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Impact of Incubation on Innovative Firms

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  • José Ignacio Rivero

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

This paper measures the impact of incubation on new and innovative Uruguayan firms’performance. Technological innovation has a fundamental role in explaining economic growth and broader economic development. With this in mind, the fact that new and innovative firms face larger difficulties when trying to validate their innovations becomes a policy concern. One of the answers given to this problem is incubation, which attempts to place this particular sort of companies in a “secure” environment until they are able to survive on their own. The evaluation was restricted to firms housed at a particular incubator called Ingenio, which is one of the largest and oldest operating in Uruguay. It was carried out using a unique panel of data gathered from the incubator and through a survey of current and former incubatees and of rejected candidates. In order to control for potential correlation between the outcome and firms’ observed and unobserved traits a sharp regression discontinuity design was employed, exploiting the incubator’s selection process. Evidence showed timid support for the hypothesis that incubation has a positive impact on firms’ sales and employment, while no impact was detected on their exports. One of the possible explanations for the small impacts detected is that small sample size may have biased the estimates downwards. Therefore it can be affirmed that, at the very least, incubation did not hamper these companies’ performance.

Suggested Citation

  • José Ignacio Rivero, 2015. "Impact of Incubation on Innovative Firms," Documentos de Trabajo (working papers) 0315, Department of Economics - dECON.
  • Handle: RePEc:ude:wpaper:0315
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    File URL: https://hdl.handle.net/20.500.12008/7640
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    incubation; sharp regression discontinuity; impact evaluation.;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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