Review of 20 Business Incubation Models – Lazarowich & Wojciechowski ‘New Economy’ Incubator Model 2002 (Part 7 of 20)

While incubators have grown in numbers, the uneven performance and poor sustainability in many situations have become serious issues with the governments and sponsors who continue to subsidize many of them. There has been much recent interest in identifying ‘best practices’ that could then be used elsewhere. But these practices are location-, culture- and time-specific, and can only be adapted to the conditions prevailing in local situations.

In today’s part of Business Incubation Model Series we will describe the model proposed by Michael Lazarowich & M. John Wojciechowski. The document they presented had two main objectives:

1) to examine ‘best practices’ of setting up and operating business incubators. Hence the strategic plan is a form of blueprint for the proposed pilot project, identifying the parameters, goals, and processes of business incubator
development.

2) the establishment of a Business Incubator Model suitable for local environment (in particular for Russia) (please refer to the document attached to the post)

2002, Lazarowich & Wojciechowski ‘New Economy’ Incubator Model (white-box, structure, operations)

Mr Lazarowich and Mr Wojciechowski define ‘New Economy Incubator’ as usually funded by venture capital companies or set up by large multidisciplinary consultancies that are able to offer a complete range of technological, advisory and other business support services to their clients. This type is often virtual. For new-economy incubators the primary objective being is the generation of returns to investment to their own shareholders. Due to the high risk involved and often low return rates (due to the fierce global competitions) some
incubators resorted to selling consulting services to established companies, or to partnering with local universities and research institutes. An analysis of best practice suggests that incubators should not be treated as stand-alone operations but rather integrated into a network of key stakeholders, agencies and schemes that work together to promote innovation, competitiveness, technology transfer and other key public policy objectives.

Lazarowich & Wojciechowski 'New Economy' Incubator Model (2002)

Lazarowich & Wojciechowski ‘New Economy’ Incubator Model (2002)

The model described by Lazarowich and Wojciechowski[1] explains ‘new economy’ incubators. They are characterized by the following:

  • “Business incubators are private-sector, profit-driven with the pay-back coming from investment in companies rather than from rental income.
  • They tend to focus mainly on high-tech and internet-related activities and unlike ‘traditional’ incubators, do not have job creation as their principal.
  • ‘New economy’ incubators often have an essentially virtual presence with financial and business services at the core of the offering unlike their ‘traditional’ counterparts that usually  center on the provision of physical workspace.”
The authors also make the following list of reccomendations:
I.  The micro-economic framework should stimulate innovation and markets for new goods and services, together with a master plan prepared in consultation with local communities, entrepreneurs and stakeholders.
II.  Commensurate investments are required in scientific research and technology development, engineering and managementconsultancy, technical education, environmental preservation, transport and communications infrastructure.
III.  Long-term plans should be formulated for developing the convergent enterprise support systems encompassing the full range of small business development services, anchored possibly in a business incubator and technology park. Locations for these support complexes should be environmentally attractive and well connected to technical universities and research laboratories, cultural and recreational facilities. While it is easier to start in a developed urban environment, the political wisdom may call for balanced expansion to peripheral regions.
IV.  The selection of proactive sponsors and organization structure could originate from strong initial government support, withresponsibilities moving progressively to knowledge institutions, non-governmental agencies and the private sector.
V.  Programs are required for kindling nascent entrepreneurship from school onwards, and structured efforts to search for new tenantbusinesses, their selection and graduation.
VI.  Networks should be developed with agents at the national and international levels particularly consulting, and service sectors, venture capital, banking, legal and accounting services, business associations and chambers, state and community leaders, together with firm linkages totechnical universities and research institutes.

Summary of the model

Source (Author, Year): Lazarowich & Wojciechowski, 2002
Purpose of a model: To describe a “new economy incubator”
Type of a model: Structure model
Abstraction technique: White-box
Theoretical background: No information provided
Resources: Government funds, technical infrastructure, professional service providers, incubation staff (consultants, trainers, analytics), board
Processes and practices: Business strategy development, Selection/graduation, manager training, tenants financing, professional service providing, linking to universities, international businesses.
Efficiency and effectiveness: No information
Linkages “Entrepreneur – Business Incubator – Innovation Ecosystem”: University community linkage, international business linkage,
Key contribution: Attempt to conceptualize a “new economy incubator”. Stress on private-sector, profit-driven incubator, provider of virtual & physical services.

[1] Michael Lazarowich ,M. John Wojciechowski, 2002, Russian Business Incubator Program – The Functioning of Business Incubator Organizations: Legal Framework, Finances, Governance Structure and Tenant Relations. Ontario: School of Planning – University of Waterloo

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