Whether you are raising kids, teaching students, developing employees or – even – incubating start-up companies the key question is this:
Are you bridging or buffering?
With our interventions we can effectively protect our “subjects” (kids, students, employees, start-ups) and buffer their dependency on the external environment OR we can bridge between them and the external environment providing (good) relational connections. The first is mostly concerned with shielding, providing protection and isolation. The second provides engagement, learning and ultimately, advantage.
Amezcua and others studied this bridging or buffering sponsorship phenomenon in the context of incubators in the US over the period 1994 – 2007. Incubators provide resources, social connections, and management advice, and as such give start-ups advantages, which should increase their survival relative to independent firms. They found – in contrast to older studies and commonly held beliefs – this is not necessarily the case.
The researchers found the following to be true for sponsorship services:
- Networking (bridging) reduces exit (mortality) rates in high founding density environments,
- Field building (bridging) reduces exit rates in low density environments, and
- Direct support (bridging or buffering) reduces exit rates in high founding density environments.
In general, Incubators should focus on their role as bridging agents. When considering direct support services (e.g. training, education, etc) incubators should realise that these services are most productive in situation of higher founding density. In emerging fields this is less applicable. In strong, competitive contexts start-ups gain from networking efforts. In contexts without this facilitating higher rates of social interaction will increase survival. Additionally, new organizations in emerging industries (low density) benefit from field building and cooperation to establish legitimacy and in- creased recognition. Interestingly, incubated organisations that were founded before joining the incubator experienced 1.96 greater odds of survival than organisations founded in an incubator.
The bottom-line is that founding density and the variety of sponsorship mechanism alters organisational survival trajectories in unforeseen ways. Since incubators clearly want to increase survival rates this is a critical issue to consider.