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Index May 2002

July 2002

September 2002
Dossier

BUSINESS INCUBATION

 


Growing companies

 
    Europe's business incubators generate nearly 40,000 new jobs each year. But they are also important mechanisms for the commercialisation of new ideas. Their contribution to Europe's knowledge economy will be even greater if good practice is applied in areas - geographical and technological - which still lack incubation support.

A benchmarking exercise recently completed by the European Commission's Directorate-General for Enterprise identified around 850 business incubators across the Union. Most were established with public sector finance, as part of employment or regional economic development strategies. On average, they receive continuing public subsidies equivalent to 37% of their operating costs.

The return on this investment is good. Companies that start in an incubator grow rapidly, and only 15% fail in their early years. Incubation is instrumental in the creation of high-quality jobs at an average cost per job of Euro 4,400 - considerably less than that of many alternative policy measures. Taking into account indirect employment impacts, between 2002 and 2010 Europe's existing incubators will contribute at least 1 million new jobs towards the Lisbon goal of increasing employment by 20 million by the end of the decade.

But the benchmarking study goes beyond this positive assessment. It offers a framework for further strengthening incubator performance through the spread of good practice. It also suggests that Europe may need as many as 450 more incubators, and proposes innovative models for the financing and delivery of new services.