The role of incubator support in new firms accumulation of resources and capabilities

Abstract

ABSTRACT Entrepreneurs need to accumulate different types of resources and capabilities to gain a competitive advantage for their firms, often in settings characterised by uncertainty and complexity. The purpose of business incubators is to provide new firms with a structured and nurturing environment during the early development stages and thus help firms accumulate the necessary capabilities and resources for development and growth. Drawing from an organizational sponsorship framework, this study examines the role of incubator support, referred to as buffering and bridging mechanisms, in the accumulation of capabilities and external resources in new firms. We conceptualise two types of buffering mechanisms in the context of business incubation: sheltering and building. Acknowledging that incubator services may differ in their influence on firm development, and that such influence depends on the extent to which the firms actually utilise the provided services, this study analyses firms’ use of various incubator services, and its effect on their accumulation of resources and capabilities. Analyses of data collected from 253 tenant firms of business incubators in Norway suggest that the bridging mechanism (i.e., external network support) and the sheltering mechanism provided by incubator management are important for firms to acquire external resources (i.e., financing, new customers) and to develop capabilities (i.e., organisational processes and routines). This study highlights the importance of different incubator support mechanisms for the resource and capability accumulation of new firms.