Measuring the effect of business incubation in Oslo : an empirical study on performance, survival, and access to public subsidies

Abstract

This paper examines the effect of participation in a business incubation program in Oslo, Norway, measured in terms of economic performance, survival rates, and access to public subsidies. Our research involves incubated companies entering an incubator from 2011 and 2016, matching with comparable companies with similar characteristics. Furthermore, we use the data available for these companies in the period 2011-2018 to analyse the effect incubators have on the incubated companies. To measure the effect of incubator participation, we construct a representative control group by using coarsened exact matching combined with nearest Mahalanobis distance. We then use difference-in-differences estimation (DiD) to estimate the effect of the incubator program on the incubated companies. We find that, in terms of performance, the only positive significant effect of incubator participation is on the number of employees. We find no significant effects on value creation or sales revenues. However, we also find some evidence of negative effects on operating profits for the incubated companies. Further, we find no evidence that the group of incubated companies experience higher survival rates or better access to public subsidies, compared to the group of control companies.