The effectiveness of incubation programs in startup development

In spite of the increasing diffusion of startups and incubators in Italy, whether the incubation programs have been successful in fostering the establishment and growth of startups and in preventing their failure remains an open question. This paper aims to answer such question by considering a sample of digital startups located in the Regions of Veneto and Emilia Romagna. Some of these businesses took part in incubation programs, while others did not. The study focuses on the main features of digital startups (motivation underlying company creation; birth of the business idea; physical, human and financial resources available), the importance of an incubation program to the new business and the reasons behind the failure of those which faced closure. After an overview of the literature on the definition of success, failure and efficiency of an incubation program, we test how the latter contributes to firm growth by analyzing multiple case studies through structured interviews. First, we investigated the support provided to a startup by an incubation program. In order to verify the effectiveness of an incubation program we have identified the key aspects which fuel the support provided by incubators: motivation behind the access to the incubation program, resources (human, physical and financial) and skills supplied to the new business and level of support provided at the different stages of the business development. We then studied the reasons for failure of businesses which faced closure by offering the surveyed companies a list of possible motivations, also leaving the possibility to integrate such list. Empirical evidence confirms the effectiveness incubation programs in business growth. Our findings suggest that there is a link between the access to an incubation program and the probability of business avoiding failure. The match between the aspects that underlie the choice of accessing an incubation program and the factors that have caused the failure of the unsuccessful startups is also highlighted as the latters did not take part in any programs or were not able to take full advantage of support offered.