Abstract
This study examines the effects of technology business incubator (TBI)’s funding, technical support and entrepreneurial mentoring on the graduation performance of new technology-based firms in China’s three tier cities. Using a new dataset on all TBIs and incubated new technology-based firms from government surveys conducted over five consecutive years from 2009 to 2013 combined with archival and hand-collected data, we find the effects of incubator services on the early growth of new technology-based firms vary according to the local context. Technical support facilities and entrepreneurial mentoring from TBIs are found to have significantly and positively influenced the early development of the firms in the four most affluent tier 1 cities, whilst these effects become less pronounced for the tier 2 and tier 3 cities. These two services are also found to influence graduation performance in the government and university types of TBI respectively. Results support the notion that the effectiveness of an incubator’s services is shaped by the level of a city’s socio-economic development and that the city location of a TBI does impact the graduation performance of its incubatees.
Highlights
This study examines the effects of technology business incubator (TBI)’s funding, technical support and entrepreneurial mentoring on the graduation performance of new technology-based firms in China’s three tier cities
Using a new dataset on all TBIs and incubated new technology-based firms from government surveys conducted over five consecutive years from 2009 to 2013 combined with archival and handcollected data, we find the effects of incubator services on the early growth of new technology-based firms vary according to the local context
Technical support facilities and entrepreneurial mentoring from TBIs are found to have significantly and positively influenced the early development of the firms in the four most affluent tier 1 cities, whilst these effects become less pronounced for the tier 2 and tier 3 cities
Summary
The principal drivers for establishing technology business incubators (TBIs) are to facilitate the formation and growth of early stage technology-based firms and to promote regional economic development by providing much needed support services (Phan et al 2005; Ratinbo and Henriques 2010; Markman et al 2005; McAdam and McAdam 2008; Siegel et al 2007, 2003). Studies that examine the effects of an incubator on the successful development and growth performance of new technology-based firms have emphasised the importance of the incubator’s support services (Mian 1996; Phan et al 2005; Ratinbo and Henriques 2010; Lundqvist 2014). Given the focus of much of the existing literature, it is recognised that there is a need for research on the role that TBIs are playing in emerging and transition economies (Smith and Zhang 2012) This includes the need for investigation of the effects of TBI support services on the performance of incubated firms in different geographical contexts within China. Our present study focuses on the graduation performance of TBIs, as measured by the number of incubated firms qualifying for graduation by reaching a level of sales turnover and profitability set by TBI senior managers
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