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A Control Group Study of Incubators’ Impact to Promote Firm Survival

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  • Schwartz, Michael

Abstract

It is widely unclear as to whether start-up firms supported by publicly-initiated incubator initiatives have higher survival rates than comparable start-up firms that have not received support by such initiatives. This paper contributes to the underlying discussion by performing an empirical analysis of the long-term survival of 371 incubator firms (after their graduation) from five German incubators and contrasting these results with the long-term survival of a control group of 371 comparable non-incubated firms. The analysis covers a 10-year time span. To account for the problem of selection bias, a nonparametric matching approach is applied to identify an appropriate control group. For neither of the five incubator locations we find statistically significant higher survival probabilities for firms located in incubators compared to firms located outside those incubator organizations. For three incubator locations the analysis even reveals statistically significant lower chances of survival for those start-ups having received support by an incubator. We therefore arrive at the conclusion that being located in an incubator - contrasting the widespread rhetoric of policy actors and incubator stakeholders - does not increase the chances of long-term business survival.

Suggested Citation

  • Schwartz, Michael, 2010. "A Control Group Study of Incubators’ Impact to Promote Firm Survival," IWH Discussion Papers 11/2010, Halle Institute for Economic Research (IWH).
  • Handle: RePEc:zbw:iwhdps:iwh-11-10
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    Cited by:

    1. José Ignacio Rivero, 2015. "Impact of Incubation on Innovative Firms," Documentos de Trabajo (working papers) 0315, Department of Economics - dECON.

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    More about this item

    Keywords

    business incubators; firm survival; control group; matching; survival analysis; technology policy; Technologiezentren; Gründerzentren; Kontrollgruppe; Matching; Überleben; Überlebenszeitanalyse;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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