Measurement of Business Incubator Performance by Governments: Studying the Practices in the Nordic Region

Abstract: This master thesis aims to investigate the measurement of business incubator performance by governments. Business incubators play a vital role in nurturing startups, promoting innovation, and fostering economic development. Governments have recognized the importance of supporting and monitoring the performance of these incubators to ensure their effectiveness in achieving desired outcomes. The investigation focuses on the Nordic region, renowned for its reputation for innovation as well as the future sustainable goals of the governments. By utilizing an exploratory approach with interviews and secondary data collection this research gathers insights from four Nordic countries - Sweden, Norway, Finland and Iceland. Government officials were the primary data sources to enable an in-depth examination of the existing performance measurement practices, their effectiveness, and areas for improvement. The research begins by exploring the theories on business incubators, incubator objectives and success as well as government support to business incubators. Drawing upon the analysis of the collected data, this study identifies and evaluates the different institutional regimes, the challenges with the evaluation as well as the metrics used for performance measurement, employed by governments in the Nordic region. The outcomes serve as a valuable resource for governments and organizations seeking to enhance the effectiveness and impact of business incubators in their respective regions. By establishing robust performance measurement frameworks, policymakers can make informed decisions, allocate resources efficiently, and create an enabling environment for startups to thrive. In conclusion, the main challenges are isolating the effects of incubator participation, collecting comprehensive and up-to-date data, selecting appropriate KPIs and measuring social and environmental returns. The findings and literature converge on the importance of job creation, direct economic effects, gender equality, capital attraction, and service quality in assessing the impact of supported business incubators. However, to develop a more comprehensive evaluation framework, additional factors such as systemic effects, regional economic development, technological innovation, and entrepreneurial capabilities need to be considered. By incorporating a balanced approach and a wide range of evaluation criteria, governments can effectively evaluate the impact of business incubators and make informed decisions to foster entrepreneurship and drive socio-economic development.