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Business has changed a lot since then and more recent research, such as “Boon or Boondoggle? Business Incubation as Entrepreneurship Policy” by Alejandro S. Amezcua of the Whitman School of Management has muddied the waters.
Amezcua’s study drew on a sample of approximately 35,000 incubated and unincubated businesses. He looked at sales growth, employment growth, and whether companies were able to survive independently.
According to his research, in terms of age and survival trends, the average incubated firm stays in business for 5 years and 42% of incubated firms close by the time they are 3.63 years old. In contrast, he found that only 4% of the sample or 655 incubated firms managed to exit their incubator, over an 18-year period, having spent an average of 3.84 years in their incubator. Incubators did have higher average sales than unincubated businesses in their first year: $693,000 versus $437,000 and also had a higher number of employees (average of 4.43 employees for incubated businesses versus 3.45 employees for unincubated businesses in their first year). But taking all of these figures together, the results seem to show that incubators have mixed results:
”Incubated firms outperform their peers in terms of employment and sales growth but fail sooner. These are important findings for policymakers who support incubation as a strategy to increase employment locally and for entrepreneurs who risk their livelihoods in order to earn a decent living.
Ultimately, he found overall that claims that incubators are highly successful are overstated.
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