Public versus Private Technological Incubator Programmes: Privatizing the Technological Incubators in Israel

Abstract

Private technological incubators began operating in Israel in 2000, and developed thanks to the rapidly growing private (venture) capital (VC) sector, which traditionally had not funded such projects. The present study examines the differences and similarities between two types of technological incubators-public and private. It addresses the question whether the need still exists for the Public Technological Incubators Programme (PTIP). Based on our empirical analysis and findings, the main conclusion is that private incubators cannot fully replace public incubators; even after the entry of the private sector into the area of technological incubator activity, there is still justification for the continuation of the PTIP. Private incubators tend to concentrate in selected fields, whereas public incubators sponsor a large variety of activities. The PTIP was found to provide answers to advancing national objectives, such promoting peripheral regions and providing special incentives to selected population groups (e.g. new immigrants) for whom such activities would otherwise be out of reach.

Incubators as Tools for Entrepreneurship Promotion in Developing Countries

“…were effectively used as a tool for absorbing immigration (Roper 1999;Frenkel et al 2008). Between 1989 and 1995 more than 11.000 high skilled scientists and engineers emigrated from the former Soviet Union some of which were employed in incubator firms.…”

“…Incubators were used as an effective policy tool in various countries for reducing unemployment, new job and venture creation. See for instance, Thierstein and Wilhelm (2001) for the German case, Frenkel et al, (2008) and Roper (1999) for the Israeli case and Abetti (2004) for the case of Finland.…”

“…Networking is constrained in the incubator because companies more or less compete in the same sector. Frenkel et al (2008) 12 incubators (6 private and 6 public). Surveys with incubator managers, 60 firms.…”

Challenges and opportunities of innovation and incubators as a tool for knowledge-based economy

“…2008; Al-Mubaraki and Busler, 2010a, 2010b, 2010c, 2011a, 2011b, 2011c, 2011dFrenkel, Shefer, & Miller, 2008;Hannon, 2005;Hansen, Chesbrough, Norhoa, & Sull, 2000;Hughes et al 2007;Lalkaka, 2002;McAdam & McAdam, 2008;McAdam, Galbraith, McAdam, & Humphreys, 2006;Mian, 1994aMian, , 1994bMian, , 1996aMian, , 1996bMian, , 1997Phillips, 2002;Rothaermel & Thursby, 2005a, 2005bSmilor & Gill, 1986;Sweeney, 1987;Thierstein & Wilhelm, 2001). Many international organizations serving business incubators in the United States, such as the National Business Incubation Association (NBIA, 2012), demonstrated the highest percentage of incubator characteristics such as: (1) incubator type indicated (54%) as mixed-use type; (2) incubator goal includes job creation and fostering entrepreneurial climate; and (3) incubator services such as (i) help with business basics, (ii) high-speed Internet access, (iii) marketing assistance, and (iv) networking activities.…”

“…• Frenkel et al, 2008 In the USA, private and public technology incubator firms promoted technological entrepreneurship among the immigrants in the USA and those from the former USSR. In private incubators, firms tend to benefit more from networking with international strategic partners and academia.…”