The Evolution of Business Incubators: Comparing demand and supply of business incubation services across different incubator generations

Business incubators (BIs) have been established around the world to stimulate new business creation. Whilst it is accepted that incubation models have evolved, little is known about whether existing incubators have adjusted their value proposition to incorporate recent incubation paradigms or have simply remained operating as originally founded. We present data collected within seven BIs and their tenants regarding service provision and selection criteria. Our findings show that whilst BIs of all generations offer similar support services, tenants in older generation BIs make less use of the BI's service portfolio. We suggest this is a consequence of slack selection criteria and the absence of clearly defined exit policies. These results imply that older generation BIs should update their service portfolio while simultaneously imposing stricter selection criteria and introducing exit policies. Finally, we discuss the wider implications this raises for BIs' managers, prospective tenants and policy makers.

► We follow the evolution of business incubation models.
► We analyze both supply and demand of business incubation services.
► More recent generation of business incubators provide more tenants with services.
► Slack selection criteria and unclear exit policies create a mismatch between the service portfolio and tenant companies' needs.
► Implications for business incubators managers, prospective tenants and policy makers are discussed.