The business of business incubators

Abstract

PurposeNew business ideas, especially those which address markets that do not yet exist, face huge difficulties in securing vital resources. Hence, governments support the creation of a protected environment, business incubators, in which these early ventures can develop. Business incubators perform two different processes: servicing the companies they host and fulfilling their main stakeholders' demands. Hence, this paper is critical of whether business incubators in Lithuania have been installed due to real economic demand to help all the promising startups to develop or if they serve primarily political goals. Business incubators are exposed to pressure from shareholders, both public and private, and adopt certain strategies to deal with their expectations. The paper aims to explore how the management of business incubators understand their own position, tasks and challenges and how they see their business incubators performing now and in the future.Design/methodology/approachThis paper adds viewpoints from the sociology‐based institutional theory, adopting a more critical view on how institutions emerge, how they are influenced by their environment and how they shape the environment in which they operate. In‐depth interviews were conducted with the management of the business incubators. The paper included all seven business incubators of Lithuania: five business incubators in Vilnius and two business incubators in Kaunas.FindingsThe studied Lithuanian business incubators have a strong focus on property, together with the offering of training and consulting, although at a very superficial level. There are strong arguments in favor of a mimicking process and institutional behavior. What made these property developments so attractive was the available public money, particularly from the European Union. As long as the money keeps flowing, there is a strong incentive to grow. The managers say that their public shareholders provide only weak support after the business incubator was set up. Their private investors, on the other hand, are interested in high rents. In addition, teams operating the business incubators are small, most consisting of not more than three people; a much lower number than the European average of 12.Originality/valueThe empirical results offer interesting insights into the self‐understanding of the management of Lithuanian business incubators, their setup and the environment in which they operate.