”, Nonprofit and Voluntary Sector Quarterly, Vol. 31 No. 4, pp. 525-548. Bruton, G.D. (1998), “Incubators as a small business support in Russia: contrast of university related US incubators with the Zelenograd Scientific and Technology Park”, Journal of Small Business Management, Vol. 36, pp. 91-94. Carayannis, E.G. and von Zedtwitz, M. (2005), “Architecting gloCal (global-local), real-virtual incubator networks (G-RVINs) as catalysts and accelerators of entrepreneurship in transitioning and developing economies: lessons learned and best practices from current development and business incubation practices”, Technovation, Vol. 25 No. 2, pp. 95-110. Chan, K.F. and Lau, T. (2005), “Assessing technology incubator programs in the science park: the good, the bad and the ugly”, Technovation, Vol. 25 No. 10, pp. 1215-1228. Small business incubators 229 JKIC 5,3 230 Cofield, N.M. (2011), “Advancing entrepreneurship: the role of business incubators in entrepreneurship development: interview with Dinah Adkins, President Emeritus, National Business Incubation Association”, NMC Consulting Group, NMC Quarterly Report, Spring, available at: www.nataliecofield.com/wp-content/uploads/2012/03/ NMCQIncubation20111.pdf Cohen, L. (1996), “From town center to shopping center: the reconfiguration of community marketplaces in postwar America”, The American Historical Review, Vol. 101 No. 4, pp. 1050-1081, available at: www.jstor.org/stable/2169634 Doescher, W.F. (1988), “Hatching young companies”, Dun and Bradstreet Reports, Vol. 36 No. 4. Durão, D., Sarmento, M., Varela, V. and Maltez, L. (2005), “Virtual and real-estate science and technology parks: a case study of Taguspark”, Technovation, Vol. 25 No. 3, pp. 237-244. EC (2002), Benchmarking of Business Incubators, Final Report, EC, Brussels. Forrest, J.E. (1990), “Strategic alliances and the small technology-based firm”, Journal of Small Business Management, Vol. 28, pp. 37-45. Gale Encyclopedia of Small Business (2012), available at: www.answers.com/topic/businessincubator Geiger, R.L. (2004), Knowledge and Money: Research Universities and the Paradox of the Marketplace, Stanford University Press, Palo Alto, CA. Grimaldi, R. and Grandi, A. (2005), “Business incubators and new venture creation: an assessment of incubating models”, Technovation, Vol. 25 No. 2, pp. 111-121. Grimes, A. (2004), “Why Stanford is celebrating the Google IPO”, The Wall Street Journal, August. Hackett, S.M. and Dilts, D.M. (2004), “A systematic review of business incubation research”, The Journal of Technology Transfer, Vol. 29 No. 1, pp. 55-82. Hansen, M.T., Chesbrough, H.W., Nohria, N. and Sull, D.N. (2000), “Networked incubators: hothouses of the new economy”, Harvard Business Review, September/October, pp. 74-84. Haugen, T.M. (1990), “Getting a head start: the rise of business incubators”, Business Forum, Vol. 15 No. 1, pp. 25-27. Hernandez-Gantes, V.M., Sorensen, R.P. and Nieri, A.H. (1995), “Fostering entrepreneurship for school-to-business transition: a challenging role for postsecondary education”, paper presented at the Annual Meeting of the American Educational Research Association, San Francisco, CA, April 18-22. Klein, M.W. (2012), Doing More with Less in “The Missing Middle”: Rowan University, An Entrepreneurial Public Master’s University, New York University, New York, NY. Knopp, L. (2007), National Business Incubation Association: 2006 State of the Business Incubation Industry, National Business Incubation Association Publications, Athens, OH. Lalkaka, R. (2002), “Technology business incubators to help build an innovation-based economy”, Journal of Change Management, Vol. 3 No. 2, pp. 167-176. Lalkaka, R. (2006), Technology Business Incubation: A Toolkit on Innovation in Engineering, Science and Technology, Vol. 255, UNESCO, Paris. Lalkaka, R. and Abetti, P. (1999), “Business incubation and enterprise support systems in restructuring countries”, Creativity and Innovation Management, Vol. 8 No. 3, pp. 197-209. Lalkaka, R. and Bishop, J. (1996), Business Incubators in Economic Development – An Initial Assessment in Industrialising Countries, United Nation Development Programme, New York, NY. Larson, R., Bengtsson, L., Henriksson, K. and Sparks, J. (1998), “The interorganizational learning dilemma: collective knowledge development in strategic alliances”, Organization Science, Vol. 9 No. 3, pp. 285-305. Lee, F., Chu, P. and Liang, T.P. (2000), “The critical success factors of technology incubators: an empirical study”, available at: http://iceb.nccu.edu.tw/proceedings/APDSI/2000/list/pdf/ P-075.pdf (accessed July 2000). Lewis, D. (2001), “Does technology incubation work? A critical review”, Reviews of Economic Development, Literature and Practice – Rutgers University, available at: https://umdrive. memphis.edu/jkwalkr1/public/business_incubator/do%20business%20incubators% 20work.pdf McAdam, M. and McAdam, R. (2008), “High tech start-ups in University Science Park incubators: the relationship between the start-up’s lifecycle progression and use of the incubator’s resources”, Technovation, Vol. 28 No. 5, pp. 277-290. Markley, D.M. and McNamara, K.T. (1994), November, Purdue University Center for Rural Development, West Lafayette, IN, pp. 2-3. NBIA (2006), The History of Business Incubation, National Business Incubation Association, available at: www.nbia.org/resource_library/history/index.php NBIA (2009), Joseph Mancuso, National Business Incubation Association, available at: www.nbia.org/about_nbia/founders_awards/mancuso.php NBIA (2013), Business Incubation FAQ, National Business Incubation Association, available at: www.nbia.org/resource_library/faq/#4 Nowak, M.J. and Grantham, C.E. (2000), “The virtual incubator: managing human capital in the software industry”, Research Policy, Vol. 29 No. 2, pp. 125-134. Peña, I. (2004), “Business incubation centers and new firm growth in the basque country”, Small Business Economics, Vol. 22 No. 3, pp. 223-236. Pursell, C.W. (2007), Technology in Postwar America: A History, Columbia University Press, New York, NY. Santoro, M.D. and Betts, S.C. (2002), “Making industry-university partnerships work”, Research Technology Management, Vol. 45 No. 3, pp. 42-46. SBA (1954), Second Semi-Annual Report of the US Small Business Administration, Small Business Administration, Washington, DC. SBA (1977), Study Report: Management Assistance Organization and Performance, Small Business Administration, Washington, DC. Smilor, R.W. and Gill, M.D.J. (1986), The New Business Incubator: Linking Talent, Technology Capital, and Know-How, Lexington Books, Toronto. Sofouli, E. and Vonortas, N. (2007), “S&T parks and business incubators in middle-sized countries: the case of Greece”, The Journal of Technology Transfer, Vol. 32 No. 5, pp. 525-544. Strahan, A.N. (2008), “The effectiveness of a government high-technology small business program within a small business incubator: a case study in government, university, and business collaboration”, unpublished doctoral dissertation, University of La Verne, La Verne, CA. Tötterman, H. and Sten, J. (2005), “Start-ups: business incubation and social capital”, International Small Business Journal, Vol. 23 No. 5, pp. 487-511. Vohora, A., Wright, M. and Lockett, A. (2004), “Critical junctures in the development of university high-tech spinout companies”, Research Policy, Vol. 33 No. 1, pp. 147-175. Washington Post (2011), “A brief history of unemployment”, available at: www.washingtonpost. com/wp-srv/special/business/us-unemployment-rate-history/ (accessed 3 November 2011). Small business incubators 231 JKIC 5,3 232 White, T. and McLaughlin, J. (2006), “Building a business incubator: a teaching case study”, Journal of Business Case Studies, Vol. 2 No. 4, pp. 19-22. Willing, P.R. (1982), A History of the Management Assistance and Educational Programs of the Small Business Administration from 1953 to 1978, University Microfilms International, Ann Arbor, MI. Zablocki, E.M. (2007), “Formation of a business incubator”, Intellectual Property Management In Health and Agriculture Innovation: A Handbook of Best Practices, MIHR, Oxford, available at: www.iphandbook.org/handbook/ch13/p06/#11 Appendix. Summary profile of business incubators A preliminary profile was established based on the responses of the managers of present day incubators. The generalizability of this initial profile was limited due to the small sample size and the exploratory nature of this study. However, creating a picture of business incubators may help people understand the current trends and directions and possible future applications. Below were the relevant points gathered. Clients (1) (2) (3) (4) (5) 59 percent of the incubator managers surveyed are serving small businesses. 31 percent are serving students. Larger incubators are more likely than small incubators to serve students. 89 percent of the manager see clients as being risk takers, but not adversely so. 66 percent see their clients as being able to adapt; those who are risk takers are also likely to be seen as adaptive. (6) Crucial traits for success include: . Overcoming challenges (63 percent). . Risk taking (44 percent). . Organizational and leadership skills (20 and 24 percent). Mission (1) 59 percent have a mission statement with 65 percent stating that it is extremely clear. (2) 98 percent stated that their business plan supported the mission statement. Staffing (1) 93 percent are qualified to operate an incubator. (2) 94 percent are highly qualified to lead a business. (3) These traits are desirable for business incubator personnel take on both roles in equal measure. This is especially true of business incubator managers. Services (1) Advisory role rates at 61 percent in importance. This is rated to speed up the learning process by 98 percent. (2) Incubatees learned new skills by 49 percent when they agreed to undertake incubator services. (3) 38 percent held that business incubators provided an important reality check to business situations. Management (1) Client services and organizational management accounts for the two main occupations of incubator managers. (2) For client services, a great number of incubator managers spend 70 percent of their time in direct client services such as mentoring, advising, and counseling. The other 49 percent is spent on indirect services such as setting up meetings, networking and the like. (3) For organizational management, day-to-day task handling and implementation assistance accounts for 65 percent of managerial services provided by incubator managers. Facilities/technology (1) 83 percent mentioned office location as significant. (2) Administrative services and facilities rates 65 percent while mentoring rates 59 percent. (3) A great percentage seems to focus on current day technologies with an overwhelming 93 percent stating internet services as paramount. (4) The resources that are worth noting are 74 percent phone systems, web hosting 24 percent, accounting 15 percent and legal 19 percent. About the author Jeffrey M. Shepard is part-time Faculty at Xavier University in Cincinnati, Ohio. He is also an Adjunct Professor at St John Fisher College in Rochester, New York. In addition, he serves as Executive Director of the National Center of Innovation and Entrepreneurship in New York. He is currently CEO and Chairman of Medacheck LLC, a health IT company focused on health care applications. Dr Shepard’s academic research examines past and future models of accelerators and incubators and their relationship to entrepreneurs that reside within them. Jeffrey M. Shepard can be contacted at: jeffreyshepard@me.com To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints Small business incubators 233 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.