Start-ups attract ample attention. Society expects solutions for big and small problems accompanied with economic growth and employment from these innovative businesses. But the fact is that most start-ups cannot deliver on this promise.
Business incubation aims to improve the development of start-ups, by offering a package of services which reduce the chance for starting entrepreneurs to fail. These days, incubators interfere with the start-ups in a somewhat assertive manner. However, whether this actually leads to structurally improved start-up development remains disputed. To contribute to this debate, this thesis researched what the influence of business incubation is on start-up performance.
A literature review shows that incubation leads to several benefits. But under which conditions this leads to improved business performance remains unclear.
An original study among 269 start-ups that applied for two Dutch incubators shows that business incubation indeed leads to improved business performance. The start-ups that were accepted to the incubators performed significantly better after several years than the ones that were rejected, even after controlling for start-up quality during application.
To investigate why this is the case, ten start-ups were followed for ten months. Start-ups experiment continuously with their business model. This study shows that business incubation helps experimenting by compensating for three types of cognitive biases of the entrepreneur: ignorance, doubt, and confusion. To each bias, particular incubator services are associated. Also, the digital network of incubated start-up entrepreneurs is important. In particular, contacts that possess different knowledge as the entrepreneurs are useful.