| Abstract |
New Zealand's business incubators have rapidly developed in the past decade. A deficient innovation network, characterised by disjointed institutional activity and weak, early-stage capital markets, has starved New Zealand's innovative high-tech, start-up firms of the resources, expertise and financial backing necessary to commercialise, grow and prosper. Since 2001, government intervention has sought to address these fundamental market failures, partly through financial support for business incubation. Initial efforts resulted in a proliferation of incubators, which proved unsustainable. More targeted government assistance has since reduced the number of publicly-funded incubators from a peak of 19 to seven. With limited resources, competing demands for government intervention and a strategy of government catalysing rather than sustaining-in-perpetuity an effective innovation network, the policy objective has always been to create a self-sustainable business incubation system. This spawns challenges in terms of incentives, timing issues and a responsibility to maximise the returns on public funds. It also presents policy makers with the quandary of whether the goal of self-sustainability usurps other, often intangible, benefits from business incubators that may continue to rely on government support. This paper will explain (a) the inherently experimental nature of any government-funded incubator model and the implications for policy makers, (b) the New Zealand policy rationale of "incubating incubators", and (c) the process ahead by which policy makers can maximise the chances of a self-sustaining business incubation system in New Zealand. |