Balanced Give and Take — An Empirical Study on the Survival of Corporate Incubators

Abstract

Many companies have created corporate incubators to deal with the increasing pace of innovation and to foster innovation activities beyond their current business. Since these corporate incubators demand considerable resources, the parent companies continuously evaluate the incubators’ performance and then decide on their survival. This decision depends on the balance between incubator’s contributions and the hosting company’s financial investment (top-level), while the incubator’s contributions again depend on the balance between incubator investment and the supported new business contributions (bottom-level). We apply the Barnard-Simon theory of organisational equilibrium to investigate the resource flow balance on both levels and to predict the resulting incubators’ performance, which determines their future survival. The analysis is based on a sample of corporate incubators surveyed in 2019. Results show that incubators with a top-level equilibrium and a bottom-level disequilibrium perform better. These counterintuitive yet insightful results are discussed in detail.

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