Sustainability-Oriented Business Incubators


This thesis explores the attraction, selection, and support in sustainability-oriented business incubators. Business incubators as hatcheries for start-ups are considered key tools to enhance job creation and strengthen regional economies. While the world population grows and consumption of natural resources increases, the ecosystem services decline. If these issues are not properly addressed, the economic, social, and environmental pressures that are growing in our societies will lead to disasters and threats to humankind. Green incubators can implement sustainability thinking and the related principles in the start-up community right from the beginning, and hence play a significant role in reorienting start-up businesses towards sustainability.

This study shows the importance of making business incubators better known to their potential clients in order to increase visibility and attract more green tenants. The sustainability-oriented business incubators (SOBI), to have a better selection of tenants, need to attract more sustainable entrepreneurs in the first place. Moreover, the selection criteria affect the in-house atmosphere of the incubator, which in turn affects the attraction of more like-minded tenants to the incubator. In addition, word of mouth through partners and referrals by successfully graduated tenants, as well as expert management teams including coaches and consultants and their related networks and mediations, exert more influence on the attraction. In other words, the attraction is dependent both on the selection criteria and the support given to the tenants. To attract proper tenants, a rich local environment, regional and inter-regional collaboration, a well-planned, well-structured pre-incubation process, and credibility of incubators with managerial sustainability expertise and well-established networks are also essential.

When it comes to the selection processes, different factors affect the selection criteria, including business incubators’ goal and agenda such as job creation, diversification of the local economy, utilization of vacant property, commercialization of research, investment as well as owner and sponsors (including public and private), physical characters such as age, size, and occupancy rates. Furthermore, incubators might have different selection strategies such as rigorous-vs-flexible as well as entrepreneur-vs-idea priorities. The initial ambition of SOBIs is to select business ideas that are primarily geared towards sustainability. However, the empirical data has shown that it is not always achievable to attract a sufficient number of green tenants to meet those criteria. The challenges, for example, could be due to economic cycles, specialization, and high-bar (i.e., eligibility) criteria, location limits, lack of sustainable-minded entrepreneurs, and the like.

In recent years, increased awareness about sustainability issues and the UN Sustainable Development Goals (SDGs), as well as signals from green financiers, business owners, and other stakeholders, have forced many incubators to adjust their selection criteria to match sustainability requirements. However, empirical results show that the support given to tenants in green incubators has not been different from conventional ones. But more recently (especially during the past two-three years), institutional forces and the need for more legitimacy have led more and more incubators (even conventional ones) to change their mindset and provide more support towards sustainable business ideas. The conclusions of this study imply that business incubators need to strive for making sustainable entrepreneurs, not selecting them. In order to provide comprehensive sustainability-oriented support, SOBIs need to recruit sustainability experts and educate management teams as well as their tenants about sustainability issues.

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