An empirical test of sponsorship theory on a population of business incubators between 2005 and 2017 – is it working or not?

Abstract

ABSTRACT This article investigates how business incubator support affects subsequent firm performance. We build on and extend a recent focus on organisational sponsorship mechanisms, applying the lens to business incubators. We first ask: Is there an overall effect of business incubator sponsorship on subsequent firm performance? Second, we ask: To what extent do the decisions of business incubator managers, in terms of allocating resources to start-up firms, impact the subsequent firm performance? We use a unique dataset consisting of the entire population of business incubators in Sweden and their start-ups from 2005 to 2015. Results indicate that business incubator sponsorship has a positive effect on firm performance, while the effects of various forms of sponsorship vary from large positive to neutral effects. Thus, we confirm earlier research on the positive effects of sponsorship and give input on how business managers can use sponsorship theory to provide more optimal resource allocation over time. It appears that coaching and legitimacy have more positive impact on firm level performance compared to other sponsoring activities. Sponsorship is a complex issue, meriting increased theoretical and managerial understanding of its forms and mechanisms. In this respect, our study of how the sponsorship activities of business incubators affect start-up performance complements and extends previous studies of how the effects of business incubator sponsorship depend on external contingencies.