Incubators - What is


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BUSINESS INCUBATORS FOR CENTRAL AND EASTERN EUROPE John L. Kmetz Associate Professor of Management Department of Business Administration University of Delaware Newark, DE 19716 USA Telephone/voice mail: (302) 831-1773 Fax: (302) 831-4196 E-mail: [email protected] Home page: August 7, 2000 Earlier versions of this paper were presented to the Second World Congress of the International Management Development Association, Turku School of Business and Economics, Turku, Finland, 3 June 1993, and to the 29 th International Conference on Small Business, Strasbourg, France, 25 June 1994. Portions of this version were presented to the Partners for International Education and Training at the Region VIII NAFSA conference, Bethesda, Md., 17 November 1995. Copyright©John L. Kmetz, 2000
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BUSINESS INCUBATORS FOR CENTRAL AND EASTERN EUROPE ABSTRACT This paper provides a literature review on the “business incubator” as a new- business development tool, based primarily on research done on these organizations in the U.S. Combining this with numerous interactions with University of Delaware and other groups from Ukraine, Bulgaria, and Slovakia since 1989, and experience from a USAID program in Bulgaria since 1991, the author makes recommendations for the formation and management of business incubators in Central and Eastern Europe. The recommendations in the main body of the paper are for general incubators; the Appendix makes specific suggestions for technology incubators. WHAT IS A “BUSINESS INCUBATOR?” At the awards banquet of the 1994 annual meeting of the National Business Incubation Association, Frank Mancuso, an individual widely recognized as the “father of business incubators,” told the story of how the first one got started and how the name originated: In the 1950's, Watertown, New York, had experienced significant job loss owing to the movement of many manufacturing industries to the South and the West Coast. Along with this industrial shift, an incubator that had served local poultry growers closed, since much of the industry was moving (to Delaware, as it turns out). Left with a vacant building, the city of Watertown decided to clean it and refurbish it, and Mr. Mancuso, who was then Mayor, decided to allow entrepreneurs to use the building as a place to get their businesses started. He charged minimal rent, since his primary purpose was to stimulate economic activity, and basically provided a heated space to work and access to a telephone. Even with such limited resources, a number of new start-ups emerged from the building, and the program was enough of a success to attract the attention of the local press. A reporter who came by to see what was going on asked Mr. Mancuso what he was doing. As he tells it, he replied, “I don’t really know what to call it—we used to incubate chickens in here, and now I guess we’re incubating businesses.” The rest, as they say, is history. A modern “business incubator” is a combination of physical space and facilities,
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