Business incubation ensures more effective change processes for startups

PhD Research

Chris Eveleens
Chris Eveleens

Chris Eveleens researched whether business incubation - aiming for the improvement of startup development - actually makes a structural contribution to the performance of a startup. The Netherlands has more than 65 business incubators and the literature shows that incubation has many advantages. But under what conditions, and why? Utrecht University Centre for Entrepreneurship spoke with Eveleens about his findings.

Startups and incubation

Start-ups create economic growth and jobs and offer innovative solutions to large and small problems. At least, that is the image that many people have of a startup. In reality, the success rate among startups is very low. Business incubators try to increase the number of successful startups by helping starting entrepreneurs with their development.

To this end, business incubators support startups in an assertive way. On the one hand, they provide facilitaties starting companies often have no resources for, such as office space and legal advice, and access to a network of mentors and investors. On the other hand, the incubator proactively offers coaching sessions and continuously holds up a mirror, for example if an entrepreneur continues to firmly believe in a business model that turns out to be unsuccessful.

Incubation leads to better business performance

Research among 269 startups that had registered for two Dutch incubators shows that business incubation does indeed lead to better business performance. After a few years, the incubated startups performed significantly better than the rejected startups, even after correction for the quality of the startup at registration.

Interaction accelerates development

Eveleens concluded that it is the mix of incubator services, with an interaction between facilitating and intervening, that contributes to the successful development of a startup. Incubators play a crucial role in removing cognitive biases the entrepreneurs may have. In addition to ignorance - ignoring alternative business models and at all costs maintaining one's own model - Eveleens identified doubt ('cold feet') and confusion (a crippling reaction to an abundance of possibilities) as such cognitive obstacles.

With their firm approach, incubators ensure that startups are actively working on these biases, while at the same time the facilities are in place to tackle them. "This only works if an entrepreneur is willing to be led and remains open to change, and the incubator focuses on the change process itself," says Eveleens. "An incubator must accommodate a learning process that benefits the entrepreneur."

PhD defence

Chris Eveleens defends his thesis Interfering with innovative entrepreneurship: How business incubation impacts the performance of start-ups this Friday, September 13th, at the Academiegebouw.