An empirical analysis of the factors that influence the success of the incubation process

Nowadays startups are the real engine for the economic development of countries since they create new highly skilled jobs and ensure technological innovation. In fact, the word startup can be labeled as the essence of unconventional thinking, creativity, and originality which are considered as prerequisites to the rejuvenation of countries. For instance, in Italy during the past six months, there are 11,899 start-ups, 3.2% of all newly incorporated companies. (Mise, 2021) The correlation between the creation of small businesses and the economic development of nations stands in the fact that SMEs represent most of the number of enterprises in the European countries. Thus, improving the SMEs sector improves productivity, competition, and employment generation, as well as social cohesion. But, as a matter of fact, small businesses are more subject to failures with respect to big companies, especially in the first stages of existence. Startup Genome points out that 9 out of 10 startups tend to fail to 1-3 years. (2019) Some scholars argue that the selection forces that eliminate uncompetitive firms are enough for ensuring an efficient and competitive business environment. However, to reduce the likelihood of venture failures there is a need of establishing strong institutions that help economic progress, especially by developing the SMEs sector, which represents the majority of companies in the Italian business landscape. In this context, business incubation has been used as a policy tool to increase the pool of new businesses and address their needs from the initial and vulnerable stage of their existence, so that they become autonomous to face market competitiveness. Incubators implement an incubation process that begins with a selection phase in which only businesses worthy of support are considered, and ends with their launch into the market, ensuring that they have more value than they entered the incubation process with. What becomes interesting in the study of business incubators, however, is finding a formula for how an incubator's success in supporting startups is assured. In fact, this thesis, through a detailed literature review and the construction of an empirical model aims to identify the key factors that influence the success of incubators. At greater length, I firstly defined the incubation process and how it affects the firm performance, through a comprehensive literature review. Then, through the collection and interpretation of data, and then a regression analysis, the model is tested to find out which are the key characteristics that make a difference between incubators, in terms of startup support. Finally, you can find a study on whether there is still a difference between private and public incubators in supporting startups.