Graduate Survival as an Outcome-Based Approach to

Business Incubator Evaluation: A Case Study of the Hamilton

County Business Center

A thesis submitted to the

Graduate School
of the University of Cincinnati
in partial fulfillment of the
requirements for the degree of

Master of Community Planning

in the School of Planning

of the College of Design, Architecture, Art and Planning

by

Alison Verba

B.A. McGill University

May 2008

Committee Chair: Beth Walter Honadle, PhD

Committee Member: Michael C. Romanos, PhD
  

Abstract

Small businesses have generally been considered an engine of job creation and

economic growth in the United States since the 1970s. This can be attributed to two

factors. First, economic restructuring—characterized by the transformation from a

manufacturing into a service-oriented economic base—left many formerly prosperous

communities fragmented by corporate downsizing and industrial departure. Second,

groundbreaking research published by David L. Birch of MIT during this era showed that

job creation was being driven primarily by enterprises of twenty or fewer employees; a

trend postulated to continue indefinitely. Small-business development efforts arose in

this context as a strategy to overcome unemployment and to stimulate potential growth

industries. Also known as entrepreneur-led economic development, many state and

local governments made small-business assistance a policy priority.

It is an empirical fact, however, that despite their role in job creation and

economic development, small businesses have very high failure rates and their attrition

occurs within a narrow timeframe. Therefore, efforts to help small-businesses start

needed to be compounded with efforts to help them survive and grow in order to realize

their economic benefit. Becoming mainstream in the 1980s, the business incubator is

one policy innovation designed specifically to accomplish this task.

There is no single definition for business incubation or a business incubator.

Conceptually, business incubators nurture the development of entrepreneurial

companies, helping them survive and grow during the start-up period, when they are

most vulnerable. Client companies are co-located within a single incubator facility and

each benefits from flexible reduced rents, business support services and resources

  ii  
  

tailored to young firms such as networking assistance. Business incubators can public,

private or nonprofit entities or sponsored by an educational institution, although many

are developed collaboratively. The population of incubators in the United States grew

from 12 to 1,115 between 1980 and 2006.

Business incubators are incredibly heterogeneous with respect to their

geographic location, mixture of tenants, sources and amount of funding, operating

policies and objectives. Early research efforts sought to render this growing

phenomenon through definitions, taxonomy and configuration. Altogether, much is

known about the incubation process, but little of this understanding is grounded in

theory and even less can be said about methodological approaches to evaluation.

Very little research has addressed firms who have graduated from the incubator,

which obfuscates a true understanding of the long-term impact of business incubation.

This thesis attempts to fill that gap through a case study of a sample of 77 graduates

from the Hamilton County Business Center (HCBC). Categorical and quantitative data

was collected on these firms and the results show that HCBC graduates have a very

high survival rate, have remained in the region and largely have industrial classifications

in proven areas of employment growth.

  iii  
  

  iv  
  

Table of Contents

List of Tables vi
List of Figures vii

Chapter 1: Introduction 1
1.1 Purpose of Study 1
1.2 Background and Salience 2
1.3 Scope of Study 4
1.4 Organization of Thesis 5
Chapter 2: Literature Review 6
2.1 Historical Evolution of Business Incubation 6
2.2 Incubator Development Studies: What is a Business Incubator? 9
2.3 Incubator Configuration Studies: How do Business Incubators Succeed? 15
2.4 Incubator Impact Studies: What does Business Incubation Accomplish? 22
2.5 Evaluating Incubator Outcomes: Difficulties and Directions for Future Research 26
Chapter 3: Theoretical Framework 31
3.1 Background and Assumptions 31
3.2 The Logical Framework 32
3.3 A Logical Framework for Business Incubation 32
Chapter 4: Methodology 33
4.1 Research Methodology 33
4.2 The Hamilton County Business Center 36
4.3 Data Collection Procedures 37
4.4 Methodological Limitations 39
Chapter 5: Findings 42
5.1 Research Findings 42
5.2 Research Limitations 46
5.3 Discussion 48
Chapter 6: Conclusions 52
6.1 Conclusions and Implications 52
6.2 Recommendations 54

Appendices 56
References 66

  v  
  

List of Tables

Table Name Page Number

Table 1: Summary of Early Business Incubator Studies
15
Table 2: Comparison of Research Methodologies
28
Table 3: Distribution of Graduate Businesses by Geographic Area
43
Table 4: Distribution of Graduate Firm Size
44
Table 5: Distribution of Annual Sales Volume, Graduate Firms
44
Table 6: Distribution of Graduates by 3-Digit NAICS Code
45
Table 7: Size and Sales Volume for 541 Industry Sector
46
Table 8: A Simplified Framework for Business Incubator Evaluation 53

  vi  
  

List of Figures

Figure Name Page Number

Figure 1: A Framework for Defining an Optimal Mix of Incubator Firms 17
Figure 2: Tenant Selection Strategies
18
Figure 3: Performance Measures of Business Best Practice within
Business Incubators 23

Figure 4: A Logical Framework for Business Incubation 32

Figure 5: A Statistical Overview of HCBC Graduates
42

  vii  
  

Chapter 1: Introduction

1.1 Purpose of Study

The purpose of this thesis is to study a sample of graduates from the Hamilton

County Business Center (HCBC), a business incubator located in Norwood, Ohio.

Given that business incubators are developed to generate jobs, investment

opportunities and local value through creation of new firms; determining what happens

to graduated firms that no longer receive the support of the incubator is critical to

understanding the efficacy of business incubation programs in meeting these goals.

However, few incubators actually track their graduates (Lewis, 2001, 12). According to

Uddell, the last effects of the incubator on entrepreneurs are often unknown and could

be temporary (Uddell, 1990, 118). That is, business incubators may help more ventures

start, but these ventures do not necessarily stay in business upon exiting the incubator.

This presents implications related to the value business incubators offer to

stakeholders and local communities—monetary and nonmonetary—as well as the

overall strength and credibility of business incubation as an economic development

strategy. The central question of this thesis asks: what has happened to the graduates

of the Hamilton County Business Center? Through a literature review and case study,

the reader will be equipped with the background, theoretical framework and data

needed to evaluate the HCBC in terms of graduate survival.

  1  
  

1.2 Background and Salience

The belief that small business start-ups are a cornerstone of the United States

economy has greatly influenced public policy and the surrounding economic and

political debates for several decades. It is rooted in the 1970s, when economic

restructuring—best characterized as the transformation from a manufacturing into a

service-oriented economic base—left many formerly prosperous communities

economically devastated and searching for responses (Lewis, 2001, 1).

At the same time, prolific research undertaken by David Birch of MIT found that

87 percent of the employment increase between 1969 and 1976 occurred in

establishments with fewer than 100 employees and 66 percent in establishments with

twenty or less (Birch, 1979). These research findings—combined with bleak economic

prospects, federal devolution and mounting constituent pressure—uncovered small

businesses in general and entrepreneurial endeavors in particular as prime targets for

economic development strategy (Campbell et al, 1985; Lewis, 2001).

Speaking to the significance of new business start-ups, Bruderl et al explain,

“many hopes and expectations are connected with this development: new businesses

create new jobs, open up chances for social upward social mobility, foster economic

flexibility, contribute to competition and economic efficiency, stimulate industrial

organization and so on. [Yet], these hopes and expectations are justified only if newly

founded enterprises survive” (Bruderl et al, 1992, 227). The authors explain how the

human capital of the entrepreneur, the organizational ecology of the start-up and the

conditions characterizing the environment of a new firm can all affect its survival

chances (Bruderl et al, 1992, 227). In addition, market dynamics, geographic location

  2  
  

and financial variables also play a role in entrepreneurial survival (Strotman, 2006, 89).

Ultimately, the complex dynamics of market entry cause many casualties and most

empirical evidence shows that a high proportion of new business organizations fail

within a short time (Bruderl, 1992, 227).

The small business incubator is one policy innovation that emerged in this

context in order to minimize the risk of failure among nascent businesses and in turn,

generate economic development. Although there is no overriding definition for a

business incubator, it can be characterized as follows:

“A multi-tenant facility which provides entrepreneurs with: 1) flexible leases on

small amounts of inexpensive space; 2) a pool of shared support services to
reduce overhead costs; 3) some form of professional and managerial assistance;
and 4) access to or assistance in acquiring seed capital” (Brooks, 1986, 24).

Plosilia and Allen further explain, “the major public policy purpose of an incubator is to

assist the firm [during its initial years] so that it will move from the facility and generate

jobs in the local community” (Plosilia and Allen, 1985, 729). As of October 2006, there

were over 1,115 business incubators in the United States, up from only twelve in 1980

(NBIAa) and they can be found in communities ranging in size from a few thousand to a

few million (Uddell, 1990, 110).

The significant increase in the number of business incubators across a broad

geographic scope makes them a compelling area of study. One explanation driving

local enthusiasm for incubators advanced by Uddell is that the concept is easy to

understand and easy to implement at the local level (Uddell, 1990, 111). Merrifield

agrees, “Incubators can be replicated in any state and almost any community” and

states that the U.S. has created a favorable climate for them through tax credits and

  3  
  

other forms of subsidy (Merrifield, 1987, 287). Business incubators have also leveraged

generous funding from the private sector and educational institutions.

These factors have enabled the business incubator industry to achieve an

established place within local economic development strategy that is perceived to be

both politically feasible and financially viable. However, Campbell and Allen caution that

many incorrectly think of business incubation as a panacea (Campbell and Allen, 1987,

189). The salience of business incubator research therefore lies in the need to examine

individual cases closely in order to assess how incubators are meeting their goals and

serving the local community, as opposed to consuming resources without delivering

adequate returns.

This leads the discussion to the idea of success, of which long-term survival

among graduated firms is considered one of the most important indicators. However,

research explicitly focusing on the post-gradation period has been largely neglected

(Schwartz, 2008, 404). This thesis intends to contribute to that deficit by conducting a

case study of the Hamilton County Business Center that will collect and analyze

quantitative and categorical data on a sample of graduates.

1.3 Scope of Study

The scope of this study is limited to the known survivors of the Hamilton County

Business Center only. This is a sample of the entire graduate population, which also

includes graduates that are no longer in business. However, these failed graduates are

unidentifiable and are therefore precluded from the analysis. The term ‘graduate’ as

used in this thesis encompasses the publicly available roster of tenants provided by the

  4  
  

Hamilton County Business Center that have remained operational upon graduation from

the incubator facility. Also, the study focuses on the outcomes achieved by graduates

only and does not incorporate the policies of the incubator facility.

1.4 Organization of Thesis

The following chapter will be a literature review, which begins with a description

of the historical evolution of the modern business incubator concept in the United

States. It will then address the various ways to define and categorize business

incubators, followed by a discussion about business incubator configuration. This initial

portion of the literature review will familiarize the reader with key terms and a

foundational understanding of the incubator-incubation process. The latter portion of

the literature review moves toward impact and evaluation, with the goal of unpacking

the variables used to determine how the applied concept of business incubation

translates into measurable outcomes. It concludes with an overview of research

challenges and directions for future study.

Chapter 3 will provide a theoretical framework that grounds the case study, which

will be detailed in Chapter 4. This chapter will justify why a case study is an appropriate

methodology and then outline the procedures and data used. It will also explain the

methodological limitations, i.e. what the case study by design cannot accomplish.

Chapter 5 presents the research findings, limitations attributable to the data collected

and a discussion of the case study results. Chapter 6 contains the conclusion and

recommendations for future research.

  5  
  

Chapter 2: Literature Review

2.1 Historical Evolution of Business Incubation

The formal concept of business incubation was first introduced in the United

States in 1959 with the opening of the Batavia Industrial Center (BIC) in Batavia, New

York. This event was precipitated in 1956 by the closure of an 850,000 square foot

building complex operated by Massey-Ferguson, a manufacturer of farm equipment. It

was a physical and economic loss for the City of Batavia, which faced the formidable

challenges of filling such a massive vacancy and mitigating an unemployment rate that

consequently soared above twenty percent (NBIAb). The property idled for three years

before a New York family business called Manusco & Son purchased the building and

entrusted one heir named Joseph Manusco to bring it to productive use.

Manusco quickly concluded that it would be impossible to rent to a single tenant,

so he decided on a revolutionary strategy: he would partition the building and lease it

out in small pieces, hoping to find enough tenants to turn a potential white elephant into

a money-making proposition (Barrow, 2001, 11). Each tenant was provided with shared

office services, assistance with raising capital and business advice (NBIAb). Manusco

coined the term ‘incubator’ in reference to an early tenant that actually incubated

chickens in the BIC. It was a chicken company; and when asked what he was doing

with the building, Manusco liked to joke that he was managing an incubator.

Universally recognized as the world’s first business incubator, Batavia was an early

example—albeit an accidental one—of an initiative to make space for small firms to get

started (Barrow, 2001, 12).

  6  
  

The evolution towards modern business incubation programs in the United

States has three primary historical roots. First, business incubation programs in the

1960s and 1970s diffused largely in response to the need for urban economic

revitalization (Hackett and Dilts, 2004, 57). The University City Science Center (UCSC)

is one of the earliest cases illustrating this potential. It was built in an urban renewal

area in West Philadelphia in 1964 to provide federal contract management and contract

research. Start-up companies not formally affiliated with the UCSC were able to rent

space inside the facility “as available” and also share in excess office services and

equipment. Campbell writes, “Although no facility was ever designed, built, or managed

as a business incubator, UCSC’s impact was very similar…the businesses that located

there were nurtured by this environment [and] over the years, the redeveloped area has

grown…in what was once a run-down inner-city neighborhood” (Campbell, 1988, 13).

Thus, the incidental success of the UCSC in seeding a blighted area with new

enterprise sparked further interest in business incubation for redevelopment purposes.

A second historical antecedent to business incubation in the United States was

the effort to cultivate entrepreneurship through innovation centers supported by the

National Science Foundation (NSF) beginning in 1973. The Innovation Centers

Program as it is called sought to stimulate and institutionalize best practices in the

processes of evaluating and commercializing technological inventions (Hackett and

Dilts, 2004, 57). Though the program was discontinued by the mid-1980s, the model

adopted by dozens of universities [became] a science park with a business incubator to

act as a breeder and feeder facility of new tenants (Allen and Campbell, 1987, 181).

  7  
  

The final historical component of today’s incubator is the role that established

entrepreneurs played in galvanizing private sector interest around business incubation

programs. An individual named Loren Schultz is commonly credited in this regard

(Barrow, 2001; Campbell, 1988). In 1976, he established the first of multiple

Technology Enterprise Centers, which housed technology-oriented start-ups. Campbell

explains, “In the early 1980s, Schultz expanded his concept to other facilities and then

to a national market of communities with technology-based enterprises interested in

space, services and advice of a seasoned business person in a supportive

environment” (Campbell, 1988, 15). Focused on commercialization of new

technologies, the championing efforts of Schultz helped make venture capital firms,

business angels, management consultants and other entrepreneurs realize the

enormous profitability offered by well-managed and innovative start-up companies.

The preceding discussion highlights the diversity and breadth of the business

incubation concept upon its establishment. Community revitalization, product

innovation, technology commercialization and enhanced profits are all distinct objectives

that were served by early incubators. According to Campbell, “none of these models

are purely separate or distinct from the others, nor are they entirely similar. However,

they all share a fundamental interest in promoting the formation and survival of new

enterprises” (Campbell, 1988, 15). As the number of business incubators in the United

States has increased over the past decades, so has the quest to understand them.

Researchers have sought to define and classify incubators, detail their processes

and critical success factors, and also gauge their contribution to economic development.

However, “business incubation has suffered from a problem than is common to many

  8  
  

economic development programs: a concentration on process rather than on outcomes

or impacts” (Sherman and Chappell, 1998, 314). There is a need for research to focus

on methods of evaluating incubator outcomes (Sherman and Chappell, 1998; Hackett

and Dilts, 2004; Tamasy, 2007), particularly with respect to the long-term survival of

incubator graduates (Schwartz, 2008). This literature review will begin by describing the

early scholarship on business incubators: incubator development studies, incubator

configuration studies, and incubator impact studies. It will then examine more recent

research, which takes a more theoretical and evaluative approach. It will conclude by

identifying knowledge deficits and directions for future research.

2.2 Incubator Development Studies: What is a Business Incubator?

Defining a Small Business Incubator

At the onset of the 1980s, the combination of economic restructuring in the

United States and studies linking small business establishments and job growth (Birch,

1987) created the context for modern business incubator development. Brooks explains,

“the argument in support of incubators hypothesizes that once extraneous factors that

lead to early stage failure of small businesses are controlled or eliminated, the projected

increased survival rate of new ventures should lead to increased employment and an

expanded tax base” (Brooks, 1986, 24). Therefore, many state and local governments

struggling to revive ailing economies invested the small business incubator as a

promising tool available to shore up entrepreneurship within the community and

generate growth. The goal of research published in the early phases of incubator

  9  
  

development was to describe incubators and it addressed themes such as defining

incubation, creating incubator taxonomies and recommending policy prescriptions.

Even today there is no singular, overriding definition for business incubation

(Hackett and Dilts, 2004, 59). Rather, authors in the economic development community

have conceptualized the process of business incubation in their own words,

distinguishing between the physical element of the incubator facility itself and the value-

added services provided by the facility’s staff. Brooks summarizes the role of the

physical facility as 1) to provide visibility to the community, the entrepreneur and

potential investors; 2) to provide tenant support through below market rent; 3) to provide

a focus for activities of entrepreneurial assistance groups, and 4) to place start-up

ventures in close proximity with other start-up companies (Brooks, 1986, 26). Thus,

most definitions of business incubator facilities incorporate the themes of flexible, low-

cost space, co-location of businesses and the idea that the physical incubator is an

environment conducive to stakeholder input.

Virtually all definitions of business incubators include the availability of shared

and value-added services to incubator tenants. These include office support, access to

financial resources, start-up support such as business consulting and access to

networks. Cumulatively, services enable business incubators to serve their tenants by

making resources integral to daily operations readily accessible and also by developing

the skills and expertise of the individual entrepreneurs (Carayannis and von Zedtwiz,

2005). Taken together, efforts to define a small business incubator in terms of both its

physical facility and the services it provides made it evident that there was vast

heterogeneity of business incubator facilities and their tenants with respect to their

  10  
  

resources, needs and goals. Researchers subsequently attempted to draw conclusions

from these differences and create a taxonomy for business incubators. In other words,

having established what a business incubator is, the question became what varieties of

incubators are there?

Categorizing Business Incubators

Business incubators can be classified on the basis of a) their primary financial

sponsorship; b) whether the incubatees are spin-offs or start-ups; c) the business focus

of the incubatees; and d) the business focus of the incubator.

A. Financial Sponsorship

Business incubators can be sponsored by the private sector, the public sector or

by an educational institution. Private sector sponsors—corporations, investor groups—

are often more profit-driven than public sector sponsors—nonprofit development

organizations and local governments—which are primarily interested in job creation and

economic diversification (Allen and Rahman, 1985, 13). Business incubators sponsored

by educational institutions are generally motivated by their desire to participate in

regional development efforts and at the same time, encourage the commercialization of

the university’s own research (Mian, 1994, 515). However, many business incubators

were developed collaboratively (Campbell and Allen, 1987) and work to achieve multiple

objectives simultaneously.

B. Spin-off or Start-up

  11  
  

Plosilia and Allen define a spin-off incubator—referred to as a corporate venture

today—as a new venture that emerges with the support of a mother firm that hopes to

pursue cooperative activities (Plosilia and Allen, 1985, 729). Intel and National

Semiconductor are two products of spin-off incubation, while many other prominent

companies such as Kodak, Cisco Systems and Apple have initiated their own corporate

ventures. In contrast, start-ups develop independently from existing firms. Plosilia and

Allen asserted that the incubation process is much more difficult for start-ups (Allen and

Plosilia, 1985, 729); yet Barrow uses the example of failed corporate ventures during

the dotcom bubble to note that spin-off incubation has only played a “fluctuating role in

the incubation process,” which is “more closely aligned to the force-feeding associated

with foie gras production than the more natural process of encouraging an egg to hatch”

(Barrow, 2001, 16). Ultimately, spin-off and start-up incubators share a common

methodology of mentorship and using resources to help their portfolio companies

(Richards, 2002, 11).

C. Business Focus of the Incubatee

The business focus of an incubatee refers to the type of firm that a business

incubator facility attracts. Generally there are three orientations of incubator facilities:

product development/technology, manufacturing and mixed-use (Plosilia and Allen,

1985; Campbell, 1988; Barrow, 2001; Knopp, 2006). Research shows that the business

focus of an incubated firm is market-driven (Campbell et al, 1985; Brooks, 1986;

Campbell, 1989, Barrow, 2001) relative to its own feasibility and the community at-large.

Brooks explains, “In order to survive and become self-supporting, the [tenant] must

  12  
  

satisfy a demonstrable demand in the marketplace, but because of the nature of the

incubator as a tool for economic development, there is an element of demand that can

be loosely defined by the needs of the community” (Brooks, 1986, 28). By needs of the

community, Brooks is referring to the short-term need to generate jobs and the possible

long-term need to restructure an area’s economic base. Thus, the business focus of an

incubatee ideally reflects its ability to 1) leverage the resources of the facility and their

stakeholders in order to reach maturity and 2) create meaningful opportunities for

development of the surrounding community.

D. Business Focus of the Incubator

The business focus of an incubator can be categorized as either a real estate

incubator or an economic growth incubator. According to Brooks, the main thrust of a

real estate incubator is to make effective re-use of existing buildings that would

otherwise be vacant (Brooks, 1986, 27). In his analysis of business incubator life

cycles, Allen equates the real estate model with a newly developing facility (Allen,

1988). He writes, “the real estate aspect first came into play when a building, rather

than enterprise assistance, became the main item on the development agenda [and]

with the pressures of filling the building preeminent, existing small businesses became

the dominant incubator tenants” (Allen, 1988, 22). Brooks adds, “the job creation rate at

real estate incubators is generally faster, mostly attributable to the fact that the tenants

are at the later stages of business development” (Brooks, 1986, 27). This underscores

the strategy of real estate incubators to select more established tenants in order to

generate a more reliable stream of rental income.

  13  
  

In contrast, an economic growth incubator usually serves businesses in the early

stage of development that require a greater degree of hands-on assistance (Brooks,

1986, 27). It is a distinct model that emphasizes the capacity of the entrepreneur and

the support network over the facility. Economic growth incubators generally address the

need for long-term, structural economic change in a community by serving high growth

clients in technology or research and development (Brooks, 1986). In this capacity, the

economic growth incubator is acting as a “change agent,” stabilizing local economies

and providing a small base of new economic activity (Campbell, 1989, 57)—a theme

that will resurface in the review of economic impact literature. However, despite the

differing segments of the entrepreneurial market that real estate and economic

development incubators serve, both operationally help fledgling businesses at various

stages of development survive in the marketplace as well as bring visibility to

entrepreneurial activity within a community.

Summary

The lack of a unitary definition for a business incubator and the existence of

multiple business incubator taxonomies evidence the complexity inherent to the concept

of incubation. Incubator development studies have played an exploratory role and

helped to render a young, yet growing, phenomenon. According to Campbell and Allen,

“The small business incubator industry is not a flash in the pan; it has already achieved

a place in local economic development strategy as one element of an entrepreneurial

assistance program. The approach has become widely accepted but it is not widely

understood” (Campbell and Allen, 1987, 189). While this statement opens the door to

  14  
  

much inquiry, the following section will address the specific question: What factors are

necessary to ensure the success of a business incubator?

2.3 Incubator Configuration Studies: How Do Business Incubators Succeed?

Early incubator configuration studies focused largely on identifying various

design elements considered to be important for the success of an incubation facility

(Autio and Klofsten, 1998, 33). Most of these studies used qualitative measures that

were judged qualitatively by the researcher (Autio and Klofsten, 1998, 33). Data

pertinent to incubator configuration has almost exclusively been derived through

surveys or interviews among incubator facility managers and their tenants. Table 1

summarizes the first reports published in this area, although configuration research has

continually proliferated (Lumpkin and Ireland, 1988; Rice and Matthews, 1995; Autio

and Klofsten, 1998; Hisrich; 1998). The most important broad categories of incubator

configuration include: tenant selection, management, services and the stakeholder

network.

Table 1: Summary of Early Business Incubator Studies

The New
Homegrown Business
n/a; sponsored
Business Entrepreneurship: Incubator:
by Economic
Study Name Incubator Profiles: Pennsylvania Linking Talent,
Development
A National Survey Business Technology,
Administration
Incubators Capital and
Know-How
Study
Temali, Campbell D. Allen D Allen Smilor, Gill
Author(s)
Date published 7/84 8/84 9/85 6/86
Scope National PA National National
Data collection
10/83-5/84 Spring 84 10/84-5/85 7-8/85
period

  15  
  

Size of
55 facilities 12 facilities 70 facilities 117 facilities
population
# Respondents 50 12 46 50
Response rate 91 100 66 43
Survey Survey Survey
Interviews (facility
Methodology (managers and (managers and (incubator
managers)
tenants) tenants) managers)
Adapted from: Campbell and Allen, "The Small Business Incubator: Micro-Level Economic Development" in
Economic Development Quarterly, 1987 1:178.

Tenant Selection

A business incubator’s tenants are the cornerstones of any program. Companies

admitted to the incubator should help the incubator achieve the revenue required in its

financial model and they should also have a high potential for growth and job creation

and therefore warrant the intense and focused assistance that the incubator can provide

(Rice and Matthews, 1995, 102). Therefore, it is prudent for business incubators to

have admissions criteria in place to ensure that the facility and the tenants realize these

reciprocal benefits. According to Rice and Matthews, “the admissions criteria should

reflect the principles underlying best practices in business incubation,” suggesting

factors such as capacity to pay for space and services, relative potential for fast growth,

type of business and willingness to accept and act on advice and counsel (Rice and

Matthews, 1995, 102). Lumpkin and Ireland added the client firms’ possession of skills

known to be related to success in the areas within which the incubator competes

(Lumpkin and Ireland, 1988, 61); while Merrfield developed a three-step decision tree

known as Constraint Analysis to help managers increase the probability of success1

(Merrifield, 1987, 281).

                                                                                                               
1
The first step asks: “Is this a good business in which anyone should be involved” (yes or no). The second question
is: “Is this a business in which our organization has the competence to compete” (yes or no). The final question is
“What is the best method for entry and/or growth?” Regression analysis involving a study of hundreds of projects has
identified six critical factors in the first two categories that are important in defining the commercial potential of
prospective tenant (Merrifield, 1987, 281).

  16  
  

Tenant selection generally involves different frameworks (Rice and Matthews,

1995; Bergek and Norman, 2008) and can involve successive phases (Rice and

Matthews, 1995; Autio and Klofsten, 1998). Figure 1 provides a mechanism by which

incubator managers can categorize prospective clients according to their level of

maturity and growth potential. Figure 2 presents an alternative framework that also

categorizes potential tenants according to growth potential (‘survival of the fittest’ versus

‘picking the winners’), but substitutes the idea (the product, market or profit potential)

versus the entrepreneur-focus (the skills, experience and personality of the

entrepreneur) for maturity. Although opinions differ with regard to what appropriate

selection criteria are, researchers seem to agree that selection is an important task

since it is the basis for effective resource allocation with respect to both individual

incubators and to the general economy (Bergek and Norman, 2008).

Figure 1: A Framework for Defining an Optimal Mix of Incubator Firms

Level of Maturity of Firm with Respect to Critical Success Factors

Growth Potential of Firm High Low

High I. “Superstars” II. “Up-and-Comers”
Low IV. “Anchor Tenants” III. “Long Shots”

Source: (Rice and Matthews, 1995, 106)

However, selection is not only a matter of criteria—it is also a matter of flexibility

or strictness in applying them (Bergek and Norman, 2008, 23). Lumpkin and Ireland

surveyed 75 incubator managers to evaluate the importance of various Critical Success

Factors (CSFs) in three areas—financial ratios, personal characteristics of the

entrepreneurial management and market factors and found that 15.2 percent

respondents have no screening process at all (Lumpkin and Ireland, 1988, 72). In

  17  
  

contrast, Autio and Klofsten describe a Finnish case study that uses a rigorous two-

stage evaluation and selection process that builds into a six-month training and

consulting pipeline which feeds into a tailored, long-term support package offered to the

most viable candidates (Autio and Klofsten, 1998, 37). Irrespective of methodological

differences in the selection process, thorough screening practices are consistent with

the dictates of effective strategic management practices (Lumpkin and Ireland, 1988,

76) and incubator best practices (Rice and Matthews, 1995, 100).

Figure 2: Tenant Selection Strategies

Survival of the Fittest Picking the Winners

Tenant mix: Highly niched portfolio

Tenant mix: Upcoming entrepreneurs
of thoroughly screened ideas within
Idea-Focused Selection with immature ideas in a broad
a narrow area—often sprung from
spectrum of fields
university research

Tenant mix: Diversified; Tenant mix: A few hand-picked and

Entrepreneur-Focused entrepreneurs/teams with strong carefully evaluated entrepreneurs,
Selection driving forces representing a broad sometimes coupled with research
set of ventures areas of a nearby university

Source: (Bergek and Norman, 2008, 24)

Management

In contrast to their highly varied organizational structures, most incubators have a

relatively common managerial structure: a full-time manager appointed by the Board of

Directors who is in charge of day-to-day operations, delivery of complementary

services, coordination of support staff activities and marketing (Lewis, 2001, 11). The

manager is the gatekeeper of the facility and also the liaison between the incubator’s

tenants and its network of stakeholders. Moreover, the manager plays a critical role in

the development of skills among the incubator’s tenants through business planning and

formulating strategy (Barrow, 2001, 192).

  18  
  

It is important that the Board of Directors recruits and appropriately compensates

management capable of achieving the mission of the incubator and having the ability to

help companies grow (NBIAc). Personal characteristics conducive to effective incubator

management may coincide with those of an entrepreneur, including high energy, high

need for achievement, persistence, capacity to learn from mistakes, drive, adaptability,

strong work ethic, self-starting capacity and independence (Rice and Matthews, 1995,

75). In addition, managers should possess business savvy, motivational and leadership

skills and the capacity to network (Rice and Matthews, 1995, 75). As a function of their

role, well-selected incubator managers can enhance the credibility of both the incubator

facility and its tenants.

Services

One of the most distinguishing features of a business incubator facility is the

provision of services. Services can be classified into five groups: financial consulting

assistance, management assistance, general business assistance and physical

services (Allen and Rahman, 1985, 15). Several of these topics have been discussed

previously. The salient feature of services is that they give form and substance to start-

up or emerging ventures by maintaining controlled conditions with the expectation that

the system will result in viable tenant companies (Hisrich, 1988, 229). This is because

the provision of business services holds the key to the value-adding capacity of most

incubators (Barrow, 2001, 166). Additionally, services deliver cost-savings to tenant

firms by absolving financial responsibility for support staff and supplies and by

minimizing transaction costs in processing and service requests.

  19  
  

However, the success of incubator tenants is not only dependent on the nature of

these services, but also how they are supplied (Bergek and Norman, 2008, 25).

Differences with regard to time intensity, comprehensiveness and degree of quality may

exist, which places incubators on a scale of depending on the extent to which they see

themselves as managers of the incubation process or as external facilitators of a

process primarily managed by the incubatees themselves (Bergek and Norman, 2008,

25). Ultimately, scholars stress the importance of having a good fit between incubatee

needs and the business assistance services the incubator is capable of providing

(Hackett and Dilts, 2004, 65).

Stakeholder Network

A business incubator does not exist in isolation from a wide network of

stakeholders such as financial sponsors, board members, educational institutions and

community leaders. According to Rice and Matthews, “without doubt the stakeholder

network offers access to resources and know-how that entrepreneurs often do not have

but definitely need” (Rice and Matthews, 1995, 66). The ability of the incubator to

leverage financial investment in the beginning stages is very important, but as the

facility becomes more established within the community, relationships with other actors

such as lawyers, professors and government officials may become a bigger priority.

These stakeholders may go beyond financial assistance by scouting for viable tenants,

making referrals or even volunteering some of the value-added services that the

manager might typically provide (Rice and Matthews, 1995, 67).

  20  
  

The maturation stage marks the fullest extension of the incubator into the

community; at which point the incubator becomes a focal point of local entrepreneurship

(Allen, 1988, 26). While the stakeholder network is considered a Critical Success

Factor for business incubation (Merrifield, 1987; Campbell et al, 1985), business

incubators also add value to the community by reflecting its cultural values (Hisrich,

1988). It is standard to compensate stakeholders for any assistance given to the

incubator, in the form of recognition or further networking with other incubator

companies. However, in addition to the need to attract stakeholders to the incubator, it

is also necessary for facility managers to balance the interests of the stakeholders

against those of the incubator and its tenants. As long as this is accomplished, the

incubator stands to benefit from access to and acquisition of resources and expertise

that can improve the probability of survival and success of the incubator companies

(Rice and Matthews, 1995, 66).

Summary

In conclusion, the configuration of business incubators has a direct impact on

their effectiveness relative to serving their tenants and by extension, creating economic

growth. Early research on business incubators published in the 1980s has helped distill

components of incubator configuration of particular importance: tenant selection,

management, services and stakeholders. Investigating each of these areas in turn

contributes to a richer understanding of the business incubation process. This

knowledge brings the literature closer to a formal evaluation of business incubators.

The following section of the literature review will apply previously discussed descriptive

  21  
  

and configurative aspects of business incubation in order to assess the impact of

incubators on client firms and the communities in which they are located.

2.4 Incubator Impact Studies: What Does Business Incubation Accomplish?

Impact of Incubation on Facilities and Firms

Figure 3 shows a conceptual framework applicable to identifying performance

measures of business best practice within business incubators. Those factors listed

under ‘Business Incubator Provision of’ can be thought of as inputs while those

identified as either hard or soft measures represent outcomes achieved by both client

firms and the incubator facility.

As the diagram shows, the process of business incubation provides reciprocal

benefits to facilities and client firms in qualitative and quantitative terms—hard

measures and soft measures. According to Voisey et al, “hard outcomes” are clearly

definable and quantifiable results that show progress made, and “soft outcomes”

represent the intermediate stage on the way to achieving the hard outcome, which may

include personal skills. Both may also be referred to as indicators (Voisey et al, 2006,

457). Thus, for clients, the impact of business incubation is greater advancement

towards maturity as measured by quantitative—including economic—indicators and as

perceived in terms of increased confidence and improved skills (Voisey et al, 2006;

Mcadam and Marlow, 2007). The impact in turn on the facility is continued viability,

support from stakeholders and interest from prospective tenants.

  22  
  

Figure 3: Performance Measures of Business Best Practice within Business Incubators

Source: (Voisey, et al, 2006, 465)

This analysis may sound redundant following the lengthy discussion in the

previous section, which explained how aspects of incubator configuration theoretically

reflect best practices and help client firms. The framework shown in Figure 3 simply

helps visualize what indicators are available to gauge what a given incubation is actually

accomplishing. The impact of business incubation on facilities and firms therefore is a

sustainable process whereby inputs consistently achieve desired outcomes.

Impact of Incubation on Communities

  23  
  

While the objectives and strategies of the various types of incubators may vary,

there is an overriding theme of economic development (Uddell, 1990, 109). Often

business incubators have been developed either in response to declines in

manufacturing employment, plant closures, regional economic crises or in hopes of

nurturing a new base of industry or technology (Campbell, 1989, 56). Many local

economic development agencies, government and other public institutions in particular

have adopted incubators as a tool to reduce the probability of failure and to speed up

the process of business creation (Grimaldi and Grandi, 2005, 112). Therefore,

expansion of local employment and new enterprise development are crucial goals for

business incubators to achieve within a given community.

Many researchers have examined the economic development impact of business

in local communities (Campbell and Allen, 1987; Campbell, 1989; Uddell, 1990). From

the early studies on business incubators summarized and shown previously in Table 1,

Campbell and Allen concluded that new small businesses in general have limited

prospects for employment growth and that few of the incubating firms create more than

a handful of jobs (Campbell and Allen, 1987, 188). Also, they found that in practice

there is a tension between economic growth, economic stability, economic diversity and

economic development; which becomes evident when those promoting incubators

simultaneously seek to nurture new high-growth industry that creates direct and

immediate jobs in industries that have not previously had a major role in the local

economy (Campbell and Allen, 1987, 1988). In other words, despite recommendations

that incubators be market-driven, this may not always be the case.

  24  
  

In his survey of 71 business incubators, Uddell also questioned the job creation

potential of business incubators. He states, “claims of impressive job creation were

found in the promotional literature and reports of some incubators [and] similar claims

were also made verbally during personal interviews with incubator staff” (Uddell, 1990,

112). Yet, these claims were simply headcounts of the tenants; which is in his opinion

is already a biased sample—entrepreneurs who were selected according to specific

criteria that may enable them to succeed outside the incubator (Uddell, 1990; Bearse,

1998). Still, business incubators in any given community do contribute positively to

economic development. Campbell describes incubators as “change agents” with two

primary applications to economic development: 1) generally assisting small businesses

in declining economies and 2) assisting them among specific industries, areas or types

of entrepreneurs within a local economy (Campbell, 1989, 57).

Ultimately, input does not equal impact and proving a difference [economic

development generated by a business incubator] is exceedingly difficult and requires

longitudinal data and sophisticated methodology (Uddell, 1990, 113). Campbell and

Allen question, “first and foremost, if the purpose of incubators is to create jobs,

investment opportunities and new local value by creating new firms, what happens to

firms after they leave the incubators” (Campbell and Allen, 1987, 188). Uddell adds, “It

could be claimed that the alleged reduction in rental and support service costs provides

a financial stimulus to entrepreneurs, but the last effect of this stimulus is unknown:

more ventures may start, but do they stay in business” (Uddell, 1990, 118)? The lack of

reliable graduate data makes it difficult to truly measure the economic contributions of

client firms (Lewis, 2001, 12).

  25  
  

Summary

The impact of business incubation can be assessed in multiple ways. Analyzing

the impact business incubation at the facility level evidences how there are measurable

inputs and outcomes, quantitative and qualitative, associated with the business

incubation process. Further, it can be concluded from the literature that if the process of

business incubation is managed properly then the inputs will consistently yield desirable

outcomes; which relates to the sustainability of the incubator model.

Impact can also be considered in terms of economic development within the

community where an incubator is located. Many incubator facilities have been

developed in response to economic stagnation or restructuring and as such, job

creation and stimulation of new industries have both been important indicators. While a

simple headcount of incubator staff and tenant companies demonstrate that incubators

do create jobs, the literature suggests that there is much more to the story. The

possible selection bias inherent to incubator tenants due to screening, the difficulty in

calibrating a scant number of jobs to a larger economic scale and the lack of information

relative to incubator graduates are three compelling issues with business incubation that

have informed another category of incubator research: evaluation studies. Such

evaluation studies differ from impact studies through their attempt to answer questions

raised by impact research and also through their attempt to deliver more theoretical

grounding to the study of business incubation.

2.5 Evaluating Incubator Outcomes

  26  
  

Assessing the impact of business incubators is a necessary precondition for

evaluating them more broadly. However, “the research area is complex and empirical

studies are often anecdotal, suffer from ad hoc research designs, or lack a theoretical

embedding” (Tamasy, 2007, 462). In their article entitled “Methodological Challenges in

Evaluating Business Incubator Outcomes,” Sherman and Chappell identify three issues

that complicate the evaluation process. First, new businesses have diverse needs and

so business incubator programs set a variety of goals with a range of outcomes. Thus,

different methodologies must be used to indentify the full range of business incubator

goals and program outcomes. Second, each incubator caters to specific regional needs

and characteristics, preventing business incubation from becoming a highly

standardized industry. Third, business incubation has suffered from a concentration on

process rather than outcomes or impacts. As a result, there has been a lack of

standardization of evaluation approaches in terms of measures and methodology

(Sherman and Chappell, 1998, 314).

For their study, Sherman and Chappell took three completely different research

methodologies and applied them to various samples of incubator programs. Their

findings are summarized below. Overall, there is a lack of integration among the

potential findings associated with each individual methodology. This highlights the

difficulty in evaluating business incubators due to the need to assess the incubator

facility and incubatees separately, using qualitative and quantitative data. According to

Sherman and Chappell, it is in the best interests of the business incubation industry to

implement a comprehensive outcome review process, but also the industry [the NBIA]

should establish a national database of performance outcomes that can be used to

  27  
  

develop a national performance-benchmarking program (Sherman and Chappell, 1998,

321).

Table 2: Comparison of Research Methodologies

Methodology Quasi-experimental Macroeconomic models Stakeholder analysis

research design
Purpose Compare longitudinal
business performance data
among a sample of
incubator clients and a
comparable sample of
companies in the same
community but only
received services available
to the community
Data Survey data
Sample 126 firms
Limitations Flawed data; companies
out of business not
identifiable, no control
group
Findings 1) Firms that participated in
business incubation
program showed large
gains in financial
performance; 2) Firms
added 2.7 FT jobs and 1.0
PT jobs/year on average;
3) Perception of
helpfulness of incubator
important
Estimate total impact of Gather
jobs and income using descriptive and qualitative data
Regional Economics from stakeholders in the
Models Inc. (REMI) community and incubator
software managers
Employment and wage Judgment/opinion questions
data intended to assess views on
incubator impacts
23 firms 37 incubator managers, 34
incubator board members, 34
community stakeholders
Usefulness of REMI Stakeholder analysis does not
depends on intent of provide perceptive, qualitative
evaluation: provides total information; difficult to
economic impact not determine actual of knowledge
applicable to internal of participants
evaluation or comparative
analysis
Additions to personal Variation in assessment of
income, local tax revenue; incubator effectiveness from
appear to provide good different parties
return on investment

Source: Sherman and Chappell, 1998, 314

Similarly, Bearse suggests that although there have been attempts to evaluate

incubators, “some suffered from serious methodological shortcomings” and that “for all

its capacity building and data collection efforts, the NBIA is still trying to create a

comprehensive database and reporting system” (Bearse, 1998, 323). According to

Bearse, the NBIA needs to address the three interrelated challenges of evaluation,

  28  
  

performance benchmarking and standard setting and certification (Bearse, 1998, 323).

The NBIA received money from the Economic Development Administration (EDA) in

1993 and subsequently commissioned a study entitled Report on the Impact of

Business Incubators (IMPACT) which was published in 1997. Although its intent was to

improve the evaluative and methodological shortcomings, the study largely passes the

buck of these challenges to others by calling for more research in areas where their

study was supposed to have been definitive (Bearse, 1998, 324). More recently,

Tamasy affirms, “a general accepted set of instruments for analyzing the effectiveness

of business incubators has yet to be developed” (Tamasy, 2007, 465).

Literature strongly suggests that inadequate data is an enduring problem

(Sherman and Chappell, 1998; Bearse, 1998; Tamasy, 2007). Publicly available

information and cursory research undertaken by the incubation industry portrays

business incubators as a success story (Tamasy, 2007, 461). However, there are gaps

in data in three areas. First, control data that squarely address the question “if the

incubatee had not been incubated, would there be any difference in the survival rate of

new ventures?” is not readily available (Hackett and Dilts, 2004, 73). Second, data

related to failed incubatees is difficult to obtain because such information can result in a

decrease or elimination of operating subsidies (Hackett and Dilts, 2004, 73). Third,

there is a lack of systematically recorded data on formerly incubated firms (Schwartz,

2008, 404). Any categorical absence of data obfuscates a richer understanding of a

given process or phenomenon. The research presented in the following chapter will

integrate each of these deficit but place an explicit focus on the third—data collected on

  29  
  

incubator graduates—with the goal of analyzing the phenomenon of long-term graduate

survival as a verifiable indicator of incubator success.

  30  
  

Chapter 3: Theoretical Framework

3.1 Background and Assumptions

The existence of a graduate is an important incubator performance milestone

(Campbell and Allen, 1987, 189). Accordingly, researchers are increasingly turning

their focus to post-graduation issues (Schwartz, 2008, 417). That is the focus of this

thesis, which is a case study designed to evaluate the Hamilton County Business

Center (HCBC) through analysis of the current operational status of a sample of its

graduates. The study is based on two assumptions. First, it assumes that long-term

survival of graduated firms is a primary objective of the HCBC as an extension of

mission to help Greater Cincinnati entrepreneurs launch and build successful

companies (HCBC). Second, it assumes that with varying priorities and resources,

business incubators should be studied within the context of their own individual

missions (Sherman and Chappell, 1998, 313).

The literature review highlighted the difficulty in evaluating business incubation

as an economic development policy due to methodological challenges and the absence

of a performance-benchmarking database (Bearse, 1998; Sherman and Chappell,

1998). It has also been claimed that only a limited number of studies have been

designed to evaluate the effectiveness of the incubation industry on representative and

theoretically grounded bases (Tamasy, 2007, 462). Therefore, it is necessary to place

business incubation within a theoretical framework in order to conceptualize and

evaluate the outcomes it achieves.

  31  
  

3.2 The Logical Framework

The Logical Framework was initially developed for the U.S. Agency for

International Development (USAID) in 1970 as an evaluation tool to help increase

accountability to Congress (Sartorious, 1991,139). The Logical Framework is a 4 x 4

matrix that conceptualizes an activity or intervention through identification of inputs that

lead to a set of outputs, which serve a purpose that is critical to achieving a goal. Each

level—input, output, purpose and goal—is accompanied by a set of assumptions;

defined as factors one assumes will or must take place in order for the activity to

achieve its aim (Middleton, 2005, 43). Each level also has its own set of objectively

verifiable indicators and means of verification that describe how to measure and confirm

the accomplishment of all appropriate objectives. In sum, the Logical Framework is a

flexible tool that starts with higher order objectives and forces stakeholders to think

about a project or policy’s impact and the activities necessary to achieve it; the main

features of good project design (Sartorious, 1991, 146).

3.3 A Logical Framework for Business Incubation

Figure 4: A Logical Framework for Business Incubation

Narrative Summary Measurable Indicators Means of Verification Key Assumptions

GOAL Longitudinal study of graduated Private commercial Financially solvent
Create jobs and generate firms: databases (ex: Dun & small businesses are a
economic development -Have they survived? Bradstreet) proven source of
-Have they expanded? permanent
-New opportunity for employment; small
Economic indicator data individual incubators, business start-ups can
EDCs/CDCs and/or National be correlated with
Business Incubator market and product
Association (NBIA) innovation

  32
 

PURPOSE
Graduate viable
businesses with minimal
risk of failure into the
open—preferably local—
marketplace
OUTPUTS
Supportive environment
where client companies
can mature
ACTIVITIES
Provide shared and
value-added services to
qualified start-up or early-
stage businesses co-
located in single facility
offering below-market
rent and flexible leases
Consistent with the intended use of the Logical Framework, the table above
provides a visual summary of the means—ends interactions characteristic of business
incubation. One complexity of business incubation is that it is seen as both a policy
program and a dynamic process. In other words, the local and state governments,
 
Number of graduated firms Firms fully operational upon Clients overcome the
(annually and aggregate) exiting incubator facility so-called “liability of
newness” due to the
support they receive
while in the incubator
Economic indicator data: Annual evaluation of tenants In order to improve the
by Manager based upon survival rate of small
Total Equity Investment economic indicator data business start-ups,
-Private investors, venture capital policies and programs
should target their
SBIR/STTR Grant Activity specific vulnerabilities
-Applications submitted and
awarded, Phase I & II
Technology Commercialization
-# Technologies licensed from
institutions in/outside Ohio, from
companies or individual inventors
Payroll & Employment
-Number of clients, aggregate
payroll, total jobs, avg. salary/job
INPUTS Oversight of Board of Small business start-
Logistical Services Directors ups have a notoriously
Small and large conference room, high failure rate due to
janitor, utilities, PO Box, parking, factors such as:
security undercapitalization,
poor management,
Value-Added Services weak business plan or
Businesses assistance unmarketable product.
programming, counseling and
seminars, access to network
including: Venture capital, legal
services, accounting, IP specialists,
tech commercialization experts and
other entrepreneurs
Reduced rent on office space plus
additional facilities (warehouse,
labs, etc.)
Created by Alison Verba
33

 

universities and private funders who support business incubators generally do so as

part of an overarching strategy—economic development, technology commercialization,

increasing profits, and so on. However, developing a business incubator as an

entrepreneur-led economic development program is an action undertaken

independently of what occurs inside the facility. That is, business incubation as its own

organic process.

Applying the Logical Framework in this scenario shows that the inputs are a

combination of fixed assets—physical space, office amenities, rental subsidies—and

human interactions like business consulting, networking and financial management

coaching. The data collected and analyzed in the case study serve as indicators for one

outcome achieved by the inputs of the incubator—graduate survival. These findings fall

within the framework of evaluation used to evaluate the HCBC in meeting its economic

development goals.

  34  
  

Chapter 4: Methodology

4.1 Research Methodology

The research question posited by this thesis is exploratory rather than

explanatory. As such, its goal is “to develop pertinent hypotheses and propositions for

further inquiry” and therefore any of the five research methods—experiment, survey,

archival analysis, history or case study—can be used (Yin, 2009, 9). Given this

freedom, the selected methodology employed to examine what has happened to the

graduates of the Hamilton County Business Center (HCBC) is a case study.

Yin defines the scope of a case study as “an empirical inquiry that investigates a

contemporary phenomenon in depth and within its real-life context, especially when the

boundaries between phenomenon and context are not clearly evident” (Yin, 2009, 18).

In other words, a case study is appropriate when contextual conditions are highly

pertinent to a given phenomenon of study. Business incubation fits this criterion

because the ability to meet its objectives—creating jobs and generating economic

development—is influenced by the local community and the marketplace (Brooks,

1986). This is true for the survival chances of graduated firms as well as for the

feasibility of the incubator facility itself (Uddell, 1990). Put simply, the nature of

business incubation as an economic development activity is necessarily contextual and

therefore falls within the scope of case study research.

The case study developed for this thesis will be a single-case (Type 1) design. It

can be classified as revelatory case, intended to observe and analyze a phenomenon

previously inaccessible to social science inquiry (Yin, 2009, 48). To date, research

  35  
  

explicitly focusing on the post-graduation period has been largely neglected due to

deficits concerning elementary information on the current location after graduation from

the BIs and a lack of systematically recorded on formerly incubated firms (Schwartz,

2009, 404). The HCBC is no exception. Although it collects annual economic indicator

data on its current tenants, there have been no efforts to systematically track and record

any data on its graduates.

4.2 The Hamilton County Business Center

The Hamilton County Business Center located in Norwood, Ohio was opened in

1989 as the Entrepreneurial Services division of the Hamilton County Development

Corporation. It was repurposed from a former paint factory and occupies an expansive

four-acre campus with two large multi-purpose buildings that include office, laboratory,

light manufacturing and warehouse space. It is considered a mixed-use business

incubator, although it is technology-focused (HCBC).

HCBC is a non-profit economic development entity that focuses its energies on

the creation, development, and growth of Greater Cincinnati's entrepreneurial

endeavors (HCBC). It is the oldest incubation program in the region2 and throughout its

operation it has supported roughly 260 start-up or early-stage companies, over 100 of

whom have successfully graduated into the open market. Its maturity makes HCBC a

compelling case, but it was also selected because of its geographic accessibility, large

                                                                                                               
2
Bio/Start (located in Cincinnati) and the BizTech Center (located in Hamilton, OH). While financially
healthy, both are newer programs—Bio/Start was started in 1997 and BizTech in 2003—with only a
handful of graduates. The older, more established local case would have been the Cincinnati Business
Incubator (CBI), but it closed on January 31, 2010 after over 20 years due to funding cuts by the City of
Cincinnati.
 

  36  
  

surface area and tenant capacity, mixture of tenants, financial solvency and prominent

stakeholder network, including: the Ohio Department of Development, the Cincinnati

USA Regional Chamber, the Greater Cincinnati Venture Association, University of

Cincinnati, Xavier University, and Miami University (HCBC).

4.3 Data Collection Procedures

The individual graduated firm is the unit of analysis for this case study. The

sample used was taken from a roster of graduates listed on the HCBC webpage

(HCBC). There are 77 in sum and their graduation dates range from 1994 to 2010. A

listing of these firms and their current address—found through a web search—can be

found in the Appendix. Location data is essential to verifying the survival of the

graduated tenant outside the incubator facility, and therefore collecting such data for the

entire sample was the first step in answering the research question. Survival outside

the supportive environment created by the incubator facility is a significant achievement,

which becomes increasingly noteworthy over time.

The second step of the case study was to determine other relevant data based

upon the literature. The data points were largely informed by a study conducted by

Michael Schwartz of 352 graduate firms from five separate East German incubators.

Schwartz’s study was built up within the framework of a larger research project

concerned with the long-term effects of business incubation projects on the survival and

growth of small firms (Schwartz, 2008, 408). Like the United States, there is no

comprehensive data source for business incubators in Germany, so Schwartz relied on

publicly accessible data from Creditreform, which is a national credit rating agency that

  37  
  

collects detailed information on all firms in the German commercial register. This

includes employment and sales figures on an annual basis from the date the firm was

founded and other firm-specific variables such as sector affiliation (Schwartz, 2008,

408). Schwartz collected all of this data for his sample, noting, “Creditreform data are

frequently used in entrepreneurship research and studies on small firm growth and

performance” (Schwartz, 2008, 409).

This study was able to find similar data from a publicly available source called

Manta, an online community of 64 million small businesses. While it exists partially for

networking purposes among the universe of entrepreneurs, it also serves as a

searchable database for business profiles comprised of secondary data originally

collected by Dun & Bradstreet. From these profiles, the case study examines annual

sales volume, firm size, NAICS code and number of years in business for the sample of

HCBC graduates.

Annual sales volume and firm size were selected as data points in order to

substantiate claims about job creation and economic development. In addition, the

case study looked for qualitative evidence of company growth and market innovation by

visiting the home page for each graduate firm in search of special recognition, such as

awards or achievements. This was an important step because without access to

longitudinal data on employment and sales commencing with the incubation period,

there is little insight to be gained about how well the incubation process potentially

works beyond guiding firms to graduation from the facility.

The study examined number of years in business next. This is an important

consideration because of the temporary nature of the business incubation process. By

  38  
  

subtracting the firm birth year from the graduation year, the average age of HCBC

graduates can be calculated. This figure could have important explanatory implications.

In his study of German business incubators, Schwartz reports that firms staying longer

in the incubator are statistically significantly less likely to fail (Schwartz, 2008, 408).

However, this figure is an estimate, as it is not made publicly available when the

business entered the incubator. Although the business incubation model is strongly

associated with start-ups, it is possible that some firms in the sample were in a more

advanced stage of the business development upon entry into the HCBC.

The final step in data collection was to compile a list of 3-digit NAICS codes for

each firm. NAICS stands for the North American Industrial Classification System, which

is the standard used by Federal statistical agencies in classifying business

establishments for the purpose of collecting, analyzing, and publishing statistical data

related to the U.S. business economy (US Census Bureau). The motivation for

obtaining such data was to gain a better perspective of what markets, if any,

predominate the sample and also to examine patterns that may be present relating to

industry sector, firm size and annual sales volume.

All of the data collected used in the study was organized in an Excel

spreadsheet. Data manipulation consisted of arithmetic functions and usage of pivot

tables. Data visualization for analytical purposes is done using tables.

4.4 Methodological Limitations

One methodological limitation presented by this case study was the exclusive

use of publicly available data. Because the unit of analysis is a private firm and as

  39  
  

such, there is little public disclosure of information—particularly financial. That many of

these firms are small enterprises of five individuals or fewer exacerbates the issue

because they are by nature low-profile organizations, often with rudimentary websites.

In most cases the business profiles found on Manta contained more data than could be

found directly from the firm’s homepage, but the issue here is that companies must

willingly register with the site for the profile to be available. Only 53 of the 77 HCBC

graduates in the sample were registered with the site, and among these 53 there was

still some unreported data. Finally, the HCBC states that over 100 firms have

graduated, yet only 77 appear on their roster. Therefore, it does not appear that there is

a publicly available means of accounting for graduates who have gone out of business.

Another limitation is that the case study is a Type I design. Schwartz quotes Allen

and McClusky as stating no two incubators are alike, which was also the case for the

five facilities he studied in Germany with respect to graduate survival (Schwartz, 2008,

413). The universe of business incubators in the United States is already very

heterogeneous, and studying the graduates of only the HCBC could not yield a

generalizable result. Rather, the results of the case study are more effective in

evaluating the HCBC in terms of its individual mission and goals and incorporating its

own specific inputs and outcomes into a framework.

Taken together, the case study serves mostly as a snapshot. Rothaemel and

Thursby summarize:

“The lack of data on incubators has been a limitation to the literature on

incubators, [which has been] based on incubator-level data, one-time surveys or
qualitative descriptions. Future research should attempt to rely on longitudinal
surveys conducted in multiple incubators, preferably in and outside the US, to
enhance validity and generalizability” (Rothaemel and Thursby, 2005, 1088).

  40  
  

In the absence of a comprehensive database of graduate information or even such data

collection from the HCBC itself, a more robust analysis of post-graduate firms would

require an IRB approved methodology that solicited firms directly. A standardized set of

qualitative and quantitative performance benchmarks would ideally serve as the basis

for this inquiry, which would commence upon entry of the incubator facility and continue

at regular intervals following graduation.

  41  
  

Chapter 5: Findings

Figure 5: A Statistical Overview of HCBC Graduates

Yearly Count of Graduates

9
Number of Graduates

8 Mean: 4.529
7 Median: 5
6 Mode: 5, 6
5 Range: 1 to 8
4  
3
2
1
1995
1996
1997
1998
1999
2000
2001
2002
2003

2005
2006
2007
2008
2009
2010
1994

2004

Graduation Year

Created by Alison Verba

5.1 Research Findings

Using a valid business address as a preliminary basis for verification of graduate

survival, the HCBC appears to have a very high success rate. According to the table

below, over 83 percent of the sample of graduates have survived outside the incubator.

Also, the majority of these businesses have remained in the region. The largest

proportion of incubator graduates operates in the City of Cincinnati alongside a small

contingent that is located in the surrounding Metropolitan Statistical Area (MSA). Taken

together, almost 82 percent of the graduates are regional. Interestingly, while one

business located in other state outright—Spartanburg, SC—none of the graduates in

the sample appear to have relocated to other metro areas in Ohio. The case study

cannot account for the graduates with no address information, or the discrepancy

  42  
  

between HCBC’s claim that over 100 tenants have graduated while only 77 appear on

their roster of graduates.

Table 3: Distribution of Graduate Businesses by Geographic Area

The findings also show that the graduates have remained small businesses. The

data for firm size lacks precision to the extent that not every business that could be

verified could also be found in the business directory that provided the secondary

quantitative data. This reduced the size of the sample for firm size, annual sales

volume and NAICS code. Also, data reported on firm size and annual sales volume

were given in ranges, so the data had to be handled according to categorical groupings

which prevented calculation of averages and also obfuscated what the real data outliers

are. Regardless, the data shows that a majority of the graduated firms employ fewer

than five individuals and generate less than $500,000 annually.

  43  
  

Table 4: Distribution of Graduate Firm Size

Table 5: Distribution of Annual Sales Volume, Graduate Firms

The final figure shows the breakdown of graduates by 3-digit NAICS code, which

shows that there is great diversity among the graduates of the HCBC. The largest

share of graduates fall into the category of Professional, Scientific and Technical

Services, which is consistent with the Business Center’s own claim that they are a

mixed-use but technology-focused incubator facility. In fact, the HCBC explicitly states

in the Incubator Application section of its website that it is looking for the following types

of companies: Research & Development, Technology-Oriented, Innovative Traditional

Entities, Manufacturing or Light Industrial. Distilling the manufacturing firms further into

their most general 2-digit classification aggregates them into the second most

represented industry sector, comprising 9 of 53 HCBC graduates in the sample.

  44  
  

Table 6: Distribution of Graduates by 3-Digit NAICS Code

Analyzing data on the Professional, Scientific and Technical Services group

further shows an interesting result. Referring to the tables that shows the distribution of

graduate firms by number of employees, it is evident that the proportion of firms falling

into each category starting with the “10 to 19” range declines significantly. However,

62.5 percent of the firms employing 10 to 19 individuals have a NAICS designation of

541 and one third of the firms employing 50 to 99 are also from this sector. Moreover, a

  45  
  

healthy 31.25 percent of these graduates report at least one million in annual sales.

These results suggest that among the graduates of the Hamilton County Business

Incubator there is a correlation between Professional, Scientific and Services sector and

larger size as well as high annual sales.

Table 7: Size and Sales Volume for 541 Industry Sector

5.2 Research Limitations

The first limitation of the study concerns the average age of incubator graduates.

The study found that figure to be 7.11 years, calculated using the difference between

the firm birth year and the graduation year. However, there is no publicly available

means of determining when each firm entered the incubator and therefore the average

age of incubator graduates is an estimate. The HCBC states on its website that it is

  46  
  

looking for start-up and early-stage ventures, but the application itself does not qualify

that preference with actual age constraints. It could be the case that the firms were

admitted to the incubator at a later stage of development.

Second, in terms of firm size, the case study cannot specify what these jobs

actually are. Variables such as being full time or part time, being salaried or paying

wages, the inclusion and quality of benefits as well as any educational or skill

requirements are all important characteristics. While it is clear that few of the incubated

firms create more than a handful of jobs (Campbell and Allen, 1987, 188), that is not to

suggest they are incapable of making meaningful contributions to the local economy;

supposing they are stable and fulfill a market demand. Unfortunately, the data do not

address these considerations.

Finally, regarding sales volume—while it is a point of interest, it is insufficient

grounds for understanding the financial intricacies of graduate firms. How do revenues

compare to expenditures? Are the sources of income viable? Is there evidence of

growth and expansion or is there potential for growth and expansion? Hackett and Dilts

advance three different, mutually exclusive outcome states at the completion of the

incubation process that are indicative of incubation success: 1) the incubatee is

surviving and growing profitably; 2) the incubatee is surviving and growing and is on a

path toward profitability; 3) the incubatee is surviving but is not growing and is not

profitable or is only marginally profitable (Hackett and Dilts, 2004, 74). However,

“[these] outcome states represent only a snapshot of the incubatee’s performance on

graduation day and are no guarantee of future success or failure” (Hackett and Dilts,

2004, 74). Implicit in this discussion is the idea that without longitudinal collection of

  47  
  

multiple quantifiable performance benchmarks, it is difficult to ascertain how well

business incubation prepares its tenants for long-term survival in the open market.

5.3 Discussion

The results of the case study show that the majority of graduates from the

Hamilton County Business Center have survived outside of the incubator. Moreover,

they have predominately remained in the Cincinnati Metropolitan Statistical Area, with

many located within the City of Cincinnati. This means that they have continually

contributed to the regional economy in the post-graduation period through jobs and

sales volume. Though most of the incubator graduates are small operations, some

have grown considerably and even expanded operations into other states. However,

many of the firms in the sample fall into the Professional, Scientific and Technical

Services industry sector which suggests the jobs created by incubator firms are

knowledge-intensive, skill-intensive or both. Compounded with the multiple graduates

classified within the manufacturing sector, it appears that overall the graduates of the

HCBC comprise industry sectors that are known sources of employment growth.

An important extension of this finding is the long-term consistency of the HCBC

graduate population. Schwartz’s study found that more than half of post-graduation firm

closures occur within the first three years of leaving the incubator that is associated with

a high probability of durable establishment in the market for firms that survive beyond

this period (Schwartz, 2008, 416). A sizable 66 out of 77 HCBC graduates have

survived this critical period, and a full 32 of 77 have been operating for at least ten

  48  
  

years. Thus, the case study illustrates that the regional economic impact of the

graduates of the HCBC is applicable in the short- and long-term.

A final point of discussion concerns the average of HCBC graduates upon exiting

the incubator—7.11 years. This is a relatively long incubation period relative to previous

incubator research. One early national study conducted by Smilor and Gill—a survey of

50 business incubator managers—found that among graduate companies, a majority

was in tenancy less than two years (in Campbell and Allen, 1987, 187). Similarly, in his

analysis of 41 incubator firms affiliated with a university, Mian concluded that an

incubation period of three years seemed to be the norm (Mian, 1994, 522). More

recently, in a study of 79 tenants of the Advanced Technology Development Center—a

technology incubator affiliated with the Georgia Institute of Technology—Rothaermel

and Thursby reported that over 70 percent of firms either graduated or failed within

three years (Rothaermel and Thursby, 2005, 1089). This research supports the

business incubation concept as a brief, temporary support system for small businesses.

Even if the HCBC admits some of its tenants past the start-up stage, 7.11 years

is still a lengthy incubation period. One illustrative example is Etegent Technologies, a

high tech R & D firm serving prominent military and corporate clients and operating out

of their local office as well as Wright-Patterson Air Force Base in Dayton, Ohio. Etegent

graduated in 2009, yet was formed in 1996 according to the Corporate Filings Database

maintained by the Ohio Secretary of State. This is either an extraordinarily long

incubation period, or indicative of very mature entry into the HCBC, which does not

support the purpose of business incubation or even the HCBC’s own claim that it seeks

start-up or early-stage businesses for admission.

  49  
  

Moreover, several of the HCBC graduates are still located in the incubator. The

HCBC began leasing market-rate office space to its graduates in February 2010. The

rationale for the HCBC, which receives state funds, was to stabilize its revenue stream

by integrating anchor tenants in the face of state budget cuts (Feoshia Henderson,

Soapbox Cincinnati, February 16, 2010). Recalling the incubator taxonomy described in

the literature review, this action is commensurate with a real estate incubator.

Interviewed by Soapbox media, HCBC Director Pat Longo stated that the businesses

benefit by remaining in a supportive environment but also giving back to the incubator

facility by serving as mentors to current tenants (Feoshia Henderson, Soapbox

Cincinnati, February 16, 2010).

One class of 2010 graduate currently operating out of the HCBC is MobileTEK

consulting, formed in 2002. Potentially completing an eight year incubation period,

MobileTEK was a Cincinnati Business Courier “Fast 55” award recipient—meaning it is

among the 55 fastest-growing companies in Cincinnati—in 2007, 2008 and 2009; in

addition to being named HCBC Tenant of the Year in 2008 (HCBC). Soapbox

interviewed MobileTEK founder Howard Mandel for its feature on the HCBC graduate

facility, quoting him as follows: ““The Business Center provides an environment that is

very conducive to growth and planning and resources that you can tap into for help”

(Feoshia Henderson, Soapbox Cincinnati, February 16, 2010). From this perspective, it

seems evident that a significant factor driving the stability and survival of graduate firms

is the prolonged dependence on the incubator facility. This arguably goes against the

business incubation model and creates normative questions about the allocation of

  50  
  

resources designated for and within the HCBC, in addition to the presence and

stringency of both tenant selection and graduation policies.

  51  
  

Chapter 6: Conclusion

6.1 Conclusions and Implications

Returning to the original research question: what has happened to the graduates

of the Hamilton County Business Center? The sample of graduates studied in the case

study of the HCBC represents those surviving firms who exited the incubator between

1994 and 2010. Of these, 83 percent of the graduates have verifiable, current

addresses. Moreover, virtually all of them have maintained their operations within the

region.

Though the majority of firms have remained small enterprises of five or fewer

employees, they most commonly fall under the Professional, Scientific and Technical

Services industry sector, followed by manufacturing. This is consistent with the

generalization that the types of businesses being nurtured in business incubators

include service-related firms, technology-based companies and light manufacturers—all

known sources of employment growth (Campbell and Allen, 1987, 188). While figures

for sales volume comprised the smallest sample for the case study, the data showed

that nearly half of graduate firms earn at least one million annually.

The next question that arises from these findings is what implications do these

results have for the Hamilton County Business Incubator? This thesis situated business

incubation within the realm of entrepreneur-focused economic development, a strategic

approach to job creation and economic growth through small-business support. From

this perspective, the HCBC serves as an economic development program—taken as an

amalgamation of its physical infrastructure and the provision of value-added services—

which can be evaluated using the Logical Framework.

  52  
  

The data collected and analyzed in the case study serve as indicators for one

outcome achieved by the inputs of the incubator—graduate survival. These findings fall

within the framework of evaluation used to evaluate the HCBC in meeting its economic

development goals. Although the case study affirms that the surviving graduates of

the Hamilton County Business Center have made contributions to the local and regional

economy, incorporating data on failed graduates—a task that is beyond the scope of

this thesis—would have an impact on each of the measures that may be significant for

the evaluation of the incubation program.

Table 8: A Simplified Framework for Evaluation of Business Incubation

Input Output Purpose Goal

Logistical Services, Supportive Graduate viable businesses Create jobs
Value-Added environment with minimal risk of failure and
Services, Physical where client into the open—preferably generate
Space companies can local—marketplace economic
mature development

While the incubator’s policies were also beyond the scope of the research, it stands

to reason that certain facets of the incubation process may be positively correlated with

graduate survival. Drawing upon the literature on best practices and critical success

factors, it is possible that the survival of the sample of HCBC graduates studied was

influenced by 1) the presence of competitive tenant selection policies; 2) the existence

linkages to the University of Cincinnati and other educational institutions; 3) their

situation within an urban economic context; 4) their classification within high-growth

sectors; and 5) their potentially higher-than-average incubation period. Substantiating

  53  
  

the validity and extent of these relationships using regression analysis could be a

direction for future research.

6.2 Recommendations

While conceptually easy to understand, both the contextual nature of business

incubators and the large data deficits surrounding their performance and impact make

them an elusive area of study. Even if the development of a standardized methodology

for the performance benchmarking and evaluation of business incubators is an

unrealistic goal, it seems that policy-makers, researchers and local communities could

at least benefit from a better clearinghouse of data on individual incubators in the United

States. For this reason, it is the contention of this thesis that business incubator

managers should be required to collect longitudinal and qualitative data on tenant firms

including: firm size, annual sales, salaries paid, investments leveraged, patent and grant

activity, and so on.

Such data collection should commence upon a firm’s entrance into an incubator

facility and span a standardized number of years upon graduation. Moreover,

information gathered on firms who cease operations within the incubator or who fail

within the post-graduation data collection timeframe should remain available. This

thesis suggests that this effort should begin with a requirement imposed by the National

Business Incubator Association on all of its members. The NBIA should also create a

database where information on all of its members—including their current tenants and

graduates—can be stored and made publicly accessible.

  54  
  

In practical terms, the issue for business incubators—particularly economic

development incubators—is accountability. A question for current tenants becomes:

based upon what is known and quantifiable about performance, what returns can be

calculated on investment? What are the multipliers? Further, once these businesses

leave the incubator facility and continue operations as graduates, how can their

performance be compared to regional statistics within their industry classification? A

comprehensive database on business incubators in the United States would facilitate

addressing the questions across a broad spectrum of policy or economic research and

analysis and also enhance the transparency of the incubator industry as a whole.

  55  
  

Appendix 1: Directory of HCBC Graduates

(Reverse Chronological Order)

Graduation
Tenant Year Address City, State, Zip

1776 Mentor Avenue,

Mobiletek Consulting 2010 Suite 431 Norwood, OH 45212

Mindbox Corporation 2010 2645 Erie Ave Cincinnati, OH 45208

Etegent
Technologies
(formerly SDL Sheet 1775 Mentor Avenue,
Dynamics Ltd.) 2009 Suite 227 Norwood, OH 45212
1776 Mentor Avenue,
Transmissions LLC 2009 Suite 428 Norwood, OH 45212

Works International
dba Public School
Works 2009 2010 Madison Road Cincinnati OH 45208
Acetech Services 2008 925 Duntreath Lane Loveland, OH 45140

Best Express Foods 2008 2105 Grandin Rd #2 Cincinnati, OH 45208

Safe Schools 7434 Montgomery

(Scenario Learning) 2008 Road Cincinnati, OH 45236
Skilled Trades 2008 1775 Mentor Avenue Norwood, OH 45212

347 Stanley Avenue #

Somatic Digital, LLC 2008 C Cincinnati, OH 45226

ZQI, Inc. 2008 2707 Erie Avenue Cincinnati, OH 45206

Advanced Control
Products 2007 14 De Camp Avenue Cincinnati, OH 45216

  56  
  

100 Corporate Drive, Spartanburg, SC

DBK USA Inc. 2007 Suite G 29303
F & B Medical
Supplies 2007 7247 Ohio Avenue Cincinnati, OH 45236

Industrial Solutions 635 W. 7th Street,

Group 2007 Suite 406 Cincinnati, OH 45203
The Hug Delivery
Company 2007 8950 Rossash Road Cincinnati, OH 45236
W-Insight 2007 5820 Windsong Court Cincinnati, OH 45243

Escoll Technologies 2006 160A Donald Drive Fairfield, OH 45014

201 Main Street, 3rd
MemberMap LLC 2006 Floor Cincinnati, OH 45210

Safety First Inc. 2006 671 Wilmer Ave #A Cincinnati, OH 45226

Summit Digital 4412 Carver Woods

Network 2006 Drive #200 Cincinnati, OH 45242

100 E. Rivercenter
DMinSite 2005 Boulevard, Suite 500 Covington, KY 41011

Matrix Claims
Management Co. 2005 7162 Reading Road Cincinnati, OH 45237
Summer Solutions 2005

XCG Consultants 4359 Glendale-Milford

Ltd. 2005 Road Cincinnati, OH 45242

  57  
  

Yobotics Inc. 2005 2138 Sinton Avenue Cincinnati, OH 45206

660 Lincoln Avenue,
Suite 305 Cincinnati, OH 45206
Advantage Group Big Sky, Montana
Engineers 2004 P.O. Box 161821 59716

Genomatix Ltd. 2004

Gerard Biotech LLC 2004 20 West High Street Oxford, OH 45056

700 Pete Rose Way,

Mae Consulting, Inc. 2004 Suite 5D Cincinnati, OH 45203

30 W Third Street,
M B J Consulting 2004 Suite 4M Cincinnati, OH 45202
Mill Creek
Restoration 2004 1617 Elmore Court Cincinnati, OH 45233
Time Plus 2004

2510 Highland
Ultra Maid 2004 Avenue Cincinnati, OH 45212
9891 Montgomery
Domainit, Inc. 2003 Road, #225 Cincinnati, OH 45242

  58  
  

Hermetic Connector
Division 2003
615 Elsinore Place,
Prevent Blindness Annex Building Suite
Ohio 2003 2020 Cincinnati, OH 45202

ROI Technologies,
Inc. 2003 74 Locust Hill Road Cincinnati, OH 45245
Tri-State
Environmental
Resource Ctr 2003 2828 Vernon Street Cincinnati, OH 45219
Animated
Resolutions LTD 2002 611 Foulke Street Cincinnati, OH 45220

Diffused Gas
Technologies Inc 2002 265 Harmon Avenue Lebanon, OH 45036

MeasureNet Cincinnati, Ohio

Technology Inc. 2002 4240 Airport Road 45226
The Modal Shop 2002 3149 E Kemper Road Cincinnati, OH 45241

7565 Kenwood Road

Pathway Guidance 2002 # 203 Cincinnati, OH 45236
2260 Park Avenue #
Recovery Link 2002 300 Cincinnati, OH 45206
118 William Howard
Intracellular Imaging 2001 Taft Road Cincinnati, OH 45219

1925 Sherman
Jerry Hof & Co 2001 Avenue Cincinnati, OH 45212
Maverick
Corporation 2001 11379 Grooms Road Cincinnati, OH 45242

  59  
  

Premier Mailing Cincinnati, Ohio

Services 2001 9933 Alliance Road 45242
Process Automation 2001

Radial Access Inc. 2001 531 Murray Road Cincinnati, OH 45217

Stevens 2692 Madison Road #
Communications 2001 332 Cincinnati, OH 45208

Lancaster Bingo 2000

3630 Park 42 Drive #
Thinkronize 2000 170F Cincinnati, OH 45241

Williams Electric (T J 7925 New Haven

Williams Electric Co) 2000 Road Harrison, OH 45030

4150 Hamilton
Hazelglas 1999 Avenue Cincinnati, OH 45223

Premier Network
Solutions 1999 5070 Oaklawn Drive Cincinnati, OH 45227
Technitron 1999 3980 Webster Avenue Cincinnati, OH 45212

TNS Technologies 1999

7373 Beechmont
Workflow Dynamics 1999 Avenue # 100 Cincinnati, OH 45230

  60  
  

11427 Reed Hartman

Getter Control, Inc. 1998 Highway Cincinnati, OH 45241
MHI 1998 750 Redna Terrace Cincinnati, OH 45215

Gamco Flavors, Inc. 1997 4350 Mulhauser Road Fairfield, OH 45014

Global Quality 8449 Beechmont
Corporation 1997 Avenue Cincinnati, OH 45255
Gruber Dental Labs
Inc 1997
Hallmark Custom
Drapery 1996
Integrity Summit 1996

Kam Awards 1996 6762 Bramble Avenue Cincinnati, OH 45227

Panoptic Media 1996 2303 Gilbert Avenue Cincinnati, OH 45206
Rapid Engineering
Solutions 1996
Sant & Associates 1996
1544 W Galbraith
Applause Magazine 1995 Road Cincinnati, OH 45231

Clean as a Whistle 5586 E Galbraith

Maintenance 1995 Road Cincinnati, OH 45236

Listermann Brewery
Supplies &
Manufacturing 1995 1621 Dana Avenue Cincinnati, OH 45207

800 Compton Road,

Meta Marketing 1995 Building 13 Cincinnati, OH 45231
Vantage Orthopedics
Inc. 1995 41 Techview Drive Cincinnati, OH 45215
R.T Systems 1994

Compiled by: Alison Verba

  61  
  

Appendix II: HCBC Tenant Application

HCBC INCUBATION PROGRAM

APPLICATION
PART 1 - COMPANY INFORMATION
Entity Name:
_______________________________________________________________________________
Federal Tax ID #: ______________________________ Business Phone
Number:____________________
Current Business
Address:____________________________________________________________________________
Web Address:_______________________________E-Mail Address:
_________________________________________
Type of Business Structure: Sole Proprietor Partnership
C – Corporation S - Corporation
Limited Liability Partnership Limited Liability Company
Date Company was Established:_________________
How did you hear about Hamilton County Business
Center:______________________________________
______________________________________________________________________
______________
PART 2 - REQUIRED STATISTICAL INFORMATION
Business Owned By: Female (100%) Female (At least 51%)
Male (100%) Male (At least 51%)
Minority Owned Business: Yes No
Dollar amount of Last Quarter’s
Sales:$________________________________________________________________
Dollar amount of Monthly Payroll:
$________________________________________________________________
Number of Current Employees: _____ Full Time (Include Owners)
_____ Part Time
_____ Total Employment
PART 3 - INTERMEDIARY RELATIONSHIPS
Commercial Bank: ______________________________________Phone
#__________________________________
Legal Representation: ______________________________________Phone
#__________________________________
Accountant: ______________________________________Phone
#__________________________________
Insurance Provider: ______________________________________Phone
#__________________________________
PART 4 - OWNERSHIP INFORMATION Use separate sheet to list additional
owners.
Owner’s Name #1:____________________________________ Title:
__________________________________
Address:____________________________________________________________________________
_
Phone #:_________________________________ Social Security
Number:__________________________
% of Ownership: _______________________

  62  
  

Owner’s Name #2:___________________________________ Title:

__________________________________
Address:____________________________________________________________________________
_______
Phone #:_________________________________ Social Security
Number:__________________________
% of Ownership: _______________________
Owner’s Name #3:___________________________________ Title:
__________________________________
Address:____________________________________________________________________________
_______
Phone #:_________________________________ Social Security
Number:__________________________
% of Ownership: _______________________
PART 5 - PRODUCT / SERVICE INFORMATION
Describe your products / services and attach any product / service literature:
______________________________________________________________________
_______________
______________________________________________________________________
_______________
______________________________________________________________________
_______________
Is the entity or any of its owners a patent holder? Yes No
If yes, please
describe_______________________________________________________________

Does your entity require any special electrical considerations? Yes No

If yes, please describe:
__________________________________________________________________
____________________________________________________________________________________
_________________
PART 6 – BUSINESS SUMMARY
The following questions are intended to provide a summary of your business. These questions should be
answered and submitted to the Hamilton County Business Center as part of the application for tenancy at
the Business Center. The answers to all these questions should total between three and five pages.
1. WHAT DOES YOUR COMPANY DO?
Provide a description of the business, including the range of products and/or services offered. Describe
the significant problem that your business addresses.
2. HOW YOU DO IT – WHAT MAKES YOUR COMPANY UNIQUE?
Describe the key factors that differentiate your business. How will you gain, sustain and grow a market
position? How do you close the door on your competition and maintain your leadership position?
3. HOW DOES YOUR COMPANY MAKE MONEY?
Describe the revenue model for the business. Provide details of the primary revenue source and mention
others if appropriate.
4. WHO ARE YOUR (POTENTIAL) CUSTOMERS AND PARTNERS
Describe the market, the purchase decision makers in the market, the sales and distribution channel(s),
and the sales cycle. Insure that the information is specific to your business opportunity vs. a
generalization of
the industry.
5. HOW LARGE IS THE MARKET OPPORTUNITY
What is the size of the specific market and how much can you expect to capture annually over the next
few years?
6. WHAT ARE THE COMPETING SOLUTIONS

  63  
  

Describe the alternative products and suppliers that offer your customers a solution. Describe how your
solution is superior to the competition.
7. WHEN DO YOU EXPECT TO BE SUCCESSFUL
Describe the major milestones and challenges for developing the business.
8. WHO ARE THE PRINCIPAL PLAYERS IN THIS BUSINESS
Describe the principle participants in the business and the positions that need to be filled. What specific
strengths and resources does your team bring to the opportunity? What makes you, as individuals,
unique?

Source: Hamilton County Business Center. http://www.hcdc.com/incubation/application

  64  
  

Appendix III: HCBC Economic Indicator Data, 2008, 2009, 2010

Source: Pat Longo, VP & Director, Hamilton County Business Center. 1/16/2011.

  65  
  

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