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Assessing value-added contributions of university technology business incubators to tenant firms

ELSEVIER Research Policy25 (1996) 325-335


Assessing value-added contributions of university technology business incubators to tenant firms
Sarfraz A. Mian
School of Business, State University of New York, Oswego, NY 13126, USA

Final version receivedJanuary 1995


This paper assesses the value-added contributions of university technology business incubators (UTBIs) to their new technology-based tenant firms. The business incubator is widely believed as providing a nurturing environment for new business start-ups. However, the role played by university relationships in supporting the development of new technology-based firms (NTBFs) has escaped systematic review in the US due to a lack of historical data. To fill this gap, this article presents empirical data on UTBIs by focusing on their value-added dimensions which include typical incubator services along with university-related inputs. The study is based on a national survey of six representative UTBI facilities, providing an insight into the value-added aspects as perceived by the clients. It concludes that several UTBI services, specifically some of the university-related inputs such as university image, laboratories and equipment, and student employees add major values to the client firms, making the UTBI a viable strategy for nurturing NTBFs.

1. Introduction

The university technology business incubator (UTBI) is a modern enterprise development tool employed by some entrepreneurial universities to provide support for nurturing new technologybased firms (Mian, 1994a). The incubation concept seeks to link effectively talent, technology, capital and know-how to leverage entrepreneurial talent, accelerate the development of new companies, and thus speed the commercialization of technology (Smilor and Gill, 1986). Three major groups of elements have been identified as providing the infrastructure for supporting the development of new technology-based firms: business, technical, and social inputs (Miller and Marcel, 1987). The UTBI's efforts in providing these in-

frastructure elements in the form of a variety of incubator services and other inputs from the surrounding university environment are aimed at providing a milieu for technological entrepreneurship (Bullock, 1985; Mian, 1994b). The term value-added, employed in this paper, has become part of the lexicon of the technology business incubation industry, which corresponds to the provision of the aforementioned three major groups of elements sought for nurturing new technology-based ventures. In the incubator industry, value-added refers to those specific ways that an incubator program enhances the ability of its tenants to survive and grow in business (Allen and Bazan, 1990). To accomplish these firm survival and growth objectives a typical business incubator program provides shared office services

0048-7333/96/$15.00 ? 1996 Elsevier Science B.V. All rights reserved SSD! 0048-7333(95)00828-4


S.A. Mian / Research Policy 25 (1996) 325-335

and business assistance including affordable rent and fostering connections with firms inside the incubator and in the local economy. In the case of UTBIs, these value-added components are further supplemented by the provision of various university-related inputs such as university image, student employees, faculty consultants, and the institutional support provided by the R & D community in and around the university. This article assesses university technology business incubators in the US by exploring their value-added contributions to technology-based start-ups. The study is based on six cases of UTBIs representing a population of 30 5-year
Table 1 University technology business incubator perspective: major studies Author(s), year Allen, 1985 Research sample 70 incubators (UTBIs 15%, response 66%) 910 firms (response 56%) Study context

and older facilities in the US. The paper attempts to answer questions such as: What contributions do university incubators make to new technology-based start-ups in the form of various services provided? What additional benefits accrue from the university relationships? What are some of the implications for technology-based firms?

2. Relevant literature and study framework With the popularity of the business incubation concept starting in the early 1980s, numerous

Key findings/contribution This study pointed out the potential of incubators for regional development. It helped to defined incubator organization types based on sponsorship, and service categories provided to the tenants. The concept of incubator was described as: a network of organizations providing skills, knowledge and motivation, real estate experience, provision of business and shared services The findings of this research supported much of what was already known and provided new data about the age, education, and salary of incubator managers. Using the four incubator organization types identified earlier the study further identified their measures of success In this case study, the features identified contributing to the incubator effectiveness were: low cost developing and operating; and quality management of facilities As the first UTBI focused work, the study supported the assertion that university incubators appear to provide the resource base and environment conducive to the development of NTBFs. It provided a chicklist for successful facilities and developed an assessment framework for UTBIs The study contended that managerial intervention is the key in incubation support, and success is measured by proactive direct intervention. Factors limiting the effectiveness of direct intervention were identified as the availability of time and lack of responsiveness of the firms

Institute of Public Administration, Pennsylvania State University, University Park, PA and the US Department of Commerce, Washington DC

Smilor and Gill, 1986

117 incubators (UTBIs 10%, response 43%) 211 firms (response NA)

IC 2 Institute, University of Texas at Austin, TX

Campbell et al., 1988

13 incubators (UTBIs 21%, case study) 294 firms (response 55%) 6 incubators (UTBIs 100%, case study) 150 firms (response 32%)

H. Humphrey Institute, University of Minnesota, Minneapolis, MN School of Business & public Management, George Washington University, Washington DC

Mian, 1991, 1994a

Rice, 1993

9 incubators (56% UTBIs, case study) 36 firms (selected)

School of Management, Renselaer Polytechnic Institute, Troy, NY

S.A. Mian / Research Policy 25 (1996) 325-335


studies have been conducted to assess the emerging incubator industry across the nation (Allen, 1985; Allen and Levine, 1986; Smilor and Gill, 1986; Campbell et al., 1988; Mian, 1991; Rice, 1993). Most of these studies are primarily descriptive, generally covering various types of incubator models. Table 1 provides a summary of the major studies including UTBI perspective. As shown, only a handful of the studies were comprehensive enough to include the role of university-related facilities in providing business incubation support. And with the exception of one study (Mian, 1991) none of the other studies specifically focused on the university technology incubator, generally understood to provide a resource base necessary for the development of new technology based firms (NTBFs) (Allen and Levine, 1986; Mian, 1991, 1994a,b) From the incubation business literature reviewed (Allen, 1985; Allen and Levine, 1986; Smilor and Gill, 1986; Campbell et al., 1988; Mian, 1991; Rice, 1993) it is clear that most of the incubator-related knowledge does not have a sound theoretical base of its own and is by and large anecdotal in nature. Hence, our understanding of the business incubation function in general and the university-sponsored business in-

cubation support for developing new technologybased firms, in particular, remains fairly rudimentary. Consequently, there is no consensus on what makes up the content of successful UTBI management practices in providing an optimal set of technology and business incubation services and how the value-added contributions of these services may be enhanced (Allen and Levine, 1986; Deutriaux, 1987). The UTBIs' value-added dimensions employed in this research along with the authors who used these dimensions in various studies are summarized in Table 2. These dimensions are derived from parallel but separate incubator and university-industry interaction studies reported in the literature (Mian, 1991). As shown, there are two main categories of services: (a) typical incubator services which include shared office services, business assistance, access to capital, business networks, and rent breaks; and (b) the university-related services including faculty consultants, student employees, university image conveyance, library services, labs/workshops and equipment, mainframe computers, related R & D activity, technology transfer programs, employee education and training, and sports and other social activity. The determination of the provision

Table 2 Summary of the literature on value-added contributions of UTBI services Contribution Used by Allen and Rehman (1985), Smilor (1987), Hisrich and Smilor (1988) Allen and Bazan (1990), Smilor (1987) Plosila and Allen (1985), Smilor (1987) Smilor (1987), Lichtenstein (1992) Hisrich and Smilor (1988), Allen and Bazan (1990)

Typical incubator services and their impact 1. Shared office services 2. Business assistance 3. Access to capital 4. Business networks 5. Rent breaks University-related services and their impact 1. Faculty consultants 2. Student employees 3. University image 4. Library services 5. Labs and workshops 6. Mainframe computers 7. Related R & D activity 8. Technology transfer programs
9. Employee education and training 10. Sports and social activity

Allen and Levine (1986), Smilor et al. (1988), Udell (1990) Same as above Smilor (1987), Scheirer et al. (1985) Smilor (1987), Allen and Levine (1986) Brown (1985), Smilor (1977), Doutriaux (1987) Bullock (1985), Hisrich and Smilor (1988) Allen and Levine (1986), Smilor et al. (1988) Doutriaux (1987) Allen and Levine (1986), Smilor (1987), Hisrich and Smilor (1988), Abetti and Stuart (1985) Allen and Levine (1986), Hisrich and Smilor (1988), Udell (1990) Allen and Levine (1986), Smilor (1987)


S.A. Mian / Research Policy 25 (1996) 325-335

Table 3 Selected U T B I s ' background, institutional support, and their client firms' survey data Incubator facility, sponsoring university (year established) Facility background Programs institutions providing R & D and other support services to client firms Technology initiatives program - M a r y l a n d ind'l partnerships - Technology extension service D i n g m a n entrepr, center - L a w and enterpr, program

No. of client firms contacted 25

No. of client firms responded 10


Technology Advancement Program (TAP), University of Maryland - a state university (1984)

T A P rents 15 700 square feet 2 space to a group of 15 to 19 tenants at a rate of $7.5 foot-2, which is about 30% less than the market rate


Advanced Technology Development Center (ATDC), Georgia Tech - a state university (1980)

A T D C rents 15 700 feet 2 space at its main facility on Georgia Tech campus, at a rate of $9.50 foot -2, which is more than 30% cheaper than the market rate BCC's 87000 feet 2 rentable space at its newly built facility is available at $10.50 foot -2, which is slightly cheaper (0 to 15%) than the market rate

- Georgia Tech res. inst. - Georgia Tech res. corp. - M a n u f a c t u r i n g res. center -Industral extension service Georgia capital network - Small business tech. dev. center Univ. tech. transfer center -International bus. dev. program Univ. res. park - Small bus. dev. corp. Evanston bus. investment corp. Basic ind'l research lab. Basic ind'l research inst. Inst of learning sciences




The Ben Craig Center (BCC), University of North Carolina at Charlotte - a state university (1986)




Technology Innovation Center (TIC), Northwestern University - a private university (1986)

TIC rents its 33000 feet 2 of rentable space at its new facility at a rate of $14.75 foot -2, which is market competitive




Ben Franklin Technology, Incubator (BFTI), Lehigh University - a private university (1983)

BFI'I rents 21900 feet 2 of its rental space in four different buildings. The rental rates vary from $5.00 to $15.00 foot -2. These rates are about 30% less than the market rate

- Technical assistance program -Business assistance program - Challenge grants program Seed grants program - U n i v . tech. transfer office Edison biotechnology center - C l e v e l a n d adv. manuf. program University tech. trans, office - M a r k e t i n g services associates




Edison Technology Incubator (ETI), Case Western Reserve University - a private university (1984)

ETI rents 13000 feet 2 of its space in its multistory building. The rental rate varies from $4.50 to $12.50 foot -2. These rate are about from 15 to 30% less than the market rates





47 (32%)

S_4. Mian / Research Policy 25 (1996) 325-335 Table 4 Client firms' use and value-added contributions of incubator services (values in percent) Incubator service/item Reported frequency of use Daily/ weekly Monthly/ yearly Only at inception Never Value added contribution No value Minor value Moderate value Major value


Rel. between use and value-added: correlation coefficient (significant?) 0.31 (yes) 0.76 (yes) 0.66 (yes) 0.47 (yes) 0.55 (yes) 0.75 (yes) 0.35 (yes) 0.76 (yes) 0.68 (yes) 0.48 (yes) 0.62 (yes) 0.17 (no) 0.68 (yes) 0.56 (yes) 0.20 (no) 0.20 (no) 0.46 (yes) 0.64 (yes) 0.39 (yes) 0.24 (no) 0.59 (yes) 0.43 (yes) -

A. Shared office services 1. Photocopier 2. Telephone 3. Facsimile (Fax) 4. Conference room 5. Security 6. Receptionist 7. Custodial/ maintenance 8. Personal computer 9. Shipping/receiving 10. Mail sorting 11. Word processing/ clerical 12. Cafeteria/lunch room

83 61 66 40 83 61 94 47 46 72 19 57

5 3 13 50 0 3 0 14 20 0 31 0 32 39 40 27 34 35 33 38 66 68 . .

10 9 8 7 3 9 3 14 8 3 9 4 12 28 6 6 16 11 11 9 3 3 .

2 27 13 3 14 27 3 25 26 25 41 39 47 33 51 67 45 49 53 50 14 5

2 14 11 3 9 22 3 26 18 10 23 33 38 12 28 36 40 32 26 35 6 10 41

10 7 8 15 13 19 19 3 27 30 26 11 14 21 30 16 24 19 35 35 21 24 8

35 31 34 37 38 19 39 39 24 33 32 48 10 35 14 20 9 23 16 15 32 37 8

53 48 47 45 40 40 39 32 31 27 19 8 38 32 28 28 27 26 23 15 41 29 43

B. Business assistance and networks 1. Govt. grants and loans 9 2. Business plan 0 3. Legal/govt. 3 regulations 4. Tax assistance 0 5, Accessing outside 5 capital 6. Marketing 5 7. Accounting 3 8. Personnel recruiting 3 9. Business connections 17 outside the incubator 10, Business connections 24 between tenants 11. Rent breaks .

a nd t e n a n t firms' p e r c e i v e d v a l u e - a d d e d contrib u t i o n s o f t h e s e U T B I services f o r m s t h e basis o f this study. T h i s f r a m e w o r k c a p t u r e s m o s t o f th e key U T B I services d e s c r i b e d in t h e l i t e r a t u r e a n d is able to a d d r e s s t h e m a j o r a s p e c ts o f t h e U T B I v a l u e - a d d e d d i m e n s i o n s . T h e following sections e m p l o y this f r a m e w o r k to a n a ly z e t h e s e l e c t e d six cases.

p l o y e d (Mian, 1991). F o r d a t a c o l l e c t i o n on-site interviews w e r e c o n d u c t e d with t h e i n c u b a t o r m a n a g e r s an d t h e i r staff, an d t h e s e w e r e supplem e n t e d by i n f o r m a t i o n o b t a i n e d t h r o u g h mail surveys a d m i n i s t e r e d to t h e c l i e n t firms t o f t h e following six s e l e c t e d U T B I cases: ? Technology Advancement Program (TAP), ? Advanced Technology Development Center

3. Methodology and sample
I n this study a m u l t i p l e - c a s e design with an e m b e d d e d survey o f t h e client firms was e m -

(ATDC), ? The Ben Craig Center (BCC),
i Client firms include both tenant firms as well as graduate firms.


S.A. Mian /Research Policy 25 (1996) 325-335

Table 5 Client firms' use and value-added contributions of university-related services (values in percent) University related service/item Firm's degree of involvement in (or use of) services/items No involvement 1. University image 2. Labs/workshops and equipment 3. Student employees 4. Faculty consultants 5. Library resources 6. Related R & D activity 7. Education and training 8. Tech. transfer programs 9. Sports and social activities 10. Mainframe computer 18 40 15 23 21 55 80 73 68 85 Occasional involvement 40 38 53 63 62 30 18 25 22 12 High involvement 42 22 32 14 17 15 2 2 10 3 Value added by each of these factors/items No value Minor value Moderate value Major value Rel. between use and value added: (significance?)

19 33 13 20 19 49 69 59 56 73

12 16 20 28 26 9 9 23 29 15

28 18 35 26 29 20 13 12 9 9

40 33 32 26 26 22 9 6 6 3

0.80 (yes) 0.85 (yes) 0.76 (yes) 0.79 (yes) 0.80 (yes) 0.92 (yes) 0.73 (yes) 0.86 (yes) 0.87 (yes) 0.89 (yes)

? T e c h n o l o g y I n n o v a t i o n C e n t e r (TIC), ? B e n F r a n k l i n T e c h n o l o g y I n c u b a t o r (BF-I'I), ? E d i s o n T e c h n o l o g y I n c u b a t o r (ETI). T a b l e 3 p r o v i d e s a list o f t h e six s e l e c t e d cases, t h e i r s p o n s o r i n g universities, facility b a c k g r o u n d , i n s t i t u t i o n a l s u p p o r t , a n d t h e i r client firms' survey data. A s shown, t h e six U T B I s s t u d i e d w e r e c h o s e n (from a s a m p l i n g f r a m e o f 30) to r e p r e sent p r o g r a m s which 2: (a) w e r e s p o n s o r e d by a ' m a j o r ' university in t h e US; (b) r e p r e s e n t e d b o t h p u b l i c a n d private university types; (c) w e r e generally v i e w e d as successful o r o t h e r w i s e unique; (d) w e r e at least 5 y e a r s old. O u t o f t h e total 150 client firms c o n t a c t e d 47 r e s p o n d e d to t h e survey (a r e s p o n s e r a t e o f 32%). 3

4. Provision of services and infrastructure support
University t e c h n o l o g y business i n c u b a t o r s a r e m u l t i - t e n a n t buildings, in a n d a r o u n d university c a m p u s e s , which p r o v i d e a f f o r d a b l e , flexible s p a c e a n d a v a r i e t y o f typical i n c u b a t o r a n d universityr e l a t e d services for a select g r o u p o f t e c h n o l o g y b a s e d t e n a n t firms. T a b l e s 4 a n d 5 ( c o l u m n o n e ) list t h e type o f services p r o v i d e d by t h e six U T B I facilities inc l u d e d in the survey. A s shown in T a b l e 4, essential s h a r e d office services w e r e p r o v i d e d by alm o s t all o f the six facilities studied. Business assistance services w e r e also g e n e r a l l y a v a i l a b l e b u t with d i f f e r e n t a r r a n g e m e n t s . A t A T D C , business a n d m a n a g e m e n t consulting was p r o v i d e d by i n - h o u s e c o n s u l t a n t s , while at BCC, TIC, B F T I , a n d E T I t h e services w e r e available t h r o u g h resid e n t p r i v a t e firms. N o such f o r m a l a r r a n g e m e n t was r e p o r t e d at T A P , w h e r e t h e i n c u b a t o r m a n a g e r a n d t h e staff s e e m e d to have assisted ent r e p r e n e u r s in b u s i n e s s / m a n a g e m e n t p r o b l e m s . M o s t o f the typical u n i v e r s i t y - r e l a t e d services w e r e available at all t h e six facilities ( T a b l e 5). A c c e s s to a s t u d e n t l a b o r pool, r e l a t e d R & D activity, t e c h n o l o g y t r a n s f e r p r o g r a m s , m a i n f r a m e c o m p u t e r s , a n d l i b r a r y / i n f o r m a t i o n d a t a b a s e fa-

2 Fourteen of the most highly respected experts in the field were interviewed personally during the annual professional conference (with extended telephone follow-ups). These experts were asked to verify the selection criteria and help identify a representative sample for the case study. Based on a summation of their responses a total of seven UTBI facilities were identified out of which six allowed access. 3 Mail reminders, and help from the respective facility management was sought to encourage response without bias and selectivity. None the less, most of the non-respondents were found to be relatively newer tenants and were not dissimilar to the responding tenants in terms of industry type and/or size.

S.A. Mian / Research Policy 25 (1996) 325-335


cilities were reported across the board. However, with the exception of TAP, access to the remaining services (see Table 5) was not equally emphasized. Table 3 (column 3) depicts the institutional support system available to the clients in each of the six facilities surveyed. As shown, tenants from all six programs can take advantage of their respective university research and development activities including technology transfer programs, technology and business development assistance centers, and research institutes. Two of the land grant institutions, a that is, University of Maryland and Georgia Institute of Technology, have technology/industrial extension services which provide the necessary technology transfer environments. Both Georgia Institute of Technology and Northwestern University have established industrial research laboratories and institutes for contractual applied research. As for certain specialized areas, Northwestern University and Case Western Reserve University both have established biotechnology centers/institutes. Georgia Institute of Technology has recently established an information technology center. Only the Ben Craig Center at University of North Carolina at Charlotte has a focused international program to help develop US subsidies of foreign businesses.


Telephone-2 Facsimile ( F a x ) - 3 Conference R o o m - 4
Security-5 Receptionist-6 Cuetodial/Meint.-7 Personal Computer-8 ~hipping/Recaiving-9 Mail Sor ting-10



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. . . . . . . .




t~\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\~ ~-

Cafeteria-12 0% 25% 50% 75% 100%

Percent Respondents
No Value M a j o r Value ~

Minor-Moderate value

(Source: survey dat~)

Fig. 1. Perceived value-added of shared office services.

5. Use and value-added contributions of the services

picted in Tables 4 and 5. As shown, against each of the service, client reported frequency of use, the value-added contributions, and the relationship between these two variables are delineated. Furthermore, Figs. 1 to 3 provide details of the value-added contributions, which are rank ordered (in each figure) according to the percentage of respondents assigning major value-added contributions to each of the service reported. Table 4 shows the client firms' response data on typical incubator services which include 12 shared office services and 11 business assistance and network services including rent breaks. In the shared office services category, the data show that a majority (more than 50%) of the

The individual case-by-case data on the UTBI services show considerable variation in the frequency of use and their client-perceived value-added contributions. 5 In this section the case-wide data is aggregated ( N = 47) and analyzed as de-

Rent Breaks-1 Outside Connection-2 Govt Loane/Qrants-3 Business Plan-4 Inside N e t w o r k i n g - 5 Legal/Regulations-6 Tax Aesistance-7 Accessing C a p i t a l - 8 Marketing-9 Ac c o u n t i n g - 10 Pars. Re o r u i t i n g - 1 1

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~ '


~%~%~%~\\~\~\~; ' ' ' ~\%~\~%%~%~\%%\'~, = ' ' t~\~\\~\~%~\\~\~\\~... Ii i ' ~%~\~%%~%%\\~\~,: ' ...... ' ~ \ ~ \ ~ ,~ \ ~ \ \ ~ \ ~ \ % ~ I

~ I~ " I ~

' I ' I ( 1 100%

4 Land-grant institutions are American colleges and universities initially given federal aid in 1870s, especially by land grants, they are now supported by the individual states, with supplementary federal funds. 5 Value-added contributions of the services provided were assessed through tenant's perceptions recorded on a 4-level scale, with 0 as no value-added, 1 as minor value-added, 2 as moderate value-added, and 3 as major value added.



~ 25%

~\~%~\\~'~\%~\~\\%~ I 1 50% 75%

Percent Respondents
[~ No V a l u e M a j o r Value ~

Minor-Moderate value

(Source= Survey nets)

Fig. 2. Perceived value-added of business assistance/networking services.


S.4. Mian / Research Policy 25 (1996) 325-335

University Image-1 Laba & Equipment-2 Student Employees-3 Faculty Conaultent-4 Library Services-5 R & D Activities-6 Employee Education-7 Tech. "rrena. Prog.-8 Sports &Soc. Act.-9 Mainframe Comput.-lO

~\\\\\\%\\\\\\\\\\\\\\\\\\\\\\\\\\\%\\\~ ?~ \ ~ x x \ ~ ~



25% 50% 75% Percent Respondents No Value Major Value ~


Minor-Moderate Value

F i g . 3. P e r c e i v e d v a l u e - a d d e d

of university-related


respondents reported using eight out of 12 services frequently (daily/weekly); these include: mail sorting (72%), photocopier (83%), receptionist (61%), facsimile/fax (66%), custodial maintenance (94%), cafeteria/lunch room (57%), security (83%), and telephone (61%). Infrequent use (monthly/yearly) of a conference room was reported by 50% of the respondents. For wordprocessing, 41% reported they never used this service, while 31% reported infrequent use (monthly/yearly). In the case of personal computer services 47% reported frequent use (daily/weekly) while 25% reported they never used this service. For shipping and receiving, 46% reported frequent use (daily/weekly) and 26% reported they never used the service. In sum, almost all of the services had some use, with the majority being used frequently. On the value-added side of the table, a majority (67% or more) of the respondents reported that all 12 services had some value-added contribution (minor to major) to their firms. As shown in Fig. 1, the 12 shared office services were ranked in terms of the percentages of respondents assigning a major value to these services. The figure shows that nearly half of the respondents assigned a major value to photocopier, telephone, and fax services. In the business assistance set of services depicted in Table 4 section B (1-8), a majority or near majority of the respondents (45% or more) replied that they never used seven out of the

available eight services. In fact, only one service, i.e. business plan assistance was used at inception by 67% of the respondents. On the value-added side of the Table 4, a majority of the respondents assigned some value (minor or major) for all of the 11 services. This means that although they are not using these services, they do not consider them to be valueless. In business networking set of services (Section B9, 10), a majority of the respondents (66%-68%) reported monthly/ yearly use of the assistance available in providing business connections among tenants and business connections outside the incubator. In rent breaks (Section Bll), there was a major split between no value-added (41%) and major value-added (43%) responses. This seems obvious due to the fact that two out of six UTBIs (i.e. TIC and BCC) charged market competitive rents, while the remaining tend to subsidize rents. As shown in Fig. 2, the 11 business assistance and other networking services are ranked in terms of the percentages of respondents assigning major values to these services. The figure shows that at least one quarter of the respondents assign a major value to nine out of the 11 services. These findings support the earlier work on the value-added contributions of Pennsylvania's business incubators (Allen and Bazan, 1990). Similarly, the individual case-by-case data analyses on value-added contributions of university-related services show considerable variation in the frequency of use and the client-perceived value-added contribution. As stated earlier, here too the case-wide data was aggregated for the analysis. The results are shown in Table 5 which provide UTBI-wide data on the reported use and perceived value-added patterns of the universityrelated services (N = 47). In terms of use, a majority (50% or more) of the respondents answered involvement/use (occasional to high) with five (out of ten) services frequently used, namely: student employees (85%), university image conveyance (82%), labs/workshops and sophisticated equipment (60%), library/information databases (79%), and faculty consultants (77%). No involvement was reported by 50% or more respondents in the remaining five service areas, namely: mainframe

S.A. Mian / Research Policy 25 (1996) 325-335


computers (85%), technology transfer programs (73%), employee education and training (80%), and sports and other social activity (68%). In terms of value-added contributions (see Fig. 3) more than one half of the respondents assigned some value to six out of the ten university-related services. These findings generally support the earlier work on the university and technology-based firms linkages (Allen and Levine, 1986). A review of the study results show that, while most of the above services were provided at each of the six facilities studied, their modes of delivery differed. There is insufficient data to suggest that any one of the modes is better than any other, and these different modes apparently suited to the individual UTBI needs.

In the case of university-related services the measures of association between the frequency of use and value-added contributions show a high positive relationship (with Pearson correlation coefficients varying from 0.73 to 0.92) in all of the ten university-related services. All these relationships were found significant. The highest relationship (0.92) was revealed in the use of related R & D activity, which means that if the client's business related R & D activities are in progress, then it becomes highly valuable for the client firm to locate in the UTBI and make use of the available knowledge. Same is true with respect to the remaining services where high positive relationships were found between the frequency of use and the values they add to the client firms. In sum, this analysis showed that the firms who needed and used these services valued them highly.

6. Relationships between the frequency of use and value-added of the services 7. Summary and conclusion

Tables 4 and 5 (last columns) list the strength of relationships between the frequency of use and the value-added contributions of the UTBI services, as indicated by the Pearson correlation coefficients. As shown in Table 4, the measure of association between the frequency of use and value-added contributions show significant relationships (with Pearson correlation coefficients varying from 0.31 to 0.76) in 11 out of the 12 shared office services. The only exception is the cafeteria/lunch room service, where there is low positive relationship (Pearson correlation coefficient 0.17) which is not significant either. In business assistance, relationships were significant (with Pearson correlation coefficient varying from 0.39 to 0.68) in five out of the eight services. Assistance in legal/government regulations, personnel recruiting, and tax matters did not show any significant association between their use and value-added contributions. In providing inside as well as outside business networks these associations were found significant (with Pearson correlation coefficient of 0.43 and 0.59, respectively).

The above findings indicate that the UTBI concept seems to provide a nurturing environment for the development of NTBFs through a combination of much needed university-related inputs and other typical incubator services. Furthermore, the vast majority of the respondents believed that the UTBI services they received were adding value to their fledgling firms. Thus, it can be concluded that the UTBI in the US does contribute to the growth and survival of their tenants making it a viable system for nurturing NTBFs. When compared with previous fragmented research findings (Allen and Levine, 1986; Allen and Bazan, 1990), these findings not only confirm that the incubators add value to their client firms, but go a step further to establish that UTBIs are specifically suitable for developing NTBFs. In interpreting these conclusions on the client reported value-added contributions, there is, however, a need for caution. Some previous authors (Allen and Bazan, 1990) have commented on the generally modest perceptions of value-added components by incubator tenants saying that,


S.A. Mian / Research Policy 25 (1996) 325-335

" e n t r e p r e n e u r s are not a particularly appreciative group, and their high degree of a u t o n o m y and self-esteem shade their perceptions of how m u c h they are really being helped". This further strengthens the findings. In spite o f the fact that the tenant response rate was only a r o u n d one third and the plausibility that a majority of the respondents may have been 'successful' tenants, the overall conclusion would remain the same. Furthermore, the contributions reported here may not have fully acc o u n t e d for some o f the softer value-added aspects such as: (a) the psychological support the tenants draw from each o t h e r (Lichtenstein, 1992), (b) managerial interventions which may provide critical know-how and the sharing of entrepreneurial skills (Rice, 1993), and (c) miscellaneous other programs the U T B I s offer, for example, seminars and meetings and mentoring with local entrepreneurs etc. F r o m the N T B F e n t r e p r e n e u r ' s viewpoint, the implications of these findings are obvious. The U T B I ' s university linkage plays an important role in providing the infrastructure support necessary for nurturing their firms (Mian, 1994b). F r o m the university point of view, the U T B I s ' contributions in their work with university-related clients (faculty, students, and alumni) is equally important in developing e n t r e p r e n e u r s from within at the same time enhancing the prospects for university technology commercialization (Abetti and Sheart, 1985; Doutriaux, 1987). In a b r o a d e r sense, what makes the U T B I ' s value-added contributions justifiable from a university policy perspective is the continuing evidence that an entrepreneurial university is broadening its mission in addressing the technologybased economic development needs of their regions. While this preliminary effort has provided useful insights into the value a d d e d contributions of UTBIs, several challenges remain. T o make the U T B I tool more attractive to the entrepreneurial university, perhaps m o r e self-sustainable models will have to be developed. Additionally, from e n t r e p r e n e u r ' s point of view the relative merits of the U T B I c o m p a r e d to the classic intrapreneurial model for new venture creation, or the traditional i n d e p e n d e n t N T B F de-

velopment m o d e n e e d to be probed. These areas including a better accounting of the aforementioned softer value-added c o m p o n e n t s n e e d further research.

Abetti, P. and R. Stuart, 1985, Entrepreneurship and technology transfer: key factors in the innovation process, in: D.L. Sexton and R.W. Smilor (Editors), The Art and Science of Entrepreneurship (Ballinger Publishers, Cambridge, MA). Allen, D., 1985, Small business incubators and enterprise development, report prepared for the US Department of Commerce (Pennsylvania State University, University Park, PA). Allen, D. and E. Bazan, 1990, Value-added contribution of pennsylvania's business incubators to tenant firms and local economies, report prepared for Pennsylvania Department of Commerce (Pennsylvania State University, University Park, PA). Allen, D. and V. Levine, 1986, Nurturing advanced technology enterprises: emerging issues in state and local economic development policy (Prager, New York). Allen, D. and S. Rehman, 1985, Small business incubators: a positive environment for entrepreneurship, Journal of Small Business Management (July), 12-24. Brown, W., 1985, A proposed mechanism for commercializing university technology, Technovation 3, 19-25. Bullock, M., 1985, Cohabitation: small research-based companies and the universities, Technovation 3, 27-38. Campbell, C., D. Berge, J. Janus and K. Olsen, 1988, Change Agents in the New Economy: Business Incubators and Economic Development (University of Minnesota, Minneapolis, MN). Coopers, A., 1985, The role of incubator organizations in the founding of growth oriented firms, Journal of Business Venturing l, 75-86. Doutriaux, J., 1987, Growth patterns of academic entrepreneurial firms, Journal of Business Venturing 2, 285297. Hisrich, R. and R. Smilor, 1988, The university and business incubation: technology transfer through entrepreneurial development, Technology Transfer (fall), 14-19. Lichtenstein, G., 1992, The significance of relationships in entrepreneurial development: a case study of the ecology of enterprise in two business incubators, unpublished dissertation (University of Pennsylvania, PA). McMullan, W., W. Long and J. Graham, 1986, Assessing economic value-added by university-based outreach programs, Journal of Business Venturing (spring), 225-240. Mian, S., 1991, An assessment of university-sponsored business incubators in supporting the development of new technology-based firms, unpublished doctoral dissertation (The George Washington University, Washington, DC). Mian, S., 1994a, U.S. university-sponsored technology incuba-

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tors: an overview of management, policies, and performance, Technovation 14, 515-528. Mian, S. 1994b, Are university technology incubators providing a milieu for technology-based entrepreneurship? Technology Management 1, 86-93. Miller, R. and C. Marcel, 1987, Growing the Next Silicon Valley, (Lexington Books, Lexington, MA). Plosila, W. and D. Allen, 1985, Small business incubators and public policy: implications for states and local development strategies, Policy Studies Journal 13, 729-734. National Business Incubation Association, 1992, The State of the Business Incubation Industry - 1991 (NBIA, Athens, OH). Rice, M., 1993, Intervention mechanisms used to influence the critical success of new ventures: an exploratory study, unpublished doctoral dissertation (Renssalaer Polytechnic Institute, Troy, NY).


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