Review of 20 Business Incubation Models – Costa-David, Malan, Lalkaka, NBIA Model 2002 (Part 9 of 20)

The model presented today is widely quoted and used business incubator model across the USA and EU. This is 9th model of the Business Incubation Model Series. Interesting feature about this model is that it’s a kind of benchmark for establishing a business incubator in the EU. It contains practical recommendations for establishing incubator and EU’s incubator best practices.

2002, Costa-David, Malan, Lalkaka, NBIA (mixed, mixed, operations)

This model was presented in a 2002 EU incubator benchmarking study[1] as a general ‘model of incubation’ based on EU-wide survey data. However, it was developed by very knowledgeable authors Costa-David, Malan, Lalkaka for NBIA. Later the Center for Strategy & Evaluation Services (EU) copied this model and used proposed benchmarks that depict incubator efficiency and performance in terms of using inputs, developing and orchestrating processes and ensuring a steady supply of quality outputs.

On the one hand, it’s white-box model which gives understanding of what practices are used to transform initial inputs into outputs. Authors believe that incubation consists of pre-incubation, incubation and after care stages. Incubation itself provides following practices for tenants:

  • training
  • business advice
  • financial support
  • technology support
  • physical space
  • networking

Main inputs of the incubation process are projects, finance, objectives of stakeholders and employees of the incubator (management skills).

Even though, it doesn’t provide exact sequence of practices and step-by-step incubation process.  On the other hand, it links this process to the external environment. Another important idea is establishing a feedback loops for measuring efficiency and effectiveness of the incubation process.

Costa-David, Malan, Lalkaka Generic Incubator Model (2002)

Costa-David, Malan, Lalkaka Generic Incubator Model (2002)

Although the above model is a useful attempt, it has serious limitations[2] (we will provide you with analysis by Mr. Ahmad from 2009) such as:

1) “the model is divorced from the national and regional environment and the macro-politics of institutional change which determine the real aims and objectives of state-level incubation systems” (Aernoudt, 2004);

2) “the total absence of the role and influence of the incubatee firm – an important party in the co-production dynamic of the incubation process” (Rice, 2002);

3) “the model is fundamentally inward looking because it is presenting a ‘black-box’ view of the  process of incubation”  (Hackett & Dilts, 2008).

According to the model, a number of independent ‘services’ feed into ‘incubation’ which in turn feed into the ‘process’ black-box. There is no sense of what services come first and why, their relationships to stages of growth of incubating firms and causal mechanisms. Without due attention to the process of incubation, the internal normative environment and incubators’ special structural properties a holistic understanding of ‘what incubators really do’ and ‘how they do what they do’ cannot emerge.

In conclusion, I would like to admit that all statements above are true to some extent. However, there was no attempts to create a holistic model of business incubator (from external and internal points of view). And this is the only model I know of that kind.

Summary of the model

Source (Author, Year): Costa-David, Malan, Lalkaka, NBIA, 2002
Purpose of a model: To provide a guideline for EU states of establishing a generic business incubator
Type of a model: Mixed model
Abstraction technique: White-box & Black-box
Theoretical background: No information provided
Resources: Finance, projects, incubation physical and networking resources
Processes and practices: Pre-incubation, admission, training, business support, financial support, networking, graduation, post-incubation
Efficiency and effectiveness: Effectiveness is measured through direct and indirect net impacts against stakeholders objectives, efficiency is basically linked to how smart finance spending is done
Linkages “Entrepreneur – Business Incubator – Innovation Ecosystem”: It links regional dimension and operation dimension. However, few words said about entrepreneur’s process.
Key contribution: First comprehensive endeavor to create generic incubation model which links external and internal environment, operational processes of incubation.

[1] Centre for Strategy & Evaluation Services. 2002. Benchmarking of Business Incubators. European Commission Enterprise Directorate General: Brussels.

[2] Ali Ahmad. On the Structure and Internal Mechanisms of Business Incubators: A Comparative Case Study, DCU Business School, 2009

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