The Incubator Model In Order To Explain Commerce Essay


In order to explain preciously what the involvement is of the government concerning incubators, a description of what an incubator is and what kind of actions it takes is necessary. The role of new companies are carrying is rather an important role in fueling the economy, however, the foundation of newborn companies are frequently characterized by having a tough time in which they struggle to make it through the first years (Storey, 1994; European Commission, 2003; OECD, 2002). The risk that new and small companies are carrying is higher than those of well-known and established companies. The reason to this matter is that the liability of newness and the liability of smallness is relative small among the population (Stinchcombe, 1965 ; Freeman et al, 1983). To circumvent some of these barriers, the solution is to establish a supportive environment for new young companies in which they can develop gradually. For that reason, the concept of an incubator has risen.

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The initial objective of the business incubator is to provide business assistance to companies in the early stages of their development in order to increase the survival-role of the firm. This can be done by focusing on how an incubator can compensate some of the resource deficits of young companies. Some measures that incubators take to overcome this, is by providing flexible office space, share equipment and provide some administrative and supportive services( Allen and McCluskey, 1990 ; Grimaldi and Grandi, 2005). Because nowadays these precautions aren't sufficient anymore, an incubator should provide next to the physical infrastructures some business trainings, provide access for networking and consulting in all areas of expertise (Hackett and Dilts, 2004; Peters et al., 2004; McAdam and McAdam, 2006). Due to this, we can say that there are no incubators who are exactly the same or as Aernoudt (2004) articulates it, "the term business incubator is becoming more and more of an 'umbrella word', covering a heterogeneous reality."

Trough time, a relative high number of definitions are suggested in literature with a different label such as seedbeds, business accelerator, science park incubators, industrial parks, networked business incubators, … Those labels indicates which strategies and priorities the incubators are using. This signalize a spectrum from a focus on value added trough real estate to the capitalization of investment opportunities and fostering of new enterprises. In between there are non-profit and academic incubators. (Bollingtoft 2012) Nonetheless off these different labels, they do have some key characteristics which you can find in the better incubators . These are: low price on renting the equipment and infrastructure, support services who are shared and reduce overhead costs, access to support network, existence of an entry and exit policy and finally coaching services (Aerts et al., 2007; Bergek and Norrman 2008).

Especially the role of networking plays one of the most important roles in an incubator. A good organized network is typical for the better incubators because it influences the emergence and successful evolution of a new company. It can provide information, advice and resources that are held by other institutions who are under normal circumstances not available on the market or very expensive (Witt, 2004). Networking can be compared with a bridge between the environment and its tenants with the aim of leveraging entrepreneurial talent and resources (Peters et al, 2004; Bøllingtoft and Ulhøi, 2005; Grimaldi and Grandi, 2005).

Although there is a necessary condition to make a network among entrepreneurs work out properly. It is the manager's role of the incubator, to facilitate and accelerate the formation of informal networks by bringing entrepreneurs together. As tenants are located under the same roof, it makes collaboration much more likely. Firms in science parks are more likely to have links with local universities and develop some kind of organizational relationship because of the geographical proximity. Incubator environment is conductive to cross-fertilization of ideas, advice and networking. Finding from European commission show that tenants should be clustered in the same sector for sharing to take place (European Commission, 2002; Lofsten and Lindelof, 2001; McAdam and McAdam, 2006).

Another difference we can find considering incubators is the origin of the incubators, this can be public or private. Private incubators are for companies who are pursuing to make profit and that receive a fee for the services they are providing to their clients. In principle, private incubators can be compared with a consulting firm that is specialized in new firm creation. While public incubators are generally founded to create a higher welfare and they are more focused on high-tech science based industries like the biology, chemistry and ICT sectors. They have an effective collaboration with universities and other research institutes which encourages researchers to take the step into taking the risk of initiating a company. (Sahay, 2008)

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The study of Abetti (2004) has shown that incubators can be divided over three main categories. Starting with the high-tech incubators, these are firms with high potential who are connected with major universities. Their objective is to promote growth of new firms by using the businesses technical resources and capabilities provided by those sponsoring universities. It is from those firms expected that they might become worldwide leaders in their chosen market segment. The second category are the specialized incubators, their goal is to serve in specific differentiated market segments based on a narrow band of technological and business skills. The last category are the incubators founded to improve the local business development. There objective is to decentralize activities and provide opportunities to the unemployed labor force in the local region.

In addition of helping young innovative firms to survive, the incubator is playing a significant role for economy and society as a whole. Next to creating new ventures which will lead to job creation, there is also the matter of cost effectiveness. This effectiveness shortly means that governments who invest lots of money in the incubator projects, eventually will earn even more money back trough taxes paid by the new employees, companies and others. Furthermore incubator will have an positive impact on the economic growth, revitalize the neighborhoods and makes the country more attractable for foreign investors (Abetti, 2004).

Transition of the government's role

The goal of institutional innovations is to achieve a better relation between firms and faculties. Before, there was an "endless frontier" of basic research funded as and in itself, hereby the only focus was long-term practical results. This model has been changed by a model of "endless transition" were the focus is on the linkages between basic research and utilization through intermediate processes which are often stimulated by the government (Callon, 1998).

In the beginning the linear model showed itself in terms of technology push or market pull, but this was not sufficient enough to let transfer of knowledge and technology happen. There was need for a new model in which regulations and rules are reshaped and where there was room for a new interface strategy which would involve technology push and market pull through new organizational mechanisms (Rothwell and Zegveld, 1981). In order to obtain such a new model, a Triple Helix series of conferences (Amsterdam, 1996; Purchase, New York, 1998; and Rio de Janeiro, 2000) were organized. During these conferences, there was a discussion led by policy analysts and academic professors on the subject of theoretical and empirical issues (Leydesdorff and Etzkowitz, 1998). The result of these conferences were different possible solutions of the relations among institutional entities of university, industry and government. These entities should assist to generate alternative strategies for economic growth and social transformation.

Trough time Etzkowitz and Leydesdorff (2000) describes the evolution of innovation systems and the current conflict over the roles that university, industry and government should be playing. Finally they concluded that there are three different models who can be played by these institutions.The first model, with the label Triple Helix 1, can be described as a specific historical model. In this model the state comprehend the role of university and the one of the industry, meaning that the government can direct everything. All the relations and interactions among those entities are watched over from above, meaning that the government allows only those interactions which the policy that they are pursuing. This kind of model could be found in the former Soviet Union which was characterized by its extreme socialistic behavior. (Fig. 1)

The second policy model excludes the government as an entity with absolute power over the other entities. In this model the institutes are separated from each other were they have strong borders that divide them and were relations between the institutions are prescribed preciously. This kind of policy can also be described as a "laissez-faire" model were institutions just do what they are supposed to do, but do not interact with each other if this isn't required. (Fig. 2)

As last model, we come to the Triple Helix 3. This policy model can be recognized by its infrastructure of overlapping institutional spheres. Each institution is taking part of the other entity's role because they all got an hybrid and transparent interfaces which encourages interactions among each other. (Fig. 3) .

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Nowadays the former two versions of the Triple Helix agreements bring some normative interests forth. Triple Helix 1 is considered on large scale as a failed policy model. This is because innovation was rather discouraged than encouraged and there was almost no opportunity for bottom up initiatives to evolve. The Triple Helix 2 embraces the laissez-faire policy like said before, but this served as reaction against the role of the government in model 1 that needed to be reduced. Currently, most of the countries and regions are trying to achieve some kind of shape of Triple Helix 3. The mutual aim is to realize an innovative environment consisting of university spin-offs, tri-lateral initiatives for knowledgebase economic development, and strategic alliances among firms, laboratories and academic research groups like incubators are these days. These agreements are not held by governments, but they are rather encouraged by them. This can happen trough direct or indirect assistance, or like happened in the USA through a change in legislation with the the Bayh-Dole Act or some foundations who are promoting innovation (Etzkowitz & Leydesdorff, 2000).

However this model seems to be abstract, it enables us to define different windows of theoretical appreciation in terms of their constitutive subdynamics (Leydesdorff and Van den Besselaar, 1997). It can be expected that these different subdynamics are selected asymmetrically upon each other as in the process of negotiation by using their specific codes. An example can clarify this, when markets and networks are selected upon technological possibilities, whereas the options for technological developments can also be specified in terms of market forces. Governments can step in by helping to create a new market or by changing the rules of the game. When the options seal in upon each other, next-order systems may become pertinent. These days, when a development of a new technological trajectory invokes, the use of a Triple Helix 3 policy model is increasing by involving government and even international levels like the EU.

Role of the government

An essential factor in promoting growth in output and employment is without any doubt entrepreneurship. Therefore most governments in developed counties have created business incubation to encourage new start-ups.

Both the central government and various state government are taking increased interests in promoting of entrepreneurship. Individuals are being encouraged to form new businesses and are being provided such government support as tax incentives, buildings, roads and a communication system to facilitate the creation process.

(Figure) from the moment an idea gets crystallized, one has to mobilize the resources including the financial resources. For this, every state government should develop its own innovative industrial strategies for fostering entrepreneurial activity and timely development of the technology of the area. The states should also have their own state-sponsored venture funds.

S&T Entrepreneurship Development

National Science and Technology Entrepreneurship Development Board (NSTEDB) aims to foster entrepreneurship among S&T persons through its programs and activities. National Science and Technology Entrepreneurship Development Board (NSTEDB) aims to foster entrepreneurship among S&T persons through its programs and activities. Major aim of the projects implemented by the Board is creation of techno-entrepreneurs among the S&T persons through structured training programs and other facilitating mechanisms. The programs aim to create additional employment through technology-based entrepreneurship and application of S&T tools and methods. During the year 2005-2006, the NSTEDB continued to pursue and strengthen its existing activities/programs, in addition to conceptualizing and initiating a few new projects.

Concept: As a particular cluster becomes more successful because of the existence of the incubator, the benefits of this success spill over into the region, thus strengthening the RIS, which may comprise several clusters. (Abetti 2004) shows how a group of incubators that is governed centrally can support RIS development of a technopolis. As the technopolis concept includes a research university as the main source of innovation and technology, incubators can be used as tools by the university to further stimulate this innovation process. A life cycle of an incubators exists out three stages: the start-up, business development and maturity stages.

Infrastructure and support services for the development of technology-based industries: two strategies are implemented to attract leading companies. The region, which was equipped with infrastructure and other support services, was designated as the initial platform as it had an environmental conductive for business. The area had already some of the requisite infrastructure and support services as there were a number of research institutions and universities, both publicly and privately sponsored; government-based think tanks; a large pools of skilled workers from the universities and the research institutes located in the area. They created as well a government regional development agency and given the responsibly to oversee much of the progress and achievement of the objectives. Next to that it was to help managing the infrastructure and help develop and manage incentives and other support services within the area. The government helped by creating a bill which entitled the companies to receive tax advantages on their income and import duties, to employ unrestricted numbers of foreign-knowledge workers, to have a flexible ownership basis and financing options, and to receive privilege to government-contract businesses.

The incubator are government-owned companies, operated under and sponsored by the Ministry of Science, Technology, and Innovation (MOSTI).

The challenge is to make sure that all persons working in the incubators are top professionals. The quality working group produces systematically quality standards and procedures, that are written, discussed, approved and become mandatory guidelines for all incubators. The incubators draw on a large network of experts, usually professional consultants and some entrepreneurs who are recognized as leaders in a specific area. The TE-Center evaluates the quality of incubators with comparisons between incubators, annual feedback from customer companies and through self-evaluations of the incubators. The center also keeps statistics on companies and works with the evaluation methods of the European Union, since it provides 40% of the funds. Nonetheless, a ''typical'' company starts with one or two employees, leaves the incubator at the end of the second year with seven employees, and reaches 40 employees in the fifth year. Companies are not looking for spectacular growth as in the United States, but prefer to limit risks and stay small (50-100 employees). This limitation may also be due to the scarcity of venture capital and mistrust of rapid international expansion. TE-Center offers a variety of initiatives and programs to promote entrepreneurship and assist entrepreneurs in starting and growing their companies: The Start Point project, The Growh Path, ..

Best practices: if all incubators learn from each other and adopt the best practices, adapted as necessary, this will raise the added value of all the incubators in the region for their clients and for society and their prestige among peers worldwide. Outside Finland, for instance in the United States, incubators have originated as wild flowers, from uncoordinated individual initiatives of universities, state governments, municipalities, private companies, for profit and not-for profit organizations, etc. his approach has led inevitably to duplication of efforts, competition for funds and especially for tenants, political lobbying, over-emphasis on some technologies and market fads and neglect of other less glamorous technologies, and worse, high mortality rate of incubators, based on the Darwinian ecological theory of survival of the fittest. In turn, this unregulated competition and lack of coordination at the regional level has stressed the incubator managers and staff, resulting in a high turnover of personnel. In contrast, the incubators in the Helsinki region appear more as a well arranged and tended garden, with beds displaying mostly different flowers. The part owner of the garden, of course is the TECenter and the master gardener is the ''godfather'' Esa Sahlman. The basic differences in the two approaches, spontaneous wildflowers versus a managed garden, may be attributed to the cultural differences between the individualistic American ''cowboys'' and the consensus and cooperation oriented Finns.

Regional best practice A-proposal evaluation Set up at the regional (not national) level an organization to evaluate all proposals for new incubators. Only the approved incubators will receive government funding.

Regional best practice B-government funding. Ensure long term government funding of incubators in the region by emphasizing their contribution to a high priority continuing political issue (job creation to reduce unemployment in the present case), and by obtaining joint support from several government organizations (three ministries in this case, plus the Finnish representatives in the European Union).

Common best practice 1-incubator marketing and public relations. Each incubator has its own marketing plan but there are common guidelines and a permanent working group that ensure that potential capable entrepreneurs will know and contact the incubator(s) most suitable for their business objectives. This process also ensures that the incubators present a ''united front'' in their publicity and relationships with sponsors, customers, government officials and organizations.

Best common practice 2-customer contacts and company selection. Incubators follow common procedures for taking care of their customer contacts, company evaluation and admission according to the criteria specific to each incubator, but also common rules and instructions. This process ensures that different types of contacts from a variety of customers are successfully managed and the selection process is flexible and fair for all applicants.

Best common practice 3-check-in and contracts. In addition to the practical steps of check-in and negotiation of contract with the customer, the incubator staff evaluates the strength of the business idea and the possibilities of realization of the company's business plan. On this basis an estimate is made of the required actions, such as technical and business development, entrepreneur training, market research, financing, etc. This process ensures that the incubator will have a valid contract and a plan for assistance and cooperation tailored to the needs of the client company

.Best common practice 4-starting procedures and customer guidance. The basis for the customer guidance and development activities is stated in the contract and development agreement, which includes the rights and obligations for both the customer company and the incubator. This process ensures that the company has the necessary qualifications, ability and resources to work productively in the incubator and has also obtained the required approvals, licenses, etc. for operation, for instance insurance.

Best common practice 5-company development, growth and support. In order to accelerate the development and growth of the companies, the incubator will focus its activities in congruence with customer's needs and market orientation by utilizing the services available and by consultingand controlling. The focus is on mapping out the demand and market needs; product development and production; sales and marketing; budget and profit and loss reports; personnel and other resources. This process ensures that the start-up company develops its operations systematically, becomes well established, grows and becomes internationalized.

Best common practice 6-exit follow-up and feedback. Once a company is stable and is prepared to ''graduate'' from the incubator, it will be treated in a business-to-business-like manner and will be asked to give feedback in order to improve the incubator operations. Also, the incubator will continue to monitor the further development of its ''graduates'' and utilize these success stories as examples and role models. In addition, the graduated entrepreneurs will act as marketing persons, tutors, sponsors, and possibly customers for the incubator and its tenants. This process ensures that the exit process reinforces company satisfaction, and that the company will continue to supply information and assistance to the incubator.

Key success factors: The principal factor contributing to Finland's top ranking in growth competitiveness has been the development of national innovative capacity through the creation of agglomerations of knowledge-intensive industries. Rather than following the technopolis or cluster model. This approach assumes that the most fundamental resource is knowledge and the most important process is learning and that learning is predominantly an interactive social process. Therefore, there must be a strong network of cooperation between new entrepreneurial ventures, research institutions, universities, established firms and providers of knowledge-intensive business services, to disseminate and transfer both codified and tacit knowledge. This learning infrastructure

cannot be built effectively through market mechanisms, or by the government picking ''winners'' by selecting certain industries. Rather, the role of the government is to foster ''a complete set of externalized and localized core competencies and learning capabilities such that all participants in a region can thrive and win in the international marketplace''. However, in addition to stimulation and funding by the central government, the active involvement of local, regional and municipal communities, industrial and professional associations is crucial for success.


Centers, Angel Fund and public venture capital programs. They also encourage promotion of private venture capital firms. While Angel fund is provided by high net worth individuals (of late certain govt. departments as well), venture capital, which is a means of financing growing private companies, is provided by venture capital funds, both in public and private sectors. Finance may be required as seed capital, for the startup, development/expansion or purchase of a company via a mechanism such as in a management buyout. Both establishing a new business as well as growing businesses always requires

An angel investor or "angel" (known as a "business angel" in Europe), is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors are organizing themselves into angel networks or angel groups to share research and pool their investment capital.

Investment profile

Angel investments bear extremely high risk, and thus require a very high return on investment. Because a large percentage of angel investments are lost completely when early stage companies fail, professional angel investors seek investments that have the potential to return at least 10 or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering or an acquisition.

When venture capitalists invest in a business they become part-owners and typically require a seat on the company's board of directors. They tend to take a minority share in the company and usually do not take day-to-day control. Rather, professional venture capitalists act as mentors and aim to provide support and advice on a range of management and technical issues to assist the company to develop its full potential.

Finance - The venture capitalist injects long-term equity finance


Mentoring - The venture capitalist is able to provide strategic, operational and financial advice

Alliances - The venture capitalist also has a network of contacts in many areas

Facilitation of Exit - The venture capitalist is experienced in the process of preparing a company for an initial public offering (IPO) and facilitating in trade sales.

In developed countries such as U.S.A. and U.K., venture capital financing, is mainly through private initiative, with hardly any involvement of the government institutions. It has done great service in stimulating entrepreneurial growth in unproven and risky ventures which offered high potential for growth. Government not only plays a pro-active role in creating a regulatory environment to secure benefits to the small and medium enterprises (SMEs) but also provides venture support through different arms.

Entrepreneurship Economics

Due to the uprising of globalization and an era characterized by its knowledge economy, it is mandatory that regional economies needs to be adjusted and restructured constantly in response to the changing behavior of customer preferences and production technologies (Shefer, 1999). Therefore, entrepreneurship economics' market dynamics theory appears to be increasingly more instructive and flexible for regional development strategy than the classical theory with his general equilibrium theory.

According to this classical economic model of Schumpeter and Kizner, they explaining that entrepreneurial activity is related to the process through which the market economy adjusts in response to factors which are creating an disequilibrium. This is why there was need for business incubators who would serve as some kind of "nest for entrepreneurs" (Hackett and Dilts, 2004). The approach they are mainly focusing on are the personal traits of entrepreneurs such as an innovator, a new young company, a self disciplined manager. The result is that many literatures are reasoning that the business incubators' function is an unlimited resource for deposing entrepreneurs as special human resource while the role of the government is overlooked or even excluded most of the time.

But this gradually changing like mentioned above in the part of Triple Helix 3, economics are relocating the position of the government in their conceptual framework. In this framework, the government is doing more comprehensive attempts at identifying the economic importance of entrepreneurship.

Etzioni commented on the tendency of the distinction between entrepreneurs serving as an economic agent and entrepreneurship as a system in which entrepreneurs and governments operate with legal and institutional arrangements and an environmental structure. So in his economic analytical framework, he does not emphasis on entrepreneurship at an individual level. Sometimes it might happen that entrepreneurship occur at a given basis on individual level, Etzioni argues, but the most common form of entrepreneurship is happening in a collective institutional form whereas decision-making is a routine and so is entrepreneurship a routine as well (Etzioni, 1987). Considering this, collectivism is the basic form of human organization, collective beliefs and values are influencing the preferences for and the constraints upon decision making. This will also reflect upon activities such as entrepreneurship. In this sense, government with its power in hands can play an influencing role during the legitimization of entrepreneurship on national and even on local level.

2.2. European Countries

Originally the concept of an incubator is coming from the USA, over there they saw incubators as an successful experience for regional economic transition. During the time USA was implementing this kind of models, Western Europe was facing a serious unemployment problem because they failed to adapt to the knowledge economy in the 1980's (Acs, 1998). As reaction to the problem, the major countries of Europe (Germany, Italy, France and Great Britain) adopted the model of incubation in which entrepreneurship and its favorable environment are essential in order to revitalize the traditional industry. That is why the development of business incubators and its network with the local economy was adopted in Europe at a spectacular speed during the past 30 years.

The maximization of the government's profit in the development of an incubator is based on the ability of the incubator to embed itself with the local economy and their catalytic action to small business prosperity. On the one hand government's have to invest a certain amount of capital in the construction of incubators because of the absence of entrepreneurship and the potential market failure considering incubators' significant externality effect, no matter that the money are from territorial governments or commonwealth and federal governments. On the other hand, the governments will tend to share the property right with local communities, otherwise an exclusive control of the government must lead to isolation between the incubation supply and the regional economic demand. Such isolation equals the failure of an incubator's intention to promote local entrepreneurship, which is totally against the socioeconomic approach.

Nowadays, most of the incubator projects are implemented as initiatives from regional economic development offices together with the country's chamber of commerce. This relationship between these two institutes wasn't always that smoothly in the past, this was one with disagreements and lots of attempts to co-operate remained just intentions. But the introduction of the incubators changed this, they formed a concrete basis for cooperation between those two entities. For example in more than 30% of German incubators, the two entities are both partners. Besides this, there are several cases in which the local government gets a part of the shares in an incubator while the chamber of commerce is active in management. Next to the government, the financial sector is often involved in many incubator projects. In more than 45% of the incubators in Germany, financial institutions are listed among the partners. Although these financial institutions are mainly public saving banks and just for a very small part private banks who want to invest, they claimed earlier that banks in Germany used to disregard new innovation oriented firms, so such change in mind of the financial executives is very positive. (Yu, 2005)

While there is an arrangement between the government and the local communities to remodel from a traditional industrial economy to a knowledge economy, the maximization of the government's profit may simply be achieved through cooperation between different interest groups and by the reduction of social transaction costs. In order to let this happen, the government must play an intermediary role in which it attempts to facilitate the plan of engaging local communities to stimulate entrepreneurship, which suits perfectly with an incubator model.

The Government's Role in Networking and Benchmarking

When lots of communities begin to develop their business incubator programs, their developed an uneven part of enthusiasm between the federal state, and local funding agencies and legislative bodies (Sherman and Chappell, 1998). An example of Italy will give a better view concerning the government's role in balancing the uneven enthusiasm and reducing the transaction cost which was generated through the process of sharing information.

Business incubators in Italy are moreover local alliances who are composed of commercial, political and trade unions leaders, because the government hopes to integrate its policies with the local interest groups' concerns all along.

Local alliances for business incubator's development in Italy are composed of political, commercial and trade union leaders because the government hopes to integrate its policies with

the local interest groups' concerns all along. The Calabria regional government put this forward

by becoming a shareholder in the new Business Incubator Center under construction there, which

is also a good example for securing the local authorities' oral commitment of support into

practices. A key factor in building such alliances is that the governing system could be made

neutral by designing a board or committee. The majority of these boards are comprised of

business, community and government representatives in Italy while all the representatives are

required to be aware of two principles: firstly, they have to submerge their differences and

commit themselves to work together to achieve common goals; and second, each leader has to have a broader vision of and for their community than their own role in it (OECD, 1999). SPI-

Promozione e Sviluppo Imprenditoriale S.P.A-- which is dedicated to entrepreneurship and

development is one of the principal agencies responsible for inspecting the formation of an

incubator's board.

Meanwhile, in an age of decreasing financial public support of government programs, there is

increasing pressure on economic development programs to clearly justify their benefits (Sherman

and Chappell, 1998). Both the policy makers and stockholders demand to identify and establish

good practice as well as develop 'benchmarks' to measure performance and impact. As a

reaction, benchmarking projects in Europe have been ubiquitously supported by governments not

only at the national level but also at an international level. For example, in 2002 UK business

incubation (UKBI) initiated a project sponsored by Welsh Development Agency to develop an

incubation benchmarking framework, with a view to establishing a set of 'benchmarks' for the

incubation industry in UK. Organizations which are doing the same research funded by national

governments can be found as ADT - Association of German Technology and Business

Incubation Centers in Germany, SPI in Italy. What is more, the European Commission's

Enterprise Directorate-General has created Business Incubators Database which objects to

provide an overview of the business incubators in the 15 EU Member States, the EEA countries

(Norway, Iceland, Liechtenstein), Switzerland and the 13 candidate countries. It also engages in

establishing network and implementing benchmarking among all the incubators in European


Without the inclusive property right mechanism, incubator construction in European countries

will not be able to contain so many interest groups' (e.g. the government, local entrepreneurs,

financial institutions, and research institutes) incentives and continuously attract their participation and investment. Followed by the case of China, this part particularly exhibited the

importance of institutionally converging the government's interest and the local communities'

interest with the respect to cultivating entrepreneurship and fostering incubation programs.

Hereby, the government role as a supplier of appropriate institution and a coordinator in

incubators' networking as well as continent wide benchmarking should be acknowledged and

emphasized based on the European case.