TOWARDS A RESOURCE-BASED VIEW OF CORPORATE INCUBATORS

Abstract

Corporate incubators for technology development are a recent phenomenon whose functioning and implications are not yet well understood. The resource-based view can offer an explanatory model on how corporate incubators function as specialised corporate units that hatch new businesses. While tangible resources, such as the financial, physical and even explicit knowledge flow, are all visible, and therefore easy to measure, intangible resources such as tacit knowledge and branding flow are harder to detect and localise. Managing the resource flow requires the initial allocation of resources to the corporate incubator during its set-up as well as a continuous resource flow to the technology venture and, during the harvest phase, also from it. Two levels of analysis need to be distinguished: (1) the resource flow between the corporate incubator and the technology venture and (2) the resource flow interface between the corporate incubator and the technology venture. Our empirical findings are based on two phases: First, in-depth case studies of 22 companies through 47 semi-structured interviews that were conducted with managers of large technology-intensive corporations' corporate incubators in Europe and the U.S., and second, an analysis of the European Commission's benchmarking survey of 77 incubators.

Full text

January 21, 2006 15:0 WSPC/150-IJIM 00138
International Journal of Innovation Management
Vol. 10, No. 1 (March 2006) pp. 19–45
© Imperial College Press
TOWARDS A RESOURCE-BASED VIEW
OF CORPORATE INCUBATORS
OLIVER GASSMANN
University of St. Gallen
Institute of Technology Management
Dufourstrasse 50, CH-9000 St. Gallen, Switzerland
oliver.gassmann@unisg.ch
BARBARA BECKER
McKinsey & Company, Germany
becker@post.harvard.edu
Received 24 February 2004
Revised 13 April 2005
Accepted 15 April 2005
Corporate incubators for technology development are a recent phenomenon whose func-
tioning and implications are not yet well understood. The resource-based view can offer
an explanatory model on how corporate incubators function as specialised corporate units
that hatch new businesses. While tangible resources, such as the financial, physical and
even explicit knowledge flow, are all visible, and therefore easy to measure, intangible
resources such as tacit knowledge and branding flow are harder to detect and localise. Man-
aging the resource flow requires the initial allocation of resources to the corporate incu-
bator during its set-up as well as a continuous resource flow to the technology venture
and, during the harvest phase, also from it. Two levels of analysis need to be distin-
guished: (1) the resource flow between the corporate incubator and the technology venture
and (2) the resource flow interface between the corporate incubator and the technology
venture. Our empirical findings are based on two phases: First, in-depth case studies
of 22 companies through 47 semi-structured interviews that were conducted with man-
agers of large technology-intensive corporations’ corporate incubators in Europe and the
U.S., and second, an analysis of the European Commission’s benchmarking survey of 77
incubators.
Keywords: Innovation process; corporate incubators; resource based view; venturing.
19

January 21, 2006 15:0 WSPC/150-IJIM 00138
20 O. Gassmann & B. Becker
Introduction
Rise and fall of incubators
While non-profit incubators have existed for a long time, for-profit corporate incu-
bators have only recently emerged as a prominent organisational form of R&D
management. An incubator is an entity that “hatches” new ideas by providing phys-
ical resources and support to nurture the growth of new business ventures, which
can either be an independent start-up, or an internal corporate venture (Allen and
McCluskey, 1990; Hansen et al., 2000a). Non-profit incubators focus on providing
support to start-ups by furthering local development and other community social
purposes, while for-profit incubators concentrate on financial returns for the cor-
poration. From 1998 to early 2000 the number of for-profit incubators increased
substantially during a concurrent boom in venture capital. For example, in the U.S.
the number of incubators rose to more than 900 from the 12 in 1980 (NBIA, 2000).1
Fuelled by new opportunities from the Internet boom, and venture capitalists
and angel investors’ increasing appetite for technology start-ups, independent incu-
bators were quite successful between 1998 and 2000. With the market correction in
early 2000, many independent incubators shrank, or disappeared along with venture
capital funds. However, corporate incubators have increased in importance. They
have learned from the rise and fall of independent incubators and have taken over
some of their processes, mechanisms and instruments.
Despite many corporate incubators having survived the rise and fall of incubato rs,
little research has been undertaken on the increasing empirical relevance of this
recent phenomenon.
The proposed taxonomy (Fig. 1) distinguishes between non-profit and for-profit
incubators, which can be further differentiated by whether they are organised as
independent organisations or are linked to a corporation. For-profit incubators focus
on financial returns for their owners, or on corporate goals such as enhancing tech-
nology development, thus indirectly benefitting profitability. In the medium to long
term, they achieve positive gains through service fees and equity stakes in new ven-
tures. For-profit incubators include independent for-profit incubators as start-ups
that aim to gain fast profits from other successful start-ups, or corporate incubators
that want to extract value from their portfolio of technologies, or want to explore
new technology for their core business.
However, some incubators might exhibit elements of more than one type. Overall
incubators may vary in terms of their sponsor’s motivation and objective, which
1For example, the number of for-profit Internet incubators doubled between December 1999 (112
Internet incubators) and May 2000 to 214 incubators, tapping the opportunities of the New Economy
(Hansen et al., 2000a, p. 8).

January 21, 2006 15:0 WSPC/150-IJIM 00138
Towards a Resource-Based View of Corporate Incubators 21
•
Profit orientation
•
Profit driven
–Creation of new businesses
–Company development
–Business cluster
Focus of research on
corporate incubators
•
Siemens Technology Accelerator
•
Lucent New Ventures
•
Cisco Ventures
•
Siemens Mobile Acceleration
•
Zuerich Science Park
•
Idealab!
•
CMGI, ICG
•
Softbank, Hotbank
•
New Profit
•
Austin Entrepreneurs Foundation
•
Massachusetts Biomedical
Initiatives, Worchester
•
Baltimore Technology Incubator
•
Women’s Technology Cluster
•
ECompanies
•
EHatchery
•
Divine InterVentures
•
MIT Virtual Accelerator
•
Garage.com
•
Venture Capital Online
•
Arizona Technology Incubator
•
Austin Technology Incubator
•
Berkeley Business Incubator
•
Austin Technology Incubator
•
Maryland College Park’s
Technology Advancement Program
•
Bainlab
•
J.P. Morgan Chase LabMorgan
•
Price Waterhouse Coopers Incub.
University
University
Community
Community
Holding
Holding
Venture
Capitalist
Venture
Capitalist
Service
Providers
Service
Providers
Non-profit
Non-profit
For-profit
For-profit
•
Non-profit orientation
•
Policy driven
–Creation of jobs
–Regional development
–Innovation and technology cluster
CharacteristicsExamples (mainly U.S. based)
Technology
Development
Corporate
Corporate
Non-
Government
Government
Non-Profit
Development
Independent
Technology/
Science Park
Virtual
Organization
Differentiation
•
Profit orientation
•
Profit driven
–Creation of new businesses
–Company development
–Business cluster
Focus of research on
corporate incubators
•
Siemens Technology Accelerator
•
Lucent New Ventures
•
Cisco Ventures
•
Siemens Mobile Acceleration
•
Zuerich Science Park
•
Idealab!
•
CMGI, ICG
•
Softbank, Hotbank
•
New Profit
•
Austin Entrepreneurs Foundation
•
Massachusetts Biomedical
Initiatives, Worchester
•
Baltimore Technology Incubator
•
Women’s Technology Cluster
•
ECompanies
•
EHatchery
•
Divine InterVentures
•
MIT Virtual Accelerator
•
Garage.com
•
Venture Capital Online
•
Arizona Technology Incubator
•
Austin Technology Incubator
•
Berkeley Business Incubator
•
Austin Technology Incubator
•
Maryland College Park’s
Technology Advancement Program
•
Bainlab
•
J.P. Morgan Chase LabMorgan
•
Price Waterhouse Coopers Incub.
University
University
Community
Community
Holding
Holding
Venture
Capitalist
Venture
Capitalist
Service
Providers
Service
Providers
Non-profit
Non-profit
For-profit
For-profit
•
Non-profit orientation
•
Policy driven
–Creation of jobs
–Regional development
–Innovation and technology cluster
CharacteristicsExamples (mainly U.S. based)
Technology
Development
Technology
Development
Corporate
Corporate
Non-
Government
Non-
Government
GovernmentGovernment
Non-Profit
Development
Non-Profit
Development
IndependentIndependent
Technology/
Science Park
Technology/
Science Park
Virtual
Organization
Virtual
Organization
Differentiation
Fig. 1. Development of corporate incubators.
ensure their continuous support by the sponsor, determine the type of services
provided, the way they operate and the incubator staff’s background and expertise,
particularly that of the incubator manager.
Besides the first-order differentiation between non-profit and for-profit incu-
bators, four types of incubators can be distinguished in a second-order in terms
of their institutional sponsor, in other words, whether it is a governmental, non-
governmental, independent (start-up) or corporate incubator. This research focuses
on the role of corporate incubators as strategic investments designed to develop tech-
nologies and partnerships benefitting the parent corporation, and ignores venture
capital investment aims. While research on the nature of the relationship between
the corporate incubator and the parent corporation, on the incubation process and on
the resources provided has been limited, the relationship and interaction between
new ventures and investors, such as venture capitalists and angel investors, have
been extensively researched.
Corporate incubators are specialised corporate units that hatch new businesses
and enhance a corporation’s technology base to support its overall development
and growth. The object of their support can be external or internal start-ups, or

January 21, 2006 15:0 WSPC/150-IJIM 00138
22 O. Gassmann & B. Becker
entrepreneurs with a promising business idea, or technology, which will be termed
technology ventures hereafter. Often legally structured as a subsidiary of the parent
holding firm, they draw on the whole corporation’s resources to support either
internal or external ventures. Corporate incubators realise technological options as
part of an overall corporate mission and thus gain profits in the medium to long term.
Being part of a larger corporation, corporate incubators have long-term strategic
goals and take the fit with the parent corporation into account, but are also able to
leverage the parent’s resources.
The paper is structured as follows: After a literature review of the resource-based
view as well as the resource flow in the incubation and corporate venturing literature,
the tangible as well as intangible resources of for-profit corporate incubators are
examined. This includes the resource flow between the corporate incubator and
parent corporation as well as between the corporate incubator and the technology
venture, based on quantitative findings as well as on examples of case studies. The
paper concludes with a discussion of the resource allocation process as well as the
quality and impact of the resource flow. Finally, suggestions for further research are
forwarded.
Literature review of the resource-based view and corporate incubators
In this paper, we seek to link the resource-based view of the firm with an analysis
of the resource flow from and to the corporate incubator. Resources are flexible
assets that can be utilised to create value. We focus on resources for two reasons.
First, corporate incubators can support the technology venture’s development, thus
substantially improving their resource constraint. Since start-ups lack resources
and insights due to their short existence, one of the corporate incubator’s central
purposes is to bridge the physical as well as intangible resource and knowledge
gaps. And, second, this resource flow can increase the new technology venture’s
chances of survival and growth.
The resource-based view
The resource-based view suggests that corporations can create a competitive advan-
tage through the development and intelligent application of core resources and
capabilities (Wernerfelt, 1984; Hamel and Prahalad, 1990; Barney, 1991; Grant,
1991; Peteraf, 1993). Resources, as the basic unit of analysis, can be defined in
generic terms as input into the production process through which the corporation
can perform operations and thus create and extract streams of economic rent from its
resources (Grant, 1991; Amit and Shoemaker, 1993; Black and Boal, 1994). How-
ever, neither the existence of resources nor their random use is enough, since only
by applying resources strategically can economic rents be created and extracted

January 21, 2006 15:0 WSPC/150-IJIM 00138
Towards a Resource-Based View of Corporate Incubators 23
(Penrose, 1959; Chandler, 1977; Nelson and Winter, 1982). Large corporations
should have extensive resources that are vital, and therefore core, if they are (at
least partially) to meet four important conditions: the resource is valuable, rare,
hard to imitate and cannot be easily substituted (Barney, 1991).
Besides the resources’ impact, a second stream of literature focuses on dis-
tinguishing the resources. Barney (1991) detected financial, physical, human and
organisational resources, which Grant (1991) extended with two further factors —
technology resources and reputation. Also “invisible assets” are important and were
introduced by Itami and Roehl (1987) as “information-based resources” such as
management skills and experience, distribution control, corporate culture, consumer
trust and brand image (see also classifications by Aaker (1989) and Hall (1992).
The management resource is of particular importance, but is an often-overlooked
catalyst, because the corporation’s managers and management team will recombine
the firm’s resources (Penrose, 1959; Aaker, 1989).
The resource-based view distinguishes between resources as stocks (inputs)
and capabilities as resource flows (Dierickx et al., 1989), with the latter being
the focus of this paper. Granovetter’s (1973, 1985) work on strong and weak ties
described the strength and nature of relationships, which are important determinants
of the resource flow. Due to the importance of the resource-based framework, the
resource flow process of resources’ creation and dissemination both to and from
the corporate incubator needs to been analysed. The corporate incubator receives
resources from the parent corporation during its initial set-up and, consequently,
can continuously provide its portfolio companies, called technology ventures, with
resources.
There is constant interaction between the three players — the parent corpo-
ration, corporate incubator and technology venture — involved in the corporate
incubation process (see Fig. 2). The parent corporation initialises the corporate
incubator through the provision of resources while, in turn, the corporate incu-
bator accelerates the technology ventures’ development by providing resources.
The parent corporation is a complex organisation with various hierarchical levels,
subsidiaries and partially controlled affiliates such as joint ventures or alliances.
The flow of resources inside the corporation occurs between all parties through
mutual exchange. Additionally, resources can come from external partners out-
side the corporation’s boundaries such as suppliers, service providers and even
competitors.
Understanding the resource flow requires two levels of analysis: (1) the resource
flow between the corporate incubator and parent corporation and (2) the resource
flow between the corporate incubator and the technology venture during the incuba-
tion’s involvement phase. The resource flow outside the corporation to other parties
was not included in the literature research.

January 21, 2006 15:0 WSPC/150-IJIM 00138
24 O. Gassmann & B. Becker
Corporate
Incubator
Corporate
Incubator
Corporate
Parent
Corporate
Parent
Technology
Venture
Technology
Venture
Corporation
Other parties outside
corporation
•
Suppliers
•
Service providers
•
Competitors
•
…
Flow of
resources, knowledge,
intellectual property,
services
Corporate
Incubator
Corporate
Incubator
Corporate
Parent
Corporate
Parent
Technology
Venture
Technology
Venture
Corporation
Other parties outside
corporation
•
Suppliers
•
Service providers
•
Competitors
•
…
Flow of
resources, knowledge,
intellectual property,
services
Fig. 2. Corporate incubator’s resource flow.
Resource flow between the corporate incubator and parent corporation
The incubator literature analyses the incubator’s set-up and structure and the incu-
bation process. In other words, how technology ventures such as start-ups can be
supported, and, to a lesser degree since it is a relatively recent phenomenon, how
resources flow from the parent corporation to the corporate incubator. However,
the literature on corporate venturing and “intrapreneurship” (a term specific to
entrepreneurship in large corporations) mostly focuses on how innovation can be
enhanced (through active investment) using corporate funds in semi-autonomous
units in large mature corporations (Burgelman, 1984; Pinchot, 1985; Hisrich, 1986;
Vesper, 1990; Bitzer, 1991; Dyckerhoff, 1995). It is emphasised that senior man-
agement should provide the rationale for business development, set up the ven-
ture’s structure, authorise projects and monitor performance (Burgelman and Sayles,
1986).
One of the most important advantages of a corporate venture is its access to cor-
porate resources such as capital, expertise, branding and networks. By comparing
corporate ventures with independent entrepreneurial ventures, Shrader and Simon
(1997) found that corporate ventures emphasise proprietary knowledge, marketing
expertise and internal capital. Furthermore, the corporate venture can use the cor-
poration’s underutilised capacities and, therefore, realise economies of scale. For
example, corporate ventures may tap the parent corporation’s distribution and sup-
ply advantages, leveraging the corporation’s long-term relationships, reputation and
trademarks (Caves and Porter, 1977). Finally, the corporate venture has strong mar-
keting expertise and, through the parent corporation, knows its customers’ needs.

January 21, 2006 15:0 WSPC/150-IJIM 00138
Towards a Resource-Based View of Corporate Incubators 25
The flow of resources to the incubator from the parent can either occur top-down
from the senior management, or be attracted internally from the bottom-up if the
incubator manager has a highly autonomous position, or through external sources
such as venture capitalists. Since capital for the corporate venture is often provided
in a political budget process by senior management, corporate ventures may be
strangled by bureaucratic whims such as tight budgetary control systems, short-
term quantitative targets and multiple review levels (Burgelman and Sayles, 1986).
Access to time-sensitive resources can be delayed through bureaucratic decision-
making (Kanter, 1989, p. 217). Corporate ventures furthermore often receive little
real corporate commitment in the form of continuous funding and reporting to senior
management (Fast, 1981; Lerner, 2000, p. 445). New senior managers, who often
terminate their predecessor’s “pet projects”, also threaten venture programmes’
continuity. “The typical corporate venture capital program has been terminated
within four years of being launched.” (Gompers and Lerner, 2001, p. 145). Future
research thus needs to distinguish between successful and unsuccessful corporate
venturing programmes linked to the parent corporation’s financial or strategic goals.
Resource flow between the corporate incubator and technology venture
The corporate incubator can support external or internal entrepreneurs who pur-
sue opportunities despite their resource constraints (Stevenson and Jarillo, 1990;
Timmons, 1999). Financing, infrastructure, consulting and networks are major com-
ponents of the provided incubation services (Achtleitner and Engel, 2001a) [See for
other grouping of provided services such as shared services, assistance and financ-
ing (Allen and Rahman, 1985; Schroeder, 1990; Westhead and Batstone, 1999;
European Commission, 2002)].
Once technology ventures have been selected for the incubator, the interaction
between the incubator manager and technology venture determines the resource
flows’ scope during their involvement (MacMillan et al., 1986; Lumpkin and
Ireland, 1988; Rice, 1993; Rice and Abetti, 1993). The incubator’s quality and out-
put may vary in the “co-production dyad”, with the incubator as producer of business
assistance and the entrepreneurs as consumers or receiver of resources (Rice, 2002).
The incubator manager is a resource broker p roviding networking, counselling, emo-
tional support and expertise to the new ventures (Smilor and Gill, 1986; Rice and
Abetti, 1992). Proactive management by the incubator manager supports knowl-
edge dissemination to the technology venture through counselling and the transfer
of business skills and advice (Dierdonck et al., 1991; Westhead and Batstone, 1999).
While incubator managers stress the importance of physical goods, the CEO,
employees and auditors of technology ventures tend to place greater value on intan-
gible skills passed on through physical co-location. Start-ups might benefit from

January 21, 2006 15:0 WSPC/150-IJIM 00138
26 O. Gassmann & B. Becker
the incubator by deriving credibility through its affiliation in terms of creating con-
tacts with potential industry experts, customers, and suppliers to accelerate busi-
ness building. By examining the impact of the incubator manager responsible for
the day-to-day support on resident start-ups in high-technology incubators, Seidel
(2001) found four intangible resources to be most beneficial for the entrepreneur: a
network of contacts, the incubator manager’s CEO expertise, regular performance
feedback and benchmarking against other entrepreneurs, and the signalling effect
through incubator affiliation. Conversely, however, potential business partners and
investors might perceive affiliation as a crutch that strong entrepreneurs with exten-
sive own networks need not rely on. Nevertheless, social networks’ importance for
entrepreneurs has been widely examined and accepted (Birley, 1985; Aldrich and
Dubini, 1991; Hansen, 1995; Ostgaard and Birley, 1996). The incubator is able to
extend the new venture’s entrepreneurial network to potential customers, suppliers
and service contractors (Rice, 2002), thus extending the social networks.
With the rise of for-profit independent incubators during the Internet boom,
networks seemed to be one of the most important factors for new ventures in
the e-commerce economy, as was found in a comprehensive worldwide survey by
Hansen, Berger and Nohria. Termed “network incubators”, they created high value
by providing access to potential customers, suppliers and service providers (Hansen
et al., 2000a, b); similar findings were derived for Germany during the same period
by Achtleitner and Engel (2001b). However, with the bust of independent incuba-
tors during the following economic slowdown, networks were proven to be not a
long-term indicator of the creation of real volume and, thus, revenues.
Besides being used for building business, networks can also be important for
quality control and to enhance own capacity by means of external service providers.
If the incubator itself cannot provide the missing resources and knowledge, it takes
on the role of a gatekeeper or network spider in coordinating third-party services
(Colombo and Delmastro, 2002). Smilor and Gill (1986) introduced the concept
of an incubator “know-how network”, which includes technical experts, marketing
experts, intellectual property lawyers, accountants, potential debt or equity investors
and other types of consultants or service specialists.
Research methodology
Our research focuses on how large technology-driven corporations with substantial
R&D units can derive competitive advantage by supporting the management of their
technology through the use of corporate incubators. The research question is how
corporations organise their internal resource flow between the corporate incubator
and the parent corporation to hatch internal and external new ventures for tech-
nology development acceleration. Our unit of analysis is the corporate incubator’s

January 21, 2006 15:0 WSPC/150-IJIM 00138
Towards a Resource-Based View of Corporate Incubators 27
relationship and interaction with the parent corporation as well as with the tech-
nology venture in the form of the resource flow. This paper excludes the resource
flow from external parties such as suppliers, competitors or service providers (e.g.
consultants, legal providers, accountants and outside investors). External financing
through public funding (e.g. federal laboratory or government agencies) or pri-
vate funding (e.g. venture capitalists or angel investors) can, however, reduce the
investment risk through diversification.
The research was carried out in two phases:
Phase 1 (2001–2002): As part of an exploratory field research, a qualitative
approach was undertaken through in-depth case studies (Yin, 1994) of 22 large
European and American technology-intensive corporations’ corporate incubators
(see Table 1 for details). The research was based on 47 semi-structured interviews
in 2001 and 2002 with the managers of corporate incubators of corporations with
operations in high-tech industries such as computers, electronics and communica-
tions equipment manufacturing. For increased reliability, data were collected and
analysed through multiple sources of evidence, such as archival records, company
profiles, company records, company presentations, annual reports, press releases,
and articles, as well as through our own observations (Eisenhardt, 1989; Miles and
Huberman, 1994).
As far as the regional distribution of our sample is concerned, 15 case studies are
from U.S.-based technology-intensive companies and seven from European-based
companies. The criteria used for selecting the specific corporate incubators for case
studies included their business-to-business concentration, headquarters in Europe
or the U.S., their focus on high-tech industries as reflected in a high degree of
R&D intensity and the sales generated from products less than 3 years old. These
criteria stress the importance of supporting young enterprises or start-up ideas
through special programmes, including the provision of physical resources. The
majority of the corporate incubators surveyed were set up between 1998 and 2000
and at the time of writing approximately two-thirds were still operational. Since
corporate incubators use different names, such as incubator, accelerator, business
innovation and venture fund, they were included in the study if their strategic
mission dealt with hatching young enterprises for technology development.
Phase 2 (2002–2003): The first findings regarding the resource flow between the
parent corporation, corporate incubator and technology venture were extended
by collecting quantitative data in two ways. First, the European Commission’s
database (European Commission, 2002) of more than 800 European incubators
dispersed throughout the 15 EU member states, EEA countries (Norway, Iceland
and Lichtenstein), Switzerland and the 13 candidate EU countries was utilised and,
secondly, the European Commission’s primary data analysis of a benchmarking

January 21, 2006 15:0 WSPC/150-IJIM 00138
28 O. Gassmann & B. Becker
Table 1. Research sample of corporate incubators.
Location Communication Computers Information Others
equipment electronics management
manufacturing
USA AT&T Ventures
Ericsson
Business
Innovation
Nokia Ventures
Organisation
Cisco New
Ventures
IBM Dotcom
Incubator
Intel Capital
Lucent New
Ventures Group
Motorola Ventures
Panasonic Internet
Incubator
Siemens
Technology-to-
Business Center
Xerox Technology
Ventures
Eastman Digital
Company
Reuters Incubator
Shell Internet
Works Incubator
UPS Strategic
Enterprise Fund
Europe BT Brightstar
Siemens Mobile
Acceleration
Business-
Incubator.com
Bertelsmann
Capital
Ventures
Siemens
Technology
Accelerator
Novartis Venture
Fund
Sulzer Innotec
survey of European incubator managers (n=77). The questionnaire encompassed
key success factors in setting up and operating incubators, the support services’
nature and scope, the incubator managers’ key functions, the evaluation of the
incubator services and the impacts from the receiving end.
Resource Flow from and to the Corporate Incubator
Distinguishing between the resource of corporate incubators
The resource flow to and from the corporate incubator was analysed regarding the
kind of resources, as well as the resource sources.
From the wide range of resource classification, the kind of resource can be
described as being either tangible or intangible, reflecting the extent of its flexi-
bility in respect of change (Chatterjee and Wernerfelt, 1991). Tangible resources
include financing, physical space, infrastructure and production facilities, while

January 21, 2006 15:0 WSPC/150-IJIM 00138
Towards a Resource-Based View of Corporate Incubators 29
intangible resources that do not appear on the corporation’s balance sheet and are
harder to measure, include management know-how, organisational skills and cul-
ture, reputation or brand name, and customer networks. Since intangible resources
are harder to detect, change or imitate by competitors, they are harder to measure
and have often been neglected in the past.
We developed a model of resources distinction for corporate incubators (see
Fig. 3). Tangible resources comprise a financial, physical and tangible knowledge
flow, while intangible knowledge is passed on through physical co-location and
branding. Knowledge flow integrates two aspects — a tangible part with physi-
cal elements, such as the use of databases or patents, and intangible knowledge
such as advice and coaching and contacts. The intangible knowledge flow is
particularly comprehensive, since it involves interaction and coordination inside
the corporation as well as with outside networks, but is often hard to detect.
Intangible resources furthermore create an iceberg effect under the surface. They
are not immediately visible, but a project can fail if it is not conscious of the
intangible flow.
There are three sources of resources: The corporate incubator can use its own
resources, enhance its resources by leveraging the parent corporation or tap external
resources outside the corporation. Resources from the parent corporation can come
from central R&D, central support functions such as the HR or legal offices, market
units with specific market knowledge, or key customer contacts.
Intangible
resources
•
Regular vs. adhoc advice
•
Exchange lessons-learned between
technology ventures
•
Contact person at parent
•
Transfer patents from parent
•
Common database
•
Co-location
•
Lease
•
Shared use
•
Volume discount
Tangible
resources
•
Staged installments per milestone
Branding flow
Knowledge flow (intangible)
Knowledge flow (tangible)
Physical flow
•
Perceived perception
Resource flow
Financial flow
Intangible
resources
•
Regular vs. adhoc advice
•
Exchange lessons-learned between
technology ventures
•
Contact person at parent
•
Transfer patents from parent
•
Common database
•
Co-location
•
Lease
•
Shared use
•
Volume discount
Tangible
resources
•
Staged installments per milestone
Branding flow
Knowledge flow (intangible)
Knowledge flow (tangible)
Physical flow
•
Perceived perception
Resource flow
Financial flow
Fig. 3. Resource distinction.

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30 O. Gassmann & B. Becker
In the following sections two sources of resources are described in detail: The
resource flow between the corporate incubator and parent corporation, and the
resource flow between the corporate incubator and the technology venture.
Managing the resource flow between the corporate incubator
and the parent corporation
One of the greatest strengths of the corporate incubator is its close link to the
parent corporation, particularly with corporate specialists such as patent lawyers,
technology experts and corporate customers. Internal resources flow continuously
from the parent to the corporate incubator, defining the organisational boundaries of
the firm internally, excluding alliances, joint ventures or supply partnerships as well
as external resource flow-back to outside investors such as venture capitalists. Three
stages can be distinguished: setting-up the corporate incubator with the transfer
of capital, space and personnel, the incubation operation itself and the closing of
the incubator. Besides the initial resource allocation to the incubator during its
set-up, the incubator’s own resources are enhanced by continuous access to the
parent’s resources during the incubator’s operation. During operation, the corporate
incubator might benefit from other parent core resource units, such as laboratories,
as well as shared service units, like legal, personnel and market research. Through
positive “network externalities” with the parent company, the corporate incubator
can increase its access to the parent’s resources outside the incubator itself, such as
its financial and human resources, reputation and networks with potential.
Understanding of the interaction and resource flow between corporate incuba-
tor and parent corporation is still limited and must be researched further. While the
transfer of tangible resources is easily visible, the exchange of intangible resources is
less defined. It might, however, be even more important, since this is where the incu-
bator acts as a knowledge broker between the parent corporation and the technology
ventures (Fernandez et al., 2000). In a continuing relationship, the corporation sup-
ports the incubator by providing advice, networking and marketing support and by
sharing R&D laboratory facilities and pilot production facilities. Patents are trans-
ferred non-exclusively from the parent through the incubator to their destination,
the technology venture, licensing patents internally to the incubator’s technology
ventures.
Motorola Ventures was set up in 1998 with four core offices (Boston, San
Francisco, Tel Aviv and Latin America) to invest in technologies that would strate-
gically support its existing and emerging platforms and products. In order to fulfil
its strategic mission, it has access to the following corporate resources that it for-
wards to its technology ventures: Any number of relationships at any number of
business units (access to its 35,000 engineers with adequate technical support), joint

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Towards a Resource-Based View of Corporate Incubators 31
development, software competencies, distribution opportunities (e.g., access to car-
riers), volume sales discounts; transfer of non-core patents from the parent, or the
discounted licensing of intellectual properties’ fees, brand name and business rela-
tions. Nevertheless, Motorola Ventures allows new technology ventures to freely
compete with the parent company by not enforcing exclusivity agreements.
The corporate incubator can coordinate its formal interface with the parent cor-
poration through explicitly defined contact persons within the parent organisation.
Mentors can help to access corporate resources more swiftly, increase commitment
and control. These interface agents in corporate services, such as R&D, legal and
finance or market-near business units, are all part of a predefined process of advice
to optimise the incubation process. Moreover, the predetermined structure enhances
corporate incubator’s effectiveness.
For example, BT Brightstar, British Telecom’s incubator for the corporate R&D
unit BT Exact, relies on a mentorship model to find promising technologies and
patents for which to create a business plan. In the end, this plan is financed through
external partnerships with institutional venture capitalists. Endorsement of employ-
ees’ ideas, rather than management encouragement, leads to the creation of business
plans supported and coached by internal mentors. Similarly, Siemens Mobile Accel-
eration has appointed contact persons in the corporate centre and major business
units to standardise the process of support that the technology venture receives from
its parent corporation. A godfather or mentoring programme ensures a close link
and fit with the Siemens Mobile portfolio. If the incubator manager and its staff
need to tap further parent corporation information or networks, the defined com-
munication channels help to reduce search time as well as to ensure commitment
and support from the parent corporation. If a technology venture is spun-off at the
end of its incubation, corporate finance and market business units might help to
establish potential buyers for a trade sale or acquisition.
Resources also flow from the incubator back to its parent, in particular during
the harvesting phase at the end of the incubation process. Harvesting successful new
ventures’ proceeds comprises flows of tangible technological and financial returns
to the parent as well as intangible resources. Intangible benefits can include an
increase in external prestige, relief from organisational pressure through expansion
into new technology and market areas, alternative career paths for innovators and
“intrapreneurs”, opportunity for staff sabbaticals by accepting line management in
the incubator and executive development through venturing activities. Through their
different sizes, the corporate incubator and its technology ventures can also provide
the parent organisation with alternative channels to partner external firms that might
otherwise be competitors.
For example, Panasonic Digital Concepts Center with its Panasonic Internet
Incubator in Cupertino and San Francisco, California, gives this Japanese electronic

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32 O. Gassmann & B. Becker
company visibility and access to technologies and players in Silicon Valley; it
also offers the possibility of partnering other firms in the Silicon Valley venture
community.
By analysing the knowledge flow, lessons learned from technology ventures’
incubation process can be transferred back to the parent, particularly through R&D
or market units. The corporate incubator can act as a knowledge broker to improve
the explicit and tacit knowledge, because individual experts, acting as gatekeepers or
promoters in the incubator, might be aware of who knows what within the organisa-
tion and thus support the knowledge flow with the parent (Allen and Cooney, 1971;
Tushman and Scanlan, 1981; Hauschildt and Chakrabarti, 1988). Furthermore, the
incubator itself, as a semi-autonomous facet of the organisation, can play a for-
mal or informal gatekeeper role. The incubator’s informal organic structure, with
little formalisation and extensive contacts with knowledgeable experts throughout
the corporation, behaves like a “spider’s web”, supporting the transfer of knowl-
edge (Miles and Snow, 1986). The corporate incubator can support knowledge
sharing between the R&D and different business units and can transfer experience
and knowledge on how to support venturing activities and technology between the
research and market units. This decreases venturing costs and realises economies
of scale.
After a successful incubation process, the “graduated” technology ventures can
be incorporated into the parent organisation, or spun-in into existing core businesses,
or into a newly established business unit. An example of the support of knowledge
transfer is provided by Nokia Ventures Organization. It grants managers the mobility
to encourage a steady flow of information within the corporation. Employees from
the business units can move into the incubator for a limited time to support their
idea’s realisation before they return to their respective business units. Nokia focuses
on a close link between the technology venture and its business lines, as is reflected
in the preferred exists of spin-ins to existing business units, or the forming of new
Nokia business units.
Corporate incubation requires long-term corporate commitment by senior man-
agement to ensure the stability of the resource flow, as had already been stressed
in the case of corporate venturing activities. Once a corporation commits resources
through the design and set-up of a corporate incubator, the operation itself requires
a lead-time of ideally 5–7 years to receive tangible and intangible returns. Roberts
already pointed out the long-term perspective, which he called the “long-term
persistence” (Roberts, 1980). However, before the benefits of corporate incuba-
tion can materialise, the programme is often changed or even eliminated. Thus
senior management plays an important role in the authorisation and commitment
to resource transfer to the incubator and continuous mentorship. The corporate

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Towards a Resource-Based View of Corporate Incubators 33
incubator’s existence is not only linked to its own success, but also closely con-
nected to the corporation’s well-being due to its interwoven resources. Any change
within the corporation, such as a new senior management, mergers or finan-
cial drain, can all unfold as either opportunities for or threats to the corporate
incubator.
An example of how the appointed new senior management can change the strate-
gic focus of the corporation and, therefore, end the resource flow to its incubator,
is Bertelsmann Valley. In April 2001, Bertelsmann AG, the media conglomerate
with its headquarters in Guetersloh, Germany, combined all of its venture activities
into one unit called Bertelsmann Capital Ventures (BCV). The wholly owned sub-
sidiary of Bertelsmann AG had the mission to develop external technology-driven
multimedia companies that could expand and complement Bertelsmann’s core busi-
ness. Its incubator had access to the comprehensive resources of a global network
of internal brands and sub-companies as well as Bertelsmann’s customer base.
In January 2002, it merged with Bertelsmann Valley, a division of Bertelsmann
Multimedia GmbH, which incubated external start-ups that had been sourced
through universities and trade fairs. Despite its proven incubation record of pro-
viding market access for Bertelsmann core businesses, Bertelsmann Capital Ven-
tures was terminated after July 2002 with the departure of former CEO Thomas
Middelhoff.
Even financial success is no guarantee of the corporate incubator’s contin-
uation, as was proved in the case of Lucent New Ventures (LNV). Formed in
1997 to spin-out internal non-core technologies developed in its Bell Labs, and,
later, to spin-in technologies complementing its own product line, it achieved
extraordinary financial and strategic success. In 2001, tensions arose between the
successful incubator and the parent’s declining fortunes, because the incubator
managers received a high remuneration due to their 50 percent annualised internal
rate of return through equity gains, particularly from three re-acquisitions, while
company bonuses were frozen. Lucent’s financial woes coincided with organisa-
tional restructuring, and the sale of their incubator’s 80 percent majority share
to Coller Capital, a London-based equity management company, to preserve cash
reserves.
Corporate incubators with early high-return successes increase their chances of
having sufficient political capital to survive an internal corporate shake-up. Building
a positive internal reputation can enhance internal support for a continuous and
stable resource flow from the parent to the corporate incubator. While the transfer
of tangible resources has been recognised as important, intangible skills passed on
through physical co-location has only recently received greater appreciation and
management awareness.

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34 O. Gassmann & B. Becker
Managing the resource flow between the corporate incubator
and technology venture
Once the corporate incubator is established and equipped with resources from the
parent, tangible and intangible resources are transferred to various technology ven-
tures. The resource type and the scope thereof determine the incubator’s “prod-
uct”, and the provision of management assistance to accelerate the development of
technology ventures. The four-stage process of incubation (selection, structuring,
involvement and exit) helps to describe the resource flow as derived from the ven-
ture capital literature (Gompers and Lerner, 2001a, b). Based on the corporation’s
strategic and financial goals, corporate incubators decide what kind of technology
ventures they want to attract and select in the selection phase. Once the technology
venture has been selected, the structuring stage involves deciding how the tech-
nology venture will pay for the resources and services it receives, which is usually
through equity stakes or service charges. The longest incubation process phase is the
involvement stage when technology ventures receive most of their resources from
the corporate incubator. During the final incubation stage, exit from the technol-
ogy venture, corporate incubators follow developed exit criteria, such as milestones
reached or closing due to unachieved objectives.
In the subsequent paragraphs we describe the (a) provision of tangible and intan-
gible resources from the parent to technology ventures during the involvement phase,
(b) their secondary effects on the technology venture itself as well as (c) the resource
flow from technology ventures back to the incubator.
The best known example of the transfer of tangible and intangible resources
from the corporate incubator to the technology venture can be found at Cisco New
Ventures that defined similar resource flows to their technology ventures. In one
of their start-ups, Ardent Communication Ventures, the business idea for a traffic
aggregation device for data and voice originally came from a Cisco employee who
had already made plans to leave the corporation to start his own venture. Cisco
first supported the start-up through investment and other resource flows before its
later spin-in. In June 1996, Cisco’s initial investment comprised an equity stake
of 32 percent with a put/call option requiring Cisco to purchase the start-up if the
team was successful within 15 months. Further support of the start-up included the
licensing of its software and gratis access to Cisco’s testing and certification facil-
ity. Intangible resources included the provision of engineering consulting services
for a standard fee, which temporarily assigned Cisco’s engineers to the start-up to
accommodate their needs and speed up business growth. A positive impact of the
close connection with the parent was that Ardent Communication Ventures could
define product specifications in line with Cisco’s requirements. This enhanced the
internal use of the device as well as leveraging Cisco’s customers. In June 1997,

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Towards a Resource-Based View of Corporate Incubators 35
Cisco spun-in the start-up for $232.5 million — 3 months before the put/call option
expired. The mutually defined technology standard accelerated the new technol-
ogy venture’s technological integration into the parent. Furthermore, Cisco’s coor-
dination of Ardent’s marketing programme avoided the need to re-educate their
customers after the spin-in.
Our analysis of the EU survey data points to the importance of resources for both
for-profit incubators, which include corporate incubators, as well as non-profit incu-
bators. Important tangible resources entail the provision of financials such as fund-
ing and tangible knowledge, including accounting, legal and marketing research,
and human resource advice such as transfer of an incubator’s personnel (Fig. 4).
Intangible knowledge entails support in writing business plans for start-ups’ for-
mation, networking opportunities and contacts to various of the parent’s business
units, customers and service providers, and support to appoint the technology ven-
ture’s board and establish business partners for common development and service.
The credibility that technology ventures derive from affiliation with an incubator is
important in terms of creating contacts with potential industry experts, customers
and suppliers, who provide feedback regarding market needs.
In the study, 76.6 percent of for-profit incubator managers reported that raising
financing from banks, venture capital corporations or grants is the most important
in-house service in respect of tangible resources. Interestingly, the incubator’s pro-
vision of seed funding is mentioned by only 23.5 percent of for-profit incubators,
For-profit incubators
Non-profit incubators
76.5
41.2
23.5
17.6
17.6
90.0
41.7
43.3
46.7
21.7
Tangible resou rces
Raise financing
Human resource
advice
Incubator
seed/VC fund
Accounting/legal
Market
research/sales
Intangible resources
Forming a
company
Pre-incubation
Networking
Develop new
products
Develop business
skills
Board members,
advisers
Partner search
abroad
E-business
* Multiple answers possible
88.2
82.4
64.7
52.9
41.2
41.2
35.3
29.4
76.7
85.0
86.7
55
53.3
48.3
53.3
36.7
For-profit incubators
Non-profit incubators
For-profit incubators
Non-profit incubators
76.5
41.2
23.5
17.6
17.6
90.0
41.7
43.3
46.7
21.7
Percent of very important*
Tangible resou rces
Raise financing
Human resource
advice
Incubator
seed/VC fund
Accounting/legal
Market
research/sales
Percent of very important*
Intangible resources
Forming a
company
Pre-incubation
Networking
Develop new
products
Develop business
skills
Board members,
advisers
Partner search
abroad
E-business
* Multiple answers possible
N=77
88.2
82.4
64.7
52.9
41.2
41.2
35.3
29.4
76.7
85.0
86.7
55
53.3
48.3
53.3
36.7
88.2
82.4
64.7
52.9
41.2
41.2
35.3
29.4
76.7
85.0
86.7
55
53.3
48.3
53.3
36.7
Fig. 4. Tangible and intangible resource flow from incubator to technology venture (Source: Own
analysis of EU survey on incubators in 2001).

January 21, 2006 15:0 WSPC/150-IJIM 00138
36 O. Gassmann & B. Becker
with this having a higher priority for non-profit incubators. In respect of human
resource advice there is no significant difference between for-profit and non-profit
incubators.
Incubator managers find the incubator’s provision of intangible resources to the
technology venture very important. For example, 88.2 percent of for-profit incubator
managers ranked forming a company as the most important service provided to their
technology ventures, 82.4 percent cited pre-incubation and 64.7 percent mentioned
networking with entrepreneurs and potential customers. The latter is surprisingly
smaller than for non-profit incubators, 86.7 percent of which mentioned networking
services. The second most important service provided is the development of new
products (52.9 percent).
Overall, corporate incubators as well as non-profit incubators offer only routine
support services such as minimal accounting, bookkeeping, tax work and filling
out routine legal forms, but refer technology ventures to outside expertise when
this is deemed necessary. For these more comprehensive requirements they rely
on external affiliated firms such as accounting offices and local legal firms. Since
corporate incubators’ new ventures are new business for the corporation, they tend
to be more complicated and are consequently more likely to need outside expertise
than non-profit incubators do. Corporate incubators’ staff is therefore more likely
to make regular use of external intangible resources.
The incubator management team, comprising the incubator manager and his
staff, largely determine the quality of the intangible resources provided to the tech-
nology venture. In his seminal paper, Von Hippel (1977) had already found access
to incubator personnel an important determinant of a venture’s relative success. He
ascertained that both the technology venture team’s educational background and
the venture manager’s previous organisational experience are key success factors
for technology ventures.
Interestingly, the background of for-profit and non-profit incubator managers
does not differ substantially. There are two exceptions: more for-profit incubator
managers have a real estate or property management background (29.4 percent for
for-profit contrasting with 11.7 percent for non-profit incubators), while twice as
many of non-profit incubators’ staff come from a personnel management or an
education background (45 percent).
The incubator manager and incubator staff’s qualifications are determined by
their industry background, as already described, as well as by their educational
background and experience. Staff of for-profit incubators have more background
in training relevant to business incubation (45.5 percent with more than 4 years’
experience), advising start-ups or small companies (25 percent) and managing their
own companies (23.1 percent). An incubator manager’s number of qualifications

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Towards a Resource-Based View of Corporate Incubators 37
correlates with the number of staff who participated in training to enhance incuba-
tion know-how during the previous 12 months (0.254 with P<0.05). A qualified
incubator manager looks after his staff and provides them with relevant training,
although incubator managers’ qualification correlates with the number of staff who
has managed their own companies or worked in business (0.266 with P<0.05).
A qualified incubator manager can therefore attract more qualified staff with busi-
ness backgrounds. Along these lines, the number of staff who managed their own
companies or worked in business is negatively correlated to the number of external
services (−0.214 with P<0.001). An incubator with more qualified staff thus
requires a smaller number of external services, since the incubator can offer them
internally.
While the above discussion has described the main resource flow from the incu-
bator to the technology venture, on a limited scale, resources also flow back to the
incubator from its portfolio companies. Through cooperation with innovative tech-
nology ventures, outstanding employees can be selected and transferred from the
technology venture to the parent organisation for special tasks. To a lesser extent,
technology ventures’ founders and key employees can be recognised and retained
through new ventures being spun-in, as happens at Cisco New Ventures. Rather than
simply evaluating its current physical assets, Cisco evaluates the technology ven-
ture’s intellectual assets, since they represent the management team and engineers
who will determine the next generation of products. To avoid the danger of key
researchers’ transfer to other corporations during or after the spin-in, Cisco New
Ventures manages human resource services actively through stock participation,
bonus packages and the definition of new responsibilities and career paths.
Discussion
There is no single definition of corporate incubators as alternative for-profit sources
of technology advancement for corporations in the incubator world. An incubator
could be formed as a joint venture, or an industry-wide venture, with more than one
corporate parent. Furthermore, the model presented here with its three actors — the
parent organisation, corporate incubator and the technology venture — and its two-
stage process of early set-up and harvest phase during the incubator’s involvement,
is still far from an accurate reflection of reality. A description of resource flows can
be further enhanced by including all potential exchanges between the three players
as well as their networks, i.e. the resource flow from
– the parent company to the corporate incubator, to the technology ventures;
– the parent company’s network to the corporate incubator, to the technology
ventures;

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38 O. Gassmann & B. Becker
– the corporate incubator to the technology ventures;
– the corporate incubator’s network to the technology ventures;
– the technology ventures to the corporate incubator, to the incubator’s network
affiliates, to the parent company, to the parent company’s affiliates; as well as
from
– the technology venture’s network to the corporate incubator, to the parent com-
pany, to the technology ventures.
There are also additional, many-to-many linkages between each principal party’s
affiliates, but those are indirect effects as far as this set of relationships is concerned.
Based on interviews in the case studies, we hypothesise in respect of the scope
and importance of the resource flow to technology ventures that the (Table 2):
– financial flow from the parent corporation is particularly strong.
– physical flow from the corporate incubator is strong.
– tangible knowledge flow from both the incubator as well as the parent is strong.
– intangible knowledge flow from the incubator is strong.
– branding from the parent is strong.
The corporate incubator is mainly associated with a physical resource flow. How-
ever, tangible and intangible knowledge flows play an important role in accelerating
technology development. Furthermore, the neglected external flowof resources pro-
vides an explanation for the exogenous residual variances unexplained in the model.
As far as the management of the resource flow between the corporate incubator
and parent corporation is concerned, issues regarding the scope of the autonomy
and organisational design arise. The corporate incubator depends on a continuous
resource flow from the parent, competing with other business groups and subunits
for limited resources such as personnel, capital and time. Middle managers who
allocate resources to the incubator often choose projects with the highest likelihood
of success and low risk. On the other hand, a corporate incubator is often set up
to develop something new in respect of technology and markets that the parent
Table 2. Hypothesis regarding scope of resources flow to technology venture.
Kind of resource flow Corporate incubator Corporate parent External
Tangible Resources Finanical flow ++++
Physical flow ++ + −
Knowledge flow (tangible) ++ ++ −
Intangible Resources Knowledge flow (intangible) ++ + +
Branding flow −++−

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Towards a Resource-Based View of Corporate Incubators 39
corporation cannot do. This requires moving away from the corporation’s rules and
location as well as from the “emotional equity of the past” (Hamel, 1999).
Thus, the scope of the corporate incubator’s autonomy needs to be determined
to ensure a continuous resource flow. Aligning the incubator’s goals with those
of the parent corporation as well as strong networking support projects of strategic
importance to the corporation could ensure its long-term existence. If the separation
is too great, problems of exchange and communication might occur as was witnessed
when Xerox failed to maintain contact with its incubator PARC.
Strategic importance and operational relatedness determine the corporate incu-
bator’s organisational design. If the corporate incubator is positioned near the cor-
porate centre, its direct integration reflects its high strategic importance. Being less
crucial for the corporation, it can be organised as a semi-autonomous unit with the
potential to be spun-out. In this case, more resources might initially flow to the
incubator to increase the level of independence needed to operate as a profit centre.
Where the corporate incubator is part of a central or business unit R&D, it might
have less of its own resources but a stronger network to resources from the central
R&D and other support units.
The quality of the exchange between the corporate incubator and technology
venture depends on the scope and quality of resources, the resource allocation
process, their physical proximity and resource absorption.
The traditional resource allocation process could be augmented with resource
attraction, or a bottom-up approach, especially in the early venturing phase. Projects
should receive funding through an internal competition of ideas based on merit, and
not on past history or relationships. This self-selecting process creates dynamic
internal markets for ideas, capital and talent. Some degree of resource distribution
from the bottom-up allows a flexible distribution of resources on a need basis,
including changes to other projects or units, exit from a technology venture, or
project extension after the project assessment. In this case, communicating through
stories and obtaining additional bottom-up information enable market signals and
extend traditional financial performance measures, such as net present value and
discounted cash flow.
It is unclear whether the incubator’s physical proximity to its technology ven-
tures supports the resource flow and thus their performance. Venture capitalists and
angel investors stress the old concept of physical proximity as a success factor, com-
menting, “If we can’t drive to it, we don’t lend to it”. Allen (1970) found physical
proximity to determine the scope of potential interaction describing the corporation
and communication in R&D units. Nearby units, however, increase accessibility
to key people, i.e. how easily they can be approached for advice. The physical
proximity to different business units helps the new technology venture to receive
casual support “from someone near the water cooler”. Some incubators, such as

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40 O. Gassmann & B. Becker
Siemens Technology Accelerator, do not relocate entrepreneurs to the incubator;
they rather leave them in their original business units. Others, such as Bell Labs’
discovery team, Lucent New Ventures Group, demand relocation in order to have
more interaction with the centrally located technology venture. Lucent’s scientists
are additionally motivated by an incentive system through which they receive phan-
tom stock options for the technology venture’s potential gains on top of their normal
compensation package.
On the other hand, while globalisation increases the geographically dispersion
of corporations, they are supported by cheap technical advancements such as web-
based communication, e-mail and videoconferencing tools. Virtual incubators, in
other words, incubators “without walls”, have developed, tending to defy the impor-
tance of physical proximity that was so effective in the 1970s. Reliability and the
quality of information are other key factors that can be enhanced by the appropriate
incentive system.
Once resources are placed at technology ventures’ disposal, questions regarding
the resource absorption arise. Due to its resource constraints, the technology ven-
ture often welcomes physical resources such as money and infrastructure. Intangible
resources such as contact leads, consulting, coaching, or even advice, though highly
desirable, can be harder to absorb. Absorption might also be limited due to cultural
incompatibility if the technology ventures are not aligned with the corporate incu-
bator and the parent corporation’s values. Trust and commitment are other factors
influencing the degree of readiness to receive the provided resources. The corporate
incubator’s long-standing existence supports the establishment of deep-seated trust
rather than a mere focus on short-term incubation performance.
Conclusion and Further Research
The main objective of this paper was to contribute to the understanding of the
resource flow from and to the corporate incubator. Research needs to distinguish
between the two fundamental business models of non-profit and for-profit incu-
bators that support the development of new ventures. By distinguishing corporate
incubators from independent for-profit incubators, the resource-based view offers
a valuable framework for an analysis. It can determine what types of resources
are transferred to technology ventures and how the incubator manager can mea-
sure and control the resource flow. To analyse the resource flow between the three
players during incubation — parent organisation, corporate incubator and technol-
ogy venture — a distinction between tangible and intangible resources is helpful,
despite or even due to the various definitions of resources. While the focus was on
the transfer of tangible resources in the past, intangible resources can often have a
higher impact, despite being difficult to measure. The resource flow is a two-fold
process of early set-up and the harvest phase. Furthermore, to understand the kind

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Towards a Resource-Based View of Corporate Incubators 41
of resources provided, one should examine the resource flow between the corporate
incubator and the parent corporation as well as between the corporate incubator
and its technology ventures. Initially, the corporate incubator and the technology
venture receive resources that they return in the form of financial profits but, even
more importantly, which they return to the corporation through explicit and tacit
knowledge.
Our exploratory study provides a first insight into a resource-based view of cor-
porate incubators and invites further development and applications. Further research
is needed in several areas.
An in-depth quantitative longitudinal study on the development of corporate
incubators should be carried out measuring the performance outcomes of incubation
by means of, for example, the number of successful new ventures or revenues
generated. This should include a survey of technology ventures’ success factors
in respect of the type of resource flow, the sophistication of management know-
how, the extent of the networking quality and the effect of corporate branding on
the growth of technology ventures. This can link the corporate incubator’s mission
with the type of incubator, owner (i.e. provider of capital for the incubator) and the
incubator manager’s characteristics.
The question of whether physical proximity might improve performance, needs
to be examined further. This would concern the incubator’s location in relation to
the corporate parent as well as the distance between the incubator and its technology
ventures and its scope of access.
Further research needs to analyse resource absorption. The question here is how
the relationship between incubator manager and the technology venture affects the
resource flow’s scope and quality. A high degree of interaction and a long-term
perspective, based on mutual trust and commitment, might specifically support the
intangible resource flow and the reliability of the exchange.
The three-player model needs to be enhanced with internal as well as external
partners and thus the role of networks regarding direct and indirect contributors to
venture outcomes. Further networks included the ones from the parent company,
the corporate incubator as well as the technology ventures.
Finally, it would be interesting to enhance the concept of gatekeepers in respect of
whether it can be applied to hybrid organisations an d not only individuals. Incubators
could assume a formal or informal gatekeeper role to drive information flow and,
thus, innovation.
Acknowledgements
The authors would like to thank the managers in the case-study companies for setting
aside time for interviews as well as providing additional background information
on their incubators’ resource flow.

January 21, 2006 15:0 WSPC/150-IJIM 00138
42 O. Gassmann & B. Becker
The authors also want to thank the two anonymous reviewers for their thought-
ful comments. One of them in particular provided comprehensive and thought-
provoking suggestions that have been pivotal in the overall improvement of this
paper, particularly its Discussion section.
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