Technology incubator schemes provide workspaces for start-up firms to benefit from shared facilities and a range of business support services on preferential and flexible terms that would otherwise be unavailable through markets. Such support tends to be time-limited and is intended to support young firms during the most vulnerable stages of their development. Incubators are commonly found attached to research universities and PRIs, though they may also exist independently of such institutes while maintaining close ties. In this way, technology incubators constitute conduits for knowledge flows between public sector research groups and the commercial world of applications.
Broadly, what activities and outcomes do technology incubator schemes seek to influence?
Technology incubators are targeted primarily at providing the conditions for high-tech start-ups to grow and prosper. Accordingly, they can be important in supporting the generation and survival of spin-offs from research universities and PRIs. At the same time, they can foster other activities conducive to public sector research contributing to innovation, including technological development, R&D collaboration, advice and consultancy, and even inter-sectoral mobility through the employment of graduates and researchers by tenant firms.
How do technology incubator schemes have an influence?
Technology incubators can help to offset some of the constraints typically faced by research universities, researchers and high-tech SMEs when seeking to commercialise science and technology knowledge:
- In most OECD countries, research universities and PRIs have increasingly sought to commercialise their research results through the generation of spin-off firms. However, such institutes are mostly focused on performing research and teaching activities and have traditionally lacked a supporting environment for starting new firms. Technology incubator schemes are part of broader attempts by funding organisations to re-balance the activities of such institutes towards more commercialisation activity. They provide dedicated workspaces, including laboratories and workshops that would otherwise be difficult for start-up firms to access. They also act as a focal point for risk capital, funding organisations, and potential employees attracted to a critical mass of high-tech commercialisation activity.
- Researchers often lack the capabilities and networks to successfully start and run businesses. Technology incubators are helpful in that they provide a range of business services, including training, mentoring, finance advice, market research and technical consultancy. Many researchers involved in spin-off activity also wish to maintain their research position in their institute. As many technology incubators are institute-owned and/or even operated, this is often possible.
- High-tech SMEs are often attracted to technology incubators on account of the latter’s proximity to research universities and PRIs. This reflects incubators being well-placed to provide scientific support through direct links between tenant firms and research groups. Technology incubators can also harbour peer-based learning among tenant firms.
What factors should be considered when implementing technology incubator schemes?
Several factors should be considered when implementing technology incubator schemes:
- Availability of public funding: while technology incubators earn income from their services, this may be insufficient to support all of the infrastructure and services they can usefully provide. Technology incubators may therefore be partly dependent on government funding for their long-term operation. The extent to which such commitment can be accommodated will depend on the public sector research funding regime that prevails.
- Wider business environment: the geographic location of technology incubators is particularly important. Proximity to markets and financing, but also an industrial ecology that sees agglomeration in clusters can be highly beneficial to tenant firms. Success is much harder where these conditions are absent. Furthermore, IPR regimes need to be sufficiently robust to protect the largely intangible assets owned by tenant firms.
- Rules, ideas and incentives governing public research actors: technology incubators are likely to enjoy only minimal success where the rules governing the conduct of public researchers (many of whom are civil servants in several OECD countries) prevent them from engaging in commercial activities. Prevailing ideas around the roles of universities and PRIs can act as a further discouragement, as can the incentives shaping researchers’ progression along traditional academic career paths.
- Availability of know-how and skills: setting-up and managing technology incubators requires certain types of skills that tend not to be widely available and that take time to accumulate. As far as possible, arrangements should be put in place for incubators to exchange good practices.
OECD (2008), A Review of Local Economic and Employment Development Policy Approaches in OECD Countries, OECD LEED Programme, Paris.