World Journal of Enterprenuership, Management and Sustainable Development, Vol. 6, No. 4, 2010
BUsINess INCUBaTORs MODels Of The
Usa aND UK: a sWOT aNalysIs
Hanadi Mubarak Al-Mubaraki1
Kuwait University, Kuwait
Michael Busler2
Richard Stockton College, USA
Abstract: Purpose: To identify the strengths, weaknesses, opportunities and threatsof business incubator models and their potential use in worldwide. Methodology:We studied two international cases: a)United States, b)United Kingdom. Findings:The results highlight the similarities and differences between the countries. It addsknowledge for both academics and practitioners who are interested in business in-cubation. Value: This paper is the first to utilize the SWOT technique to analyzethe business incubation field and provides recommendations to implement successfuladoption of the incubator’s strengths. The potential of Business Incubators who actas models in worldwide and their contribution to the economy, the active role theyplay in the local, regional and national economic development are discussed. Impli-cations: Adaptation of a Business Incubator Model leads to 1) the support of diverseeconomies, 2) the commercialization of new technologies, 3) job creation and 4)increases in wealth, given that weaknesses can be overcome.
Keywords: Business Incubators, Economic Development, Maryland Technology Devel-opment Corporation (TEDCO), Coventry University Enterprise (CUE), SWOT Analy-sis, Technologies Commercialisation
In the USA and the United Kingdom it wasrecognised that fresh strategies were neededto help regenerate crisis sectors that experi-enced a significant rise in unemploymentresulting from the collapse of traditional in-dustries. The origins of these crises can betraced back to Western industrialised coun-tries in the late 1970s and early 1980s. It
was, however, during that time, business in-cubators began to be used as instruments tosupport innovation and technology transfer(Allen and McCluskey (1990) and McAdamand McAdam (2008)).
The Center for Strategy & EvaluationServices (CSES) for the European Commis-sion Enterprise Directorate – General (2002,p 18) defines a business incubator is an “or-
1Corresponding author: Dr Hanadi Mubarak Al-Mubaraki, Teaching Assistant, Civil Engineering De-partment, Collage of Engineering, Kuwait University, Kuwait, P.O box 39964 Nuzha, Kuwait, Email:[email protected]. Michael Busler, Associate professor of Finance and fellow at The William J. Hughes Center forPublic Policy, Richard Stockton College, Jimmie Leeds Road, Pomona, NJ 08240, USA, Email:[email protected]
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ganisation that accelerates the process ofcreating successful enterprises by providingthem with a comprehensive and integratedrange of support including: Incubator space,business support services, and clustering andnetworking opportunities by providingthem with services.”
The National Business Incubation Asso-ciation (NBIA) of the United States definesbusiness incubators as entities that “acceler-ate the successful development of entrepre-neurial companies through an array ofbusiness support resources and services, de-veloped or orchestrated by incubator man-agement and offered both in the incubatorand through its network of contacts” (NBIA1998, 2002, 2005).
Based on those definitions, Business In-cubators are used as economic developmenttools by almost all countries. Typically, anincubator provides a safe haven for a firm inits early stages of growth. This is accom-plished through a mix of tangible and in-tangible services such as providing physicalspace and sharing services, along with ad-ministrative assistance, consulting, coach-ing/training/networking, and access tofinancing. The entrants in these programsare small commercial product or servicecompanies. The Business Incubator’s pri-mary objectives are job creation, revitaliza-tion, economic development, support toparticular target groups or industries anddevelopment of companies and clusters.(Hackett, S.M., Dilts (2004a); Hackett &Dilts (2004b); Chinsomboon (2000);Lalkaka (2000, 2001, 2002, 2003); Temali(2002); Rice, Matthews (1995).
Most of the current literature discussesbusiness incubation as an economic develop-ment tool (Campbell, C., Berge D., Janus J.and Olsen K (1988); Campbell (1989)).
Some of the more recent literature discusseseconomic development strategy and the useof business incubation services to influencelong term success rates (Al-Mubaraki (2008);Al-Mubaraki, Al-Karaghouli, Busler (2010)).The American Economic DevelopmentCouncil’s definition of economic develop-ment is a “process of creating wealth throughthe mobilization of human, financial, capital,physical and natural resources to generatemarketable goods and services. The economicdeveloper’s role is to influence the process forthe benefit of the community through ex-panding job opportunities in the tax base”(Malizia and Feser (2000)).
The benefits of business incubators arevaried depending on the stakeholders whichinclude the local, national and internationalcommunity, research institutes and universi-ties, government, businesses and the tenants.Regarding the International community, in-cubators generate opportunities for trade andtechnology transfer between client companiesand their host incubators. For the local andnational community, incubators create self-esteem and an entrepreneurial culture (Josephand Eshun (2009)). For research institutesand universities, the business incubation cen-ter (BIC) helps strengthen interactions be-tween university-research-industry andpromotes research commercialization (Lewis(2001)). For Government, the incubatorhelps overcome market failures, promotes re-gional development and generates jobs. Andfinally for tenants, incubators increase theprobability of success. (Lalkaka & Abetti(1999); Lalkaka, Shaffer (1999)).
Thus it is the aim of this exploratory re-search to determine the strengths, weaknesses,opportunities and threats of the incubatormodels in the US and UK and find differ-ences as well as similarities. We will detail thetwo models and then perform the SWOT
336 H. M. Al-Mubaraki and M. Busler
analysis. We conclude by summarizing thefindings and offering some recommenda-tions. This paper should serve as a beginningpoint for comparison purposes, which mayultimately lead to a global business incubatormodel recognizing that variations may existbased on country or culture.
TheOReTICal BaCKGROUND –
BUsINess INCUBaTION MODels
(a) United states Model
Incubators in the United States are well es-tablished, numerous, often innovative andlocated at the heart of an environment thatencourages entrepreneurism. They do, how-ever, vary widely as both public and privateentities often work together. Some univer-sity-based incubators are very dynamic.Other universities develop technology trans-fer mechanisms in response to their states’massive investments in scientific research.Entrepreneurship education is thriving withthe help of major foundations and the Na-tional Business Incubation Association(NBIA) has become a driving force for busi-ness incubation. Here business incubationattempts to increase awareness and under-standing of the incubation process amongentrepreneurs and community leaders andto strive for greater excellence in these pro-grams. (Peters, Rice, Sundararajan (2004)).
The United States has the largest numberof business incubator programs in the world.In many ways the U.S. has been a pioneerin this industry and the growth has beenrapid from less than a 100 in the 1980s toabout 1,800 in the 2010 (NBIA (2010)).The United States government has played adominant role in supporting incubatorswith legislative allocations for economic de-velopment and job creation. They have alsoprovided support at both the local and state
level by providing sponsorship (Chandra& Fealey (2009)). Appendix 1 shows thedistribution of incubators worldwide.
Wiggins and Gibson (2003) concludethat business incubators must accomplishfive tasks well in order to succeed. 1) Estab-lish clear metrics for success, 2) provide en-trepreneurial leadership, 3) develop anddeliver, value added services to membercompanies, 4) develop a rational new-com-pany selection process, and 5) ensure thatmember companies gain access to necessaryhuman and financial resources.
There are two types of support availablein the United States: formal and informal.Formal support includes capital funds fromthe legislature for incubator infrastructurein the form of competitive grants from theState to select incubators, matching grantsfor service support for new ventures andfunds that are channeled through the StateEconomic Development Agency. Informalsources of support includes tax incentives inthe form of tax credits to businesses invest-ing in incubators, low interest loans to localgovernment agencies to support investmentin incubators, and private partnership fund-ing where incubators raise money fromother related businesses or from banks foroperational funds. (Chandra & Fealey(2009)).
To describe the incubator manager aswell as the characteristics of business incu-bators, the National Business Incubator As-sociation performed a study in 2010 whichreported the results from of 124 incubatorprograms of both NBIA members and nonmembers noting that 58% were full timeincubators, 26% were from part time incu-bators and 16% were from other incubatorprofessionals. This study found that biotechincubator managers earned an average an-
Business incubators models of the USA and UK: A SWOT analysis 337
nual salary of $131,800 in 2009, followedby other technology incubator managerswho earned $92,151 and mix –use incuba-tor managers with $76,500. Female incuba-tor managers earn $ 75,764 while malesearned $92,167 (Knopp (2010)).
The age of business incubation programsrepresented in the survey reflects the indus-try’s recent growth. More than 51% of fulltime incubator managers who responded tothe survey directed programs that hadopened their doors since 2000. Of these,26% of the managed incubators haveopened since 2005 when NBIA conductedits last survey. More than 28% of respon-dents had lead programs that began accept-ing clients between 1995 and 1999, and21% had programs that began operationprior to 1994 (Knopp (2010)).
Today, the programs with full time man-agers are located 40% in urban areas, 35% insuburban areas and 25% in rural areas. Theprimary sponsors of incubation programs withfull time managers are 37% university, 19%nonprofit economic development agency,18% government, 9% no sponsor, 7% hybrid,5% technical 2 year collage and 5% others. Inaddition, the types of incubation programswith full time managers as 53% mixed –use,33% technology, 9% biotechnology and 5%other. Finally, the average square footage ofincubation facilities with full time managersare 50,400 for biotech, 40,693 for mixed-use,29,932 for technology and 22,714 for others(Knopp, 2010).
In general, in the United States, incuba-tors were moving toward a service mix thatemphasized higher value-adding servicessuch as networking, which is now recog-nized as more valuable in the service con-tinuum of incubators than mix–useincubators in rural regions or regions un-
Western Europe has a wide range of incuba-tor models with countries at various stagesin the process of developing networks at theEU level. The European Commission’s En-terprise Directorate General undertook amapping exercise with benchmarking ofBusiness Incubators and compiled a data-base of all incubators in EU Member States.The results revealed that there are currentlyabout 900 business incubators (NBIA2010). Appendix 2, shows the summary ofBusiness Incubators in EU Member States.
We selected a United Kingdom incubatorbecause UK was one of the first countries toestablish incubators in Europe. In 1975,British Steel formed a subsidiary known asthe British Steel Industry (BSI) to createjobs in steel closure areas (Aernoudt (2004);Voisey, Gornall, Jones, Thomas (2006); Eu-ropean Commission (2002)). Both in theU.S. and in Europe, the business incubationconcept evolved gradually. In Germany, theUniversity of Berlin established the first in-cubator in 1983, aiming at “facilitating thetransfer of research findings to the industry”(Aernoudt (2004)). In France, the first in-cubator was created in 1985 as an incubatorwithin the Sofia Antipolis Technology Park(Aernoudt (2004)). Currently Germany hasabout one third of the incubators in the EUmember states. Most of these were set up inthe western part of the country during theearly 1980’s. Today Germany has Europe’slargest business incubator association. Thefeature of German incubators is that theyare linked mostly with universities andR&D institutes. France has 21% of the in-
338 H. M. Al-Mubaraki and M. Busler
cubators in the EU’s Member States. How-ever, only 50 of the 192 programs meet the“minimum standard”. UK has just 16% ofthe total with 144 business incubation pro-grams. A European Business and InnovationCenter Network (EBN) Business IncubationCenter (BIC) observatory report demon-strates the European model for all memberlevels (EBN 2009). The EBN experiencedan increase in the number of BIC’s demon-strating the business and innovation supportmodel and is generally considered to behighly relevant, very efficient, and alwaysmore embedded in the strategies of localeconomic development. The core focus ison all types of innovation and BIC’s havedemonstrated a high capability of adaptingtheir models and their activities.
In the UK model, with 35 years of expe-rience, the BIC has become increasingly ad-equate and flexible to adapt itself to thechanging surroundings and is capable of re-maining in the forefront of innovation. It isnot by coincidence that large companies areshowing more and more interest in the BICmodel and are getting in touch with thenetwork as a viable source of innovation de-tection. EBN’s quality system, which wascreated 5 years ago to manage the EC BIClogo for the European Commission, has as-sured a high level of quality that contributesto the achievement of results of the networkin terms of promotion and networking. TheEBN objective is to keep those at high levels(EBN 2010).
The BIC’s mission (EBN 2008, 2009),which remains and needs to remain the cre-ation of innovative enterprises, can betterbe reached if appropriate and effective agree-ments are carried out with other local stake-holders as well as with other specific andspecialized service oriented organizations.This can increase the delivery of a more ho-
listic, collaborative and efficient level of sup-port to the end users who are the innova-tion-based entrepreneurs of tomorrow’sEurope.
The EBN’s (2009, 2010) BIC’s networkconfirmed the fundamental role of BICs aslocal development instruments within theirregions. This has been recognized by thelocal and national policy makers and hasconfirmed BIC’s “public interest” mission.Among those, 14% of BIC’s report beingprivate while 78% are non-profit The legalstatus of the BICs indicates that over 50%represent public bodies or public equivalentbodies. Regarding the size, the average squaremeters available for incubation activities ofowned incubators was 2945 in 2007 and3159 in 2008. In addition the average incu-bator space occupancy rate was 83% in 2007,78 % in 2008. In addition, the average incu-bation time is approximately 3 years.
EBN(2008) reports that the averagenumber of tenant companies in the incuba-tors operated by BIC’s in 2008 was 30,while the median value is 23. The averagenumber of employees within incubators was155, with a median value of 92. The Euro-pean governments play a predominant rolein supporting incubators with legislative al-locations for economic development andjob creation.
MeThODOlOGy
Concerning the planning cycle, which isthe first stage of an effective case studyanalysis we identify the goals and objectivesand then translate them into specific keysuccess indicators, assessing present and ex-isting internal strengths and weaknesses, aswell as external opportunities and threats.We then provide guidelines and recommen-dation as the result of this evaluation. To re-
Business incubators models of the USA and UK: A SWOT analysis 339
inforce this cycle, the strategy utilized in thecase studies is presented in Figure (1):
Data was collected through structuredinterviews with incubator managing direc-tors and through examination of case studies(Creswell 1994). The first case study wasconducted at the Maryland Technology De-velopment Corporation (TEDCO). Thiswas selected because it is one of the oldestand is the largest incubation program inUSA. The other case study was the CoventryUniversity Enterprise (CUE) in UnitedKingdom which is the largest university en-terprise organization in the world. The cri-teria of evaluation in each case study are 1)incubator mission and strategic planning,2) incubator finances and 3) incubator grad-uation rates. Detailed questionnaires wereused in each interview with the managingdirector of each program. The SWOT analy-sis was done based on these interviews andanalysis of each case. (Eisenhardt 1989, Yin2003).
Case sTUDIes : a sWOT aNalysIs
Maryland Technology Development
Corporation (TeDCO) U.s.a Case study
The goal was to assist in transferring tech-nology to the private sector as well as tocommercial the results and products of sci-entific research. The goals were then ex-panded to foster the commercialization ofresearch and development and to create, aswell as sustain, businesses throughout all re-gions of the State (TEDCO 2010). The vi-sion of TEDCO (2010) is that Marylandwill become internationally recognized as apremier 21st century location for technologyand technology-based economic develop-ment.
According to TEDCO’s (2010) mission
statement, they are there to foster the devel-opment of a technology-driven economythat will create and sustain businessesthroughout all regions of the State. TEDCOidentified its role to be Maryland’s leadingsource of funding for seed capital and en-trepreneurial business assistance for the de-velopment, transfer and commercializationof technology.
It is important to assess the economicimpact of incubators to understand theiroutcomes and provide support for increasedactivities. To that end, incubators must pro-vide decision makers with a better under-standing of the state’s capacity for incubatorsand the potential to realize further economicdevelopment outcomes from increased in-vestment in incubation. (Claggett Wolfe As-sociates (1998); TEDCO (2010)
RTI International (2007) conducted acomprehensive study of the TEDCO. Mary-land currently has 19 technology incubatorsand seven proposed projects. The majorityof these incubators are located in Baltimore,Montgomery, Howard, and Prince Georgecounties. Technology incubators can also befound in other areas of the state, includingFrederick, Anne Arundel, Allegany, Garrett,and Washington counties. The study hadthree significant objectives. The first was toprovide an economic impact analysis of thetechnology incubators on Maryland’s econ-omy. The second objective was to analyzethe state’s capacity for new technology in-cubators, while the final objective was toexamine the needs of incubator graduatesand the ways to help these graduate compa-nies continue to be successful after leavingthe incubators.
There are a number of key results of theRTI International (2007) study. 1) The tech-nology incubators in Maryland increased
340 H. M. Al-Mubaraki and M. Busler
gross state product by $1.2 billion. 2) Thetotal annual employment impact of tech-nology incubators was 14,044 new full timeemployees in the state (5,374 direct em-ployees and 8,670 indirect employees). 3)The new jobs contributed $845 million inannual salary and benefits to Marylandhouseholds. 4) The technology incubatorsincreased state and local tax revenue by ap-proximately $104 million per year. 5) Mary-land has the potential to support newhigh-tech incubators, as evidenced by thestate’s strong high-tech economy, abundantresearch, concentration in high tech em-ployment, and exceptional political support.6) Gross state product contributions totaled$1.2 billion which ultimately increased stateoutput by $2.7 billion per year. 7) TEDCOcontributed $104 million in state and localtaxes. 8) For every $1 of incubator assistancefunding provided by TEDCO tenant, com-panies contributed $1,800 dollars to Mary-land’s gross state product.8) TEDCO madean average investment of $120 per incubatorcompany job.
In 2008 annual report (TEDCO 2010)provided $287,500 to 12 incubator pro-grams (16 distinct physical facilities) to pro-vide directed and targeted business assistanceto their tenant and affiliate companies. Thefunding was used for a variety of businessassistance services that these incubatorswould not have been able to provide other-wise.
TEDCO’s StrengthsThere were eleven specific strengths identi-fied. First TEDCO’s contribution to eco-nomic development facilitated the creationof businesses and fostered their growth inall regions of the State through the com-mercialization of technology. SecondTEDCO is Maryland’s leading source offunding for technology transfer and devel-
opment programs and entrepreneurial busi-ness assistance. In FY 2008 the total of theincubator development fund was approxi-mately $10 million. Third TEDCO’s jobcreation made a significant contribution toMaryland which has a strong high-tech in-dustry, with over 15,000 establishments em-ploying almost 200,000 in 2006. Theaverage annual pay for high-tech jobs was$75,000, more than 60% higher than thestatewide average annual wage of $46,000.Fourth is that the Science Park, which pro-vides the local economy with new high techpositions.. Fifth is that the Networking ex-perience is shared between 19 separate pro-grams. Sixth is the information provided bythe Feasibility Studies for financial support.Seventh is the breadth of differently fundedprograms in which the University partner-ships, venture capitalists and TEDCO in-cubators are included. Eighth is that theState of Maryland support which resultedin incubators exceeding the national averagein spinning out new companies. TEDCOhas been working closely with the variousuniversity technology licensing offices toidentify barriers to new business formationand has identified specific needs, includingsophisticated market analysis and businessstrategy development. Ninth is Award 2008,a national award for excellence for a newcompany, which given to a Maryland Incu-bator Company in 2008. Tenth is that theResearch and development funding for thatAcademic R&D totaled $2,357 million in2005. The represents the fourth highesttotal in the nation. Finally is the presence ofFederal labs in which there are over 40 re-search centers in Maryland, including a sig-nificant number of federal labs andprominent university institutes.
TEDCO OpportunitiesSix specific opportunity areas were identi-fied. First is Maryland 21st century. Mary-
Business incubators models of the USA and UK: A SWOT analysis 341
land could become internationally recog-nized as one of the premier 21st century lo-cations for technology and technology-basedeconomic development. Second is the po-tential of the four Proposed Incubator andAccelerator Projects in Baltimore, Dorch-ester and Montgomery counties with incu-bator type of the projects, (TEDCO 2008).The third is Targeting Incubator entrants,especially Energy & Cyber Security firms(Melton 2010). Fourth is the growth po-tential in Concentrated Industries. The threemost concentrated industries are manage-ment, scientific, and technical consultingservices, computer systems design and re-lated services and communications equip-ment manufacturing. Fifth is the potentialfor future growth of the ACTIVATE Pro-gram, Achieving the Commercialization ofTechnology in Ventures through AppliedTraining for Entrepreneurs (ACTIVATE).This program was initially funded by a Na-tional Science Foundation Partnership forInnovation grant awarded in the summer of2004. The $600,000 grant supported threeone-year classes. TEDCO provided the re-quired $60,000 matching funds. At the con-clusion of the third year, ACTIVATE hadfar exceeded its goals in creating new com-panies. Sixth is BioMaryland 2020, a Strate-gic Plan for the Life Sciences in Maryland.This comprehensive 10-year plan reflectsMaryland’s identification of the bioscienceindustry as a strategic priority and is the re-sult of significant assessment and delibera-tion over the past 18 months by membersof the Maryland Life Sciences AdvisoryBoard. LSAB and its seven working groupshave more than 100 leaders involved in bio-science development in Maryland which isdrawn broadly from industry, education,federal laboratories, and state and local eco-nomic development organizations whohelped to shape this Strategic Plan(TEDCO2010).
TEDCO WeaknessThere were no specific weaknesses noticedin the incubation program. However, thedirector of the program said there are threemain points of potential concern. First islack of support to hire a qualified incubatormanager. Second is lack of consultancy orresources inside the program. Finally thethird is the lack of qualified feasibility stud-ies of a company to be included in the incu-bator.
TEDCO ThreatsThe impact of international economic criseseffects the government funding worldwidepotentially resulting in the loss of fundingfor some business incubation programs.
Coventry University enterprise (CUe)
case study: s.W.O.T analysis
Coventry University Enterprise’s (CUE) vi-sion for business incubation is to encourageand promote innovation and entrepreneur-ship within a supportive environment andto create opportunities for business devel-opment and growth. CUE’s mission state-ment notes, “We are a dynamic, enterprisingand creative university committed to pro-viding an excellent education enriched byour focus in applied research” (CUE 2010).
The report of EBN-BIC (2009) presentsa case study of Coventry University Enter-prise (CUE). As one of the largest universityenterprise organizations in Europe and awholly owned subsidiary of Coventry Uni-versity, it employs more than 140 peopledirectly within the field of business support,business incubation and technology transfer.It delivers business support to over 5000businesses per year, offering an activity port-folio covering a broad spectrum from pre-incubation and incubation through tospin-off company formation and develop-
342 H. M. Al-Mubaraki and M. Busler
ment, with internationalization business ad-vice. From its base at Coventry UniversityTechnology Park (CUTP), CUE offers afull and progressive package of office spaceand specialist facilities to new and growingbusinesses. It has provided incubation sup-port for the past 10 years.
Recently a CUE (2010) report definedthe CUE as a market leader in much of itsdelivery activity, including its renowned men-toring, advice and specialist support programsfor young entrepreneurs, SME’s and largecorporations on a regional, national and in-ternational basis. Due to the close links withthe University, CUE is highly experienced inthe field of commercialization of universityresearch and the development of intellectualproperty portfolios, maintaining a focus onhigh technology and high growth potentialenterprises. CUE’s people are therefore se-lected for their business experience, trackrecord in enterprise, innovation and entre-preneurship, and ability to work and respondto a fast changing, challenging business envi-ronment focused on clients’ needs and devel-opment potential. CUE is also home to theUniversity’s Institute of Applied Entrepre-neurship (IAE), through which much of thebusiness incubation activity is carried out.
The data reported in figure 2 demon-strates the (BIC) percentages for areas of ex-pertise.
CUE StrengthsThere were 8 specific strengths identified.First in the area of Economic DevelopmentCUE demonstrated the ability to see a proj-ect through to completion. This was ac-complished by giving entrepreneurs a strongvoice in their future prosperity and by en-couraging private, public, education andvolunteer agencies to work together growthas well as cross partner cooperative policy.
Second was the formation of TechnologyCorridors which accelerate the moderniza-tion and diversification of the region’s econ-omy, stimulate new enterprises and attractnew investment with great potential for in-novation. It also fosters the technology-based and high value-added businesses bydeveloping the region’s science parks andR&D centers. (CUE 2010). Third is theBusiness Development Team which has ex-tensive experience in working with compa-nies from all sectors: locally, nationally andinternationally, from large multinationalcorporations and government bodies to re-gional organizations and new pioneeringSMEs. The team has worked in many dif-ferent markets including healthcare, utilities,arts, design, manufacturing, transport andenvironmental technologies. Fourth is thefocus on Long-Term Strategy as the Univer-sity values the partnerships it develops andbelieves in investing time and effort tostrengthen these relationships and turningthem into long-term strategic alliances. Justas these alliances influence teaching, it im-proves business solutions which are sup-ported by the latest thinking and researchfrom industry-leading names at the univer-sity. (CUE 2010). Fifth are the UniversityRelationships. Coventry University has along established relationship with industryand has always encouraged this relationshipto collaborate for mutual benefit. The Uni-versity has worked with companies from allsectors: locally, nationally and internation-ally. In addition, it has a vast amount of ex-perience and knowledge of European grantsand funding. The University’s commercialwork has enabled it to build an extensivenetwork of clients and has gained a reputa-tion for providing real business solutionswhile taking an innovative and enterprisingapproach to today’s changing business envi-ronment. Sixth is the Value Added. TheUniversity values the commercial knowledge
Business incubators models of the USA and UK: A SWOT analysis 343
and relationships they build, as this enablesthe combining of practical business knowl-edge with theory taught to students. It val-ues the partnerships developed and believesin investing time and effort to strengthenthese relationships, turning them into long-term strategic alliances. Coventry Universitynot only offers business support to small-to-medium sized enterprises, but also man-ages projects on behalf of other public sectorbodies. They provide consulting serviceswhich includes expert advice, reports, mar-keting, workshop design and delivery, train-ing and event management. Seventh is theUK EBusiness EIncubation EAchievementAward 2009 and the Midlands Entrepre-neurial University Award for 2010. AndEighth is the Infrastructure and ResourceBase that supports in excess of 7500 smalland medium-sized enterprises, 500 largecompanies and 120 start-ups annually with30 private and 11 public sector strategiclevel partners.(CUE 2010)
CUE OpportunitiesThere were five areas of opportunity thatwere identified. First was Investment forDevelopment with more than £30 millionbeing invested to develop the Coventry,Solihull and Warwickshire (CSW) Technol-ogy Corridor, with £5.8 million of the totalcoming from Advantage West Midlands andthe rest coming from the EU, partner or-ganizations and the private sector. Thelonger-term vision is that the CSW area de-velops a globally significant and self-sus-taining E cluster E of E innovative,knowledge-based businesses. (CUE 2010).Second Investment of Council’s Businesswith the Investment and Enterprise Teamleading the drive to support the city’s growthplans by encouraging and supporting busi-ness investment. Their innovative SectorDevelopment Strategy is designed to givethe Coventry based businesses a competitive
advantage which they can exploit and focuson developing the following sectors: Aero-space, Automotive (including specialist ve-hicles and motor-sport), Business andProfessional services, Digital and CreativeTechnologies, Information Communica-tions Technology (ICT), EnvironmentalTechnologies, Medical Technologies, Leisureand Public Sector Relocation Retail. Thirdis Strategy Innovation where the short andlong-term projects offer a new innovativeperspective for products, processes and busi-ness strategies. Through commercial part-nerships, the university has built up a strongnetwork of clients and has gained a reputa-tion for providing real business solutions,while taking a pioneering and enterprisingapproach to today’s changing business envi-ronment. (CUE 2010). Fourth is the Re-search and Knowledge Transfer whereCoventry University’s research is focused onthe application and usefulness of researchand knowledge transfer activities. Ratherthan undertaking a study just for the sakeof research, they look to demonstrate theirauthority to teach by applying their researchto solve interesting problems for the widercommunity. These statements describe thecore principle of the University’s 2010 Ap-plied Research Strategy.
CUE WeaknessesNo such weaknesses have been noticed inthe incubation program. Although CUE isthe largest program in the UK, the impactof the international economic crisis is likelyto effect the government funding so that adecrease in 2010 is expected. (Winters2010).
CUE ThreatsBased on the interviews with Dr. Clive Win-ters, Assistant Director, a key person in theprogram, the comments regarding threatsfocused on government support.The risk is
344 H. M. Al-Mubaraki and M. Busler
that reduction in public sector funding atthe regional and national level could impactfunding for university applied research, tech-nology transfer and business incubation.(Winters 2010).
The threats and the weaknesses are themost difficult to explore. In some respectsthis is due to the fact that the incubator ispart of a wider business development activ-ity aligned to the applied research agenda ofthe university.
CONClUsION
The SWOT analysis of each case study re-flects the numerous strengths of each of theprograms studied, while complying with themission and objectives of the program, andshows great opportunity with the futureplans and performance. The weakness inthe UK case study, CUE, is that the rate ofgovernmental support is reduce based oninternational economic crises, and this ef-fected the implementation of CUE’s annualplan. In the USA, TEDCO’s weaknesses area lack of support to hire an incubator man-ager, a lack of consultancy or resources insidethe program, and finally, an unqualified fea-sibility study of a company accepted intothe incubator.
The threats and the weaknesses are themost difficult to explore. This is due to thefact that the incubator is part of a widerbusiness economic development activity tobe applied worldwide with great success, aswe have discussed in this paper. Of note,currently the total number of incubatorsworldwide is more than 7000. (NBIA 2010)
In conclusion, this study provides newand useful knowledge for both academicsand practitioners who are interested in busi-ness incubation, including the incubator
manager, client graduated companies, policymaker and governments. Further, this paperis the first paper utilizing a SWOT to ana-lyze the business incubation field. The Sum-mary Chart, following the references at theend of this paper, represents a summary ofthis discussion. Business incubators arebeing used as economic development toolsby nearly every country. Typically, an incu-bator provides a safe haven for a firm in itsearly stages of growth and developmentthrough a mix of tangible and intangibleservices from the perspective of local eco-nomic development. Business incubatorscontribute to the economy and play activeroles in the local, regional and national eco-nomic development. Their adaptation leadsto the support of diverse economies, thecommercialization of new technologies, jobscreation and wealth building.
BIOGRaPhy
Dr. Hanadi Mubarak Al-Mubaraki is ateaching assistant in Kuwait University. Sheteaches undergraduate and graduate coursesin project management, civil engineeringdepartmant and teaches undergraduatecourses in business schools such as manage-ment. She has been published in differentacademic journals, books and has presentedher research in many countries. She preparesfeasibility studies of many projects and for-mulates the aspects of research and develop-ment proposals for improving costs,monitoring projects and assuring qualitydevelopments in Kuwait University. Dr. Al-Mubaraki worked as financial analyst andproject engineer in MPW Turner Interna-tional, Kuwait. Finally, She earned intensivetraining program in Gleeds InternationalU.K as junior engineer. She earned her doc-torate from Washington International Uni-versity.
Business incubators models of the USA and UK: A SWOT analysis 345
Dr. Michael Busler is an Associate Professorof Finance, Finance Track Coordinator anda Fellow at The William J, Hughes Centerfor Public Policy at Richard Stockton Col-lege. He teaches undergraduate courses inFinance and Game Theory as well as Mana-gerial Economics and Corporate Finance inthe MBA Program. He has been publishedin eight different academic journals and haspresented his research in ten countries Inaddition he has worked as a Financial Ana-lyst for Ford Motor Company and FMCCorporation and has been an entrepreneurhaving owned several businesses mostly inthe Real Estate development field. Heearned his Doctorate at Drexel University.
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Business incubators models of the USA and UK: A SWOT analysis 349
sUMMaRy ChaRT
350 H. M. Al-Mubaraki and M. Busler
Goal & Objectives:
A. TEDCO 1. To encourage, promote,
stimulate, and supportthe Research and Devel-opment (R&D) activitythrough the use of differ-ent investments whichleads to commercializa-tion of new products andservices by small busi-nesses.
2. Business incubators canprovide significant bene-fits by helping to createsuccessful businesses thatgenerate wealth and jobopportunities to their re-gions and states.
3. It is important to assessthe economic impacts ofincubators to understandtheir outcomes and pro-vide support for increasedactivities
B. CUEVision for business incuba-tion is to encourage and pro-mote innovation andentrepreneurship within asupportive environment andto create opportunities forbusiness development andhigh growth .e (CUE)mission “We are a dynamic,enterprising and creative uni-versity committed to providingan excellent education en-riched by our focus in appliedresearch”.
SWOT Analysis: CUE CaseStudy
Strengths1. Economic Development2. Technology Corridors3. Business Development
Team4. Long-Term Strategic5. Industry Relationship6. Values Added7. UK Business Incubation
Achievement 2009.8. Infrastructure and Re-
source
Opportunities1. Investment For Develop-
ment 2. Investment of Council’s
Business3. Strategies Innovation 4. Research and Knowledge
Transfer5. Long term Strategic Al-
liances
Weaknesse impact of internationaleconomic crisis affects gov-ernment funding in 2010the government funding islow rate this effect the an-nual plan for CUE
reats:e risk is that reductions inpublic sector funding at theregional and national levelcould impact funding foruniversity applied research,technology transfer and busi-ness incubation.
SWOT Analysis: TEDCOCase Study
Strengths1. Economic Development 2. Funding 3. Job creation 4. Science Park 5. Networking 6. Feasibility Studies 7. Different funded program 8. State of Maryland sup-
port 9. Award 2008 10.Research and develop-
ment 11.Federal labs
Opportunities1. Maryland 21st century 2. Four Proposed Incubator 3. Targeting incubator 4. Concentrated Industries 5. ACTIVATE Program6. BioMaryland 2020
Weakness1. Lack of support to hire
incubator manager 2. Lack of consultancy or re-
sources inside the pro-gram
3. Un qualified feasibilitystudy of accompany to beinside the incubator.
reatse impact of internationaleconomic crises effects thegovernment funding worldthe resulting in loss funds forsome business incubationprogram .
Success Factor1. Large key measure on the
nature of incubator fi-nancing
2. Incubator mission andstrategic
3. Graduation it in turn of-fers its incubatee clients,both of which were verymuch dependent on, eco-nomic development ofeach country contextU.S.A and U.K.
Business Incubation
e National Business Incu-bation Association of theUnited States defines busi-ness incubators as entitiesthat "accelerate the successfuldevelopment of entrepre-neurial companies throughan array of business supportresources and services, devel-oped or orchestrated by incu-bator management andoffered both in the incubatorand through its network ofcontacts" (NBIA 2005).
Guidelines1. Long-term economic development 2. High Technology Corridors3. Sustainability 4. Dynamic Model 5. Generate Jobs6. Platform For Policy Decisions 7. Fostering, Supporting Enterprise And Innovation 8. High Value-Added Businesses9. Pre-incubation And Incubation Support10.Innovation Management11.Exploitation of Intellectual Property and Technology Transfer 12.New Economy Currency 13.Risk-Taking 14.Entrepreneurship 15.Commercialization Of New Technology
figure 1: The strategy for case studies
figure 2: Key Qualification- area of expertise
Business incubators models of the USA and UK: A SWOT analysis 351
aPPeNDIx 1: DIsTRIBUTION Of INCUBaTORs WORlDWIDe sOURCe: NBIa 2010
aPPeNDIx 2: BUsINess INCUBaTORs IN eU MeMBeR sTaTes sOURCe: Cses(2002)
352 H. M. Al-Mubaraki and M. Busler
aPPeNDIx 3. PROPOseD INCUBaTOR aND aCCeleRaTOR PROjeCTs;
sOURCe: TeDCO aNNUal RePORT 2008
Business incubators models of the USA and UK: A SWOT analysis 353
Incubator County Location Type of Project Targeted In-dustries
Status
East BaltimoreDevelopmentInc.
Baltimore BaltimoreCity, near theJohns Hopkins Hospital
1. Is the incubator’s mission statement inwritten form?
2. Is the mission statement consistent withthe vision and direction of the program?
3. Has this incubator developed an effectivestrategic plan?
4. Does the strategic plan contains specific,measurable goals and objectives?
5. Does this incubator has a detailed busi-ness plan?
6. Is this incubator financially self-sustainingor has it at least mapped a path to finan-cial self –sustainability?
7. Does this incubator’s selection processinclude an interview that enables the in-cubator staff or admissions committeeand applicants to exchange information?
8. Does this incubator have a system forevaluating its programs and services?
9. Does this incubator assist clients in pro-fessional development?
10. Has this incubator has developed a serv-ice provider network suitable for its clientcompanies?
11. Does this incubator’s graduation policypromote optimal incubator and graduatesuccess?
12. Does this incubator keeps in regularcontact with graduates?
13. Does this incubator annually collectsinformation on appropriate program pa-rameters?
14. Does this incubator annually collectsinformation on client performance?
15. Does this incubator annually collectsinformation on graduate’s performance?
354 H. M. Al-Mubaraki and M. Busler
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