Firm survival: The role of incubators and business characteristics

https://doi.org/10.1016/j.jbusres.2014.11.030Get rights and content

Abstract

This paper analyzes the impact of business incubators on firm survival. Using a configurational comparative method, namely fuzzy-set qualitative comparative analysis (fsQCA), the article also examines whether degree of business innovation, size, sector, and export activity affects firm survival. Results show that, when combined with other variables (i.e. sector, technology), business size is a sufficient condition for firm survival. Likewise, incubators alone cannot affect survival. A combination between incubators and other factors is necessary to ensure firm survival.

Introduction

Interest in business creation is now more intense than at any point in the last 30 years. Business incubators seek to boost regional development by fostering business and employment creation (Phan, Siegel, & Wright, 2005). The objective of a business incubator is to create and develop companies or accelerate the creation of successful firms (Bruneel, Ratinho, Clarysse, & Groen, 2012).

This study analyzes the efficiency and impact of incubators on the survival rate of firms that employ them. The study also identifies whether other factors such as degree of business innovation, firm size, sector, and export activity affect firm survival.

A configurational comparative method, fsQCA (Ragin, 1987), allows for meeting these objectives. This method enables researchers to overcome a major limitation of traditional probability-based statistics techniques—namely, the need for large samples—without limiting the study to a few cases or case studies. Generalization of conclusions or implications to a larger population is therefore possible using fsQCA.

Following this introduction, Section 2 contains the theoretical framework. Section 3 describes methodology. Section 4 presents the findings. Section 5 offers discussions with limitations and suggestions for future research.

Section snippets

Firm survival

Literature analyzing firm survival (Box, 2008, Carr et al., 2010, Coeurderoy et al., 2012, Colombelli et al., 2013, Holmes et al., 2010), highlights the importance of the following conditions: firm size, sector, export activity, and innovation intensity. The study examines how these variables affect firm survival, and, mainly, explores the influence of incubators on firm survival.

Data

A 2009 survey of CEOs and managing directors provides the data. This survey yields a sample of 47 firms. These firms operate within the European Business and Innovation Centre of Elche (Alicante, Spain). All firms are less than a kilometer away from the incubator to ensure the support from the incubator. Of these 47 firms, 30 are still active in 2014, whereas 17 are no longer going concerns. Regarding incubators' services, 26 firms receive support from the incubator, and 21 do not. Finally, in

Findings

This section presents results from two different analyses. The first explains which conditions lead firms to the outcome (i.e., survival). The second analyzes the main conditions that lead to absence of survival.

The models for analysis are:

  • surviv = f(size, tbf, sector, export, incub)

  • ~ surviv = f(size, tbf, sector, export, incub)

Symbol (~) represents the negation of the characteristic; in this case ~ surviv. The first step is to examine the conditions necessary for the outcome. Consistency does not

Discussion

This study examines conditions (firm size, sector, export activity, innovation intensity, and use of incubators) that affect business survival, specially, incubators' impact on firm survival. The study contains a review of the most recent relevant literature on these variables. The analysis employs fsQCA (Ragin, 1987) to identify combinations of causes that lead to firm survival (and non-survival) in the Region of Valencia. Unlike conventional statistical techniques, fsQCA overcomes limitations

References (38)

  • M.Y. Ali

    Barriers to export and export promotion programs: Insights from SME managers

    (2010)
  • D. Audretsch et al.

    Firm survival in the Netherlands

    Review of Industrial Organization

    (2000)
  • J.A. Belso Martínez et al.

    Perceived usefulness of innovation programs for high-tech and low-tech firms

    Management Decision

    (2013)
  • M. Box

    The death of firms: Exploring the effects of environment and birth cohort on firm survival in Sweden

    Small Business Economics

    (2008)
  • H. Buddelmeyer et al.

    Innovation and the determinants of company survival

    (2009)
  • J.C. Carr et al.

    A study of the moderating effects of firm age at internationalization on firm survival and short-term growth

    Strategic Entrepreneurship Journal

    (2010)
  • I.M. Cockburn et al.

    Patents and the survival of internet-related IPOs

    (2007)
  • R. Coeurderoy et al.

    Young firm internationalization and survival: Empirical tests on a panel of ‘adolescent’ new technology-based firms in Germany and the UK

    International Small Business Journal

    (2012)
  • T. Dunne et al.

    The growth and failure of U.S. manufacturing plants

    Quarterly Journal of Economics

    (1989)
  • Cited by (0)

    The authors are grateful of the contributions from Kun Huang Huarng, Feng Chia University, and Alicia Mas Tur, Universitat de València for their careful reading and suggestions on revising this essay. Authors also thank César Guzman for his assistance with methodology.

    View full text