Small business incubators and community economic development

The purpose of this study was to examine the relationship between small business incubators and local economic development programs. Business incubators are designed to help small businesses survive by providing them affordable space, shared office services, and management consultation. Given the newness and rapid growth of the business incubator concept, it is important that communities considering sponsoring such a project have accurate information concerning likely outcomes from such an endeavor.

The method of analysis used was the case study. Five business incubators in a variety of environments were chosen. Interviews were conducted with each incubator manager, as well as with local economic development specialists.

The study found that business incubators do have the potential to be effective economic development tools. However, this is not always the case. The effort involved in sustaining a business incubator is often underestimated, and massive job creation should not be anticipated. An incubator's performance may be improved by linking it to other more general economic development programs, by establishing an entrepreneurial network, and by applying strict exit policy.