A Comparison of Critical Success Factors for Effective Operations of University Business Incubators in the United States and Korea

Abstract

Research Background The university business incubator (UBI) is an innovative system designed to assist entrepreneurs, particularly entrepreneurs in technology, in the development of new firms. By providing a variety of services and support to startup and emerging companies, the incubator seeks to link talent, technology, capital, and know-how effectively to leverage their talent, to accelerate the development of new companies, and thus to speed the commercialization of technology (Smilor, Gibson, and Dietrich 1990). The present study suggests that there are critical success factors for effective operation of business incubators. And it compares the perceived importance of them between managers of U.S. and Korean firms. Numerous countries promote business incubator programs to revitalize their local economies, to increase employment, and to nurture high-technology industries. Recently, a number of business incubators have been established and are operated with the goal to help Korea adapt to the changing environment and to increase economic competitiveness. Initially, we reviewed the existing literature on operations and management of business incubator system. Smilor (1987) investigated the critical success factors related to managing incubator system effectively and suggested the following: on-site business expertise, access to financing and capitalization, in-kind financial support, community support, entrepreneurial network, entrepreneurial education, perception of success, selection process for tenants, tie to a university, and concise program milestone with clear policies and procedure. Lumpkin and Ireland (1988) investigated the screening practices of incubators and identified unique groups of incubators. The screening practices were found to relate to sponsorship but not to physical characteristics or objectives. Allen and McCluskey (1990) investigated the relationship among incubator structure, policy, services, and performance. From this research, it is determined that only one other structure, policy, or services variable is required to explain business development outcomes. Mian (1994) examined the cases of six incubators in the United States that are sponsored by universities. He found that university incubators share similar characteristics but also have some unique features, which can be summarized along three dimensions (Bruton 1998). The first involves the characteristics of the incubators themselves, such as technology transfer and involvement of the private sector with the incubators. The second dimension of unique characteristics of university-sponsored incubators was the profile of the client firms of the incubators and how the incubator's management interacted with those clients. He found that university-sponsored incubators typically conducted performance reviews of the tenants to ensure that they were performing as planned. Finally, Mian (1994) examined the nature of the entrepreneurs starting the businesses. The average age of entrepreneurs starting businesses was 40 years, and most of the entrepreneurs were university graduates. In addition, Mian (1997) suggested a conceptual framework for assessing and managing the university technology business incubator (UTBI) as a tool for new venture creation. University technology business incubator performance assessment framework is drawn from a combined survey of the existing body of knowledge in the areas of business incubation, the university's involvement in technology and business development support, and the commonly accepted approaches to organizational assessment that provide the necessary building blocks for the integrative framework. Sherman (1999) examined the effectiveness of business incubation programs on helping startup businesses to survive and to grow. The results can be summarized with four implications. The first is that incubator managers and sponsors need to reach consensus regarding realistic outcomes their programs are trying to achieve. …