See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/323792933

Incubation matters: Measuring the effect of business incubators on the

innovation performance of start-ups: Incubation matters

Article  in  R& D Management · March 2018

DOI: 10.1111/radm.12321

CITATIONS READS

20 1,226

4 authors:

Silvia Rita Sedita Roberta Apa

University of Padova University of Bergamo
81 PUBLICATIONS   1,545 CITATIONS    21 PUBLICATIONS   202 CITATIONS   

SEE PROFILE SEE PROFILE

Thomas Bassetti Roberto Grandinetti

University of Padova University of Padova
43 PUBLICATIONS   173 CITATIONS    111 PUBLICATIONS   2,093 CITATIONS   

SEE PROFILE SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Regional economic resilience View project

Artificial intelligence in products and services View project

All content following this page was uploaded by Silvia Rita Sedita on 05 May 2020.

The user has requested enhancement of the downloaded file.

Incubation matters. Measuring the effect
of business incubators on the innovation
performance of start-ups
Silvia Rita Sedita, Roberta Apa, Thomas Bassetti, Roberto Grandinetti

How to cite this paper:

Sedita, S. R., Apa, R., Bassetti, T., & Grandinetti, R. (2019). Incubation matters: Measuring the

effect of business incubators on the innovation performance of start-ups. R&D Management, 49(4),

439-454.

Abstract

This article explores the role of business incubators on the innovation performance of start-ups; in addition, we also

investigate how the incubation effect moderates other important factors driving their innovation performance. The

empirical evidence comes from a sample of firms located in Northern Italy belonging to the manufacturing (mechanical

engineering firms - MEF) and service sectors (knowledge-intensive business services—KIBS). The results suggest that

the incubation effect is very important in shaping the innovation performance of new ventures (measured as a percentage

of sales of new-to-market innovations). Moreover, it positively moderates the impact of a) the internal technical

capabilities and b) the adoption of a limited portfolio of collaborations for innovation.

1. Introduction

This study explores the role of business incubators (BIs) in the determination of the innovation performance of start-

ups. BIs offer incubatees several facilities, from office space and capital to management support and knowledge (Allen

and Rahman, 1985; Sherman, 1999; Tamásy, 2007), qualifying potentially as a strong instrument to promote innovation

and entrepreneurship (Allen and McCluskey, 1990; Aerts et al., 2007), by reducing the “liability of newness"

(Stinchcombe, 1965).

Literature on BIs includes theoretically driven contributions, which provide BIs taxonomies (Hansen et al. 2000;

Grimaldi and Grandi, 2005; von Zedtwitz and Grimaldi, 2006), and qualitative research on the functioning of a BI,

which focuses on a) the services provided (Rice, 2002; McAdam and Marlow, 2007; Scillitoe and Chakrabarti, 2010); b)

the relationships among incubatees, and between incubatees and the incubator management (Bøllingtoft and Ulhøi,

2005; Schwartz and Hornych, 2010; Bøllingtoft, 2012; Ebbers, 2014; Rubin et al., 2015). Existing quantitative research

1
mainly debated the idea that start-ups located in a BI have a higher survival rate (Sherman, 1999; Ferguson and

Olofsson, 2004; Schwartz, 2013) and sales growth (Löfsten and Lindelöf, 2001; Colombo and Delmastro, 2002) as

compared to similar start-ups not located in a BI. Although the creation of BIs has been promoted by regional policies in

order to foster innovative entrepreneurship, there are few contributions that focused on the innovation performance of

incubatees (Colombo and Delmastro, 2002; Sullivan and Marvel, 2011). This work contributes to building awareness of

the existence, intensity and direction of the BI effect on the innovation performance of start-ups, providing original

empirical evidence.

Moreover, it looks at the innovation process under the lenses of the open innovation framework (Chesbrough, 2003),

which underlines the importance of the external to the firm network for innovation, when coupled with internal

knowledge investments and absorptive capacity. Accordingly, we also analyse if the engagement in an incubation

programme positively moderates the impact of internal capabilities and external collaborations on the innovation

performance of start-ups. Our empirical analysis is based on a sample of start-ups located in Northern Italy, operating

either in the manufacturing (mechanical engineering firms, MEF) or the service sectors (knowledge-intensive business

services, KIBS).

The originality of our work resides on: a) the adoption of a quantitative approach to the measurement of the impact of

BIs on the innovation performance of start-ups; b) the evaluation of how BIs moderate the impact of start-ups’ internal

capabilities on their innovation performance; c) the evaluation of how BIs moderate the impact of start-ups’ external

collaborations on their innovation performance; d) the analysis of start-ups belonging to both manufacturing and service

industries; and e) the analysis of a market-based measure of innovation performance – that is the commercialisation

success.

The paper proceeds as follows. Section 2 illustrates theoretical background and hypotheses, Section 3 presents

methodological issues, Section 4 shows and discusses results, and Section 5 provides conclusions.

1. Theoretical background and hypotheses

The literature on BIs grew alongside two main streams of research: one focused on BI’s and the other on incubatees’

performance.

BIs’ performance is defined as the extent to which incubator outcomes correspond to incubator goals (Bergek and

Normann, 2008), and measured by several quality and efficiency measures (Hannon and Chaplin, 2003), mainly linked

to the evaluation of the activities conducted by the incubator organisation (Allen and McCluskey, 1990; Mian, 1997;

Löfsten and Lindelöf, 2001). Existing research mostly relies on qualitative evidence on the knowledge flows originated

and passed through the incubator, adopting a relational approach (Rice, 2002; Peters et al., 2004; Bøllingtoft and Ulhøi,

2
2005; Schwartz and Hornych, 2010; Scillitoe and Chakrabarti, 2010; Bøllingtoft, 2012; Ebbers, 2014). Literature also

provided analysis of the typologies of services and infrastructures that are more likely to improve incubatees’ daily

business (Tōtterman and Sten, 2005; Soetanto and Jack, 2013).

Incubatees’ performance is generally estimated by survival rate (Allen and McCluskey, 1990; Mian, 1997; Peña,

2004; Aerts et al., 2007; McAdam and Marlow, 2007; Bruneel et al., 2012); sales and employment growth rate

(Colombo and Delmastro, 2002; Peña, 2004; Sung, 2007; Soetanto and Jack, 2013); profit growth rate (Mian, 1997;

Chen, 2009); export growth rate (Mian, 1997); satisfaction with the return on asset (Chen, 2009).

Existing literature has not considered innovation performance as a measure of incubatee’s performance except for

Colombo and Delmastro (2002) and Sullivan and Marvel (2011). In particular, Sullivan and Marvel (2011) investigated

the relationship between knowledge acquisition and the innovativeness of the initial product/service of early-stage

technology start-up operating in university-affiliated incubators, not mentioning the role of BIs in fostering innovation

performance. Differently, Colombo and Delmastro (2002), by considering a technology BI (Phillips, 2002) – reported

that incubatees show a superior innovation performance compared to off-incubator firms. The analysis of technology BIs

is interesting and promising; nevertheless, the concept of innovation transcends that of technology-intensive activities.

Many innovations are not technology driven, but related, for instance, to business models changes. The analysis of the

impact of BIs on the innovation performance has been so far limited to high-tech start-ups; it is, therefore, important to

provide evidence, as we do, for other categories of start-ups. Building on the insights provided by Colombo and

Delmastro (2002), we formulate our baseline hypothesis (H1).

H1. The engagement in an incubation programme positively affects the innovation performance of start-ups.

The importance of open innovation as input for new business models is widely recognised (Chesbrough, 2003). For

succeeding in creating and selling innovative products and services is necessary to create and deploy successful

collaborations with competitors, consultants, suppliers, clients, universities and other research organizations (Laursen

and Salter, 2006; Baba et al., 2009). A largely established view in the management and economics literature underlines

the complementary nature of internal capabilities and external collaborations (Arora and Gambardella, 1994; Powell et

al., 1996; Cassiman and Veugelers, 2006). Through recombinant capabilities, firms acquire and use complementary

knowledge to generate technological innovation (Galunic and Rodan, 1998; Yayavaram and Ahuja, 2008). In order to

work successfully, collaborative innovation models require firms building up networking and absorptive capabilities

(Cohen and Levinthal, 1990), which derive from previous experience and repeated interactions with specific members of

the value chain (clients and/or suppliers), or established routines of exploration activities that transcend problem solving

and daily business. The liability of newness affects also innovation activities (Stinchombe, 1965), and incubators can

overcome the limits of start-ups influencing the way they develop internal capabilities and networks. The innovation

3
performance of firms relies, in fact, on the availability of proper capabilities to enhance innovative efforts (Porter, 1980;

Lee et al., 2001). Following Lee et al. (2001), we classify capabilities into business and technical. The interaction among

incubatees and between incubatees and the incubation management allows for a better use of internal capabilities,

avoiding strategic failures. This positive feedback process between incubatees’ capabilities and BI’s services emerged

clearly from previous empirical works (Rice, 2002; Scillitoe and Chakrabarti, 2010; Monsson and Jörgensen, 2016; Apa

et al., 2017). Despite the importance of this intuition, existing research did not compare the performance of incubatees

with off-incubator start-ups with similar capabilities. On the basis of this literature, we first test the direct effect of

capabilities on innovative performance (H2.1), and then the moderating effect of being engaged in an incubation

programme (H2.2).

H2.1: Business and technical capabilities positively affect the innovation performance of start-ups.

H2.2: The engagement in an incubation programme moderates positively the impact of business and technical

capabilities on the innovation performance of start-ups.

Start-ups are unable to invest heavily in internal R&D activity, due to lack of financial resources, and often miss the

point when trying to commercialise new products, due to lack of marketing capabilities. It follows that they cannot count

only on their internal knowledge; on the contrary, they have to build fruitful relationships with other organisations,

which give them a chance to multiply their learning opportunities (Sedita and Apa, 2016). BI helps incubatees to

develop their networks fuelling connections among incubatees and stimulating them to build useful external-to-the-BI

relationships in two ways.

First, BI provides incubatees with resources, capabilities, knowledge, learning and social capital that are useful to

manage efficiently their network. BIs facilitate the management of different types of relationships (Phelps et al. 2012),

increasing the probability to transform a friendship into a profitable business relationship. Second, BI provides the

adequate support in scouting and selection processes of possible partners. After the seminal contribution of Hansen et al.

(2000), many scholars studying BIs shared the idea that the most efficient incubation model is that of the networked

business incubator, which works as a relationships enabler. This conclusion has been reached through a variety of

theoretical and qualitative research analyses (mainly based on case studies) (Bøllingtoft and Ulhøi, 2005; Tōtterman and

Sten, 2005; McAdam and McAdam, 2006; Bøllingtoft, 2012; Sá and Lee, 2012; Soetanto and Jack, 2013; Rubin et al.,

2015; Apa et al., 2017). BI, having a higher knowledge of the market and the environment in which the start-ups are

involved, is able to provide incubatees with a list of possible partners that could fit their needs at the best, increasing the

quality of the overall incubatees’ network. Following Laursen and Salter (2006), we assume that the breadth of external

collaborations is positively associated with the innovation performance. Moreover, a large number of high-quality

relationships increase recombination opportunities of different knowledge and competencies that lead to better

4
innovation performance. We first test the direct effect of networks on innovation performance (H3.1), and then the

moderating effect of being engaged in an incubation programme (H3.2).

H3.1: Collaborations positively affect the innovation performance of start-ups.

H3.2: The engagement in an incubation programme positively moderates the impact of collaborations on the

innovation performance of start-ups.

3. Method

3.1 Sample

The data for the analysis come from an original survey conducted between February and June 2013. Our unit of analysis

consists of all of the shared capital companies registered within the firms’ register of the Italian Chambers of Commerce

that comply with all the following characteristics: 1) born between 2005 and 2009; 2) still active in 2012; 3) located in

Northern Italy, within any of the following regions: Emilia-Romagna, Friuli-Venezia Giulia, Trentino Alto-Adige and

Veneto (North-East), or Liguria, Lombardia, Piemonte and Valle D’Aosta (North-West); 4) either being KIBS or MEF.

The choice of these two industries is motivated by their crucial contribution to the competitiveness of Italian economy

and the fact they represent two mid-tech industries, rather understudied in previous research works in this field. Such

sectors are also interesting because of their relevance for other industries, considering that their output, being a service

or a product, supports the innovativeness and performance of clients and intermediaries. Table 1 reports the specific

ATECO 2002 (the Italian version of the NACE rev.1) codes. Out of this population of firms, we drew our sample

adopting a stratified sampling procedure by industry specialisation and geographical location (regional level).

Data were collected using a mixed mode design. A specialised survey company conducted the interviews with the

assistance of CAWI (Computer Assisted Web Interviewing) and CATI (Computer Assisted Telephone Interview)

procedures, targeting the entrepreneurs. As highlighted by De Leeuw (2005), mixed modes constitute an affordable way

to compensate for the weakness of each individual mode. Indeed, mixed designs let respondents choose their favourite

interview method, minimising non-response and non-response bias. In order to correct for CAWI self-selection effects

and ensure the representativeness of the sample, we first used the CAWI method collecting 39% of total interviews and

then the CATI method which accounted for the remaining 61% of interviews. From the 2,341 firms initially contacted,

we collected 409 interviews. However, because some responses were missing, the number of observations dropped to

243 (128 are KIBS and 115 are MEF). To test for non-response bias within the sample, we performed multivariate tests

on means, correlations and covariances. According to the results reported in Appendix A, we cannot reject the

hypothesis of equality between the response and the non-response group.

5
INSERT TABLE 1 ABOUT HERE

3.2 Variables

3.2.1 Dependent variable

Start-ups are often evaluated by means of survival (Aerts et al., 2007), growth (Soetanto and Jack, 2016) or innovation

performance indicators, such as patent activity or number of patents (Colombo and Delmastro, 2002; Ferguson and

Olofsson, 2004). Since we also consider start-ups operating in the service sectors, these traditional measures of

innovative effort may not be adequate. For this reason, we measure the innovation performance through the fraction of

the turnover related to products new to the market (INNO_PERF). This measure is both cross-sectorial (allowing for

comparative studies between manufacturing and service firms) and closer to the real value that a company receives from

its innovative effort (Teece, 1986; Schneider and Veugelers, 2010). It is in fact well acknowledged that being innovation

leaders is not necessarily connected to being able to make profits from innovation (Teece, 1986). A more consistent

measure of innovation performance is required in order to capture the ability of the firm not only to innovate, but also to

make profits from innovation.

Since respondents tend to round to the nearest 5%, the fraction of the firm’s turnover relating to products new to the

market has too many categories with a small number of observations per category. To avoid potential problems with the

estimates of standard errors, we classify the dependent variable into five classes corresponding to the quintiles of the

distribution of the innovation performance. This allows us to obtain results that are robust to rounding and that can be

easily interpreted.

3.2.2 Main independent variables

Incubation

In order to assess if the engagement in an incubation programme affects start-up innovation performance we introduced

the variable INCUB, which assumes a value of 1 if the firm passed through an incubator and 0 otherwise.

Capabilities

In order to assess the impact of firm-specific factors on the innovation performance of firms, we evaluated the set of

capabilities owned by the firm after three years of activity. As from the questionnaire items, we distinguished between

four types of capabilities: technological (TECH), marketing (MKTG), management (MAN), and ICT. Respondents were

asked to indicate the degree of their capabilities on a five-point scale ranging from 1 (no capabilities) to 5 (extremely

high capabilities). Since firms having high managerial capabilities are also likely to have high marketing capabilities

and, similarly, technical capabilities might be correlated with ICT capabilities (see Table A2 in Appendix A), we used a

principal component analysis (PCA) to obtain two composite indices capturing business (BUSINESS) and technical

6
capabilities (TECHNICAL) owned by the firm. By using these two indices instead of the original variables, we mitigate

the possibility of measurement errors coming from self-reported data.

Collaboration breadth

Stemming from the seminal contribution of Laursen and Salter (2006), several empirical works quantitatively measured

the open innovation strategy of firms by describing the breadth of the inbound information sources and/or the innovation

collaborations (e.g., van der Meer, 2007; Frenz and Ietto-Gillies, 2009; Leiponen and Helfat, 2010; Sofka and Grimpe,

2010; Love et al., 2011). Accordingly, we introduce a variable reflecting the variety of collaboration channels through

which a start-up is seeking to accumulate external resources. The variable is termed COLL and is constructed as a

combination of five types of collaborations for innovation (suppliers, clients, competitors, consultants, universities and

other public research organisations). As a starting point, each of the five types is coded as a binary variable, 0 being no

use and 1 being use of the given partner. Subsequently, the five types of partnerships were simply added up so that a

firm gets a 0 when no collaborations are in place, while a firm gets a value of 5 when all types of collaborations are

used. In other words, it is assumed that firms that use a higher variety of partnerships are more ‘open’, with respect to

external collaboration strategies, than firms that do not. In order to take into account the discrete nature of the variable as

well as possible threshold effects and nonlinearities, we treat COLL as a factor variable. Indeed, treating COLL as a

continuous variable would imply the aprioristic assumption that passing from no collaboration to 1 collaboration has the

same impact on the innovative capacity as passing from 3 to 4 or from 4 to 5.

3.2.3 Control variables

Intellectual property (IP) protections

Protection mechanisms aim at guaranteeing the appropriation of returns deriving from a firm’s innovative activity

(Hertzfeld et al., 2006). In general, the effectiveness of these mechanisms depends on the type of innovation, the

industry and the firm size. Manzini and Lazzarotti (2015) recently studied which kinds of IP protection mechanisms

should be used in different phases of new product development. On the basis of these contributions, and observing the

importance of appropriability when adopting an open innovation strategy (Laursen and Salter, 2014), we considered the

number of protections used by the firm by introducing the variable PROT. This variable is constructed from responses to

a specific question and is a combination of four types of protections (trademarks, patents, designs and trade secrets). As

a starting point, each of the four types was coded as a binary variable, 0 being no use and 1 being use of the given

protection. Subsequently, the four types of protections were added up so that a firm gets a 0 when no protections are

used and a value of 4 when all types of protections are used.

R&D expenditure

7
Traditionally, one of the key strategies to secure technological potential, and, therefore, innovation and economic

growth, is investment in R&D (Trajtenberg, 1990). R&D investment increases the possibility of achieving a higher

standard of technology in firms and regions, which would allow them to introduce new and superior products and/or

processes, resulting in higher levels of income and growth (Wakelin, 2001; Bilbao-Osorio and Rodríguez-Pose, 2004).

We assess the impact of R&D expenditure on innovation performance by considering the (self-reported) percentage of

turnover invested in R&D, measured in the first year of the start-up’s life.

Geographical area

In Italy, the industrialisation process has shown different regional patterns (Quatraro, 2009). Since diverse geographical

areas provide different institutional settings that may influence the innovation performance of firms, we introduce the

control variable GEO, which takes a value of 1 if the firm is located in the North-Western part of Italy, and 0 if the firm

is located in the North-Eastern one.

Industry specificity

In order to control for different levels of innovation performance across sectors, we introduced a dummy variable

INDUSTRY, which takes value of 1 if the firm is a KIBS and a 0 if the firm is a MEF.

Firm size and age

The existing literature suggests that both the age and the size of the firm are crucial predictors of its survival capacity

(see, e.g., Ferguson and Olofsson, 2004). At the same time, the empirical evidence on the relationship between firm size

and innovation performance is extremely mixed (see, e.g., Kamien and Schwartz, 1982; Kleinknecht and Reijnen, 1991;

Vaona and Pianta, 2008), while the probability of innovation tends to be higher in young firms (Huergo and Jaumandreu,

2004). For these reasons, we took into account both firm size and age. SIZE corresponds to the number of active

founders and employees in 2012. AGE is derived from the date of foundation of the company, and (being calculated in

2012) spans from 3 to 7, meaning that the oldest firms were founded in 2005 and the youngest in 2009.

Type of new venture

New ventures are usually classified as either start-ups, or academic/corporate spin-offs. The nature of the new venture

affects the innovation strategy (Grimaldi and Grandi, 2005), therefore we created the variable TYPE, which takes a

value of 1 if the company is a spin-off and 0 otherwise.

Internationalisation

8
Internationalisation may help firms accumulate important inputs for innovation (Kobrin, 1991). According to Kotabe

(1990), export-oriented firms have access to a wider range of resources that improve their innovative capacity. For

instance, exporters may take advantage of strategic alliances with foreign suppliers, institutions and competitors (Hitt et

al., 1997). In addition, firms competing in international markets are also exposed to international technological spillovers

(Liu and Buck, 2007). EXPORT is a dummy variable, which takes a value of 1 if the company reports some foreign

sales and 0 otherwise.

3.3 The model

We first test our hypothesis H1, by considering only the direct relationship between INCUB and the dependent variable

(INNO_PERF). The empirical analysis is based on two standard regression models (Table 4). Since our dependent

variable is far from being normally distributed, we estimate an ordered Logit model in which the thresholds are known

(we consider five equally numerous classes). We then test the remaining hypotheses by including in the model

estimation a set of interaction terms (Table 5). Because INCUB is a dichotomous variable, the interpretation of

interaction effects is straightforward. In particular, in Table 5, we tested hypothesis H2.2 by including in column 1 an

interaction term between INCUB and two variables indicating whether the firm owns BUSINESS and/or TECHNICAL

capabilities. Similarly, we test H3.2 by introducing an interaction term between INCUB and a factor variable indicating

the number of collaboration channels. Table 2 lists the variable descriptions and Table 3 shows the descriptive statistics.

INSERT TABLE 2 ABOUT HERE

INSERT TABLE 3 ABOUT HERE

4. Results and discussion

Table 4 reports the ordered Logit estimates for the percentage of revenues coming from new products in 2012. In

column 1, we estimate the model without independent variables. Only two control variables are significantly correlated

with the firm’s innovation performance: the firm’s age and its initial R&D expenditure. In particular, there is a positive

relationship between the initial R&D expenditure and the dependent variable, and a negative relationship between the

firm’s age and the innovation performance. However, this second result is due to the small number of firms that were

born in 2009.

In column 2, we test hypothesis H1. According to our results, those firms that engaged in an incubation programme

exhibit a higher innovation performance. In other words, incubators facilitate the returns from the innovation process,

thus confirming H1. This result is crucial and works as baseline for developing the further hypotheses testing exercise.

As in Colombo and Delmastro (2002), the incubation effect on innovation performance of start-ups exists and the

9
magnitude is particularly relevant. Notice that the introduction of the incubation effect sensitively increases the pseudo-

R2, that is, the inclusion of the incubation effect improves the model fit.

In column 3, together with hypothesis H1, we also test hypotheses H2.1 and H3.1. Regarding internal capabilities,

business and technical capabilities per se are not significantly associated with innovation performance. Thus H2.1 is not

confirmed. This is surprising, since a lack of internal capabilities is often considered as a major issue in discriminating

innovative new ventures (e.g., Park, 2005; De Winne and Sels, 2010). Nevertheless, start-ups are often unable to

evaluate properly their capacities, incurring in the risk of over-estimating their internal resources. Since we collected the

information about the level of capabilities through self-reported data, it reflects the perception of the entrepreneur, which

is obviously affected by his/her reference system. Being a start-up means not having experience in the competitive

environment, which allows to benchmark with other companies and to receive feedback from peers/experts. This leads

start-ups not to evaluate correctly their capabilities. In a similar vein, new ventures may not be able to recognize the

complementary capabilities needed in order to transform their resources in successful new products and services. In our

analysis, the two types of capabilities (business and technical) derive from a PCA, therefore they are orthogonal, and not

correlated. There is not a clear relation between the level of business and of technical capabilities. We might infer that

start-ups should increase their business/technical capabilities to complement their initial set of capabilities. In other

words, start-ups seem to need an external support for more carefully evaluate their strengths and weaknesses and for

developing further those capabilities that allow them to take advantage of the opportunities in the market and avoiding

the risks related to the threats.

Reading Table 4, collaboration breadth seems not to affect the firms’ innovation performance. A possible explanation

for this lack of evidence could be the relatively young age of firms entering our sample. Start-ups may be too young to

have a solid and effective network of collaborations with clients and suppliers (also discussed by Stinchcombe, 1965,

referring to the liability of newness phenomenon). Indeed, collaborations tend to take time to be developed. Moreover,

the magnitude of the initial R&D intensity positively affects the innovation performance. At a first glance, it seems that

the open innovation argument for start-ups is not working and that the importance of the internal R&D investments

overcomes the networking abilities. Thus H3.1 is not confirmed. This result paves the way to a more careful debate on

the role of open innovation for start-ups, since the phenomenon has been prevalently looked under the lenses of the large

corporation, which often “uses” start-ups for knowledge exploration through acquisition processes (Barkema and

Vermeulen, 1998), corporate incubators (Becker and Gassmann, 2006), crowdsourcing platforms and on-line

competitions (Lampel et al. 2012). Moreover, the analysis of innovation collaborations for start-ups are so far limited to

the potential given by the participation to on-line communities (West and Lakhani, 2008), especially in the case of the

software industry (Autio et al., 2013). Finally, the incubation effect remains visible and the only one affecting the

innovation performance of start-ups, being networking and internal capabilities not significant. According to the results

10
reported in Table 4, in order to have the same innovation performance guaranteed by the engagement in an incubation

programme, a firm must increase its initial R&D expenditure by 18%.

INSERT TABLE 4 ABOUT HERE

Results deriving by testing H2.1 and H3.1 deserve further attention in order to disentangle more clearly how eventually

being part of an incubation programme changes the way networking activities are conducted and internal capabilities are

combined and used. We expect to find a significant role of the BI in fuelling and selecting appropriate network partners

and exploiting properly internal capabilities. Therefore, in Table 5, we test hypotheses H2.2 and H3.2 thus verifying the

moderating effect of BIs on internal capabilities and on the collaboration breadth in shaping start-ups innovation

performance. With respect to column 3 of Table 4, in column 1 of Table 5, we interact the incubation dummy with two

variables capturing business (BUSINESS) and technical (TECHNICAL) capabilities. The coefficient of the interaction

term INCUB*TECHNICAL is positive and statistically significant at 5%. This means that high technical capabilities

have a positive impact on innovation performance only for those firms that passed through an incubator. Owning

technical capabilities per se is not sufficient to transform them into successful new-to-the market products. This is

consistent with an innovation approach that considers as highly relevant that the product design phase is parallel to a

market analysis phase, which provides the right feedback to increase the fitness between the innovative product and the

demand needs. This process is eased by the support of the management team of a BI, which overcomes the lack of

experience of a start-up. Being incubated allows start-ups to better assess their strengths and weaknesses, and this

contributes to explain the moderating effect we observe in Table 5. Again, the moderation effect showed in Table 5

demonstrates how the experience within an incubator supports firms in providing complementary resources. Therefore,

H2.2 is confirmed. As it has been also discussed by the literature on BI (Rice, 2002), the provision of support services is

useful for increasing the incubatees’ abilities in many directions. Our result qualifies as the first empirical evidence of

the moderating effect of BI on the capacity of start-ups to generate profits from innovation.

In column 2 of Table 5, we interact the incubation dummy with the number of types of collaborations reported by the

firm. In particular, by considering the ordinal nature of COLL, we find that incubators enhance the innovation

performance of those firms characterised by two or three types of collaborations. Given our specification, the coefficient

for the sole variable INCUB captures the average innovation performance of firms that have been incubated, but are not

engaged in any type of collaborations. Notice that, despite the number of these firms is too small to draw any reliable

conclusion, their performance does not significantly differ from that of firms engaged in all types of collaborations.

Results reported in column 2 of Table 5 suggest that the incubation effect found in Table 4 is mainly due to the fact that

firms passing through incubators tend to develop collaborations that boost their innovation performance. A possible

explanation for this result might be due to the quality of collaborations: BIs are able to orient the start-ups towards the

selection of the most valuable partners and to push start-ups’ products into the proper market, maximising the returns

11
from the innovation effort. Thus H3.2 is confirmed. Open innovation strategies are beneficial for start-up companies if

they pass through an incubation experience. This result is new and enriches the present understanding on how to sustain

the innovation performance of start-ups through the adoption of an open innovation strategy orientation.

INSERT TABLE 5 ABOUT HERE

Overall, an industry effect arises. In particular, KIBS show an innovation performance lower than that of MEF.

5. Conclusions

This work investigated the impact of being engaged in an incubation programme on the innovation performance of

start-ups, measured as the fraction of returns from products new to the market. Despite many theoretical and empirical

studies considered the engagement in an incubation programme as an effective tool for encouraging the birth and the

survival of technological innovative new ventures (Sherman, 1999; Ferguson and Olofsson, 2004; Schwartz, 2013), few

studies have measured the impact of BIs on start-ups’ innovation performance (Colombo and Delmastro, 2002; Sullivan

and Marvel, 2011). By using data from a survey of MEF and KIBS start-ups in Northern Italy, we demonstrated that: a)

consistently with Colombo and Delmastro (2002), firms that spent a period within a BI show a better innovation

performance compared to other start-ups; b) BIs play a moderating role by enhancing the effects of internal capabilities

on start-ups’ innovation performance, in particular, technical capabilities (technology and ICT); c) BIs positively

moderate the effect of collaboration breadth on innovation performance, when start-ups report an intermediary

collaboration breadth level. Therefore there is a peculiar behaviour of start-up companies conducive to superior

performance in terms of profits from innovation: they have to pass through a BI, which is able to recommend a better

evaluation and use of internal capabilities, and provide the adequate support in the scouting and selection process of

possible business and innovation partners. The literature on BIs is therefore enriched by our contribution, which not only

demonstrates that being incubated is beneficial for start-ups, but also that is fundamental in order to adopt successfully

an open innovation business model. Exploration and exploitation activities (Gupta et al., 2006), in fact, are empowered

by the services offered by a BI. This is a completely new and original result for the literature on BI and start-ups, which

never provided empirical evidence of the manner through which BI guarantees to start-ups to profit from innovation.

Given this interesting spectrum of results, we can draw some policy implications. The investment in incubation

structures oriented towards improving networking and internal capabilities is particularly useful for sustaining successful

innovative entrepreneurship. BIs configure themselves as an essential element for boosting the competitive advantage of

regions in a knowledge economy. Therefore, entering into the debate on the usefulness of BIs, we strongly recommend

12
policymakers to support the birth and the development of these organisations, while also carefully looking at the services

provided, so as not to generate or keep alive ghost structures unable to create economic value. Moreover, the empirical

evidence here provided suggest to prefer the networked BI (Hansen et al., 2000) as a successful model of incubation,

because it seems to be the most qualified in order to increase the networking abilities of incubatees (Eveleens et al.,

2017), thus preparing them to better adopt a successful open innovation business model. This is a key issue, especially in

the case of public BIs, which do not have a profit orientation, thus facing the risk of being inefficient. Further research

on the evaluation of BIs and the relative performance of public vs. private BIs, through appropriate measures, is

recommended.

This research has some limitations. Firstly, although the literature shows that different types of BIs can sometimes

more or less support the innovation performances of start-ups (Hackett and Dilts, 2004; Grimaldi and Grandi, 2005;

Mian et al., 2016), the questionnaire used for the survey did not take into consideration the type of incubator in which

the firm was hosted. Secondly, since we have no information on pre-incubation capabilities and ties, we cannot say

whether BIs help start-ups accumulate internal and external resources or exploit existing ones. Future research should

investigate this important issue. Other limitations include country specificity and self-reported evaluation of some

variables used in the quantitative analysis. Nevertheless, the article sheds light on a phenomenon that has been

completely neglected in the literature, which is the market performance due to products new to the market of start-ups

that benefit from an incubation programme. It adds significantly to the literature on BIs, which is typically bounded to

the analysis of incubated firms, without comparing their performance with stand-alone firms. Moreover, it offers some

advice for policymakers and entrepreneurs seeking to sustain innovative entrepreneurship and profits from innovation.

Acknowledgments

We gratefully acknowledge valuable and stimulating comments from participants to the R&D Management

Conference 2015 in Pisa on a previous version of this work. We wish to thank the editor and the anonymous referees,

who provided precious comments that helped a lot improving the manuscript. The usual disclaimer applies. This work

was supported by the University of Padova (grant number CPDA142857/14 and CPDA115589/11).

References

Aerts, K., Matthyssens, P. and Vandenbempt, K. (2007) Critical role and screening practices of European business
incubators. Technovation, 27, 5, 254–267.
Allen, D.N. and McCluskey, R. (1990) Structure, policy services, and performance in the business incubator industry.
Entrepreneurship: Theory and Practice, 15, 2, 61–77.

13
Allen, D.N. and Rahman, S. (1985) Small business incubators: a positive environment for entrepreneurship. Journal of
Small Business Management, 23, 3, 12–23.
Apa, R., Grandinetti, R. and Sedita, S.R. (2017) The social and business dimensions of a networked business incubator:
the case of H-Farm. Journal of Small Business and Enterprise Development, 24, 2, 198–221.
Arora, A. and Gambardella, A. (1994) The changing technology of technological change: general and abstract knowledge
and the division of innovative labour. Research Policy, 23, 5, 523-532.
Arundel, A. and Kabla, I. (1998) What percentage of innovations are patented? Empirical estimates for European firms.
Research Policy, 27, 2, 127–141.
Autio, E., Dahlander, L. and Frederiksen, L. (2013). Information exposure, opportunity evaluation, and entrepreneurial
action: An investigation of an online user community. Academy of Management Journal, 56, 5, 1348-1371.
Baba, Y., Shichijo, N. and Sedita, S. R. (2009) How do collaborations with universities affect firms’ innovative
performance? The role of 'Pasteur scientists' in the advanced materials field. Research Policy, 38, 5, 756-764.
Barkema, H. G., & Vermeulen, F. (1998). International expansion through start-up or acquisition: A learning perspective.
Academy of Management Journal, 41(1), 7-26.
Bauer, T.K. and Sinning, M. (2008) An extension of the Blinder-Oaxaca decomposition to nonlinear models. Advances in
Statistical Analysis, 92, 2, 197–206.
Becker, B. and Gassmann, O. (2006). Corporate incubators: industrial R&D and what universities can learn from them.
The Journal of Technology Transfer, 31, 4, 469-483
Bergek, A. and Norrman, C. (2008) Incubator best practice: a framework. Technovation, 28, 1-2, 20-28.
Bilbao-Osorio, B. and Rodríguez-Pose, A. (2004). From R&D to innovation and economic growth in the EU. Growth
and Change, 35, 4, 434–455.
Bøllingtoft, A. (2012) The bottom-up business incubator: leverage to networking and cooperation practices in a self-
generated, entrepreneurial-enabled environment. Technovation, 32, 5, 304–315.
Bøllingtoft, A. and Ulhøi, J.P. (2005) The networked business incubator: leveraging entrepreneurial agency? Journal of
Business Venturing, 20, 2, 265–290.
Bruneel, J., Ratinho, T., Clarysse, B. and Groen, A. (2012) The evolution of business incubators: Comparing demand and
supply of business incubation services across different incubator generations. Technovation, 32, 2, 110–121.
Cassiman, B. and Veugelers, R. (2006) In search of complementarity in innovation strategy: Internal R&D and external
knowledge acquisition. Management Science, 52, 1, 68-82.
Cefis, E. O. and Marsili (2005) A matter of life and death: innovation and firm survival. Industrial and
Corporate Change, 14, 6, 1167–1192
Chen, C.-J. (2009) Technology commercialization, incubator and venture capital, and new venture performance. Journal
of Business Research, 62, 1, 93–103.
Chesbrough, H. (2003) Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston:
Harvard Business School Press.
Cho, H.-C., Abe, S. (2013) Is two-tailed testing for directional research hypotheses tests legitimate? Journal of Business
Research, 66, 9, 1261–1266.
Cohen, W. M. and Levinthal, D. A. (1990) Absorptive capacity: A new perspective on learning and innovation.
Administrative Science Quarterly, 35, 1, 128–152.
Colombo, M.G. and Delmastro, M. (2002) How effective are technology incubators? Evidence from Italy. Research
Policy, 31, 7, 1103–1122.
De Leeuw, E.D. (2005) To mix or not to mix data collection modes in surveys. Journal of Official Statistics, 21, 2, 233–
255.

14
De Winne, S. and Sels, L. (2010) Interrelationships between human capital, HRM and innovation in Belgian start-ups
aiming at an innovation strategy. The International Journal of Human Resource Management, 21, 11, 1863–1883.
Ebbers, J.J. (2014) Networking behavior and contracting relationships among entrepreneurs in business incubators.
Entrepreneurship: Theory and Practice, 38, 5, 1159–1181.
Eveleens, C.P., van Rijnsoever, F.J. and Niesten, E.M. (2017) How network-based incubation helps start-up
performance: a systematic review against the background of management theories. Journal of Technology Transfer,
42, 3, 676-713.
Ferguson R. and Olofsson, C. (2004) Science parks and the development of NTBFs: location, survival and growth.
Journal of Technology Transfer, 29, 1, 5–17.
Frenz, M. and Ietto-Gillies, G. (2009) The impact on innovation performance of different sources of knowledge: evidence
from the UK Community Innovation Survey. Research Policy, 38, 7, 1125–1135.
Galunic, D. C. and Rodan, S. (1998) Resource recombinations in the firm: knowledge structures and the potential for
Schumpeterian innovation. Strategic Management Journal, 19, 2, 1193–1201.
Grimaldi, R. and Grandi, A. (2005) Business incubators and new venture creation: an assessment of incubating models.
Technovation, 25, 2, 111–121.
Gupta, A. K., Smith, K. G. and Shalley, C. E. (2006). The interplay between exploration and exploitation. Academy of
Management Journal, 49, 4, 693-706.
Hackett, S.M. and Dilts, D.M. (2004) A systematic review of business incubation research. Journal of Technology
Transfer. 29, 1, 55–82.
Hannon P. and Chaplin P. (2003) Are incubators good for business? Understanding incubation practice the challenges for
policy’, Environment and Planning C: Government and Policy, 21, 6, 861–881.
Hansen, M.T., Chesbrough, H.W., Nohria, N. and Sull, D.N. (2000) Networked incubators: hothouses of the new
economy. Harvard Business Review, 78, 5, 74–84.
Hertzfeld, H.R., Link, A. and Vonortas, N.S. (2006) Intellectual property protection mechanisms in research partnerships.
Research Policy, 35, 6, 825–838.
Hitt, M., Hoskisson, R. and Kim, H. (1997) International diversification: effects on innovation and firm performance in
product-diversified firms. Academy of Management Journal, 40, 4, 767–798.
Huergo, E. and Jaumandreu, J. (2004) How does probability of innovation change with firm age? Small Business
Economics, 22, 3, 193–207.
Kleinknecht, A. and Reijnen, J.O.N. (1991) More evidence on the undercounting of small firm R&D, Research Policy,
20, 6, 579–587.
Kobrin, S. (1991) An empirical analysis of the determinants of global integration. Strategic Management Journal, 12, S1,
17–31.
Lampel, J., Jha, P. P., and Bhalla, A. (2012). Test-driving the future: How design competitions are changing innovation.
The Academy of Management Perspectives, 26, 2, 71-85.
Laursen, K. and Salter, A. (2006) Open for innovation: the role of openness in explaining innovation performance among
UK manufacturing firms. Strategic Management Journal, 27, 2, 131–150.
Lee, C., Lee, K. and Pennings, J.M. (2001) Internal capabilities, external networks, and performance: a study on
technology-based ventures. Strategic Management Journal, 22, 6-7, 615–640.
Liu, X. and Buck, T. (2007) Innovation performance and channels for international technology spillovers: evidence from
Chinese high-tech industries. Research Policy, 36, 3, 355–366.
Löfsten, H. and Lindelöf, P. (2001) Science parks in Sweden: industrial renewal and development. R&D Management,
31, 3, 309–322.

15
Manzini, R. and Lazzarotti, V. (2015) Intellectual property protection mechanisms in collaborative new product
development. R&D Management, in press DOI: 10.1111/radm.12126.
McAdam, M. and Marlow, S. (2007) Building futures or stealing secrets? Entrepreneurial cooperation and conflict within
business incubators. International Small Business Journal, 25, 4, 361-382.
McAdam, M. and McAdam, R. (2006) The networked incubator: the role and operation of entrepreneurial networking
with the university science park incubator (USI). International Journal of Entrepreneurship and Innovation, 7, 2, 87–
97.
Mian, S.A. (1997) Assessing and managing the university technology business incubator: An integrative framework’,
Journal of Business Venturing, 12, 4, 251–285.
Mian, S., Lamine, W. and Fayolle, A. (2016) Technology business incubation: an overview of the state of knowledge.
Technovation, 50-51, 1–12.
Monsson, C.K. and Jörgensen, S.B. (2016) How do entrepreneurs' characteristics influence the benefits from the various
elements of a business incubator? Journal of Small Business and Enterprise Development, 23, 1, 224–239.
Park, J.S. (2005) Opportunity recognition and product innovation in entrepreneurial hi-tech start-ups: a new perspective
and supporting case study. Technovation, 25, 7, 739–752.
Peña, I. (2004) Business incubation centers and new firm growth in the Basque country. Small Business Economics, 22,
3–4, 223–36.
Peters, L., Rice, M. and Sundararajan, M. (2004) The role of incubators in the entrepreneurial process. Journal of
Technology Transfer, 29, 1, 83–91.
Phillips, R.G. (2002) Technology business incubators: how effective as technology transfer mechanisms? Technology in
Society, 24, 3, 299–316.
Porter, M.E. (1980) Competitive Strategy. New York: The Free Press.
Powell, W.W., Koput, K.W. and Smith-Doerr, L. (1996) Interorganizational collaboration and the locus of innovation:
networks of learning in biotechnology. Administrative Science Quarterly, 41, 1, 116–145.
Quatraro, F. (2009) Diffusion of regional innovation capabilities: evidence from Italian patent data. Regional Studies, 43,
10, 1333–1348.
Rice, M.P. (2002) Co-production of business assistance in business incubators: an exploratory study. Journal of Business
Venturing, 17, 2, 163–187.
Rubin, T.H., Aas, T.H. and Stead, A. (2015) Knowledge flow in technological business incubators: evidence from
Australia and Israel. Technovation, 41-42, 11–24.
Sá, C. and Lee, H. (2012) Science, business, and innovation: understanding networks in technology-based incubators.
R&D Management, 42, 3, 243–253.
Schneider, C. and Veugelers, R. (2010) On young highly innovative companies: why they matter and how (not) to policy
support them. Industrial and Corporate Change, 19, 4, 969–1007.
Schwartz, M. (2013) A control group study of incubators’ impact to promote firm survival. Journal of Technology
Transfer, 38, 3, 302–331.
Schwartz, M. and Hornych, C. (2010) Cooperation patterns of incubator firms and the impact of incubator specialization:
empirical evidence from Germany. Technovation, 30, 9, 485–495.
Scillitoe, J.L. and Chakrabarti, A.K. (2010) The role of incubator interactions in assisting new ventures. Technovation,
30, 3, 155–167.
Sedita, S.R. and Apa, R. (2016) The role of open innovation-oriented strategies in the innovation performance of
mechanical engineering start-up firms in Northern Italy. In: Parrilli, M.D., Fitjar, R.D. and Rodríguez-Pose, A. (eds.),
Innovation Drivers and Regional Innovation Strategies. London and New York: Routledge, pp. 142–160.

16
Sedita, S.R., Belussi, F. and Grandinetti, R. (2016) How does a networked business incubator fuel cluster emergence? A
theoretical discussion and an empirical illustration. In: Boari, C., Elfring, T. and Molina-Morales, F.X. (eds.),
Entrepreneurship and Cluster Dynamics. London and New York: Routledge, pp. 104–128.
Sherman, H. (1999) Assessing the intervention effectiveness of business incubation programs on new business start-ups.
Journal of Developmental Entrepreneurship, 4, 2, 117–133.
Soetanto, D.P. and Jack, S.L. (2013) Business incubators and the networks of technology-based firms. Journal of
Technology Transfer, 38, 4, 432–453.
Soetanto, D.P. and Jack, S.L. (2016) The impact of university-based incubation support on the innovation strategy of
academic spin-offs. Technovation, 50-51, 25–40.
Sofka, W. and Grimpe, C. (2010) Specialized search and innovation performance–evidence across Europe. R&D
Management, 40, 3, 310–323.
Stinchcombe, A.L. (1965) Social structure and organizations. In: March, J.G. (ed.), Handbook of Organizations.
Chicago: Rand McNally, pp. 142–193.
Sullivan, D.M. and Marvel, M.R. (2011) Knowledge acquisition, network reliance, and early-stage technology venture
outcomes. Journal of Management Studies, 48, 6, 1169–1193.
Sung, T. K. (2007) Incubators and business ventures in Korea: Implications for manpower policy. International Journal
of Technology Management, 38, 3, 248–267.
Tamásy, C. (2007) Rethinking technology-oriented business incubators: developing a robust policy instrument for
entrepreneurship, innovation, and regional development. Growth and Change, 38, 3, 460–473.
Teece, D.J. (1986) Profiting from technological innovation. Research Policy, 15, 6, 285–306.
Totterman, H. and Sten, J. (2005) Start-ups, business incubation and social capital. International Small Business Journal,
23, 5, 487–511.
Trajtenberg, M. (1990) A penny for your quotes: patent citations and the value of innovations. The Rand Journal of
Economics, 21, 172–187.
Vaona, A. and Pianta, M. (2008) Firm size and innovation in European manufacturing, Small Business Economics, 30, 3,
283–299.
Von Zedtwitz, M. and Grimaldi, R. (2006) Are service profiles incubator-specific? Results from an empirical
investigation in Italy. Journal of Technology Transfer, 31, 4, 459–468.
Wakelin, K. (2001) Productivity growth and R&D expenditure in UK manufacturing firms. Research Policy, 30, 7,
1079–1090.
West, J. and Lakhani, K. R. (2008). Getting clear about communities in open innovation. Industry and Innovation, 15, 2,
223-231.
Yayavaram S, Ahuja G. (2008) Decomposability in knowledge structures and its impact on the usefulness of inventions
and knowledge-base malleability. Administrative Science Quarterly, 53, 2, 333–362.

17
Appendix A. Additional descriptive statistics

This appendix contains additional descriptive statistics. In Tables A1 and A2, we compare the means, the correlation

structure and the covariance matrix of data for which we collected non-missing responses and data with missing values for

the dependent variable. We fail to reject the null hypothesis of identical populations in all multivariate tests. This means

that 243 observations are representative of the 409 sampled firms. For this reason, we do not expect a non-response bias

within the sample.

INSERT TABLE A1 ABOUT HERE

Table A2 reports the pairwise correlation coefficients between our variables. Coefficients do not show unexpected signs

and significance, supporting the reliability of the dataset.

INSERT TABLE A2 ABOUT HERE

Appendix B. Principal component analysis

Table B1 provides the scoring coefficients used to estimate the firm components, while Table B2 shows the pattern matrix

explaining the relevance of each variable in the factor. Factor BUSINESS is mostly defined by MKTG and MAN, whereas

and factor TECHNICAL is defined by TECH and ICT. The last column of Table B2 gives the fraction of variance that is

“unique” to the variable (i.e., not shared with other variables). For example, 24% of the variance in TECH is not shared

with other variables in the factor model. Finally, Table B3 reports the proportion of total variance explained by our two

principal components. We followed the Kaiser criterion retaining only those factors with eigenvalues equal or higher than

1. We also used an orthogonal rotation to obtain factors that are not correlated to each other. This procedure serves to

create new indexes without inter-correlated components. As it can be seen, the BUSINESS component explains almost

40% of total variance, and another 36% is explained by the TECHNICAL component. According to the Likelihood Ratio

(LR) test, a factor model must be preferred to a perfect-fit model.

INSERT TABLES B1-B3 ABOUT HERE

Appendix C. Survivorship bias

Because our sample consists of firms having survived up to 2012, as is common in survey-based analyses, our

results may suffer from a survivorship bias. Although we are not able to directly address this issue, we can indirectly

assess the impact of the selection process on our estimates.

18
 Given that we study the role of business incubators on firm’s innovative performance, we should consider the

firm survival after the graduation period. Indeed, during the first seven years of life, both innovative and non-innovative

firms face an important selection process (Cesif and Marsili, 2005). To address this issue, we first split our sample into

two groups belonging to different phases of the selection process, and then we investigate whether the selection process

affects both the level of covariates and the estimated coefficients of the two groups.

In order to create two almost equally numerous groups and considering the upper bound of the incubation

period, we divide our sample into young firms (aged 5 years or less) and mature firms (aged 6 or 7 years), and then we

decompose the difference in innovation performance between the two groups, Δ, following the methodology provided in

Bauer and Sinning (2008). Formally, the decomposition equation can be written as:

Δ = 𝑆(𝛽 ∗ , 𝑋!" ) − 𝑆(𝛽 ∗ , 𝑋!" ) + 𝑆 𝛽! , 𝑋!" − 𝑆(𝛽 ∗ , 𝑋!" ) + 𝑆 𝛽 ∗ , 𝑋!" − 𝑆(𝛽! , 𝑋!" ) , (C1)

where 𝑆 𝛽! , 𝑋!" is the conditional expectation of 𝑌!" evaluated at the parameter vector 𝛽! , 𝛽 ∗ = ωβ! + (1 − ω)β! , and

subscripts M and Y denote mature and young firms respectively. In equation (C1), the right-hand side displays the

difference in innovation performance between the two groups due to differences in observable characteristics (the term in

the first square bracket) and the differences in performance due to differences in the estimated coefficients (second and

third square bracket).1 On the one hand, by assuming the same vector of coefficients for both groups, we are able to

evaluate if young and mature firms differ enough in the values of covariates to exhibit different innovation performance.

On the other hand, by assuming the same levels of covariates, we can understand whether unobserved group factors

influence the marginal impacts of our explanatory variables. Since the selection process may change the endowment of

important explanatory variables as well as the marginal impact of these explanatory variables, a decomposition analysis

allows taking into account both effects.

Table C1 shows that young and mature firms do not significantly differ in terms of both endowments of explanatory

variables and estimated coefficients.

INSERT TABLE C1 ABOUT HERE

19
Tables

Table 1. Industries and activities entering the analysis

Industry ATECO 2002 code ATECO 2002 description
KIBS 72 Computer and related activities
73 Research and development
74.20.1 and 74.20.2 Architectural and engineering activities and related technical consultancy
Mechanics 29 Manufacture of machinery and equipment n.e.c
31 Manufacture of electrical machinery and apparatus n.e.c.
34 Manufacture of motor vehicles, trailers and semi-trailers
35 (excluding 35.1) Manufacture of other transport equipment

Table 2. Description of variables

Type Name Label Description

Dependent variable INNO_PERF Innovation Fraction of firm’s turnover from products new to the market
performance

Independent variables INCUB Incubation Dummy variable (1/0), assumes value 1 if the firm passed through an
incubator (either public or private) and 0 otherwise.

COLL 0-5 Collaboration breadth Number of types of collaborations for innovation (factor variable
ranging from 0 to 5)
BUSINESS Business capabilities Principal component for marketing and managerial capabilities.

TECHNICAL Technical capabilities Principal component for technological and ICT capabilities.
Control variables PROT IP Protections Number of types of IP protections

R&D R&D expenditure Percentage of turnover in R&D in the firm first year.

GEO Geographical area Dummy variable (1/0), assumes 1 if the firm is located in the North-
Western part of Italy, 0 if the firm is located in the North-Eastern
part of Italy.
INDUSTRY Industry specificity Dummy variable (1/0), assumes value 1 if the firm is a KIBS and O
if the firm is a MEF
AGE Firm age Years from firm foundation, calculated in 2012, spans from 3 to 7.

SIZE Firm size Number of active founders and employees in 2012.

TYPE Type Dummy variable (1/0), assumes value 1 if the company is a spin-off
and 0 otherwise.
EXPORT Internationalization Dummy variable (1/0), assumes value 1 if the company report
foreign sales and 0 otherwise.

Variables used to construct TECH Technological Firms evaluation of technological capabilities after three years from
BUSINESS and TECHNICAL capabilities the foundation

MKTG Marketing Firms evaluation of marketing capabilities after three years from the
capabilities foundation

MAN Management Firms evaluation of management capabilities after three years from
capabilities the foundation

ICT ICT Firms evaluation of ICT capabilities after three years from the
capabilities foundation

20
Table 3. Descriptive statistics (243 obs)

Variable Mean Std. Dev. Min Max

Dependent variable
INNO_PERF 3.006 1.414 1 5
Independent variables
INCUB 0.300 0.459 0 1
COLL 0 0.015 0.121 0 1
COLL 1 0.070 0.255 0 1
COLL 2 0.228 0.420 0 1
COLL 3 0.318 0.466 0 1
COLL 4 0.212 0.410 0 1
COLL 5 0.158 0.365 0 1
BUSINESS 0 1 -2.913 1.873
TECHNICAL 0 1 -4.432 1.567
Control variables
PROT 0.852 1.214 0 4
R&D 22.011 26.727 0 100
GEO 0.527 0.500 0 1
INDUSTRY 0.527 0.500 0 1
AGE 5.700 1.010 3 7
SIZE 9.772 9.517 1 81
TYPE 0.255 0.437 0 1
EXPORT 0.477 0.501 0 1
Variables used to construct BUSINESS and TECHNICAL
TECH 4.424 0.742 1 5
MKTG 3.395 1.147 1 5
MAN 3.617 1.043 1 5
ICT 3.984 0.962 1 5

21
Table 4. Determinants of firms innovation performance (Ordered
Logit)
(1) (2) (3)
INCUBa 0.614*** 0.516**
(0.238) (0.242)
COLL 1a -0.382
(0.583)
COLL 2a -0.375
(0.498)
a
COLL 3 0.025
(0.405)
COLL 4a 0.127
(0.442)
COLL 5a 0.015
(0.503)
BUSINESSa 0.094
(0.123)
TECHNICALa 0.117
(0.119)
PROT 0.034 0.026 0.019
(0.094) (0.094) (0.100)
R&D 0.029*** 0.028*** 0.028***
(0.005) (0.006) (0.006)
GEO 0.115 0.094 0.230
(0.231) (0.233) (0.242)
INDUSTRY -0.382 -0.433* -0.474*
(0.240) (0.242) (0.254)
AGE -0.265** -0.272*** -0.265**
(0.104) (0.104) (0.115)
SIZE (log) 0.001 0.021 -0.076
(0.158) (0.158) (0.166)
TYPE 0.325 0.183 0.253
(0.262) (0.260) (0.275)
EXPORT 0.215 0.200 0.223
(0.226) (0.227) (0.232)
Observations 248 248 243
Pseudo R2 0.058 0.065 0.075
Log-Likelihood -375.619 -372.780 -361.629
Robust standard errors in parentheses. Significant at: *10%,
**5%, ***1%. aInference is based on one-tailed significance test.

22
Table 5. Determinants of firms innovation performance with interaction
effects (Ordered Logit)
(1) (2)
INCUBa 0.574** -0.612
(0.243) (0.544)
BUSINESS 0.173 0.114
(0.144) (0.127)
TECHNICAL -0.001 0.093
(0.132) (0.122)
INCUB*BUSINESSa -0.264
(0.258)
INCUB*TECHNICALa 0.418**
(0.227)
COLL 1 -0.591 -0.693
(0.553) (0.533)
COLL 2 -0.602 -0.766
(0.515) (0.490)
COLL 3 -0.177 -0.193
(0.390) (0.403)
COLL 4 -0.082 -0.093
(0.432) (0.455)
COLL 5 -0.158 0.118
(0.484) (0.554)
INCUB*COLL 1a 1.516
(1.550)
INCUB*COLL 2a 1.770**
(0.951)
INCUB*COLL 3a 1.154**
(0.651)
INCUB*COLL 4a 1.161*
(0.713)
INCUB*COLL 5a 0.324
(0.770)
PROT 0.017 0.003
(0.098) (0.105)
R&D 0.029*** 0.029***
(0.006) (0.006)
GEO 0.238 0.270
(0.240) (0.244)
INDUSTRY -0.461* -0.485*
(0.258) (0.263)
AGE -0.247** -0.218*
(0.116) (0.124)
SIZE (log) -0.056 -0.084
(0.167) (0.167)
TYPE 0.234 0.322
(0.281) (0.297)
EXPORT 0.238 0.199
(0.232) (0.246)
Observations 243 243
Pseudo R2 0.079 0.079
Log-Likelihood -359.870 -360.070
Robust standard errors in parentheses. Significant at: *10%, **5%,
***1%. aInference based on one-tailed significance test.

23
Table A1. Multivariate test for non-response bias (within sample)
Statistic p-value
Mean test
Wilks' lambda F(14, 287) 0.932 0.111
Pillai's trace F(14, 287) 0.068 0.111
Lawley-Hotelling trace F(14, 287) 0.073 0.111
Roy's largest root F(14, 287) 0.073 0.111
Correlation test
Jennrich2(91) 97.68 0.297
Covariance test
Box F(105,35920.6) 1 0.4827
Box chi2(105) 105.3 0.4733

24
 Table A2. Pairwise correlation matrix (*denotes significance at 5% confidence level)
INNO_PERF INCUB COLL 1 COLL 2 COLL 3 COLL 4 COLL 5 BUSINESS TECHNICAL PROT R&D GEO INDUSTRY AGE SIZE TYPE
INCUB 0.216*
COLL 1 -0.040 0.059
COLL 2 -0.105 -0.076 -0.149*
COLL 3 -0.052 -0.053 -0.187* -0.37*
COLL 4 0.082 0.039 -0.143* -0.282* -0.354*
COLL 5 0.145* 0.081 -0.119* -0.235* -0.295* -0.225*
BUSINESS 0.114* 0.108* -0.117* -0.078 -0.047 0.064 0.138*
TECHNICAL 0.074 -0.061 -0.048 0.045 0.049 -0.069 0.044 0.000
PROT 0.016 0.033 0.002 0.022 -0.068 -0.020 0.091 0.031 -0.021
R&D 0.347* 0.205* 0.046 -0.078 -0.036 -0.014 0.150* 0.045 0.125* -0.030
GEO 0.000 -0.008 -0.076 0.059 -0.031 -0.013 0.039 0.054 0.012 0.001 -0.020

25
INDUSTRY -0.031 0.045 0.091 -0.151 0.096 0.018 -0.031 -0.152* 0.074 -0.050 0.073 0.062
AGE -0.073 0.042 -0.032 0.069 -0.003 -0.01 -0.067 -0.012 0.016 -0.030 0.012 0.058 -0.089
SIZE 0.013 -0.048 -0.056 0.002 -0.071 0.003 0.128 0.184* 0.105* 0.022 -0.060 -0.020 -0.202* 0.008
TYPE 0.108 0.237* -0.065 -0.031 -0.026 0.022 0.097 0.034 -0.009 0.080 0.072 -0.040 0.016 -0.060 0.097
EXPORT 0.018 -0.003 0.05 0.04 -0.032 -0.022 -0.017 -0.056 0.006 0.130 0.027 -0.020 -0.022 -0.050 0.013 -0.020
 Table B1. Scoring coefficients
Variable BUSINESS TECHNICAL
TECH -0.183 0.665
MKTG 0.643 -0.200
MAN 0.541 -0.028
ICT -0.038 0.560

Table B2. Pattern matrix

Variable BUSINESS TECHNICAL Uniqueness
TECH 0.089 0.867 0.240
MKTG 0.896 0.072 0.192
MAN 0.832 0.264 0.238
ICT 0.256 0.795 0.302

Table B3. Total variance captured by components

Factor Variance Difference Proportion Cumulative
BUSINESS 1.569 0.110 0.392 0.392
TECHNICAL 1.459 . 0.365 0.757
LR test: 𝜒 ! 6 = 305.45 , p-value= 0.000.

Table C1. Bauer and Sinning decomposition analysis

Components Effect Robust SE p-value
Ordered Logit
ω=1
Characteristics 0.062 0.092 0.503
Coefficients -0.030 0.214 0.889
ω=0
Characteristics -0.660 0.692 0.340
Coefficients 0.692 0.823 0.401
Total 0.032 0.214 0.881

1
Notice that, when ω = 1, the coefficient effect is estimated by using young firms’ covariates domain, while when ω = 0, the coefficient effect is
estimated by using mature firms’ covariates domain.

26
View publication stats