Business Incubation as an Economic Development Strategy: A Literature Review

Article excerpt

As a number of organizations in United States, Europe, Asia and developing countries seek to implement business incubation programs, the aim of this paper is to review the literature and provide the strength and weakness of economic theories with successful implementation worldwide. A business incubator offers an ideal environment for start-ups and entrepreneurs to transform their ideas, patent and innovation into viable business ventures. Entrepreneurs and small businesses receive support and guidance to be able to start up their business concepts, operate effectively and keep up with the pace of change while remaining competitive. Adaptation of a Business Incubator Model leads to 1) the support of diverse economies, 2) the commercialization of new technologies, 3) job creation and 4) increases in wealth. The aim of this paper is to provide a wide literature review that seeks to indicate the potential benefits of business incubation as a process while focusing on the identification of the economic and incubation theories as a tool for economic development. The authors' professional experience on the topic provides the foundation for this paper. The findings of this research can help policy makers, governments, practitioners to predict possible strengths and weaknesses, in their implementation of incubator programs, leading to better planning and successful implementation. Implementing strategic approaches of economic theories requires a commitment by top management. Participants can learn the strength of the application of the economic theories in business incubation programs. This study has suggested a number of ways in which Business Incubators can be used to stimulate economic growth.


There are many definitions for business incubation. However, most agreed that a business incubations program is an economic and social program which provides the intensive support to start-up companies, coach them to start and accelerate their development and success through business assistance program. The main goal is to establish the successful start up companies that will leave the incubators financially viable and freestanding. In addition, the graduates companies' outcomes are jobs creation, technology transfer, commercialize new technologies and create wealth for economies.

The pervious and current literature has been proven the positive impact of business incubators goals. First goal: it is supporting regional development through job creation (Allen and Levine, 1986; Mian, 1997; Thierstein and Wilhelm, 2001). Second goal: Incubator generally aids in the growth of new ventures (Campbell, 1989; Petree, 1997). Third goal: Incubators fosters technological innovation and industrial renewal (Allen and Rahman, 1985; Similor and Gill, 1986; Allen and McCluskey, 1990; Mian, 1996).

The objective of this paper is to show the strength and weakness of economic theories with successful implementation worldwide. It will focus on the concept of economic development, identification of economic theories and business incubation as tool for economic development.

The paper is structured as follows: Section 2 provides a thorough review of the literature on the concept of economic. In Section 3 the research methodology included the evidence from literature review and ten successful case studies to illustrate different key performance of the business incubation. In Section 4, the authors briefly discuss the finding of the study drawn from quantitative approaches of incubators. Section 5 concludes with implications of the business incubators from successful developing countries.

Related Literature Review of Concept of Economic Development

Economic development defines as the process of creating wealth through the mobilization of human, financial, capital, physical and natural resources to generate marketable goods and services. The economic developer's role is to influence the process for the benefit of the community through expanding job opportunities and the tax base (AEDC 1984, p. …


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