Incubator Zone

The emergence of incubator zones can be traced to the concept of a business incubator, that is, a shared office space facility that seeks to provide its tenant companies with a strategic, value-adding intervention system of monitoring and business assistance. Business incubators promote early-stage firms' chances of survival with systematic internal support but also facilitate access to services from the external environment such as governments, venture capital firms, universities, and community advisory organizations. The whole networking apparatus constitutes an incubator zone in both a spatial sense and a function sense.

The Batavia Industrial Center, created in 1959 at Batavia, New York, was the first incubator. After more than 40 years, including a significant diffusion of the concept since the 1980s, the original single-dimensioned incubator that mostly provided internal assistance to tenants has evolved into a diversified concept called the incubator zone that strives to sustain economic development with a portfolio of methods such as propelling small business success and creating jobs, diversifying the local economic base and promoting regional entrepreneurship, supporting innovative research, and reducing the time from technology adaptation to commercialization. Simultaneously, the original incubator zones concept has diffused from industrialized countries, such as the United States, France, and Sweden, to industrializing countries, such as China, Brazil, India, and Israel.

Incubators may be classified in a variety of ways (e.g., in terms of their primary financial sponsorship or industry focus), yet all successful incubator zones must meet several criteria. First, there must be a satisfactory degree of fit between each incubator's service and needs of the local/regional economy. Otherwise, a lack of appropriate start-ups and networking partners would constrict the successful formation of the zone. Thus, an incubator zone may be viewed as a catalyst embedded in a local/regional economic development plan. Second, an incubator zone serves as a “one-stop shopping” framework in which there are numerous desired products, services, and resources, all conveniently and efficiently colocated and accessible through one organization for the benefit of the entrepreneur and the local/regional economy. Furthermore, the successful zone virtually underpins a consistent and sustainable knowledge spillover that is symbolized by frequent formal and informal communication among entrepreneurs, incubator leaders, incubator employees and tenants, investors, governors, and community leaders that ultimately transforms the incubator zone into an entrepreneurial community.

Incubator zones may be organized around different business models. Some are heavily, if not totally, subsidized by government or community groups. In general, such subsidies greatly enhance the success of incubator zones. Unless deep financial reserves exist to span the relatively long time period that is needed for most early-stage tenant companies to reach revenue or value levels necessary to pay for the full cost of the services provided, incubation efforts often fail. Also, incubator zones often are organized around prominent or propulsive industries in the local/regional economy (e.g., information technology, biotechnology and biomedicine, agriculture, retail specializations). Such initiatives also serve to enhance success because of the strong fit with local regional specializations and resulting synergistic spillover effects.