Social Capital and the Modern Incubator: A Comparison of In-group and Out-group Social Networks

Abstract

In the public policy arena, one of the most prevalent components of entrepreneurship promotion consists of the sponsorship of public and university-based incubators. Incubators are business support institutions designed to offer an array of services, such as space, infrastructure, advice, training and administrative support meant to accelerate the business start-up process. However, research within this topic is relatively young, and biased towards qualitative studies, focusing on firms within incubators. One of the findings of previous research is that entrepreneurs in incubators benefit from strong social networks; another is that they are prone to developing bureaucratic routines early on. In this study, we examine the characteristics of the firm owners’ networks and their use of business plans. We control for the bias of just studying firms within incubators by comparing incubated, and non-incubated firms. The network characteristics of incubated firm owners tended to be more business-related, with higher involvement of incubator managers and consultants. Incubated firms wrote longer business plans and made less use of family and friends.