Review of 20 Business Incubation Models – Bergek & Norrman Model_2008 (Part 14 of 20)

So, we are coming to the end of our posts devoted to the Business Incubation Models.

The model of Bergek & Norrman from 2008 continues the ideas that have been developed by Hackett & Dilts (2004), Smilor in 1987 and Gibson & Wiggins (2003). On the one hand the model  is centered on the results of the business incubation. On the other hand it’s still process model which describes different stages of the process. So, it’s easy to adapt it in the real life and build your incubator by applying this model.

We are going to describe the model shortly and provide a small critic, which should be considered by policy makers and founders of business incubators.

2008, Bergek & Norrman model (white-box, process, operations)

Bergek & Norrman’s (2008)[1] model rejects the principle of a black box incubation model centered merely on results. Even though this model is almost the same as Hackett & Dilts’s one, there are differences in viewpoints.  Authors considered that it is only possible to evaluate the performance of a business incubator when confronting particular objectives and results of the incubator. A set of components that form the incubation process according to the internal and external variables is exactly the same as in the Hackett & Dilts model:

  1. The selection of firms that should be accepted and the ones that must be rejected;
  2. Infrastructures, regarding the physical facilities and administrative services to be provided;
  3. Mediation, i.e. the way in which the incubator mediates the relationship between the incubatees and the external world;
  4. Graduation, which concerns the policy defined by the incubator about the moment and circumstances of exit of the incubated firms.
Bergek & Norrman Business Incubation Model (2008)

Bergek & Norrman Business Incubation Model (2008)

According to Bergek & Norrman selection is one of the most important tasks. Therefore, the selection criteria must be adjusted to the business incubator’s characteristics and goals. They identified two different approaches to the selection:

  • selection based on the business idea;
  • selection based on the entrepreneur.

First requires that the incubator has the knowledge in the domain of technology or business as well as the background necessary in order to evaluate the feasibility of the business idea. The second means that the incubator must have competencies to assess the entrepreneur’s personality traits, personal skills, and capabilities related to the new venture. “The adoption of one or the other is a matter of option and flexibility.” (Bergek & Norrman) In conclusion, the selection process is the main factor for reducing risk in the incubator’s activity.

“Concerning the incubator mediation capacity, Bergek & Norrman (2008) defended the importance of the role of the mediator among incubatees and between them and other actors. In this manner, mediation capacity is a way of projecting the incubatees in the market, creating opportunities for them as well as reducing uncertainties.”

Summary of the Model

Source (Author, Year): Bergek, Norrman, 2008
Purpose of a model: To develop a model of business incubation which will be centered on the results on the one hand, and will work with uncertainty on the other.
Type of a model: Process model
Abstraction technique: White-box
Theoretical background: Cambell’s model -> Hackett & Dilts model
Resources: No information
Processes and practices: Direct correlation between stages of the process and performance of the business incubator.
Efficiency and effectiveness: Each stage of the process is devoted to reducing uncertainty & risk.Direct link between objectives of the incubator and the results of its performance.
Linkages “Entrepreneur – Business Incubator – Innovation Ecosystem”: The model as properly adjusted as it takes into account the demands of the incubator’s internal dynamics as well as the external environment.
Key contribution: Business incubation performance is positively related to:1)     selection,
2)     intensity of monitoring and business assistance efforts, 3)     mediation, 4)     graduation.

The model consists of universal components and Bergek & Norrman (2008) leaves each incubator with the responsibility of applying the different components of the model and adapting the incubator to the intricacies of each particular reality.

Nevertheless, there are some arguable points in the model:

  1. Is the “picking the winners” policy the right (successful) approach? Bergek & Norrman’s (2008) suggested, to deploy a selection process by assessing pairs of ideas/entrepreneurs, and winners/survivors in order to get more holistic vision. For the incubator’s performace this is definitely good. The higher the quality the better the output. However, I would argue that “picking the winners” is the approach that applied by 99% of the incubators, venture funds, venture capitalists and other players in the venture industry in order to reduce risk of failure. In that sense they are completely right, but this is a short-term oriented way to the incubation and they don’t consider a higher goal. This could be  development of the region and those would-be entrepreneurs that were rejected during the selection process; or, development of nation as a whole. As we will see later one of the main problems of almost every business incubator and venture fund is not a deal selection, it is a deal sourcing and deal flow. Thus, “picking the winners” and rejecting others policy doesn’t solve this problem.
  2. Again, Bergek & Norrman didn’t stated explicitly how and which services should be applied in a particular case.

[1] Bergek, A. and Norrman, C. 2008. Incubator best practice: A framework. Technovation, 28(1-2), pp. 20-28.

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