Defining social incubators : an exploratory study of social incubators in the Netherlands

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DEFINING SOCIAL INCUBATORS

AN EXPLORATORY STUDY OF SOCIAL

INCUBATORS IN THE NETHERLANDS

Name:

Dave Timmer

Degree:

MSc Entrepreneurship (joint degree UvA & VU)

Faculty:

Economics and Business Administration

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Abstract

The objective of this research was to find the defining aspects of a social incubator. The emergence of this concept in practice, combined with the scarcity of the literature, implies a need for exploring this concept of a social incubator. Exploring the defining aspects of a social incubator will help in categorizing different incubator types, and may assist social incubators in refining their program. Two independent raters identified social enterprises from a sample of 50 enterprises at ten different incubator programs. Subsequently, an explorative research has been done in which nine respondents were interviewed. The transcripts of these interviews were analyzed with a hybrid approach of methods of thematic analysis. The findings show that a social incubator supports its tenants until the end of the program through the provision of infrastructure, business support and mediation, which is in accordance with the activities of a nonsocial incubator program. However, a social incubator differentiates itself from its nonsocial counterpart due to the fact that their primary objective is to create social impact by only selecting startups that pursue a social objective. Keywords: Social incubator, incubator activities, social entrepreneurship

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Introduction

Social entrepreneurship has been an emerging concept within entrepreneurship literature (Mair & Marti, 2006; Zahra, Rawhouser, Bhawe, Neubaum & Hayton, 2008), but the concept also enjoys enhanced legitimacy in practice. During the most recent financial crisis, governments became aware of the increasing costs of the welfare state. A paradigm shift was initiated in which civilians move from anonymous consumers towards responsible participating persons (During, Van der Jagt & De Sena, 2014). This led to a fast growth of social enterprises in the Netherlands. Furthermore, jobs in social enterprises are increasingly being viewed as a viable job choice. According to the Social Enterprise Monitor 2015 survey, employment in social enterprises in the Netherlands increased with 36% between 2013 and 2015 (Social Enterprise NL, 2015), whereas the total employment in the Netherlands did not change over the same period (CBS, 2016). Also, the revenues of social enterprises rose with 24% between 2013 and 2015, regular businesses did not experience this steep revenue growth (Social Enterprise NL, 2015). These numbers illustrate the increasing demand for social entrepreneurship initiatives in the Netherlands.

Meanwhile, social startups are still struggling with some challenges, which are inherent of this new way of viewing and doing business. McKinsey & Company (2011) identified four challenges, starting with the challenge of developing a business model with a focus on both the social and the profit goal. This is generally more time consuming than for developing a purely profit focused business model. Secondly, there are significant management challenges that arise just after the startup phase, mainly because the entrepreneurs are too focused on pursuing their social goals. Thirdly, social entrepreneurs have great difficulty in obtaining venture capital, because venture capitalists are mostly interested in maximizing profitability, and thus their vision is inconsistent with that of the social entrepreneur. Lastly, social enterprises face legislation issues. They do not qualify for tax exemptions in contrast to non-profit organizations, but also can’t offer the same financial returns to investors as profit-maximizing businesses do. This leaves them somewhere in between, not grasping the legislation advantages of addressing social needs, but also unable to reap the full advantages of being a commercial organization (McKinsey & Company, 2011).

Except for the legislation issue, the challenges these social entrepreneurs face are somewhat in line with the kind of problems that commercial incubator programs help entrepreneurs to overcome. Commercial incubator programs focus on the development of a business model and its alignment with an entrepreneur’s objectives (Grimaldi & Grandi, 2005). Moreover, they support their participating ventures in overcoming management issues typical for ventures in the startup phase, by providing an array of services (Aernoudt, 2004; Bergek & Norrman, 2008; Hackett & Dilts, 2004b; Peters, Rice & Sundararajan, 2004). Furthermore, many commercial incubators see it as their duty to help their participants in obtaining venture capital (Bergek & Norrman, 2008; Bøllingtoft, 2012; Grimaldi & Grandi, 2005). There has been a remarkable increase in the amount of these incubator programs in recent decades (Bruneel, Ratinho, Clarysse & Groen, 2012), which should be able to help these social entrepreneurs in overcoming these challenges, you would think. There is only one obstacle that stands in the way of successfully helping these social entrepreneurs to cope with their challenges: the objective of these incubators. Commercial incubators are businesses as well, and in the end the stakeholders of many businesses aim to achieve one common goal: profit maximization (Bøllingtoft & Ulhøi, 2005; Peters et al., 2004). On the other hand, social entrepreneurs aim for what they call impact maximization.

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With a sustainable business, they want to achieve as much social impact as possible (Zahra, Gedajlovic, Neubaum & Shulman, 2009). The only way that incubators will be able to really help these social entrepreneurs to overcome their specific challenges is when the objectives of the two parties are aligned.

This is where social incubator programs emerge. These programs focus solely on supporting social entrepreneurs, and are thus addressing the gap in the market left unaddressed by commercial incubators. Since 2013, more and more of these social incubator programs have appeared in the Netherlands (European Commission, 2014), but they are still small in numbers. The rise of these programs may be connected to the rise of social entrepreneurship in general. In practice, the general public is becoming increasingly aware of the existence of these social incubator programs. However, in the academic world, the social incubator is an unfamiliar concept that has been left practically unexamined. In order to develop the academic field and stimulate further research on this phenomenon, there needs to be consensus on what constitutes a social incubator, and what value it adds. Therefore, this study addresses the following research question:

What defines a social incubator program?

Because this is such a broad and open-ended research question, I use sub-questions to structure this study. These will assist in shaping a profound answer, and will help to structure the data analysis. The sub-questions are:

1) In what way do social incubators differ from commercial incubator programs? 2) Why do entrepreneurs choose to be part of a social incubator?

3) What value does a social incubator create? 4) What challenges do social incubators face?

Besides that attempting to answer these questions may encourage scholars to further examine this novel field of literature; it might also gradually lead to the development of methodologies that can be applied in practice. Hence, it may increase the effectiveness of these programs, but this may still take some time to realize.

In the next section I will provide an overview of the current state of literature on this subject, and I will provide a definition of a social incubator based on this literature. Subsequently, I will describe the methods used to analyze the collected quantitative and qualitative data. Thereafter, I will elaborate on the results of that analysis, and a revised definition of a social incubator will be presented. Finally, in the last section, these results will be discussed and implications for theory and practice will be presented.

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Theory

Defining Incubators

A coherent definition of the concept is needed in order be able to do efficient research on this topic. Table 1 presents a number of definitions from relevant articles on incubators. These articles are among the highest cited in this literature, and are therefore used as a benchmark for a proper definition.

Table 1: Incubator definitions

A few recurring themes can be found among the definitions cited in Table 1. First, when considering the types of business, an incubator places the emphasis on young and small firms, also considered startups. Second, an incubator hatches or nurtures their tenants, so that they enhance their chances of surviving this first stage. And third, an incubator tries to achieve this by providing the firms with a supportive environment. Therefore, an incubator is considered an organization that supports and nurtures small firms in their startup phase by providing them with a supportive environment. However, for a proper and capturing definition, the vaguely described supportive environment needs a distinct clarification.

Researchers have acknowledged that incubators provide firms with a supportive environment in which these startups get the chance to develop themselves (e.g. Aernoudt, 2004; Aerts, Matthyssens & Vandenbempt, 2007; Bøllingtoft & Ulhøi, 2005; Chan & Lau, 2005; Hackett & Dilts, 2004b; Peters et al., 2004), but consensus needs to be reached on what constitutes this supportive environment. First of all, an incubator provides a physical location or office space to startups (Aernoudt, 2004; Bergek & Norrman, 2008; Bøllingtoft & Ulhøi, 2005; Chan & Lau, 2005; Hackett & Dilts, 2004b; Peters et al., 2004). Second, incubators provide firms with equipment and facilities that may reduce overhead costs. These may include internet lines, phone, fax, conference rooms, conference facilities, and so on (Bergek & Norrman, 2008; Bøllingtoft & Ulhøi, 2005; Chan & Lau, 2005; Peters et al., 2004). Third, incubators offer an array of business services, such as management, training, seminars, legal advice, and operational know-how (Aernoudt, 2004; Bergek & Norrman, 2008; Hackett & Dilts, 2004b; Peters et al., 2004). Fourth, an incubator connects firms to

Author(s) & citations Incubator definition

Aernoudt, 2004 (c:414) “nurture young firms, helping them to survive and grow during the start-up period when they are most vulnerable.” (p. 127)

Aerts et al., 2007 (c:288) “constitute an environment, especially designed to hatch enterprises” (p. 255) Bergek & Norrman, 2008 (c:463) “constitute or create a supportive environment that is conducive to the

‘‘hatching’’ and development of new firms” (p. 20)

Bøllingtoft & Ulhøi, 2005 (c:433) “a kind of infrastructure geared to support and nurture the establishment and development of small and medium-sized enterprises” (p. 267)

Chan & Lau, 2005 (c:335) “provide a nurturing environment for new business start-up” (p. 1215)

Hackett & Dilts, 2004b (c:623) “a shared officespace facility that seeks to provide its incubatees with a strategic, value-adding intervention system of monitoring and business assistance” (p. 57) Peters et al., 2004 (c:463) “a support environment for start-up and fledgling companies” (p. 83)

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interested third parties, such as consultants, business angels, seed capital funds, scientists, universities, industry contacts, and prospective customers (Aernoudt, 2004; Bergek & Norrman, 2008; Hackett & Dilts, 2004b; Peters et al., 2004). Thus, an incubator’s supportive environment consists of a physical location, equipment and facilities, business support and networks. These are the components that an incubator utilizes in supporting their tenants. Still, this supportive environment does not comprise all of an incubator’s activities, according to the literature.

Different incubator models are another interesting stream of literature to look at when examining how incubators offer support. These incubator models are not only about what they offer in terms of support, but also about in what way they provide their support (Bergek & Norrman, 2008). Besides the four abovementioned components that constitute the supportive environment, two extra components are adjoined: selection and graduation. Selection consists of the management choice concerning which firms to select into the incubator, and which to reject (Bergek & Norrman, 2008; Hackett & Dilts, 2004b; Peters et al., 2004). Selection of tenants is considered as being an important management task (Colombo & Delmastro, 2002). Graduation is related to under what conditions the tenants leave the incubator, also considered the incubator’s exit policy (Bergek & Norrman, 2008; Hackett & Dilts, 2004b; Peters et al., 2004). Exit policies may include that incubators require their tenants to leave after a certain period of time, when specific resource gaps have been overcome, or when a sustainable business model has been developed. Bergek & Norrman (2008) developed a framework based on the different components of incubators. They have decided to compile physical location, equipment and facilities into one component, ‘infrastructure’. Furthermore, the abovementioned component networks was given the name ‘mediation’. Subsequently, an incubator consists of five components: selection, infrastructure, business support, mediation, and graduation. Bergek & Norrman (2008) argue that infrastructure and graduation are more or less the same in any incubator, and therefore distinguish incubators on the basis of selection, business support and mediation. However, the infrastructure and graduation are also relevant in determining what constitutes an incubator. Therefore, throughout this research, an incubator will be considered: an organization that selects and nurtures startups, by providing them with infrastructure, and supporting them with business support and mediation until graduation.

Categorizing Incubators

Incubators are often referred to as ‘Business Incubators’, but many other names have been used to describe a more or less similar organization, such as: ‘Business Accelerators’, ‘Research Parks’, Science Parks’, ‘Knowledge Parks’, ‘Seedbeds’, ‘Industrial Parks’, ‘Innovation Centers’, ‘Technopoles’, and ‘Networked Incubators’ (Bøllingtoft & Ulhøi, 2005). All these organizations aim for the same goal, namely supporting firms in their startup phase, but their names differ mainly because their intentions for setting up these organizations are different as well. Some have been established to commercialize academic research, mainly by connecting high-tech universities to high-tech firms, whereas others were formed to accelerate regional economic development, or enhance job creation in general (Hackett & Dilts, 2004b; Bøllingtoft & Ulhøi, 2005). Regardless of the situation, an incubator is initially set up to address a specific gap, namely coping with market failures. It is this gap addressed by an incubator is distinguishes different types of incubators (Aernoudt, 2004). Based on this gap, two principal approaches of categorizing incubators exist (Aernoudt, 2004; Hackett & Dilts, 2004b). First of all, incubators can be categorized based on their objectives, and

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thus the objectives of the selected tenants (Aernoudt, 2004; Barbero, Casillas, Wright, & Garcia, 2014; Hackett & Dilts, 2004b). This relates to why and in what way they choose to cope with a specific market failure. For example, incubators can be categorized as ‘Economic development’, ‘Technology’, ‘Mixed’, ‘Social’, or ‘Basic research’ (Aernoudt, 2004). Moreover, incubators can be categorized according to their governance structures or stakeholders (Aernoudt, 2004; Gassmann & Becker, 2006; Grimaldi & Grandi, 2005; Hackett & Dilts, 2004b; Peters et al., 2004). This relates to how they organize themselves in coping with these market failures. For instance, a division can be made between ‘Non-profit’, ‘University-based’, and ‘For-profit’ incubators (Peters et al., 2004). Each of these incubators has a different focus, whether it is improving the local economy, enhancing technological innovations, or achieving financial returns (Gassmann & Becker, 2006; Grimaldi & Grandi, 2005; Peters et al., 2004).

The Social Incubator

In this paper, the purpose is to define a social incubator, about which little has been written thus far. As mentioned earlier, Aernoudt (2004) uses the ‘social incubator’ as one of his typologies when categorizing incubators. He defines it as an incubator “whose aim is to stimulate and to support the development, growth and continuity of companies employing people with low employment capacities” (p. 129). By capturing only incubators that focus on enhanced employment possibilities for people with low employment capacities, this definition does not capture everything that social entrepreneurship entails. Similarly, Etzkowitz, De Mello & Almeida (2005) also state that a social incubator is characterized by its objective to create employment. Perrini & Marino (2006) exhibit a broader definition of social incubators: “Incubators that operate exclusively in the field of social entrepreneurship… but, with the exception of their objectives, they do not differ from the more traditional model” (p. 50). A glance towards the current social entrepreneurship literature is deemed necessary in order to fully comprehend these definitions.

Social entrepreneurship distinguishes itself from ‘regular’ entrepreneurship in the emphasis it places on pursuing their social objectives, in addition to achieving financial viability (Mair & Marti, 2006; Mair & Noboa, 2006; Sullivan Mort, Weerawardena & Carnegie, 2003). One of the crucial determinants of social entrepreneurship is the ‘double bottom line’, which entails the simultaneous pursue of both social objectives and financial returns (Boschee, 2006; Peredo & McLean, 2006; Tracey & Phillips, 2007). However, it is this emphasis on pursuing social objectives that determines whether a business is social or not (Mair & Marti, 2006). Social enterprises prioritize their social purpose above financial profit, and when a profit is made, this is directly used to further pursue their social mission (Haugh, 2005). Still, within the concept of social entrepreneurship there exist some different positions as well. On one side of the continuum are enterprises who focus exclusively on creating social value (i.e. contributing to the well-being or welfare in a given community), and do not engage in commercial activities; on the other side of the continuum are enterprises who view financial returns as almost as important as creating social value (Massetti, 2008; Tan, Williams & Tan, 2005). This suggests that social entrepreneurship can emerge within and across the non-profit, for-profit, or government sectors (Austin, Stevenson & Wei‐Skillern, 2006; Peredo & McLean, 2006). However, non-profit organizations do not pursue the double bottom line. They depend on donations and/or subsidies, and are therefore not

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categorized as a social enterprise in this study. Figure 1 graphically exhibits the differences between non-profits, social enterprises and commercial businesses.

All in all, it is most interesting to examine incubators according to their (and their tenants’) objectives when defining social incubators. It is this social objective that distinguishes social entrepreneurship from ‘regular’ entrepreneurship. Therefore, it is that same social objective that sets social incubators apart from commercial incubators (Perrini & Marino, 2006). This leads to the following definition of a social incubator: an organization whose main objective is to create social impact, by selecting and nurturing social startups, providing them with infrastructure, and supporting them with business support and mediation until graduation.

Now that a definition has been formed on the basis of some literature sources, it will be interesting to test whether this definition of a social incubator can be validated with rich qualitative data. In the next section, I will elaborate on the methods being used test this. Furthermore, the next section will validate whether the social objective, the factor that seems to determine whether an incubator is social or not, is truly present at these type of incubators.

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Methodology

The aim of this research is to develop the literature on social incubators, since there is no coherence on what a social incubator entails. Therefore, it will be interesting to conduct interviews with different parties, which may have different positions concerning the role of these programs. In addition to this qualitative analysis, a brief quantitative measure will be done in order to verify whether these social incubators are truly focusing on a different type of enterprise compared to other incubators. When comparing the social incubators, enterprises, or entrepreneurs with their respective counterparts, I will refer to these counterparts as ‘nonsocial’ for convenience for both the reader and writer, which does not have to mean that these counterparts do not have any social intentions at all.

Quantitative analysis

In this section, I test the social status of the social incubators in the Netherlands. This means that I will examine enterprises active in both social and other incubators. Scoring these enterprises on a social scale will show whether the participants of these programs genuinely differ between the different incubator types.

When examining the current status of social incubators in the Netherlands, I categorize an incubator as social when it adheres to the definition found in the literature. Doing so the social incubators shown in Table 2 have been found in the Netherlands. These programs have two notable similarities: they are all started from 2013 onwards and are all seated in the Randstad (a megapolis in the Netherlands consisting of the four largest Dutch cities, Amsterdam, Rotterdam, The Hague and Utrecht, and surrounding areas). Some incubators also support ventures abroad (mainly in developing countries), but were selected because they are seated in the Netherlands, and mainly work with Dutch entrepreneurs. All these programs focus on social entrepreneurs that want to make an impact, while creating a sustainable business model. Thus, these incubators focus on achieving the double bottom line in collaboration with their tenants. It should be noted that the ‘Investment Ready Program’ and ‘Business Model Challenge’ are both

Table 2: Social incubator programs in the Netherlands

Social component

Name Established in (city and date) S I BS M G Objective/Description

Impact Hub Amsterdam & Rotterdam (2008) ☐    ☐

We believe a better world evolves through the combined accomplishments of creative, committed, and

compassionate individuals focused on a common purpose.

Investment Ready Program Amsterdam (2013)     

Investment Ready is a unique 4-month program for green entrepreneurs creating scalable solutions to global challenges.

Business Model Challenge Amsterdam (2014)     

The Business Model Challenge is a three month programme for social entrepreneurs which will stimulate them to create a viable business model.

Social Impact Lab At PWC offices (2014)     

Be Social. Make Impact. Join the Lab. A challenge voor start-ups. The one to two year program helps social entrepreneurs to enlarge their social impact.

Impact Booster The Hague (2015)  ☐* _ _ _

Turning sustainable ideas into profitable companies. A five months program that supports entrepreneurs to make their market entry in emerging economies.

Social Business Incubator The Hague (Cordaid) & Rotterdam

(Enviu) (2013)  ☐

* _ _ _

The SBI helps social entrepreneurs to develop impactful ideas focusing on people living at the bottom of the pyramid (BoP) into innovative business models. Incubator components: S=Selection, I=Infrastructure, BS= Business Support, M=Mediation, and G=Graduation.

*Selected start-ups aim at emerging economies, the incubators help them to do this on location by using their established network in those countries. Incubator components

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incubator programs within the Impact Hub. These have been mentioned explicitly, since the Impact Hub has additional activities besides their role as an incubator.

In order to get a better picture of the social incubator in the Netherlands, a closer look at the tenants within these incubator programs needs to be taken. Also, these tenants should be compared to tenants active in other nonsocial incubators. The first step in analyzing and comparing these tenants is determining to which degree these ventures can be defined as being social. They will be assessed by two independent raters on the basis of a 7-point Likert scale. A venture will be scored with a 1 when it’s purely focused on the economic aspects of the business, and with a 7 when the only focus is on creating social change. Based on the literature, we will look at the motivation, opportunities and outcomes of ventures, because a number of researchers have argued that these are the distinguishing properties of social entrepreneurship vis-a-vis ‘regular’ entrepreneurship (Mair & Noboa, 2006). First, motivation entails the altruistic feelings of social entrepreneurs that encourage them to create social change (Bornstein, 2004; Mair & Noboa, 2006). Motivation is low when an entrepreneur only thinks about his personal gains and displays no altruistic characteristics whatsoever, and is high when an entrepreneur assertively challenges the status quo in pursuing social change. Second, social entrepreneurs appreciate opportunities differently. Social entrepreneurs place great value on opportunities that may create a social benefit, while ‘regular’ entrepreneurs are more prone to opportunities that may amount to financial returns (Dees, 1998; Mair & Noboa, 2006; Sullivan Mort et al., 2003; Weerawardena & Mort, 2006). Third, the focus on a certain outcome varies between the social and nonsocial entrepreneurs. Social entrepreneurs target the creation of social value, whereas ‘regular’ entrepreneurs mainly consider economic wealth creation (Dees, 1998; Mair & Noboa, 2006; Peredo & McLean, 2006; Sullivan Mort et al., 2003). Taking these three properties into account, the ‘social score’ of the venture will be determined. It goes without saying that the tenants of social incubators are expected to reach a social score of at least 4, since social enterprises need to have an emphasis on social value creation versus economic value creation (Mair & Marti, 2006; Mair & Noboa, 2006; Peredo & McLean, 2006).

For each incubator, five tenants were reviewed. These five tenants consisted of the most recently selected ventures, and are expected to give an accurate and up-to-date representation of the incubator’s tenants. Whenever the venture did not disclose enough information to be critically scored on the three characteristics, the tenant was abandoned and the next one in line was reviewed. A social score of 1 characterizes a purely economically focused firm, and a 7 a purely socially focused business.

In order to be able to compare these ventures with ventures selected by nonsocial incubators, these need to be scored in a similar fashion. For a solid comparison, five incubators need to be found that are located in the same areas (Amsterdam, Rotterdam and The Hague area). Also, they need to provide the same services, i.e. comprise the same components. In each of these five incubators, five tenants will be reviewed on their sociality, and these will be selected in a similar way as the social incubator’s tenants. The five incubators can be found in Table 3.

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In total, 50 ventures (25 at social incubators and 25 at nonsocial incubators) are scored by two independent raters. This is done to enhance the reliability of the data, since the first rater may experience a bias because of the responsibility of selecting the ventures in the first place. Therefore, he is already aware which ventures are in the social program and which are not. The second rater received the ventures to be scored in a random order to eliminate this bias. Assessing the inter-rater reliability allows the agreement between independent scores of a set of subjects to be quantified. It determines what percentage of the observed variance is due to the similarity in scores between raters (true score variance), and what percentage is due to differences in scores between raters (error variance) (Hallgren, 2012). It should be noted that the second rater is non-randomly selected. The second rater enjoyed the same educational background, and therefore has knowledge about the social entrepreneurship concept. This is considered meaningful in scoring the appointed ventures.

To assess the inter-rater reliability in this case, the inter-class correlation statistic is used. Inter-class correlation is useful for ordinal, interval and ratio variables, for studies with two or more raters. It incorporates the magnitude of disagreement, with higher disagreements leading to a lower inter-class correlation and vice versa (Hallgren, 2012). This is a useful statistic for this study since the scores are expressed in ordinal variables and scored by two independent raters. A two-way mixed model is used for the inter-class correlation, since the systematic deviations for the two raters should be accounted for. Also, the inter-rater reliability is characterized by absolute agreement, since it is important that the raters provide scores that are somewhat similar in absolute value.

The resulting inter-class correlation is in the high range, inter-class correlation = 0,86 (Appendix I). The lower limit of the 95% confidence interval is already acceptable, inter-class correlation = 0,75; and the upper bound is already in the excellent range, inter-class correlation = 0,92 (Cicchetti, 1994). This means there is a high inter-rater reliability. It indicates that the raters have a high degree of agreement and shows that the ‘sociality’ of ventures is rated in a similar way by the two raters. This high inter-class correlation shows that there is a low amount of measurement error, which

Table 3: Nonsocial incubator programs in the Netherlands

Social component

Name Established in (city and date) S I BS M G Objective/Description

Rockstart Amsterdam (2012)     

Rockstart helps startups be more successful in their first 1,000 days through funding and mentorship, community and office space, relevant startup events and more.

ACE Venture Lab Amsterdam (2013)     

It is our ambition to become a leader in accelerating science based and technology companies which are the drivers of innovation, economic prosperity and job creation.

Rotterdam Internet Valley Rotterdam (2011)  ☐   

Rotterdam Internet Valley creates an ecosystem in which they offer tailor-made technical support and business coaching.

YES!Delft Delft (2005)      YES!Delft is a tech incubator that helps entrepreneurs to build and grow leading technology companies.

World Startup Factory The Hague (2015)     

World Startup Factory (WSF) offers acceleration programs to startups with impact driven solutions and convincing business models.

Incubator components: S=Selection, I=Infrastructure, BS= Business Support, M=Mediation, and G=Graduation. Incubator components

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entails that the statistical power for further analysis is not significantly reduced. According to this analysis, the ventures that are scored as being mainly social can be considered genuinely social, and ventures that are scored as being mainly commercial can be justly considered commercial.

In the social incubators, the ventures score a mean of 5,38 on the 7-point Likert scale. This indicates that the ventures mostly emphasize the social part of the venture, without completely ignoring the financial part. Of course, there need to be recognized that this is a slightly biased measure, since the first rater knew that these were considered social. However, the means of the first and second rater point in the same direction with means of 5,52 and 5,20, respectively. Using a one sample t-test, I tested whether the social scores of both independent raters are significantly higher than the 4,00 tipping point. According to the output (see Appendix II), the scores of both rater 1 (p<0,001) and rater 2 (p<0,001) are significantly higher than 4,00 at the 1% level. This confirms that the ventures that participate in social incubators are inherently social. Furthermore, the individual scores confirm that social incubators are indeed only occupied by social ventures, since no tenant reaches a social score below 4,00.

The average of the social scores of the tenants determine the social score of the incubator. With a minimum score of 4,90, and a maximum score of 6,00, it is confirmed that the incubators are inherently social (see Table 4). A noteworthy

Table 4: Social scores of social incubators' participants

Rater1 Rater2 Average

Crowdbuilding Impact Hub - Investment Ready Program 4 6 5,0

The Dutch Weed Burger Impact Hub - Investment Ready Program 5 5 5,0

De Energiebespaarders Impact Hub - Investment Ready Program 5 6 5,5

Goodhout Impact Hub - Investment Ready Program 5 5 5,0

MX3D Impact Hub - Investment Ready Program 4 4 4,0

Average 4,60 5,20 4,90

The RaisInn Impact Hub - Business Model Challenge 5 5,0

Heritage Revolution Impact Hub - Business Model Challenge 6 5 5,5

SUR+ Impact Hub - Business Model Challenge 7 6 6,5

Roots of Sicily Impact Hub - Business Model Challenge 4 4,0

Travel with A meaning Impact Hub - Business Model Challenge 5 3 4,0

Average 5,40 4,67 5,00

&Thijs Social Impact Lab 6 4 5,0

GEEF Cafe Social Impact Lab 6 7 6,5

The TravelSpy Social Impact Lab 5 5 5,0

Amplino Social Impact Lab 5 4 4,5

CTalents Social Impact Lab 6 5 5,5

Average 5,60 5,00 5,30

Bantu Initiative Impact Booster 5 5,0

Severe Weather Consult Impact Booster 6 5 5,5

MondoVet Impact Booster 7 7,0

SANAM Impact Booster 6 6 6,0

rabbitiq Impact Booster 5 5 5,0

Average 5,80 5,33 5,70

SmartFarming Social Business Incubator 6 5 5,5

YEBO! Social Business Incubator 6 6,0

Ensure Your Family Social Business Incubator 7 6 6,5

Micropensions Ghana Social Business Incubator 6 6 6,0

Gramam Agroservices Social Business Incubator 6 6 6,0

Average 6,20 5,75 6,00

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observation is that the programs that help entrepreneurs develop their ventures in emerging economies score higher on the social aspect than the incubators that stay in the Netherlands. This may be due to the raters’ subjective score of the different characteristics, or may illustrate that the ventures aiming to solve social problems in developing countries are inherently more social than the ones pursuing social objectives nationally.

The mean of the social scores of tenants at nonsocial incubators is 2,84, well below the social venture indication of 4,00 (see Table 5). This shows that ventures at other incubator programs are more focused on financial returns, while sometimes also considering the social aspect of the business. However, 24% of the ventures (6 out of 25) that were reviewed obtained a social score of at least 4,00, and are thus considered social. It would be interesting to find out why these social ventures attend a program not necessarily aimed at social entrepreneurs. Once again, the direction of the scores of the first and second rater is similar, but the difference in mean scores is larger for these commercial ventures, with means of 2,40 and 3,28, respectively. This difference may be attributed to the bias of the first rater, which already knew that these incubators where mostly commercial driven. Again using a one sample t-test, I tested whether the social scores of both independent raters are significantly lower than the 4,00 tipping point. According to

Table 5: Social scores of nonsocial incubators' participants

Rater1 Rater2 Average

Swuto Rockstart 1 2 1,5 Zenodys Rockstart 2 1 1,5 Packpin Rockstart 1 1 1,0 Teamscope Rockstart 4 3 3,5 TinyBots Rockstart 5 6 5,5 Average 2,60 2,60 2,60

MyReputationLab ACE Venture Lab 1 3 2,0

ENPICOM ACE Venture Lab 2 2 2,0

Panoptes Heritage ACE Venture Lab 1 2 1,5

3DUniversum ACE Venture Lab 2 1 1,5

Medicine Men ACE Venture Lab 4 5 4,5

Average 2,00 2,60 2,30

eTing Rotterdam Internet Valley 3 4 3,5

plane&train Rotterdam Internet Valley 1 3 2,0

Valory Rotterdam Internet Valley 1 2 1,5

Analysis.io Rotterdam Internet Valley 1 1 1,0

Be Involved Rotterdam Internet Valley 4 5 4,5

Average 2,00 3,00 2,50

Adjuvo Motion YES!Delft 5 4 4,5

Bolt Mobility YES!Delft 2 5 3,5

JUMP Innovations YES!Delft 1 4 2,5

Power Window YES!Delft 5 6 5,5

SD-Insights YES!Delft 3 4 3,5

Average 3,20 4,60 3,90

XGear World Startup Factory 1 3 2,0

Beep Beep World Startup Factory 2 2 2,0

WoodysHousing World Startup Factory 4 5 4,5

Motortourer World Startup Factory 2 4 3,0

Ingenious World Startup Factory 2 4 3,0

Average 2,20 3,60 2,90

Total 2,40 3,28 2,84

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the output (see Appendix II), the scores of both rater 1 (p<0,001) and rater 2 (p<0,05) are significantly lower than 4,00 at the 5% level. This shows that participants in nonsocial incubator programs are mostly commercial-driven.

Every nonsocial incubator program scored below a 4,00, but YES!Delft is not far off with an average social score of 3,90. The incubators obtain a social score between 2,30 and 3,90, which lies closer to the ‘tipping point’ of 4,00 compared to the social incubators. Also, the mean of all participating ventures is closer to 4,00 for the nonsocial incubators. This may have a very logical explanation: social enterprises can participate in commercial incubators, but commercial ventures are (usually) not allowed to participate in social incubator programs.

Qualitative analysis

In order to explore the concept of a social incubator, and develop the current literature, it is necessary to conduct qualitative research. This is mainly because of the nascent status of the literature, in which inductive, qualitative research embraces the best methodological fit (Edmondson & McManus, 2007).

First of all, interviews with the program directors of social incubators in the Netherlands have been conducted (Appendix IIIa). This way, knowledge on the motivation for starting these programs and how they differ from other programs was obtained. Second, ventures that are participating in these programs were interviewed (Appendix IIIb). This shed light on why social entrepreneurs specifically chose one of these social programs, instead of joining one of the other possible types of incubators. In these interviews, I aimed to obtain information about what added value a social incubator brings compared nonsocial incubators. And third, ventures that are considered to be social, but are participating in other incubator types were interviewed (Appendix IIIc). In these interviews, they main goal was to get an understanding of why these entrepreneurs chose not to join a social incubator; whether this was intentional or due to ignorance about the existence of these programs. The interviews with the three different parties provide a broad overview of what the important aspects of social incubators are, and how entrepreneurs perceive them. Because these particular respondents are needed, I chose to approach them via e-mail and by telephone, so I could get directly in contact with the desired persons.

The interview protocol differed per party, since the aim of the interviews differs among them. In the protocols, the focus is on a number of subjects. I separated the questions per subject, which makes it easier to navigate through these subjects during the interview. Furthermore, neither the sequence nor the number of questions is determined, since this has been adapted according to the flow of the interview and the answers of the interviewee. After two interviews, I further refined the interview protocol and revised the questions, to optimize the effectiveness of the interviews, and thus the quality of the data (Hill, Knox, Thompson, Williams, Hess & Ladany, 2005).

In order for the analysis to be credible, a minimum number interviews per category was set to two. The low number of social incubator programs in the Netherlands could have been an issue for this research, when the desired number of interviews with program directors would not be attained. However, three program directors were willing to participate. The social tenants were approached that participated in the respective programs of the participating program directors. Therefore, approaching these entrepreneurs had to wait until the appointments were made with the

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three programs could be approached, and most programs were relatively new. Fortunately, four respondents of this category were willing to participate in this research. Additionally, social entrepreneurs that participated in nonsocial incubators had to be approached. I chose to approach the entrepreneurs that were considered social, but active in nonsocial incubators, presented in Table 5. This was also a limited group, but luckily two entrepreneurs were found that I could conduct an interview with. In total, I did 45 attempts to approach potential respondents, either by phone or by e-mail, which lead to a total of nine interviews. This entails a response rate of 20%, which is considered low in qualitative research studies (Kelley, Clark, Brown & Sitzia, 2003). When examining the three categories separately, the program directors display the highest response rate (38%), followed by the social tenants (22%), and the nonsocial tenants exhibit the lowest response (11%). Of the nine respondents, four were women; all three of the program directors and one social tenant, the rest were male.

To analyze the rich qualitative data that is collected during this study, a hybrid approach of methods of thematic analysis has been used. This incorporates both the theory-driven deductive approach, which uses an a priori set of codes, and the data-driven inductive approach, which is based on open coding (creating codes as you go through the data) (Fereday & Muir-Cochrane, 2006). The inductive approach is used because the research question is open-ended, and I needed to be open for anything the respondents tell me (Edmondson & McManus, 2007). In the deductive approach, I made use of a code manual, which is only used as a data management tool to support the interpretation of the text by organizing it in similar pieces of text. This enhances the credibility of the study (Crabtree & Miller, 1999). The code manual is depicted in Table 6. These codes consist of the subjects in the definition of a social incubator constituted in the literature review, since this definition needs to be revised after the qualitative analysis. Coding is an iterative and reflexive process, in which I went through the same qualitative data over and over again to optimize the codes (labels) in an attempt to find out what sets social incubators apart from other types of incubators. After the first round of coding, I identified initial themes that assisted in structuring the codes. These themes were further refined with each additional round of coding, until the desired coding scheme had emerged.

During the analysis of the data, I looked for data that supported alternative explanations to test the integrity in the analysis. Since I was the only researcher that analyzed the raw data, this was an important test for the credibility of the study. By testing rival explanations, one can control whether a researcher has been analyzing the data with a bias towards a certain outcome (Patton, 1999). Due to time restrictions, this has been evaluated as the best possible option to test the integrity of the data analysis of this study.

Triangulation is a good tool to test the validity of a research, and studies that only use one method are more vulnerable to errors that are linked to that specific method (Patton, 1999). Due to the short time frame only a small amount of triangulation was applied. Because the quantitative measure is not only dependent of the same researcher as the qualitative measure, some researcher bias may be taken away by this triangulation of data. The social scores rated by the two independent raters were used in selecting the social incubators and enterprises, for which they needed a social score above 4,00. In the interviews, it was confirmed by all parties that their respective organizations were indeed

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social in nature. This shows that the social scores are a valid score for testing whether the incubators or enterprises are indeed social.

Lastly, because the researcher, myself, is the instrument when conducting qualitative research (Patton, 1999), I should include some information about myself. First of all, I am a student of the Entrepreneurship Master, in which I had some minor experience with qualitative research methods. Therefore, the quality of the methods of analyzing the data may lack a bit of professionalism, and I am aware of this. I do not have work experience connected to social enterprises, but I do find this subject quite interesting. Consequently, I had no prior connection to all of the respondents I approached, and thus interviewed. Based on these circumstances, this study will not suffer from credibility issues.

Table 6: Code manual

Label Definition Description

Social objective A focus on making social impact. Emphasis on pursuing social objective, while being financially sustainable; aiming to achieve the double bottom line.

Selection

The management choice concerning which firms to select into the incubator, and which to reject.

Usually supported by selection criteria, entrepreneurs often compete with other entrepreneurs for the available positions.

Infrastructure The physical location, equipment and facilities provided by the incubator.

This consists of office space or housing, and may include may include internet lines, phone, fax, conference rooms, conference facilities, etcetera.

Business support The array of business services offered by the incubator.

This may consist of services such as management, training, seminars, legal advice, and operational know-how.

Mediation Connecting the ventures to third parties.

These third parties may include consultants, business angels, seed capital funds, scientists, universities, industry contacts, and prospective customers.

Graduation

Under what conditions the tenants leave the incubator, also considered the exit policy.

Incubator may require their tenants to leave after a certain period of time, when specific resource gaps have been overcome, or when a sustainable business model has been developed.

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Results

In the literature review, a definition of a social incubator was constructed on the basis of available literature. The definition is as follows: an organization whose main objective is to create social impact, by selecting and nurturing socially-oriented startups, providing them with infrastructure, and supporting them with business support and mediation until graduation. However, because of the lack of literature on social incubators, it may be interesting to test whether this definition will hold using the qualitative data collected from the respondents.

Furthermore, in attempting to find a structured answer to the research question, I will first try to find answers to these sub-questions:

1) In what way do social incubators differ from commercial incubator programs? 2) Why do entrepreneurs choose to be part of a social incubator?

3) What value does a social incubator create? 4) What challenges do social incubators face?

Trying to answer these questions will help to test the definition of the social incubator mentioned in the previous paragraph. Combining all the findings will hopefully improve our understanding of social incubators.

Differentiating factors

First of all, there are quite some differences in the motivations from which these social incubators originate. Incubator X was founded by a company that already focusses on making social impact. This company uses the incubator as a tool to enhance their social impact contributions. Incubator Y was founded by a commercially-driven organization, and is also being used as a tool to achieve social impact, but from a different perspective. The incubator program is part of their corporate responsibility program, which is used as a source of inspiration for the employees of that organization. Incubator Z, the third social incubator, was founded by a team of social investors who wanted to create social impact. So, regardless of their situation or motivation for starting the incubator, the objective of all three social incubators is to make a social impact in the world they live in.

The social incubators almost exclusively focus on social enterprises, but contrary to the expectation, social incubator Z states that they also support businesses that are predominantly commercial, to become more social. These businesses accumulate to approximately 20% of their clientele. “But on the other side we have a lot of more commercialized ideas that come in and we help them in the other way to help them make their business model more social” (Program Director Incubator Z). This is in line with their mission of growing social impact, in which commercial business may also play a role. However, this statement jeopardizes the definition of the social incubator in the sense that an incubator does not necessarily select and nurtures socially-oriented startups; they might also support commercial businesses that want to become more social. Therefore, it may be better to emphasize the social objective of participating in a social incubator when finding a proper definition.

When comparing the mission or goals of each social incubator or participating venture, there is great conformity on what this entails: creating or enhancing social impact. For each, this is the main reason they set up this program or

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venture. They all want to make a positive impact on people’s lives, either directly by tackling a social problem, or indirectly by supporting the entrepreneurs in achieving this: “The goals... for us it's bringing these startups to the market so we can begin generating impact” (Program Director Incubator X). This is supported by the fact the social objective is one the most stated subjects among the respondents. This may come as no surprise since this is the principal reason of their existence.

According to the participating entrepreneurs, the most prominent differentiating factor of these social incubator programs is the focus on the double bottom line. They acknowledge the importance of pursuing of social objectives, but also mention that this in itself is not enough; trying to create sustainable businesses is what sets them apart from other incubator programs. Following the question if there is a need for social incubators, one respondent answered: “The differentiating factor is that social entrepreneurs often entails another dimension of complexity… You have an extra challenge, getting paid for the impact you realize. These are different, additional issues. So, I think that it is fine to participate in other programs, but that there are issues that are way more complex than with a regular entrepreneur” (Social tenant C). The program directors partially confirm that this is what sets them apart from commercial incubators. Two of the three state that their specialized knowledge and approaches of helping social entrepreneurs to create sustainable business models is what differentiates them from commercial incubators. The other program director mentions the importance of the way the program is set up, and the expertise they have, as their main differentiating factors.

Social incubator programs are relatively new, but in terms of experience, it is hard to say whether these social incubators differ from their commercial counterparts. Two of the three incubators are still looking for the best way to optimize the effectiveness of their programs, which is inherent to a novel program, but on the contrary they do have relevant prior experience with supporting startups. However, incubator Y does not have much experience in setting up startups. Later in this section, we will see that this has been a challenge for this incubator. In the other two incubators, the newness does not negatively affect the ability to support their tenants. Both tenants from incubator X, which started four months ago, were very satisfied with the set-up and support they received throughout the program: “Content-wise they have it all figured out. That I do have to stress clearly, they did that really well. And I don’t know about the other programs, but this is intensively guided” (Social tenant D). When looking at the two social enterprises that participated in nonsocial incubator programs, there is also a difference in experience among them. One program already has quite some experience with setting up businesses, and exists for more than ten years already. According to the tenant, they “polished the program throughout the years, so it all runs very smoothly” (Nonsocial tenant II). However, the other nonsocial incubator program is also in their first run, and as the tenant describes: “by all means it is just a startup, they also have to find their way” (Nonsocial tenant I). So, in terms of experience, it is of no use to make a distinction between social and nonsocial incubator programs. When focusing on new incubators, it seems that prior experience with setting up startups is the most important factor to be able to provide the desired support. One of the nonsocial tenants indirectly described why there is a need for social incubators. He mentions that he finds himself in a different market than most participants of the program, because he focuses on a different niche. This

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route to the market than with a regular High-tech company… when you have an incubator that is focused on Med-tech, which has a network that can help you, this would be very valuable” (Nonsocial tenant II). This describes that a different approach is needed for a different type of business, and that a focus on a specific segment can be valuable for entrepreneurs. Since social entrepreneurship asks for a different approach of doing business, an incubator purely focused on social enterprises can create additional value for the participating ventures.

The other respondents all confirm unanimously that there is indeed a need for social incubator programs. They acknowledge that the needs of social enterprises differ from other companies, and that these cannot be thoroughly addressed by a nonsocial incubator program. Multiple reasons are mentioned why a separate program is needed for social enterprises: 1) a different approach is needed to support social ventures, 2) the issues are more complex compared to nonsocial ventures, 3) you need to have a group of likeminded entrepreneurs to find inspiration for improvement, 4) it is unfair to compare social with nonsocial ventures within a program, 5) there is a great market potential for social incubators. These are all issues that nonsocial incubator are not able to tackle, and the accumulation of these issues show the current need for social incubators.

Motivation for joining

The four tenants of social incubator program that were interviewed were all motivated to choose for that specific program for three main reasons: network, expertise, and cash. Only one of the four tenants was not motivated by the option of a cash injection by the incubator. Although the order of importance of these three factors differs among the respondents, cash was never the primary motivator. The tenants of incubator X were mainly motivated to participate because of their network, while the tenants of incubator Y found their expertise the most convincing factor. For both social incubators, these were considered important selling points according to the program directors. The option to obtain cash was not mentioned as an important selling point of the incubators.

Two of these three aspects that are considered the most important motivators for choosing to participate, are in line with the three supporting factors mentioned in the definition constituted from the literature review. Expertise on how to set up or run a business can be connected to the business support activity in the definition. The social incubators support the tenants’ businesses by applying their expertise, either within the specific sector or with developing startups. The network that the incubators allow their tenants to make use of connects to the mediation activity stated in the definition. Only the third supporting factor, infrastructure, was not mentioned by the tenants as one of the motivators for participating. Office space was provided by the incubators, but the respondents did not mention it. This may imply that providing infrastructure is seen as an evident aspect of the social incubator, and not as a differentiating or value creating aspect. Also, the cash injections are not stated in the social incubator definition, simply because it is not seen as a prerequisite to be able to run a social incubator. Of the three program directors, two stated that their program provided the option of investment, the other program did not have this option. However, since obtaining funding is usually harder for these type of ventures, the tenants view this as a value enhancing aspect of the incubator.

In addition to looking for reason why participants of social incubators choose to be part of that program, it may also be interesting to find out why some social entrepreneurs choose to participate in a nonsocial incubator. Both

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respondents confirmed that their business is indeed a social enterprise, but did not participate in a social incubator. One respondent explained that: “we noticed that social impact, all those kind of things, sustainability, that is rooted in our genes. I don’t need mentors in that area. I need mentors who bring a network, a network to investors” (Nonsocial tenant I). The entrepreneur does not see the added value of a socially-oriented incubator, and later elaborated that in order to be able to continue operations, they needed cash. Therefore, they saw more added value in a commercially-oriented incubator. The other respondent was very clear about his motivation to choose for this program; he was just unaware of the existence of social incubator programs, or any other incubator program in general. However, the respondent states that he aims to achieve social impact by creating a sustainable business, but that this impact will be achieved anyway whenever the business becomes profitable.

The unawareness of social programs is a recurrent theme among many incubators’ tenants. Of the four social tenants that were interviewed, not one was aware of the existence of these programs prior to their first encounter with the program they eventually joined. “To be honest, this was the only program I was alerted of, what I knew. Actually, I didn’t even know that they existed” (Social tenant A). They all came across their respective programs coincidentally, and felt that these programs fitted their needs. Even of one the program directors stated that she did not know of any other social incubator programs. Additionally, none of the tenants considered joining any other incubator program. The main reason for this is the image they have about commercial incubators. The overarching theme when talking about commercial incubator programs is the fact that they are only focused on growth and possible returns. As one respondent illustratively stated: “Those incubators, that is a super competitive landscape, all surrounded by sharks, money-wolves who try to pull out the best idea and make lots of money with it” (Social tenant B). Because the social tenants have an aversion to parties who solely focus on commercial objectives, they never considered to join an incubator until the respective social program caught their attention.

For social entrepreneurs, the main motivators for joining a social incubator are the business support it provides and the available networks they can connect them to. Cash is another motivator for them, especially since it is harder to obtain investments as a social entrepreneur compared to a nonsocial entrepreneur. At the same time, it is notable that all the social tenants decided to join their respective incubator programs without any prior knowledge about other social incubators. Hence, the question arises whether providing real quality expertise and networks is important in attracting social entrepreneurs, or solely ‘being’ a social incubator will suffice.

Value creation

According to the program directors of the social incubators, each program generates value for their participants in a slightly different way. The program director of incubator X stated that their main value creating activity is the validation phase, as they call it, in which the entrepreneurs go to their respective target market to test their assumptions. This is mainly important because these social enterprises focus on emerging economies, and by visiting those countries “they find information and solutions that is valuable for their business, for the success of their business” (Program Director Incubator X). The program director of incubator Y emphasized the importance of their expertise in creating value for their participants. Within their organization, they have the ability to develop revenue models, make effective

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social business models, which differ from commercial business models, according to the program director. It is interesting to see whether the respective tenants consider the same activities as value creating, or if they find something else more valuable.

Of the tenants of incubator X, one respondent was very clear about the value that was created for him. The incubator helped him to get his focus right, and steer the venture in the right direction. They helped him to carefully select his target market and enhance his network, which was important for his venture. He even stated: “had I not joined [Incubator X], I’m afraid it [the venture] would have died a quiet death” (Social tenant A). For incubator X’s other tenant, exploring a different market using their network was the most important for his venture. The tenants of incubator Y mention two main value creating factors: the expertise and the network of the incubator. All in all, the tenants and the program director share more or less the same ideas when it comes to value creating activities. All social tenants and the program directors briefly elaborate on the selection process within the incubators. For incubators X and Y this process is quite intense, because of the great number of applications they receive, while the tenants speak quite lightly about this. There is no direct evidence of the added value of such a selection process, but indirectly it can be assumed that the importance of filling the program with high-quality ideas and highly-motivated entrepreneurs is what creates value for both the incubator and the entrepreneurs.

Providing infrastructure seems to be an evident part of an incubator program, as no social tenant mentions it specifically. However, when asking the program directors about what they actually offer the entrepreneurs, housing is one of the subjects that briefly comes up. The program directors of incubator X and Z mention that the housing or office space is optional, some make use of it while other do not. It is interesting to observe that the nonsocial tenants did mention with the housing aspect, without specifically asking about it. This implies that the nonsocial tenants value infrastructure more than the social tenants do.

One of the main value creating activities for social incubators is the provision of business support to their participants. This concept consists of many different value enhancing activities. First of all, the tenants receive all kinds of masterclasses, workshops, presentations, seminars, or any type of relevant educational support, for that matter. Secondly, the incubators provide legal, financial and fiscal advice. Thirdly, they help the entrepreneurs on a strategic level by making plans for the business, and helping them to develop a sustainable business model. These three activities are all interrelated, and one cannot be seen separately from the others. In order to develop a sustainable business model, the program director of incubator Z mentions the use of specific methods: “By using the business model challenge we use the business model canvas and the lean startup methods to have people with qualitative ideas to get from only just an idea to a real business” (Program Director Incubator Z). The program director of incubator X states the same methods in supporting the entrepreneurs. Furthermore, these two program directors mention that the theory that has been used, as well as the way the program is set up, does not differ from nonsocial incubators. Therefore, business support does create value for the participating ventures, but although the application of the support is different from nonsocial incubators, the type of support is not unique for social incubators.

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Together with business support, to ability to use the network of the social incubators is seen as an important value creating factor. For new social ventures, it seems to be essential to connect to the right people to get things done. For instance, the incubators connect their tenants to: partners with expertise in specific areas, the right person who is willing to pay for their product, or potential investors. As one respondent illustrated: “I was on an improper entry level… they probably didn’t take me serious” (Social tenant A), finding these persons themselves is seen as one of the issues prior to joining the social incubator, and that is the main reason that mediation of the social incubator creates value for its tenants. It is peculiar that the nonsocial tenants only mention the importance of their incubators’ network very briefly. One respondent only mentions the importance of their network of investors, and the other only confirms they have a good network.

Although not exhaustively mentioned, the incubators do have some form of graduation concept for their participating ventures at the end of the program. The two possibilities of graduation mentioned are “making sure that we, at the end of the program, have good, strong and sustainable businesses” (Program Director Incubator Z) and “get the funding to help them continue to run” (Program Director Incubator X). So, the concept of graduation mainly relates to where the incubators want to see their tenants at the end of the program, but if this concept creates any value for the participating parties is highly questionable.

One noticeable activity that multiple respondents mentioned as a value creating aspect was the investment of cash by the social incubator. Two of the three social programs provided their tenants with the investment, in return for equity or in the form of a loan. These program directors mentioned that their tenants did view this cash injection as a value creating activity, and a motivator to choose for their program. One respondent confirmed this statement when I asked about why he thought entrepreneurs chose this program: “Financial support. That attracts a lot of people” (Social tenant A). The two nonsocial programs in which the nonsocial tenants participate also provide the option for investment. This goes to show that cash injections are a common feature of incubator programs, and the social ones are no exception to the rule.

Three direct value-creating activities emerge from this analysis, mediation, business support and cash investments. The first two are seen as the most important, followed by the cash injections. These findings are in accordance with the entrepreneurs’ motivators to choose for a social incubator, which implies that the incubator fulfil their tenants’ expectations to some extent. The selection process and provision of infrastructure may have indirect value creating effects, but these are hardly perceived by the social tenants.

Challenges

Dealing with ventures that pursue social objectives might entail dealing with different issues than a nonsocial incubator would face, and consequently, these need different solutions. It would be interesting to see if there are any specific challenges concerning social incubators, so that social incubators might find an effective way to deal with them in the future.

Defining social incubators : an exploratory study of social incubators in the Netherlands