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Network brokers or hit makers? Analyzing the influence of incubation on start-up investments

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  • Frank J. Van Rijnsoever

    (Utrecht University)

  • Marijn A. Van Weele

    (Utrecht University)

  • Chris P. Eveleens

    (Utrecht University)

Abstract

Incubators are a prominent way to support technology based start-ups. Yet, it remains unclear to what extent these incubators enhance start-up performance, nor is it known through which mechanisms this would occur. In this paper we test two mechanisms to explain the relationship between incubation and the amount of investments raised by early stage start-ups as performance measure. The ‘hit maker’ mechanism refers to beneficial effects of the direct transfer of resources and organizational or business knowledge from the incubator to the start-up. The ‘network broker’ mechanism refers to the benefits that start-ups enjoy from being connected to external funding sources through the incubator’s networks. We test which of these mechanisms contribute to the performance of early stage start-ups. Our data comes from a unique survey from 935 entrepreneurs with early-stage technology based start-ups in Western Europe and North America. We find that incubators have a positive effect on (1) the amount of funding that start-ups attract and (2) the ability of start-ups to attract funding from formal investors and banks. Moreover, our results provide evidence for the network broker mechanism, but not for the hit maker mechanism.

Suggested Citation

  • Frank J. Van Rijnsoever & Marijn A. Van Weele & Chris P. Eveleens, 0. "Network brokers or hit makers? Analyzing the influence of incubation on start-up investments," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-25.
    • Handle: RePEc:spr:intemj:v::y::i::d:10.1007_s11365-016-0416-5
    DOI: 10.1007/s11365-016-0416-5
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    Cited by:

    1. van Rijnsoever, Frank J. & Eveleens, Chris P., 2021. "Money Don't matter? How incubation experience affects start-up entrepreneurs' resource valuation," Technovation, Elsevier, vol. 106(C).
    2. Chengbin Wang & Kuangnan Fang & Chenlu Zheng & Hechao Xu & Zewei Li, 2021. "Credit scoring of micro and small entrepreneurial firms in China," International Entrepreneurship and Management Journal, Springer, vol. 17(1), pages 29-43, March.
    3. Sorin Gabriel Anton, 2019. "Leverage and firm growth: an empirical investigation of gazelles from emerging Europe," International Entrepreneurship and Management Journal, Springer, vol. 15(1), pages 209-232, March.
    4. van Rijnsoever, Frank J., 2022. "Intermediaries for the greater good: How entrepreneurial support organizations can embed constrained sustainable development startups in entrepreneurial ecosystems," Research Policy, Elsevier, vol. 51(2).
    5. Li Zhang & Ping Gao & Yongtao Zhou & Yuchuan Zhang & Junhua Wang, 2019. "Surviving through Incubation Based on Entrepreneurship-Specific Human Capital Development: The Moderating Role of Tenants’ Network Involvement," Sustainability, MDPI, vol. 11(10), pages 1-19, May.
    6. van Rijnsoever, Frank J., 2020. "Meeting, mating, and intermediating: How incubators can overcome weak network problems in entrepreneurial ecosystems," Research Policy, Elsevier, vol. 49(1).
    7. Marijn A. Weele & Frank J. Rijnsoever & Menno Groen & Ellen H. M. Moors, 2020. "Gimme shelter? Heterogeneous preferences for tangible and intangible resources when choosing an incubator," The Journal of Technology Transfer, Springer, vol. 45(4), pages 984-1015, August.
    8. Chengbin Wang & Kuangnan Fang & Chenlu Zheng & Hechao Xu & Zewei Li, 0. "Credit scoring of micro and small entrepreneurial firms in China," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-15.

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