Value creation in business incubation networks: The impact of innovation diffusion on intellectual capital development in start-up companies

Business incubation programs have been part of the economic landscape for three decades. The evolution of incubators into keystones of often large networks of subject matter experts suggests that one of their primary contributions is promoting the diffusion of knowledge, ideas, technologies, etc. to start-up companies via their business incubation networks. An area not specifically addressed in existing business incubation literature is the impacts incubators may have on helping start-up companies build sustaining long-term value through the creation and growth of intellectual capital. The initial focus of this research was to investigate the role of business incubators with respect to client start-up company intellectual capital development and the impact of innovation diffusion within business incubation networks on intellectual capital development. Although limited participation by incubators and incubating start-up companies in the study restricts the ability to draw any hard conclusions with respect to these objectives, one overarching observation drawn from analysis of the available data and discussions with incubator managers and start-up company officials is that incubators do not appear to focus specifically on helping their client start-up companies develop intellectual capital assets. Since incubators are constantly challenged to utilize their resources in a manner that maximizes the return on their investment or maximizes their performance against established objectives and since recent studies indicate that intellectual capital is positively linked to start-up company success, market value, innovativeness, marketplace agility and adaptability, and value creation potential, this research concludes that incubators should consider focusing more attention on intellectual capital development as a means to attain their goals. In addition, several clues were obtained from the available data by comparing variables and visually examining data patterns that may help guide other future research. Specifically, the data provided clues that: (1) there may be practical limits to how much knowledge, skills, tools, ideas, and other forms of technology can be effectively diffused to incubating start-up companies in a given time period, (2) there may be practical limits to effective incubation duration, and (3) relational capital development during incubation may not be as effective as it could be.