Book Chapter
Incubators as Tool for Entrepreneurship Promotion in Developing Countries

This paper reviews the literature on incubators in developed and developing countries. We show that the concept of incubators has evolved in time according to market and firm needs. Contemporary successful incubators are profit-oriented, provide a wide range of services, focus more on intangible business services, and employ qualified managers and support staff. By drawing lessons from country experiences we assess the appropriateness of incubators as a tool for entrepreneurship promotion in developing countries. The main weaknesses of incubators in developing countries are: (i) focus on tangible services rather than intangible services, (ii) dependence on government, (iii) lack of management and qualified personnel, (iv) lack of incubator planning and creativeness in solving problems. Most successful incubators display a creative and innovative character in approaching problems of tenant companies. This is of course correlated with the quality of the incubator management staff. Moreover, incubators reflect the institutional set-up, creativity, and policy innovativeness in a society. Therefore policy on incubators should be well-integrated with other policies for entrepreneurship promotion and economic development, such as education and institutional deregulation. Incubators encourage firms to become innovative and competitive. Such a mission can be pursued only if incubators themselves become competitive, business-oriented, and innovative.