Technovation 32 (2012) 656–670

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Technovation

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Service-based differentiation strategies for business incubators: Exploringexternal and internal alignment

Johanna Vanderstraeten a,n, Paul Matthyssens a,b

a University of Antwerp, Prinsstraat 13, Z-403,, 2000 Antwerp, Belgiumb Antwerp Management School, Antwerp, Belgium

a r t i c l e i n f o

Available online 13 October 2012

Keywords:

Business incubator

Strategic positioning

Incubator strategy

Strategic fit

Internal alignment

External alignment

72/$ - see front matter & 2012 Elsevier Ltd. A

x.doi.org/10.1016/j.technovation.2012.09.002

esponding author. Tel.: þ32 (0)3 265 50 80;

ail addresses: johanna.vanderstraeten@ua.ac.b

tthyssens@ua.ac.be (P. Matthyssens).

a b s t r a c t

Strategic positioning and fit theories may inform the service-based differentiation strategies that

incubators use to secure external and internal alignment. External alignment relates to tenant service

expectations and perceptions; internal alignment involves a competence configuration for each

strategy alternative. By implementing the proposed framework, an incubator can achieve service

differentiation and ultimately enhanced customer (tenant) value. Qualitative research among nonprofit

economic development incubators reveals two service-based differentiation positions: specialists and

generalists. Whereas extant research advocates only a specialist stance, the present analysis confirms

that service-based differentiation can result from a generalist stance. This study offers the first typology

of service-based differentiation strategies for incubators that aligns strategy with external and internal

variables.

& 2012 Elsevier Ltd. All rights reserved.

1. Introduction

In the business incubation industry, various challenges constantlyforce incubators to adopt unique differentiation tactics. First, incuba-tors offer office space, a pool of shared support services, professionalbusiness support or advice, and internal/external network provisionto start-up firms (Bergek and Norrman, 2008; Hackett and Dilts,2004). However, they are not the only organizations active in theincubation industry, and many players offer overlapping services(Becker and Gassmann, 2006; Von Zedtwitz 2003). In general, fivemain actors participate in the incubation market: business incuba-tors, logistic infrastructure providers, nonprofit advice organizations,for-profit advice organizations, and finance providers (Becker andGassmann, 2006; Von Zedtwitz, 2003). Logistic infrastructure provi-ders also have working spaces, event spaces, workshop rooms, orcreativity rooms (e.g., The Hub, 2011) and advice organizations suchas chambers of commerce organize seminars, information sessions,and financing programs for start-up firms. Thus, ‘‘business incubator’’has become an umbrella term that refers to various initiativesdesigned to support start-ups (Aernoudt, 2004).

Second, the number of incubators also has grown (Bruneelet al., 2012). The National Business Incubation Association esti-mates that between 1998 and 2006, the number of NorthAmerican incubators almost doubled to approximately 1400

ll rights reserved.

fax: þ32 (0)3 265 50 79.

e (J. Vanderstraeten),

(Knopp, 2007), and developing and emerging countries showedsimilar growth. For example, Anprotec (2006) estimates that in2006, Brazil featured 377 incubators, compared to two in 1988.The United Kingdom Business Incubation organization (UKBI,2011) also reports about 300 incubators there, compared with10 years ago, when there were only 144 (European Commission,2002).

These changes in the incubation market have prompted scholarsto devote more attention to how incubators can strategicallyposition themselves (e.g., Chan and Lau, 2005; Grimaldi andGrandi, 2005; Schwartz and Hornych, 2008), especially as start-upentrepreneurs seek complementary assets (Wright et al., 2008) andtechnological, cognitive, or vision proximity (Cant �u, 2010) within ageographical region (Pe’er et al., 2008), which likely hosts severalincubators. Butz and Goodstein (1996) argue that organizations canattain differentiation and a competitive advantage by creatingcustomer value, which demands in-depth knowledge about custo-mer expectations. This approach reflects (Priem’s, 2007, p. 220)encouragement to ‘‘learn much about successful strategy through along-ignored consumer lens on value creation.’’ In the incubatorcontext, Bruneel et al. (2012) confirm that incubator value proposi-tions must reflect an in-depth understanding of tenant viewpoints.Therefore, we aim to investigate incubator differentiation possibi-lities, through the function of customer value creation, by answer-ing: how can business incubators, located in the same region,differentiate themselves in the incubation market through custo-mer value creation?

Beyond the general need for differentiation, strategic fitscholars stress the importance of external and internal alignment

J. Vanderstraeten, P. Matthyssens / Technovation 32 (2012) 656–670 657

(Venkatraman, 1989; Venkatraman and Prescott, 1990) as ameans to attain performance benefits (Naman and Slevin, 1993;Yamakawa et al., 2011). Organizations that undertake a strategicchange or repositioning need profound knowledge of both externalmarket and internal organizational factors to ensure strategic fit.Insights into customer needs, organizational capabilities (Brax andJonsson, 2009), value chain/network partners (Cova and Salle,2008), and the link between organizational strategy and resources(Newbert et al., 2007) are all critical, which leads us to investigateas well: how can incubators ensure external and internal alignmentfor any differentiation alternative?

These research questions are rooted in strategy literature,where strategy scholars advocate the importance of competitivepositions (e.g., Gavetti and Rivkin, 2007; Porter, 1980, 1996, 1998;Wen and Chen, 2011). In particular, academics in the positioningschool (e.g., Alipour et al., 2010; Ng et al., 2005; Yamin et al.,1999) assert that strategy formulation requires examining theorganization’s competitive scope and advantage (Mintzberg,1988) to determine where (competitive scope) and how (compe-titive advantage) the organization can compete (Juga et al., 2008).Li and Tsai (2009) explain that research on sustained competitiveadvantages mainly draws on two theories. Industrial organizationtheory focuses on strategic market positions and has an externalviewpoint, whereas the resource-based view (RBV) starts withan organization’s internal resources and capabilities and arguesthat access to valuable, rare, inimitable, and non-substitutableresources leads to a competitive advantage (Barney, 1991;Chiu et al., 2008; Newbert, 2008). Newbert et al. (2008) also linkthe RBV to a dynamic capabilities approach and show that boththe possession and exploitation of resources through an optimaluse of capabilities are necessary to attain competitive advantages.Although strategy scholars thus argue that an organization shouldtry to find a position that gives it a unique competitive advantage(Kalafatis et al., 2000), increased competition and imitation bycompetitors almost invariably erode differentiation bases andhamper organizational success (Hitt et al., 2007). Organizationsmust continually find new ways to differentiate themselves (e.g.,Cho et al., 1996; Smith and Sharif, 2007).

To address the research questions, we conducted an in-depthqualitative study with an embedded research design (Yin, 1990), inwhich we account for tenant viewpoints, expert and incubatormanager opinions on tenant value creation options (Bruneel et al.,2012; Butz and Goodstein, 1996; Huber et al., 2001), and imple-mentation issues, such as the necessary skills, resources, processes,and systems (Bharadwaj et al., 1993; Matthyssens et al., 2009).

Accordingly, in the next section, we examine strategic posi-tioning and fit theories to establish our theoretical background.We then explain the methodology for our empirical researchbefore we present and explain our results, particularly in relationto extant literature. Finally, we discuss our main contributionsand results, research limitations, and some possible avenues forfurther research.

2. Theoretical background

2.1. Strategic positioning theory

According to positioning scholars (e.g., Ibrahim and Gill, 2005;Lawton, 1999; Wen and Chen, 2011), an organization’s competi-tive scope and competitive advantage determine its competitiveposition. To recognize competitive advantage possibilities in aspecific industry, the firm must have insights into the criticalsuccess factors that prevail in that industry (e.g., Barbiroli andFocacci, 2003; Sharma, 2003), an analysis that must refer tothe strategic group level (Aaker, 2008). Because strategic groups

arise from the same generic strategy (Johnson et al., 2011), thecompetitive scope dimension then provides the basis for such ananalysis. Varadarajan (1985) suggests subdividing critical successfactors into ‘‘failure preventers’’ and ‘‘success producers’’: Theorganization must attain some threshold level of failure preven-ters, but substantial resources devoted to this area cannot lead toabove-average performance. Instead, greater effort, comparedwith competitors, devoted to success producers might enablethe firm to outperform its rivals and thus attain a competitiveadvantage.

Furthermore, a competitive advantage might accrue throughcustomer value creation (Cooper, 2001; Woodruff, 1997). How-ever, the customer value construct is very complex (Jaworskiand Kohli, 1993; Khalifa, 2004; Naumann, 1995), which makes itdifficult to measure accurately how customers determine thevalue of a particular product or service (Smith and Colgate, 2007).In this sense, it is pivotal for an organization to develop a deepunderstanding of what customers seek (O’Cass and Ngo, 2011)and thus the resources it needs to address customer expectations(Srivastava et al., 2001). Prior research has integrated the intuitiveviewpoints (Bowman and Ambrosini, 2007) of various industryplayers, including executives, external experts, and customers, todetermine customer value creation possibilities and the potentialsuccess that can be attained through such options (e.g., Ibrahimand Gill, 2005; Lawton, 1999; Matthyssens et al., 2009).

Research into incubators suggests that sector choices andfields of related technologies define an incubator’s competitivescope (Aernoudt, 2004; Grimaldi and Grandi, 2005; Haapasaloand Ekholm, 2004; Plosila and Allen, 1985; Sherman, 1999; VonZedtwitz, 2003; Von Zedtwitz and Grimaldi, 2006). The consensusseems to indicate that incubators opt for either a focused or adiversified scope (Plosila and Allen, 1985; Sherman and Chappell,1998). Focused incubators only allow entry to companies active ina specific sector or technology field; diversified incubatorsinclude tenants from a wide variety of areas. Yet other literatureshows that incubators can differentiate themselves and attaincompetitive advantages in various ways, such as from theirunique location (Hu et al., 2005) or their provision of a managerwho devotes extensive time to tenants (Rice, 2002). Thesecustomer value creation and incubator differentiation possibi-lities reflect the added value of the incubator’s service offering,‘‘such as shared rental space, shared office services, businessassistance [and] inside and outside networking,’’ (Mian, 1994,p. 523).

Despite some agreement that a service offering creates customervalue, the perspectives on which types of services do so remainsomewhat one-sided: incubators create value by offering industry-or technology-specific services (e.g., Bruneel et al., 2012; Schwartzand Hornych, 2008), including not just sector or technology knowl-edge but also infrastructure and network connections. Schwartz andHornych (2008) note that the Mitteldeutsches Multimediazentrum

Halle in Germany provides a wide variety of media-related services,featuring specialized infrastructure services, such as television, film,and audio studios with state-of-the-art equipment, as well as sector-specific business knowledge. Thus the services, applicable only tocompanies in one sector or technology field, create customer valuethat cannot be easily replicated by other players.

In contrast, real-world examples show that many incubatorsdo not choose sector- or technology-specific services. The UKRotherham Investment and Development Office (RiDO) businesscenters focus their competitive advantage and customer valuecreation efforts on the delivery of operational support services toUS-based companies willing to invest in the United Kingdom(RiDO, 2011) and the Antwerp Business Center (2011) in Belgiumdifferentiates itself by providing in-depth marketing research forcompanies active in a wide variety of sectors. That is, though the

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availability of sector- or technology-related services adds valuefor tenants, they are not the only route to customer value.

2.2. Strategic fit: internal and external alignment

Generic strategies often work to link internal and/or externalorganizational variables to ‘‘ideal’’ strategies. This effort implies theassumption that fit among external, internal, and strategic variablesleads to better performance (Naman and Slevin, 1993; Yamakawaet al., 2011). Heijltjes and van Witteloostuijn (2003) distinguish threefit perspectives: formulation, implementation, and integration. Aformulation perspective refers to the organization’s industry struc-ture, such that strategy efficacy depends on the match between theorganization’s strategy and its industry structure (e.g., Ceci andMasini, 2011). This viewpoint relates closely to the industrialorganization view, which connects external factors to an organiza-tion’s strategy (Li and Tsai, 2009). The implementation perspectiveinstead centers on the relationship between an organization’s inter-nal aspects and its strategy (e.g., Newbert et al., 2007; Xu et al.,2006), which reflects the RBV and the strategic importance ofinternal resources, capabilities, and competences (Barney, 1991; Liand Tsai, 2009; Newbert, 2008) as the roots of systematic competi-tive advantages (Banerjee, 2003; Prahalad and Hamel, 1990). Finally,the integration perspective combines the former two approaches tofocus on the relationship among an organization’s strategy, structure,and environment (e.g., Beer et al., 2005). This latter perspectivehas not, to the best of our knowledge, been applied previously inincubator literature.

In contrast, the formulation perspective considers the relation-ship between an incubator’s stakeholders and its strategy. Forexample, Sofouli and Vonortas (2007) relate Greece’s externalpolicy context to the (strategic) objectives of its science parks andincubators. Although incubators have a wide variety of stake-holders (McAdam and Keogh, 2006; Mian, 1997), the viewpoint oftheir tenants tends to be prioritized (Jungman et al., 2004), suchas when Abduh et al. (2007) examine tenant service satisfactionand McAdam and Marlow (2007) consider the (dis)advantages ofservices offered to tenants. Bruneel et al. (2012) also propose thatan incubator’s value proposition (and strategy) should be eval-uated by its tenants. We accordingly consider tenant serviceexpectations as a measure of external fit.

With regard to internal fit from the implementation perspective,Von Zedtwitz (2003) lists good incubator management practices andlinks each of them to an incubator strategy; Allen and McCluskey(1990) argue that the incubator’s value position determines itsresource offering. Clarysse et al. (2005) adopt the RBV and linkresearch institution incubation strategies to resource implications,whereas Von Zedtwitz and Grimaldi (2006) use it to investigate therelationship between incubator strategies and service characteristics.Yet despite these efforts to link strategy to internal aspects, Hackettand Dilts (2008) conclude that an incubator’s internal functioningremains a black box, without any comprehensive, systematic con-nection between internal aspects and strategy. Their extensiveliterature review allows them to propose three dimensions of anincubator’s internal functions: selection, resource munificence, andmonitoring and business assistance. During the selection process, thebusiness incubator accounts for the start-up’s market, financial, andteam characteristics (Aerts et al., 2007). Resource munificence refersto internal networking and incubator resource utilization, includingwhether tenants use the services provided. Finally, monitoring andbusiness assistance involves strategic management and the incuba-tor’s monitoring comprehensiveness and quality. We use all threedimensions to examine an incubator’s internal functioning in relationto its strategy, including all relevant processes, systems, assets,knowledge, capabilities, and cultures (Matthyssens et al., 2009).Miles and Snow (2003) and Kaplan and Norton (2008) have

established the importance of adequate processes, systems, andorganizational factors; Barney and Clark (2007) do the same forassets, knowledge, and capabilities.

3. Methodology

Our empirical study draws on extensive qualitative research,which is often required when the research domain is broad andcomplex and the context is important (Dul and Hak, 2008; Yin,1990). Eisenhardt and Graebner (2007) also find it particularlyuseful in new research areas or situations in which researchersknow little about the phenomenon. Thus, it is typically used toaddress ‘‘how’’ and ‘‘why’’ questions (Eisenhardt and Graebner,2007; Yin, 1990); both our research questions (see the Introduc-tion section) represent ‘‘how’’ questions—that is, how incubatorsdifferentiate themselves while also ensuring internal and externalalignment with their differentiation strategy. Thus, qualitativeresearch is highly appropriate for addressing the complextopics we consider (Bryman and Bell, 2007; Eisenhardt, 1989;Yin, 1990).

Between June 2009 and February 2010, we conducted 9 in-depth interviews with incubator managers, 30 in-depth inter-views with tenants, 3 focus groups with incubator managers andexperts, and then a final presentation and discussion meetingwith incubator managers and experts. We briefly discuss thispopulation, before we explain our research design and datacollection process.

3.1. Population

Specifying the population under investigation ‘‘is crucial,because the population defines the set of entities from whichthe research sample is to be drawn’’ (Eisenhardt, 1989, p. 537).This helps to lower extraneous variation and increase externalvalidity. For this study, we assert that customer value creationdemands a good understanding of the needs and expectations ofcustomers (O’Cass and Ngo, 2011), namely, of the tenants whoconsider incubator value propositions (Bruneel et al., 2012).Therefore, we must investigate incubator tenant service expecta-tions. In turn, we compare these customer viewpoints withmanager and expert experiences, to gain insights into differentia-tion possibilities (see also Ibrahim and Gill, 2005; Lawton, 1999).Moreover, the incubator managers and experts offer informationabout the internal functioning of an incubator, such as its processes,systems, resources, and capabilities, in reference to tenant expecta-tions on implementation issues (e.g., Mian, 1996; Rice, 2002).

Across the varied objectives for incubators (e.g., economic devel-opment, research commercialization, integration of social classes;Aernoudt, 2004; Von Zedtwitz, 2003), we chose to focus on nonprofiteconomic development incubators, because worldwide, most incu-bators match this profile (Bruneel et al., 2012; Knopp, 2007). Thisfocus also aligns our study with previous research (e.g., Grimaldi andGrandi, 2005; Von Zedtwitz, 2003) and acknowledges that the profitdecision is one of the most important strategic choices an incubatormakes, so combining insights from both for-profit and nonprofitincubators might bias the data. We choose economic developmentincubators specifically, in line with Ratinho and Henriques’s (2010)assertion that business incubators are mostly linked to economicdevelopment.

Most economic development incubators also focus on localdevelopment, which represents our second selection criterion. Wesought areas with a relatively large number of incubators in arelatively small space; ultimately, we targeted Belgium, a smallcountry (30.530 km2) located in the economic and political centerof Europe. Across its three economically and culturally distinct

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regions—Flanders, Wallonia, and Brussels—Belgium hosted 68incubators at the time of our study: 9 in Brussels, 13 in Wallonia,and 56 in Flanders. Flanders in turn comprises five provinces:Antwerp (16 incubators), East-Flanders (11), West-Flanders (9),Limburg (10), and Flemish-Brabant (10). Because Antwerp has themost incubators, we chose this province for our empirical research.

In Antwerp, nine of the sixteen incubators were nonprofiteconomic development incubators that worked closely togetherwith the Development Authority of the province. By working withbusiness incubators, this local government organization aims tostimulate economic development in the region (POM Antwerp,2012). Economic development is an important strategic objectivefor all nine incubators, so we included them all in the empiricalanalysis. These nine incubators are located within a 60 km radius;distances less than 80 km are considered geographically close(De Silva and McComb, 2012). Thus, the province of Antwerpoffers an appropriate research location.

The sample characteristics in Table A1 further reveal that fiveof the nine incubators can be categorized as mixed-use, such thatthat they did not focus on a particular sector or technology field,whereas four adopted a focus strategy. Specifically, Incubator Dfocused on the building sector and included sustainable buildingstart-ups; E featured companies active in the creative sector (e.g.,architects, designers); G focused on companies in the energy andenvironmental technology field; and I attracted high-tech com-panies with a focus on life sciences and information and commu-nication technologies.

To avoid the potential for bias that would occur if weincorporated the viewpoints of only one type of tenant (Mian,1996), our tenant sample represents the total tenant population.Although incubators are designed to stimulate small start-upcompanies (Bergek and Norrman, 2008) and generally supportcompanies for three to five years (European Commission, 2002),tenants in our target population represent a wide variety of ages(1–35 years), sizes (1–45 full-time employees), and incubationperiods (1–18 years). Furthermore, the combination of mixed-useand focused incubators led to a sample of tenants engaged in awide variety of activities (e.g., air transport, communications,catering). This diversity (see Table A2) enabled us to gather richdata while avoiding a bias associated with the opinions of onlyone type of tenants.

3.2. Research design, data gathering process, and study quality

Mathison (1988), p. 13 explains that ‘‘good research practiceobligates the researcher to triangulate, that is, to use multiplemethods, data sources and researchers, to enhance the validity ofresearch findings,’’ which in turn improves reliability and validity(Bryman and Bell, 2007; Eisenhardt and Graebner, 2007; Ghauri,2004; Pratt, 2009). We pursued these benefits in three main ways.First, to achieve data triangulation, we gathered primary datafrom multiple respondent groups (incubator managers, tenantmanagers, and experts) and secondary data from various sources,such as websites (of incubators, tenants, incubator partners, andcoordinating organizations), internal incubator documents, inter-nal documents from the Development Authority, and incubatorand tenant brochures. Second, we attained method triangulationby employing different qualitative research methods. Specifically,we executed in-depth interviews, focus groups, and presentationswith open discussions while also analyzing secondary data. Third,to ensure researcher triangulation and minimize researcher bias(Bollingtoft, 2007), the team of three researchers engaged inregular team meetings (Eisenhardt, 1989). We divided theresearch tasks as follows: two researchers conducted the datacollection and analysis, and a third played a reviewing, consulting,

and guidance role. The third researcher also took the lead in thefocus groups.

To confirm our interpretations, we used member checks(Danneels, 2002), such that we confirmed our intermediary inter-pretations at several moments throughout the data collection andanalysis processes (Hirschman, 1986; Lincoln and Guba, 1985). Theincubator managers and external incubator experts who participatedin the focus groups, in-depth interviews, and final presentationserved as our research auditors. In member checks, we asked theinterviewees for approval of our summaries of the in-depth inter-views. We also organized focus groups and formal presentationmoments to present and discuss the (intermediary) results.

3.2.1. In-depth interviews

For the in-depth interviews with incubator managers, twomembers of the research team participated: The first interviewerconducted the interview, and the second took field notes(Eisenhardt, 1989) and confirmed that all questions had been asked.The semi-structured interview protocol focused on the incubator’sstrategy, its service offering, its internal organization, and externalinfluences. We recorded and transcribed all interviews, then sentthe summary to the interviewees, who could make comments. Ifnecessary, we clarified any uncertainties through telephone ore-mail conversations.

The tenant interviews were similarly organized, except that formost of these interviews, only one interviewer was present. Toensure consistency, the interviewer who conducted the interviewswith the incubator managers also conducted the tenant interviews.These interviews focused on the incubator’s strategy, service offer-ing, internal organization, and external influences. We also pursueda deeper understanding of the service offering by asking tenantswhich services they found valuable, rare, inimitable, and noteasily substitutable (Barney, 1991)—that is, which services led tocustomer value creation. By checking the tenants’ viewpointsagainst those of the incubator managers and experts, we discernedthe incubator’s competitive advantage and differentiationpossibilities.

3.2.2. Focus groups

We conducted three focus groups with incubator managers andexperts. Combining focus groups and individual interviews can bevaluable, because this combination offers both depth (interviews)and breadth (focus groups); according to Morgan (1996), if the in-depth interviews take place first, the focus group can serve as acheck on the conclusions of the interview analysis. If in-depthinterviews occur after focus groups, the specific opinions andexperiences that emerged from the focus group can be examinedin-depth (Morgan, 1996). To attain both advantages, we conductedthe focus groups both before and after the in-depth interviews.

Overall, nine incubator managers and five external expertsparticipated in the focus groups. The incubator managers also hadbeen interviewed, so we could corroborate and deepen theobservations. Because our study sample consists of nonprofiteconomic development incubators, we also invited experts fromnonprofit government agencies to participate in the focus groups.

We took great care in addressing sampling, moderator involve-ment, and group size issues. First, with regard to sampling issues,we undertook a careful segmentation of focus groups to createrelatively homogenous groups (Krueger, 1988; Morgan, 1988). Thefirst focus group included incubator managers, the second externalexperts, and the third combined their viewpoints. Thus in the firstfocus group, we discussed the incubator context and factors thatmight influence its strategy. During the second focus group, wepresented the intermediary results and investigated the externalcontext more closely. Finally, the last focus group featured a

J. Vanderstraeten, P. Matthyssens / Technovation 32 (2012) 656–670660

discussion of the intermediary results and a more in-depth con-sideration of internal aspects and the external context.

Second, moderator involvement refers to (1) asking ques-tions and (2) managing group dynamics. Despite a lack ofconsensus about the number of questions a moderator shouldask, Morgan (1996) stresses that the research goal determineshow structured a focus group should be and how many ques-tions the moderator should ask. With our clear research goaland pursuit of knowledge about service-based differentiationstrategies and their necessary organizational elements, wefollowed a specific outline during the focus groups. Thus wediscouraged participants from diverging into topics with lessrelevance for this research. To manage group dynamics, themoderator must find some way to ensure everyone has an equalopportunity to participate, such that the opinions of both quietand dominant participants enter the analysis. Therefore, themoderator carefully posed questions to prompt all participantsto participate in the discussion. For example, from time to time,he asked each participant to provide his or her individualopinion about the discussion topics.

Third, Morgan (1996) states that both smaller and largergroups have advantages: In smaller groups, each participant candiscuss his or her opinions and experiences, but larger groupsbring together a wider variety of viewpoints. Thus, we kept thefirst two focus groups rather small, with five and six participants,to enable in-depth discussions, then in the third focus group, weincluded eleven participants. This larger group matched the goalof this focus group, namely, to combine the viewpoints of bothincubator managers and external experts.

4. Empirical results

In presenting the findings from our empirical study, we startwith tenant expectations about the incubator’s competitive scopeand service offering, which we compare with the incubatormanager and expert experiences and differentiation possibilities.Then we present how each service-based strategic position can beimplemented in practice, including the necessary processes,systems, assets, knowledge, capabilities, and culture.

4.1. Customer value creation leading to incubator differentiation

We discern two opposite opinions regarding the preferredincubator scope. Some tenants seek complementary activitiesand opt for an incubator with diverse tenants and no specificsector or technology focus. For example Company F2 was ‘‘procollaboration.y I would find it fantastic if I knew what this orthat company can doy. I would really like to have an ITcompany in the incubator. If you have a problem, they arenearby. Now, I have to shop around to find an appropriatesolution and that annoys me.’’ Company F3 offered anotherreason to prefer diversity: ‘‘we are all little companies. Let usbe diversified. I would definitely not choose a businessincubator that focuses on a specific sector.’’ This same inter-viewee worried that ‘‘there are people who take their pub-licity issues to other companies [outside the incubator]because they don’t even know there is somebody in theincubator that creates publicity. I think it is important tostimulate cross-selling and keep business between the fourwalls [of the incubator].’’

But not all tenants opted for this diversified focus. The groupthat assigned greater importance to a focused scope tended to beactive in fields with relatively few other players, so collaborationwith them was critical. They hoped to be able to use theincubator’s image and network to enter or grow in that sector

or technology field; Company G1 specifically stressed the impor-tance of image and credibility: ‘‘if an incubator focused oncompanies employing the same technology we use, I wouldchoose that incubator. That is much easier to identify yourself.’’In the audiovisual sector, Company H1 recognized that ‘‘if anothercompany making documentaries was located here, it would bevery valuable,’’ an opinion based on this interviewee’s broaderindustry experience: ‘‘I just became chairman of a coordinatingorganization of companies in the documentary sector and I seethat we are definitely in need of such contacts.’’

Thus we find a clear dichotomy in the type of incubator scopetenants want, and the incubator managers and experts confirmthis finding. Both diversified and focused incubators can createcustomer value through their service offerings, but which servicescreate customer value depends on the incubator’s competitivescope. Tenants opt for incubators with a diversified scope whenthey seek collaboration in their operational business activities orneed partners with complementary competencies. The tenants inthis group obtain access to on-site, in-depth services, such assecretarial functions (e.g., taking minutes, filing documents),business advice, and personal network connections that theywould otherwise have difficulty finding. These services helpstart-ups considerably during their development process. Incu-bator managers and experts agree that such services createsubstantial customer value and might provide a basis for incu-bator differentiation. Thus, these services represent success pro-ducers for incubators with a diversified scope (see Table 1). Incontrast, basic secretarial functions such as organizing the post orlogistic equipment such as a meeting room, and non-personallists of operational business advice partners are services thattenants expect to receive from all diversified incubators. Tenantsdo not consider them rare; instead, they appear part of the basicservice offering by each diversified incubator. Tenants think theycould easily switch to another diversified incubator to receivesimilar support. According to the incubator managers and experts,a decade ago these basic services might have led to differentia-tion, but today, all diversified incubators offer them. Thus theseservices represent failure preventers for diversified incubators(see Table 1).

Some tenants prefer to be co-located with other companiesactive in the same sector or that employ related technologies,because this focused scope supports core business networkopportunities. They want to use the incubator’s sector/technol-ogy image and credibility as a foundation for their own devel-opment, often through core business-related partnerships. Theystill expect basic services from their incubators, in that theirexpectations include sector- or technology-specific infrastruc-ture and a contact list of organizations active in their corebusiness that might be interested in forming partnerships withsmall firms. The tenants we interviewed perceived that otherspecialists could offer these services too, such that they couldeasily find another focused incubator with a similar offering.Incubator managers and experts concur that a lack of such basicinfrastructure and networking services would result in incuba-tor failure. However, focused incubators also can create highlevels of customer value by offering on-site in-depth businesssupport related to the tenants’ core business, which tenantsconsider difficult and expensive to find elsewhere. They alsovalue the availability of personal network connections withother organizations active in their core business, because it canbe difficult for a new, unknown company to establish goodcontacts with a well-known organization. Personal introduc-tions are often necessary. Similarly, the incubator managersand experts explicitly mentioned on-site core business andpersonal network contacts as a basis for incubator differentia-tion. The overview of tenant expectations of service offerings

Table 1Tenant expectations of service offerings (no sector/technology focus).

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by focused incubators in Table 2 consists of both incubatorfailure preventing and success producing services.

These results suggest two service-based differentiation alterna-tives: generalist and specialist stances. The Development Authorityhas an important saying in the incubator’s positioning. With Fig. 1,we classify target clients of a generalist incubator as start-upcompanies that are active in a wide variety of sectors or technologies.Thus, the generalist incubator’s strategic intent is to offer on-site, in-depth operational business activity services and perso-nal contacts to start-up firms active in a wide variety of sectorsor technologies. If they provide these services, they can differ-entiate themselves from other generalists. For example, one ofthe generalists in our sample employs an incubator managerwho previously worked for a large, nonprofit advice organiza-tion and thus can suggest personal network connections relatedto tenants’ operational business activities. Other generalists donot offer incubator managers with similar personal networks,so the focal incubator can achieve differentiation.

In contrast, the target clients of specialist incubators are start-up companies that are active in a particular sector or technologyfield, so their strategic intent should be to offer on-site, in-depthsector- or technology-specific services and personal contacts tostart-up firms active in a specific sector or field of relatedtechnologies. One of the specialist incubators in our samplemaintained an on-site library with information about the sector.Thus tenants had easy access to on-site, in-depth sector knowl-edge, which they could not attain from other specialists. This gavethis incubator a competitive advantage.

4.2. The identification of necessary competence configurations

To attain these strategic service-based positions, the incuba-tors must achieve alignment between their internal organizationand functions. The first internal incubation element, tenantselection, entails gearing a selection process to the incubator’sstrategic intent. Both specialist and generalist incubator managersassert that they must select companies that appear likely todevelop into successful businesses; the incubator experts confirmthis aspect is part of the mission statement of economic devel-opment incubators. Therefore, incubator personnel need todevelop experience with start-up firms, such as by attendingbusiness plan competitions, entrepreneurship seminars, andworkshops. The difference between generalist and specialistincubators arises only because specialists focus on one sector ortechnology field and analyze whether the potential tenant isactive in a relevant area and able to survive and grow in thatparticular market. Generalists focus more on financial, personal,or team aspects.

Because specialists and generalists likely target companieswith different service expectations, they also should select com-panies on the basis of those expectations. Incubator managers andexperts stress that specialists only select companies searching forco-location with companies active in the same sector or field.Their pool of potential tenants prioritizes sector- or technology-related business support above operational business support.Generalists’ selection process instead focuses on companies thatvalue co-location with a wide diversity of sector or technology

Table 2Tenant expectations regarding service offerings (sector/technology focus).

J. Vanderstraeten, P. Matthyssens / Technovation 32 (2012) 656–670662

offerings, because they seek operational, not core business,support.

With regard to the second internal incubation element,resource munificence, we note internal networking andresource utilization among tenants, which generally requiresregular contacts among incubator personnel and tenants. Forexample, the incubators might host introduction days for newtenants or regular meetings in which incubator personnel andtenants can discuss the services offered and used. Theseinteractions also require specific competences and capabilities.For example, the incubator personnel needs to be friendly,with good interaction skills and trustworthiness. Tenantsstressed that without trust, they would be afraid that theircore business activities might be exposed to others if theyshared their needs and problems with the incubator manager/staff. Incubator managers also stressed the importance of a‘‘willingness-to-interact’’ attitude; it is difficult to organizeactivities if (some) tenants are not willing to engage. Toencourage an open culture, the selection process often incor-porated this attitude as a selection criterion. Finally, to offerviable interaction possibilities with external organizations, thespecialist managers stressed the need for strong, active net-work partners in the relevant sector; generalist managersunderlined the importance of close partners who could offeroperational advice.

The third internal incubation element, monitoring andbusiness assistance, refers to strategic management and theincubator’s monitoring comprehensiveness and quality. Stra-tegic management requires strategy-related knowledge and astrategic planning committee to follow up in a (long-term)development process. To provide comprehensive, high qualitysupport, the incubator needs a control system that can verifywhether the services offered are of sufficient quality andsatisfy tenant needs. Regarding the latter criterion, the spe-cialist managers highlight their focus on sector- ortechnology-related expectations, whereas generalist managers

focus on operational business support needs. Comprehensiveservices often require a range of standard and adapt-able (customized) service packages. For example, one general-ist incubator manager explained that it provided Internetaccess to all tenants and then allowed tenants to choose apackage of additional services, such as accounting or humanresource support. The incubator managers and experts sug-gested that generalists encourage their employees to updatetheir knowledge constantly, to ensure they can offer compre-hensive operational business support. Employees of specialistincubators instead must remain up to date in their sector- ortechnology-related knowledge. Finally, involving (potential)tenants and experts in quality controls and checking forcomprehensiveness provides valuable insights into tenants’service expectations, the offerings available in other incuba-tors, and tenant satisfaction. In Tables 3 and 4, we depict thecompetence configurations for generalist and specialist incu-bators, respectively.

5. Discussion

Our empirical results relate to extant literature in severalrespects. We begin with tenant service expectations and incubatordifferentiation options, then discuss the necessary organizationalcomponents for each strategy alternative.

5.1. Customer value creation leading to incubator differentiation

Existing incubator classifications identify diversified and focusedscopes (Plosila and Allen, 1985; Sherman, 1999; Von Zedtwitz, 2003;Von Zedtwitz and Grimaldi, 2006). We confirm this dichotomy. Wealso reaffirm the notion that tenants in a focused incubator aim touse that incubator’s image or credibility to enter and grow in theirsector or field (Ferguson and Olofsson, 2004; Studdard, 2006).However, our empirical analysis contradicts the common view

Fig. 1. Service-based differentiation strategies.

J. Vanderstraeten, P. Matthyssens / Technovation 32 (2012) 656–670 663

that network cooperation is more effective in focused incuba-tors. That is, prior literature argues that to help tenants locatethe right contacts in a complex network, the incubator mustorganize its network connections (Rice, 2002), which seeminglyshould be easier for focused incubators (Bruneel et al., 2012),such that stimulating cooperation opportunities and synergiesmay be more effective in an incubator with a focused scope(Haapasalo and Ekholm, 2004). But our analysis shows thatnetworking can equally be effective within diversified incuba-tors. Schwartz and Hornych (2010) also have recently providedevidence that networking is effective in both diversified and focusedincubators. Although further research is needed, our findings sug-gest that the benefits of networking effectiveness achieved infocused incubators might arrive through diversified incubators.

Another contrast with previous research relates to the defini-tion of the incubator’s scope. Prior research suggests that ‘‘theprofessional preferences or competences of incubator managers’’determine the incubator’s scope (Von Zedtwitz, 2003, p. 181),because senior incubator managers offer key personal contacts,networks, and experiences that he or she can leverage throughthe incubator (Hannon and Chaplin, 2003). We find instead thatthe Development Authority had an important influence on theincubator’s focus. It was the driving force for a re-focus by one ofthe incubators in our study, which reflected a shift in companyneeds, not the incubator manager’s knowledge base. The

Development Authority even asked this incubator manager togain more in-depth knowledge in a sector in which the managerpreviously had no familiarity.

Although not a direct contrast, we also consider it surprisingthat few prior studies acknowledge how an incubator’s scopeinfluences its service offering. Many studies fail to specify theincubator’s scope (e.g., Abduh et al., 2007; Totterman and Sten,2005) or simply mention technology incubators, without specifyingwhether they focus on one or several fields (e.g., Mian, 1996).Schwartz and Hornych (2008) instead delineate the advantages anddisadvantages of incubators with a sector or technology focus, andour data partly confirm their findings, in that focused incubatorscan offer focused infrastructure, knowledge, and know-how. How-ever, our data also suggest that in focused incubators, companiesseek core business networking possibilities with other tenants,whereas Schwartz and Hornych (2008) conclude that a negativeclimate impedes internal networking in focused incubators. Furtherresearch should address this conflict; we posit that the differencemight reflect the particular context of Schwartz and Hornych’s(2008) case study, in which incubator managers attached substan-tial value to the opinions of established, better known tenants whenmaking strategic decisions. By excluding smaller, less establishedfirms, the incubator might have created a negative working climateand poor internal cooperation. We did not encounter any compar-able situations in the focused incubators studied.

Few existing studies make explicit distinctions between suc-cess producing and failure preventing services either. Our evalua-tion of tenant, manager, and expert viewpoints on customer valuecreation options adds some nuance by including the distinctionbetween incubator failure preventing and success producingservices. For example, prior studies offer evidence that basicoffice and administrative services, such as a flexible office spaceor postal delivery, save costs and time for tenants (Abduh et al.,2007). Furthermore, on-site, in-depth services, such as marketingadvice from specialists (Hackett and Dilts, 2008; Heydebrecket al., 2000), university faculty expertise (Lalkaka, 2003), adviceon financing their technology development (Heydebreck et al.,2000; Macdonald and Joseph, 2001), and access to personalcontacts (Aaboen, 2009; Abduh et al., 2007) are importantservices for incubator tenants. However, in all these cases, itremains unclear which services actually create high levels ofcustomer value and which not. Because this subdivision getslargely overlooked, even very recent studies argue that ‘‘businessincubators do not differ greatly in terms of what they offer totenants’’ (Bruneel et al., 2012, p. 115). Our results contradict thisassertion. Although service groups (e.g., administrative, logistic,business support, networking) may be comparable across incu-bators, the interpretations of these service offerings differ nota-bly. For example, some incubators offer on-site business support,while others opt for external coaches. Despite acknowledgingsuch differences (e.g., Bruneel et al., 2012; Bergek and Norrman,2008), previous scholars have not considered the possibility thatthey provide a basis for incubator differentiation.

We uncovered one study that makes an explicit subdivision inthe level of added value; our analysis contradicts its results. Thatis, Mian (1996) examines whether a service adds major, minor/moderate, or no value to tenants, and 20–50% of the respondents tothat study report that administrative services (e.g., mail sorting,word processing) and basic logistic services (e.g., conference room)add major value. In contrast, we found that such basic adminis-trative and logistic services do not create high customer value.Further research should investigate these differences, but we positthat a decade ago, such services created high value, whereas today,they are simply part of the basic service offering of an incubator andthus have transformed into failure preventers for the incubator.In the modern business world, business support and networking

Table 3Competence configuration: generalists.

J. Vanderstraeten, P. Matthyssens / Technovation 32 (2012) 656–670664

services appear relatively more important than administrative andlogistic services (Bergek and Norrman, 2008).

Our more nuanced analysis of tenant service expectations andcustomer value creation options also reveals that, in contrast withthe conventional wisdom (e.g., Bruneel et al., 2012; Schwartzand Hornych, 2008), focused incubators are not the only route tosuccess. Rather, many tenants prefer generalist incubators, andcustomer value creation is possible through both specialists andgeneralists. Companies opt to locate in the type of incubator thatcreates the most value for them. These results align with findingsthat show companies choose among locations within their region(Pe’er et al., 2008) and select the location that best fits their needsand expectations (Cant �u, 2010; Wright et al., 2008).

5.2. Necessary competence configurations

Several elements of the competence configurations apply toboth specialist and generalist incubators (e.g., empathic capability,service quality control). However, because their competitive scopesand client service expectations differ so considerably, their internalstructural and organizational aspects demand different adaptations.A generalist incubator should offer services that reflect the valuechain, whereas a specialist should focus on primary activities(Porter and Millar, 1985).

With regard to the selection internal alignment aspect, weconfirm that incubators should select weak but promising firms(Hackett and Dilts, 2008). Yet we also note a clear distinctionbetween the selection criteria for generalists and those forspecialists. Generalists focus relatively more on personal, team,and finance-related selection criteria; specialists devote moreattention to market-related criteria. Existing research does notseem to make this distinction and instead suggests that abalanced selection process, using all these criteria, is preferable(Aerts et al., 2007; Lumpkin and Ireland, 1988; Merrifield, 1987),and does not include a recognition that specialists might needdifferent selection criteria than generalists.

In addition, we discover a selection criterion that has beenlargely overlooked by prior studies, namely, whether companies

have a ‘‘willingness-to-interact’’ attitude. Although previousresearch suggests that value creation occurs only when tenantuse networking opportunities extensively (Hughes et al., 2007), ithas not established the willingness-to-interact attitude as aselection criterion. Instead, most personal selection criteria focuson the management team’s age or gender; technical, financial,and marketing skills; aggressiveness/persistence; or references(Aerts et al., 2007; Lumpkin and Ireland, 1988). The failure torecognize the importance of openness to interactions seemsstrange, because studies show that frequently acting on and usingincubator services, such as networking and business support,effectively characterize innovative, internationally focused,growth-oriented firms (Hytti and Maki, 2007). Furthermore, theconsensus opinion is that incubators strive for such companydevelopment processes (Hackett and Dilts, 2008).

For the resource munificence internal dimension (Hackett andDilts, 2008), we find that regular contact among tenants, incubatorpersonnel, and external experts is indispensable for stimulatingcooperation and resource usage. Existing literature confirms thatincubator managers exert significant effects on contact frequency,and furthermore that their efforts to establish a good workingclimate and trust can influence cooperation frequency (Tamasy,2002). Trust is necessary because tenants fear that their ideas andbusiness secrets might be stolen by other tenants (McAdam andMarlow, 2007) or experts/consultants (Chan and Lau, 2005). Ourstudy reinforces these concerns, which stresses the importance of anopen culture in which tenants are not afraid to interact with othertenants, incubator personnel, or external networking partners. Inthis situation, efficient, effective technology transfer and innovationprocesses (Gibson and Naquin, 2011) and interactions that supportoptimal technology usage (Berg and Einspruch, 2009) can take place.Again, a willingness-to-interact attitude offers a strong foundationfor such an open culture.

We also find discussions of monitoring and business assistancein prior literature, especially pertaining to the role and importanceof good strategic management practices (Autio and Klofsten,1998; Westhead and Batstone, 1998). For example, incubatormanagers and experts might use Walsh and Linton’s (2011)

Table 4Competence configuration: specialists.

J. Vanderstraeten, P. Matthyssens / Technovation 32 (2012) 656–670 665

‘‘Strategy-Technology Firm Fit Audit’’ tool to examine whether apotential tenant’s managerial capabilities and technical competen-cies fit their ‘‘potential product, strategic business unit, acquisitionor innovation efforts’’ (p. 213). Thus they can avoid potentialfailures by adopting in-depth audit and strategy planning.

Finally, our study is in line with previous research thatstresses the importance of quality control and improvement(Hackett and Dilts, 2008) and customized support offeringsthat reflect tenants’ changing development stages (Bruneelet al., 2012; Chan and Lau, 2005). Such approaches helpincrease tenant satisfaction with counseling and businessassistance effectiveness, an important aspect of business sup-port (Bergek and Norrman, 2008) that many tenants considercurrently ineffective (Abduh et al., 2007). For example, fortechnology-intensive companies, coaching related to applica-tion efforts for R&D investment programs, such as the Taiwa-nese Technology Development Program (Lu and Hung, 2011),can entail a form of customized monitoring. Although an in-depth study of changing tenant needs and incubator serviceofferings falls beyond the scope of our study, our resultsindicate the need for such studies. To the best of ourknowledge, Chan and Lau’s (2005) study is the only one thatexplicitly links tenant development stages to changing incu-bator service offerings.

6. Conclusion

In presenting the conclusion of this study, we start with offeringan answer on the paper’s research questions and summary of its

most important contributions to extant literature. Then we presentpractical implications for incubator managers, potential clients andincubator sponsors. Finally, we discuss the study’s most importantlimitations and future research possibilities.

6.1. Summary and contribution to the literature

We investigate two research questions: how can businessincubators, located in the same region, differentiate themselvesin the incubation market through customer value creation? Andhow can incubators ensure their external and internal alignmentfor each differentiation alternative? Our empirical analysis sup-ports a nuanced evaluation of customer value creation optionsthrough service offerings, which reveals that some services leadto incubator differentiation, whereas others only prevent incuba-tor failure. This distinction depends on the amount of customervalue created by the incubator service offerings, rooted in tenantservice expectations. Though prior research recognizes the impor-tance of a customer viewpoint on service offerings (Abduh et al.,2007) and incubator strategies (Bruneel et al., 2012), it has notdifferentiated sufficiently between high and low value-creatingservices (Mian, 1996). We also confirm the findings with opinionsfrom incubator managers and experts related to the differentia-tion possibilities for incubators.

Contrary to the common belief that only focused incubatorscreate high customer value (Bruneel et al., 2012; Schwartz andHornych, 2008), we empirically find two service-based differen-tiation options for incubators. With a generalist stance, theincubator attracts tenants from a wide variety of sectors andtechnologies, and it can attain differentiation by offering on-site,

J. Vanderstraeten, P. Matthyssens / Technovation 32 (2012) 656–670666

in-depth operational business support, in-depth administrativeservices, and personal network contacts. With a specialist stance,the incubator instead appeals to tenants from a specific sector orfield and should offer on-site, in-depth sector- or technology-specific services and personal contacts to attain differentiation.

Beyond this distinction, we determine the necessary organiza-tional aspects for each strategy alternative and uncover two maindifferences in the internal organizations of specialists and generalists:the selection process and the service offerings. Specialists evaluatemarket-related features of their potential tenants, whereas generalistsfocus more on personal, team, and financial characteristics. Thisdistinction has not appeared in previous research, which is surprising,considering that the incubator’s internal functioning and valueproposition is rooted in its selection process (Bruneel et al., 2012).Furthermore, each strategy type has its own resource focus: whereasgeneralists offer operational business support, specialists focus onprimary business support, and their critical internal resources andcompetences differ accordingly. If the incubator can align thesecompetencies with its strategic position, it enjoys differentiationpossibilities (Newbert et al., 2007; Prahalad and Hamel, 1990). Inthis respect, Ray et al. (2004) argue that it is not having access to alarge amount of resources but having access to critical resources thatresults in a competitive advantage.

In addition to these differences between specialists and general-ists, our empirical study offers two key results that hold for bothincubator types but have largely been overlooked by or contradictedin existing research. First, we contest the common claim thatnetworking and cooperation efforts are more effective in focusedthan in diversified incubators (Haapasalo and Ekholm, 2004; Rice,2002). We find that many companies search for diversified incuba-tors, because they prioritize operational support, a finding thatmatches recent work by Schwartz and Hornych (2010). Second,we identify a willingness-to-interact attitude as pivotal for optimalsupport offerings. Existing research on incubator selection criteriahas overlooked this selection criterion (Aerts et al., 2007; Lumpkinand Ireland, 1988; Merrifield, 1987), even as it recognizes thatbusiness and networking support can lead to optimal incubationoutcomes only if they are used extensively by tenants (Hughes et al.,2007; Hytti and Maki, 2007).

6.2. Contributions to incubator managers, potential tenants, and

incubator sponsors

Drawing on these results, incubator managers can more effec-tively choose an appropriate service-based differentiation strategy.They should assess the competitive scope and competitive advan-tage they hope to achieve by analyzing company expectations andthe competitive positions of other incubators in their region. Inturn, they can reach a well-supported determination of the mostappropriate strategic position. Both generalist and specialist stancescan result in differentiation, but the incubator’s internal organiza-tion must be adapted to its stance for success to result. Incubatorsponsors, such as universities and government organizations, alsomight offer support by undertaking a market and internal feasibilitystudy before forming the incubator (Zablocki, 2007). This studycould define the service expectations of potential clients (Zablocki,2007), which would reveal the necessary internal organizationalaspects. Incubator sponsors also might develop a subsidy orsponsorship scheme that provides incentives for implementingappropriate processes, systems, assets, knowledge, capabilities,and culture that lead to internal fit (Matthyssens et al., 2009).Finally, our study results might help potential tenants choose theirincubator more effectively. Depending on the support services theyneed, different locations might be advisable. Entrepreneurs with atechnical background, for example, often lack marketing andfinancing knowledge (Heydebreck et al., 2000), so they might

benefit most from a generalist incubator offering in-depth, custo-mized operational business knowledge. In contrast, companies in asector that features few other players might prefer a specialistincubator that offers them a strong image and the credibility toattract core business-related partners.

6.3. Further research

There are three main limitations related to our research designand three main questions surged during our empirical investiga-tion. Each suggests a potential research extension. First, thecomplexity of the topic pushed us to undertake a qualitativestudy, which means its results cannot be generalized. We thus callfor additional research that pursues a widespread, quantitativeanalysis and provides insight into the general applicability of ourresults. Second, we focused on nonprofit economic developmentincubators, though various other types of incubators exist (e.g.,Aernoudt, 2004; Von Zedtwitz, 2003). Researchers thereforemight conduct a similar study among for-profit incubators orthose focused on social or basic research (Aernoudt, 2004). Third,further research should move beyond service-based differentia-tion tactics, to include different bases for the competitive scope,such as the type of entrepreneurs or the incubator’s geographicalsegment (Von Zedtwitz, 2003). For example, interaction andcooperation require some similarity in tenants’ knowledge bases(Mowery et al., 1998), so a particular type of entrepreneur mightbe beneficial, such as university faculty and students (VonZedtwitz, 2003). An incubator’s geographical segment also mightinfluence its differentiation possibilities, because ‘‘network accessis a crucial element of successful incubation’’ (Von Zedtwitz, 2003,p. 181), and institutional factors in the geographic segment mightinfluence the organization’s functioning as well (Lalkaka, 2003).Fourth, current knowledge about incubators’ selection processesis insufficient. In addition to the willingness-to-interact attitudecriterion, other selection criteria may have been overlooked byextant research. Because an incubator’s selection process defineshow it functions (Bruneel et al., 2012), we consider furtherresearch on this aspect of great importance. Fifth, the incubator’sdevelopment process also influences its functioning (Bruneelet al., 2012), yet this internal aspect has not been examined.Finally, we show that tenant service needs might change, depend-ing on tenant characteristics such as age, development stage, orsector. Previous research implies the importance of suchservice offering changes (Bruneel et al., 2012; Hackett andDilts, 2008), but more studies should explicitly investigate howthese changing service offerings relate to tenant developmentstages (Chan and Lau, 2005).

Acknowledgments

The authors would like to thank the Province of Antwerp,Belgium, who provided financial and practical support for this study.Especially Jade Verrept and Luc Broos are recognized for theirsupport. Furthermore, we are grateful to all focus group, interviewand final meeting and presentation participants for their valuableinsights and suggestions. Finally, we would like to thank Filip Ledent-De Smet for his very much appreciated assistance in the empiricalresearch.

Appendix A

See Tables A1 and A2.

Table A1Characteristics of sample incubators.

Incubator Intervieweejob

Year of founding Size, office space(m2)

Average occupancy rate(2007–09)

Sector or technology focus

A Manager 1986 2.267 57% None

B Manager 1986 649 84% None

C Manager 1985 1.069 91% None

Da Manager 1st: 2006; 2nd:

2009

1st: 350; 2nd: 450 1st: 21%; 2nd: 0% (2009) Building sector, sustainable building

E Manager 2000 618 97% Creative sector

F Manager 2000 550 70% None

G Manager 2009 720 17% (2009) Energy and environmental technology

H Manager 1995 1.045 95% None

I Manager 1993 1.160 85% High-tech, life sciences and information & communication

technology

a This incubator has two buildings in the same location.

Table A2Characteristics of sample incubator tenants.

Incubator Tenant Intervieweejob

Year of founding Number offull-timeemployees

Year joinedincubator

Activity

A A1 CEO 2008 2 2008 Gifts for private businesses

A2 CEO 2001 45 2009 Catering services

A3 General

Manager

1982 (Belgium: 1992) 9.2 1992 Multimedia, gaming, and computer accessories for retail

distribution

A4 CEO 1999 1 2006 Wireless systems and appliances

A5 CEO 1995 4 2007 Computerizing processes

B B1 Coordinator 1984a 2 2004 Promotion and awareness stimulation of sustainable energy use

and environmental protection

B2 Managing

partner

1992 40 1993 Information and communication technology service provision

B3 Manager 2009 6 2009 Integrated services for health care

C C1 CEO 1998 3 1998 Air transport

C2 Sales

Manager

2000 (Belgium: 2008)

2 2008 Market research in

foodservices market

C3 General

Manager

1998 7 2007 Chemical: water and paper treatment

C4 CEO 2006 1 2006 Consultancy: crisis management

C5 CEO 2006 18 2008 Information and communication technology:

optimizing business processes

D D1 CEO 2009 4 2008 Sales and installation of solar panels and applications

D2 CEO 2007 1 2007 Study center: engineering

D3 Regional

Director

1811 (Belgium: 1975) 27 2008 Elevators

E E1 CEO 2001 4 2009 Interior designer

E2 CEO 2008 2 2008 Communication expert

E3 Adviser 1998 (Antwerp: 2007) 2 2007 Advice organization for artists

F F1 CEO 1998 14 2001 Specialized dry-cleaning cars

F2 CEO 2007 1 2008 Consultancy: events

F3 CEO 1999 1 2005 Design and publicity

G G1 CEO 2008 32 2009 Research and development: pharmaceuticals

G2 CEO 2009 4 2009 Study center: subterranean energy storage and heat pumps

H H1 CEO 1991 4 2000 Audiovisual communication and documentaries

H2 Employee 1999 (Belgium: 2003) 2 2005 Hardware development

H3 CEO 1999 2 2000 Communication expert

H4 CEO 2008 2 2008 Publishing company

I I1 Employee 1977 1,5 1993 Training, advice, and knowledge center creative thinking

I2 CEO 2006 2 2009 Software development

a First as part of a large organization, then a separate company.

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Johanna Vanderstraeten is a Ph.D. candidate at the Department ofManagement (Faculty of Applied Economics, University of Antwerp,Belgium). Her research focuses on strategy, institutional theory, perfor-mance and service delivering in the business incubator context. Shepublished in International Marketing Review and presented papersat international conferences, such as the International Council forSmall Business and the European Council for Small Business andEntrepreneurship.

Paul Matthyssens is Professor of Strategic Management at the Depart-ment of Management (Faculty of Applied Economics, University ofAntwerp, Belgium) and the Antwerp Management School (AMS,Belgium). His research focuses on market strategy and strategic innova-tion in international and business-to-business markets. His work hasbeen published in journals such as Long Range Planning, IndustrialMarketing Management, Journal of Service Management, Journal ofBusiness & Industrial Marketing, Journal of International Marketing,International Marketing Review, Journal of International Management,Journal of Management Studies, Corporate Governance: an InternationalReview, Journal of Purchasing & Supply Management and Technovation.