Sustainability–driven changes in the business incubation industry

Abstract

Purpose

This study aims to explore how the business incubation industry (BII) is dealing with the emerging challenges posed by the on-going transition toward an environmentally sustainable economy, from a business network perspective. Despite scholars and policymakers agreeing to emphasize the crucial role of the BII as a support sector for sustainability-driven new business development, it still needs to be determined how incubation organizations are dealing with the emerging priorities of sustainability.

Design/methodology/approach

The study relies on a qualitative interpretivist approach based on the data collected from 17 in-depth interviews with key informants from the BII of Emilia Romagna region, Italy. An industrial marketing and purchasing (IMP) analytical approach has been adopted to explore sustainability-driven changes in Incubation network contexts and dynamics.

Findings

This study shows that BII is increasingly exposed to the emergence of sustainability as a driving force in the development of new ventures. Main finding concerns the classification of incubation organizations in two macro groups, namely, local scouts and trendy scouts, according to their business incubation strategy and their approach to sustainability.

Originality/value

This study contributes to the IMP literature on the topic of sustainability by providing a filtered view through the eyes of incubators that are aware of the opportunities and obstacles to the development of new sustainable business models, resources and processes. Furthermore, this study lays the groundwork for analyzing the incubator ecosystem from an industrial perspective, highlighting the network of relationships used to support start-ups in their development.

Citation

Petrucci, F., Mutignani, F. and Santos, J.N. (2025), "Sustainability–driven changes in the business incubation industry", Journal of Business & Industrial Marketing, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JBIM-04-2024-0295

1. Introduction

The present research explores how environmental sustainability is met in the business incubation industry (BII), from a business network perspective. Our objective is to understand how incubation organizations are changing concerning the demands of sustainability, which are becoming increasingly critical in developing new and young businesses.

We start from the premise that the race to lower the impact of business activity on the natural environment is meaningfully influencing the context and process through which new businesses form and grow (Johnson and Schaltegger, 2020). Policymakers and civil society look at new ventures and entrepreneurs – and the innovation they bring – as one of the key means of reversing the disastrous outcomes of the impact of human economic activities on natural environments: indeed, nurturing a new venture can be regarded as a prominent mechanism to support the turning of new sustainable innovations, discoveries and technologies – especially those coming from scientific advances – into effective market solutions (Audretsch et al., 2023). In this context, startups are expected to respond to the issues raised by the debate on environmental sustainability by developing and bringing to market effective innovative solutions that provide a significant impetus to the transition of human economic activity toward more sustainable models. “It is therefore urgent for sustainable business to become the ‘new normal’” (Harrison et al., 2023, p. A10).

In this transformation, incubation organizations – referred to as business incubators, accelerators, innovation hubs, entrepreneurship centers and similar organizations – are called upon to play an important role by working closely with emerging new ventures as, we argue here, they have to face at least four main emerging new challenges: first, they are increasingly expected to support “non-sustainable” oriented start-ups and entrepreneurs toward the adoption more sustainable business development paths and models, in line with new emerging sustainability regulations and protocols enacted by public economic institutions. More in general, governments and economic institutions are now regulating the issue of sustainability, especially in the world of business and entrepreneurship, at a faster pace than in the past, issuing new protocols, regulations and commitments aimed at enforcing the rapid achievement of specific targets for reducing the environmental impact of industrial production and its technological transformation (IGS, 2023). Second, incubation organizations have to deal with “sustainability-oriented” start-ups that face the challenge of sustaining the development and commercialization of their new disruptive green technologies; third, they need to respond to the emerging sustainability issues of mature companies, which often look to start-ups for a solution to their green innovation processes; fourth, they have to deal with the contexts and contents of advanced scientific research to be able to unearth new ideas, talents, skills and emerging technologies useful for the creation of a new sustainable entrepreneurship.

For these reasons, within business incubation contexts, the issue of sustainability is no longer a vague object of debate; instead, over time, the pressing demand for developing more sustainability-driven innovations and new businesses has turned into the emergence of a growing set of sustainability-sensitive regulations and behaviors that, beyond a growing social pressure toward this topic, have pushed public and private organizations involved in new business development to rethink their traditional support programs and services (Lamine et al., 2018; Bergmann and Utikal, 2021). For instance, public funding calls now place incentives and rewards for those startups that work on the development of new green technologies or circular business models or demonstrate a low-impact production cycle; thus, public and private investors have adopted greener criteria to identify and select the most virtuous startups in the market which also have the highest potential for future growth. These examples are also compounded by the growing demand for sustainability certifications that are often required of young startups for operating in the public sphere – for instance – with institutional players or large corporations, or the demand for new green solutions from traditional businesses that see new technology startups as a valuable source of new sustainable solutions for their business.

The development of new sustainability protocols and criteria also concerns the internal environment of incubators, as many of them are developing in-house protocols to try to self-assess the environmental impact of incubated entrepreneurs and ventures to increase their attractiveness and value in the eyes of investors, as well as justify public spending toward incubators (Karahan et al., 2022). Also, today incubation companies are seen by policymakers as strategic hubs for nurturing the development of local entrepreneurial and innovation ecosystems and enhancing their sustainability (Audretsch et al., 2023; Lin-Lian et al., 2021). For this reason, they are increasingly empowered by policymakers to embrace sustainable development as a central priority (Lamine et al., 2018; Volkmann et al., 2021; Bergmann and Utikal, 2021). Due to its central role in supporting sustainable new business development, some scholars suggest placing business incubation “at the heart of green policy” (Klofsten et al., 2016, p. 14). Given the impelling demand for sustainability that investors, firms, policymakers and stakeholders, not least consumers, local communities and the civil society at large, are addressing to start-ups, incubation organizations must deal with a series of new challenges concerning the development of new ventures. Consequently, in addition to traditional criteria, the growth potential and value of a startup will be increasingly assessed based on its long-term environmental impact and approach to sustainability (Audretsch et al., 2023).

By this, the present study aims to investigate the impact of the growing demand for sustainability-driven start-ups and innovations on the contexts and practices of business incubation. To achieve this objective, it is our intention to gain preliminary insight into the manner in which the BII is addressing emerging changes in its incubation networks and processes that are driven by sustainability considerations. Accordingly, the present research will develop a qualitative study based on a selected panel of 15 experts and key informants, including incubation managers, venture capitalists, business angels and entrepreneurs, from Emilia Romagna’s regional network, “In-ER.” In-ER is a network association that brings together all the certified incubators located in the region. By adopting an Industrial Marketing and Purchasing (IMP) perspective, this study constructs a collective network representation of the changes and dynamics occurring in the regional BII.

The empirical analysis is supported by an overview of the current literature on sustainability and business incubation in the IMP literature to highlight key research lines, results and gaps. However, “IMP studies on startups mostly tend to be on what happens past the incubator stage” (Öberg et al., 2020, p. 1770) with some exceptions (e.g., Öberg and Shih, 2014; Petrucci, 2018; Santos and Mota, 2020; Shih and Aaboen, 2019). The main contribution of this study is to define two typologies of incubator organizations, based on how these organizations strategize in business networks. Through an emblematic case study, we meet the call for research in incubation organizations. Ratinho et al. (2020) argued that there are few articles suggesting business incubation typologies, and “unfortunately, they tended to fail in providing inductive theoretical contributions” (p. 6).

This article is structured as follows. Section 2 presents the IMP theoretical background on sustainability and business incubation. In Section 3, the qualitative methodology is outlined. Section 4 presents the results which are discussed and analyzed in Section 5. Finally, conclusions are drawn.

2. Theoretical background

The rise of venture development programs has captured the interest of both entrepreneurs and policymakers (Woolley and MacGregor, 2022). These programs such as incubation organizations are highly valued for their role in increasing survival and fostering the growth of new firms (Allen and McCluskey, 1991; Bøllingtoft and Ulhøi, 2005; Woolley and MacGregor, 2022). Business incubation processes are increasingly prevalent, while Allen and McCluskey (1991) reported about 400 incubation organizations in operation, and Sohail et al. (2023) referred there are over 10.000 incubators globally.

Incubation organizations support new ventures in accessing affordable space, shared services and business assistance (Allen and McCluskey, 1991). Thus, besides providing physical space, physical resources and administrative support, incubators also promote networking and workshops to fill in the new venture knowledge and skill gaps (Bergman and McMullen, 2022). Despite “many incubators offer little more than a place to set up shop” (Hansen et al., 2000, p. 75), Woolley and MacGregor (2022) suggested that accessing funding opportunities or business relationships is key to the success of a new venture. For this reason, entrepreneurs when considering participating in venture development programs should carefully reflect on the ability of the incubator to promote networking. Though, many articles on incubation organizations center attention on the physical infrastructure for research or manufacturing (Ratinho et al., 2020).

The notion that networking is a pivotal feature of venture development programs is not new. However, the extant works mainly focuses on networking and cooperation activities among the new ventures of an incubation organization (Bøllingtoft, 2012; Bøllingtoft and Ulhøi, 2005; Ebbers, 2014; Hansen et al., 2000). Occasionally these articles refer to actors external to the incubator, for example, when two incubated ventures cooperate in a joint offering to a customer (e.g., Bøllingtoft, 2012; Hansen et al., 2000).

Thus, most of the studies on entrepreneurial support organizations focus on the assistance occurring within the walls of such organizations, compared to those focused externally. Further, beyond the walls of entrepreneurial support organizations, most studies focus on supporting sponsors. A much smaller collection of works considers the web of interrelated actors. Consequently, more studies are needed to acknowledge that incubation organizations are socially and structurally embedded (Bergman and McMullen, 2022). As network-based research on entrepreneurship has consistently highlighted the significance of interorganizational relationships (e.g., Baraldi et al., 2019; Hoang and Antoncic, 2003; La Rocca et al., 2013), research focusing on incubation organizations is scarce.

Network-based research is perhaps the strand that has done more than others to explore the issue of sustainability as it applies to the business incubation sector. This research identified the significant intermediary and integrative function of incubation organizations in local entrepreneurial networks. Moreover, this research demonstrated that such organizations are often recommended by policymakers as a means of promoting the growth, coordination and innovation of these networks, which are frequently conceptualized by the notion of “ecosystem” within this specific literature (Abdalla et al., 2023; Lin-Lian et al., 2021). In this context, studies have shown that incubators act as vehicles for sustainability in general, not only through supporting the development of new sustainable enterprises, but also through the distribution of technological, financial and knowledge resources for sustainable development made available by governments and institutions in local networks, the dissemination of new sustainability-driven policies, regulations and standards for new business development, the identification and development of entrepreneurial pathways from research to market and, last but not least, the creation and promotion of initiatives and events to disseminate the culture and opportunities of sustainability in entrepreneurial networks (Audretsch et al., 2023; Abdalla et al., 2023; Lin-Lian et al., 2021).

2.1. A business network perspective on business incubation

Research on incubation processes, incubators and startups is generally extensive, and the entrepreneurial strand predominates. However, IMP publications on the subject are increasing as well. These studies focus their attention on the recognized importance of relationships in the startups’ development process, as they are crucial for the acquisition of critical resources and entrepreneurial development (Baraldi et al., 2019), as well as for supporting innovative processes (Petrucci and Bocconcelli, 2014; Petrucci, 2018). It is common that, from this point of view, the first relationship is established with an incubator, a third actor defined as a “facilitator” of relationships as well as the first provider of resources and technical expertise (Peters et al., 2004; Hacket and Dilts, 2004).

Studies focused on startup development emphasize the importance of inclusion in pre-existing networks (Guercini and Milanesi, 2019), by which the new firm is influenced and, in turn, exerts influence (Aaboen et al., 2017). In this regard, Baraldi et al. (2019) stated that the biggest challenge for startups is being more innovative than being accepted in a network. The concept was already underlined by Aaboen et al. (2017), who point to creating relationships with the landscape of business organizations, customers, suppliers and other actors as the first stage in developing a new venture. This is because it “is a condition for the very survival of startups” (Aaboen et al., 2017, p. 4).

However, this is a challenging task as many issues arise, and a long time could be required, as well as specific competencies (La Rocca et al., 2013). In the early stages of development, start-ups suffer of many liabilities that influence the interactional process among actors (Guercini and Milanesi, 2016). In our context of analysis, it is useful to mention the liability of newness (Stinchcombe, 1965), as it provides both a constraint and an asset (Choi and Shepherd, 2005). Notably, on the one hand, stakeholders can perceive start-ups as too young and small to add value to their business network or, on the other hand, they can see them as innovative partners, in activities and resources. From this point of view, it is important for every start-up that is entering the market to enhance the asset-side against the liability-side of their newness (Guercini and Milanesi, 2016).

Therefore, the intermediation role of incubators proves to be crucial, as they nurture both the internal network of incubated firms and the external network with other actors, indicating the best way to find the right stakeholders with whom to establish long-term and more valuable relationships (Cantù, 2015; Shih and Aaboen, 2019). Obviously, like any business (Snehota and Hakansson, 1995; Håkansson et al., 2009), participation in a broader network by establishing relationships with other actors, whether business or institutional, is also essential for the development of the incubator itself (Baraldi, 2008; Baraldi et al., 2019). The internal and external actors co-evolve together in these interactions and co-create value (Petrucci and Bocconcelli, 2014).

Interdependence, from an industrial network approach, is central to studying the formation of new businesses, as they depend on the pre-existing network of actors, resources and activities. Thus, the new business needs help to become a part of the network rather than be an entity outside the network (Snehota, 2011). However, “interdependence between companies means that the strategy process is interactive, evolutionary and responsive, rather than independently developed and implemented” (Håkansson and Ford, 2002, p. 137). Not being entirely free to act according only to their objectives, firms frequently seek to combine their goals with the other firms’ intentions. These processes occur within the context of the network structure, which depends on how all the relationships are related. Hence, the network structure will propel and constrain the firm’s ability to act and the effects of the firms’ actions (Håkansson and Ford, 2002).

The existing interdependencies between actors are an intrinsic characteristic of business networks (Ford and Mouzas, 2008). “Activities within one party are connected with activities carried out in the other” (Håkansson and Snehota, 2006, p. 260). The evolution of interdependencies between activities modifies actors’ specialization level. Thus, specialization is one effect of interaction over time in the structure of activities (Ford and Håkansson, 2013). Specialization, in turn, increases interdependencies, leading two firms to combine their resources to increase effectiveness and revenues (Håkansson and Prenkert, 2004).

Going into the details of the incubation process, Baraldi and Havenvid (2016) identified six key components that summarize previous studies and definitions of incubators: place, time, sources, resources, control and governance, activities/services and outcomes. From these elements, combined with three levels of analysis, i.e. institutional, organizational and individual project, the “strategic drivers” were derived that should guide the long-term development of the incubator and the creation of value for itself and the incubated firms.

The importance of the incubator also emerges as a place for exchange, adaptation and mutual contamination. Indeed, incubated firms are incentivized, especially in incubators specialized on specific sectors, to interact with each other mainly for training purposes but also with practical objectives, such as the establishment of supplier–buyer relationships that may last beyond the end of the incubation period (Öberg et al., 2020). Petrucci (2018) emphasized the importance of the network of interactions between actors, which also involves the incubator itself, placing it at the center of the incubation process. In particular, the evolution of internal relationships leads to constructing a specific external network, modulated on the resource and competence needs of the moment related to the incubation process.

2.2. A business network perspective on sustainability

When this comes to the issue of sustainability in new business development and innovation, Harrison et al. (2023) argued that interdependencies regarding activity links, resource ties and actor bonds are pivotal to understanding sustainability challenges in business networks (Guercini et al., 2024). For example, in the context of collaborating for sustainable business, and a circular economy in particular, developing an eco-industrial park can promote new business opportunities and foster the establishment of new firms (Ingstrup et al., 2021). However, several technological, business, organizational, regulatory, linguistic, visual and psychological barriers to a circular economy can occur.

The extant network actors must accept the sustainable technological solution (Aarikka-Stenroos et al., 2023; Mota et al., 2023). Hence, a sustainable offering by network actors, especially novice firms, must be commercially valuable in the user setting for its diffusion (Munksgaard et al., 2017). The new firms developing sustainable offerings, such as home appliances for saving energy, need to become a node in the emerging network by developing relationships with suppliers, customers and incubators, among other actors (Santos and Mota, 2020). Among the sustainability challenges in business networks, we can highlight the infrastructures, funding and solution acceptance by the extant emerging network. On top of that, firms need to establish and develop business relationships. That is, firms may capture new business opportunities associated with sustainability emerging from the pre-existing network by establishing activity links, resource ties and actor bonds.

Organizational sustainability involves social, cultural, environmental and economic aspects (Pfeffer, 2010; Sabatini et al., 2021). Integrating sustainability by new ventures brings additional complexity to the embedding process into the pre-existing network (Sabatini et al., 2021). Regarding sustainability in business networks, Dickel et al. (2018) found that networking activities are pivotal for environmentally oriented new businesses. Further external networking involving established firms is pivotal to developing this new business. However, these networking activities require more resources to develop broader networks, and the networking frequency is also higher.

On top of that, replacing resources – resource renewal – at the network level is challenging to accomplish. Even though facing resource scarcity, a startup needs to adjust its resources to the developing, producing and using settings. Thus, new businesses make enormous efforts to interact with network actors to create resource interfaces in the three business network settings (Landqvist and Lind, 2023). Three periods with blurred boundaries can be identified: pre-engagement, initial engagement and engagement. In the pre-engagement period, the new business starts sensing the value of the new sustainable offering by developing networking activities, for instance, attending trade fairs. The network interactions are deepened in the following two periods integrating feedback from network actors (Sabatini et al., 2021).

3. Methodology

This study aims to capture how incubation organizations are changing concerning the sustainability demands from a business network perspective. We use a case study method (Birkinshaw et al., 2011; Dubois and Araujo, 2004; Eisenhardt and Graebner, 2007; Yin, 2003) with the objective of understanding a contemporary phenomenon in its context. The case study method is frequently used in industrial marketing (Johnston et al., 1999; Beverland and Lindgreen, 2010) and is the most suitable method for researching organizations and relationships (Easton, 2010).

The business incubation industry is taken as an emblematic case. As mentioned before, incubation organizations are strongly involved in promoting and supporting sustainability-driven innovation because they operate as intermediary actors between the front of new emerging start-ups and scientific research on the one hand, and, on the other, the front of existing business networks looking for new sustainability-driven solutions and influenced by new sustainable development policies. Given their mediating role between demands, interests and logics coming from different worlds, many authors suggest that the business incubation industry is to be able to offer a unique point of view about the state of the art of the so-called “green transition” in business networks (Karahan et al., 2022).

Because the phenomenon of sustainability in business incubation is pervasive, multifaceted, highly context-related and rapidly evolving – and the actors operating in it are agents and builders of the context themselves – an exploratory and descriptive approach was preferred (Halinen and Törnroos, 2005). In particular, the authors elected to pursue a qualitative interpretivist methodology, which entailed one-to-one interviews, secondary data analysis and direct observations. This approach is situated within the domain of qualitative research and was selected due to its emphasis on contextual conditions in which events occur. In addition, the qualitative interpretivist approach prioritizes the study of individuals, their thoughts, feelings, experiences and perceptions of the subject under study (Eisenhardt and Graebner, 2007; Denzin and Lincoln, 2008). In particular, the interview instrument was deemed to be a more significant means of reconstructing the strategic horizon of the actors involved in the study than a quantitative approach. The interviews facilitated the incremental emergence of the most salient signals of change perceived by the actors within the sector. Additionally, they enabled the comprehension of how these actors interpreted these signals and the underlying evolutionary dynamics, which subsequently informed the development of strategic thinking regarding the potential responses to the present and future trends of these signals (Eisenhardt and Graebner, 2007).

The present study is part of a wider research and innovation project, entitled “Vitality – Innovation, digitalization and sustainability for the diffused economy in Central Italy”. The project, which is promoted by the Vitality Foundation – a consortium of nine universities located in the central Italian regions of Marche, Umbria and Abruzzo – has the objective of supporting the development of local innovation ecosystems in central Italy. In this regard, the study forms part of one of the project’s research programs, which focuses on the study of the phenomenon of localized entrepreneurial ecosystems and the dynamics of creation and development of such systems. The study of the In-ER network thus falls within the context of the analysis of an entrepreneurial network system that represents a best practice at the Italian level.

Following these premises, the present study takes its first steps from the case of In-ER, a regional industry network – born in 2019 – promoted by the regional government of the Emilia Romagna region of Italy. The In-ER network consists of most certified organizations active in the region’s business incubation and acceleration industry. Its aim is to support the activities of local incubators and accelerators through a series of actions at the local and international levels. Considering the number of actors involved and the active participation of the regional government in the network, In-Er is regarded as a representative network of the business incubation industry in the region. Consequently, it was selected as a basis for the study of the fundamental characteristics of the industry context and for the selection of the subjects to be included in the panel of experts to be interviewed for the survey.

Core empirical data were collected through 17 in-depth semistructured interviews – and related content analysis – with key industry informants from 15 incubation organizations, comprising both public and private entities. Primary data was then complemented with the examination of a plethora of secondary data sources, including economic reports and commentaries disseminated by both the Regional Government and the In-ER network itself, in addition to the material provided by the incubation organizations selected for interviews comprising strategic and business plans, technical and business reports, marketing and communication materials, recordings of meetings, conferences and roundtables, articles published in blogs and newspapers and other pertinent materials (Yin, 2003).

The research was conducted in a series of phases. First, preliminary observations were incorporated into the research design with the objective of enhancing the study’s validity. One of the authors of the paper has had the opportunity to collaborate with some of the incubators in the In-ER network. This favored the establishment of close and direct contacts with several managers and operators in the network and allowed for a deeper understanding of the reference context. Second, a small group of experts was contacted between January 2023 and June 2023 to explain the rationale and guidelines for the research, which were developed based on a broad and preliminary analysis conducted on the existing literature. This first round of interviews was then used to develop and test a robust protocol for subsequent interviews. This approach also brought closer the language between the researcher and the manager, allowing for a better understanding and analysis of the context. In addition, the first round of interviews was used to identify and validate the selection criteria for key informants, which have been defined as the following:

• lasting experience (at least five years) in the incubation industry to ensure a longitudinal perspective on the industry and its present evolution;

• top positions in such companies; and

• entrepreneurs and managers belonging to companies operating at different levels of the incubation industry to ensure an interactive perspective.

The preliminary protocol supported selecting and interviewing the whole survey panel (Creswell and Miller, 2000). The third phase of the data collection included one-to-one in-depth interviews with key informants of different organizations assuring multiple perspectives on the impact of sustainability on incubation interactions, allowing for building an interactive perspective and limiting self-reported biases that may compromise the reliability of the research. The interview guideline included four sections: respondents’ profile and brief company profile, the impact of sustainability on the incubation industry and their company, the impact of sustainability on BtoB relationships and relevant BtoB relationships heavily impacted by sustainability-driven issues and reactions. The interviews were conducted in Italian and then translated into English. Interviews lasted between 20 and 80 min and were all recorded and transcribed (Table 1).

Data analysis was concurrent with data collection. We performed researcher triangulation. Interview transcripts have been read by each research team member to provide subjective interpretation and systematization in recurrent categories. Subsequently, during a series of meetings that involved all investigators, the subjective interpretations were compared, discussed and challenged ensuring that the interpretations respected the actual words of the interviewees and a consensual and consistent connection to theory. The empirical data were connected to the theoretical concepts following a systematic combining approach (Dubois and Gadde, 2002). This approach resulted in the creation of categories (recurrent topics) by pattern-matching (Miles and Huberman, 1994) based on the content of interviews and the continuing refinement of the theoretical link. The same procedure was followed for the secondary data, which was fully read and systematized by each author and then confronted and discussed. The authors’ past research experiences in the incubation industry have been considered valuable in enriching the secondary data. This interpretive effort led to an understanding of the strategic horizon that is emerging in the business incubation industry in response to the growing and pervasive demand for sustainability-driven new business development and innovation, as described in the following sections.

4. Results

4.1 Emilia Romagna business incubation industry and sustainability

The Emilia Romagna Region innovation ecosystem is one of the most dense and powerful at national level thanks to multiple factors. In 2019, the Central Innovation Agency ARTER was established with the objective of managing ecosystem activities. The partners of ARTER, in addition to the region itself (which holds 65% of shares), are the six principal universities in the region, several research centers and institutes and a selection of industry associations. In the same year, the In-ER network of business incubators was established. Its objective is to coordinate and promote the region’s incubation industry, thereby stimulating the emergence of new development and innovation opportunities for the local entrepreneurial ecosystem. Local policymakers have always supported the development of this innovation system with effective and targeted funding and measures. At the same time, the regional business environment has always been proactive in taking up and embedding these measures through projects, collaborations and development plans aimed at developing and innovating the system. Moreover, Emilia Romagna, as in many other Italian regions, benefits from a production system based on highly cooperative SMEs according to the logic of industrial districts and clusters, also benefiting from R&D institutions such as the University of Bologna and other specialized centers. Added to this is the action of the In-ER network, as said an inner tool of the ecosystem used by the regional government to stimulate interaction, coordination and synergies between organizations in the region working in the sector.

From the interviews, the importance of interacting with all the different actors of the ecosystem emerged, often by having meetings, seminars and calls for proposal open to schools, universities, companies and startups. Certainly, the strength of incubators determines the involved stakeholders: larger incubators have often enough organizational and financial resources to keep a stable relationship with policymakers, institutions and large firms, whereas smaller incubators usually rely on their personal contacts network and local actors’ relationships. Therefore, the incubators’ strength determines the nature of their embedding network. For example, small incubators such as Fondazione REI and Impact Hub cultivated strong ties with local actors, aligning their incubation practices with the specific needs of their communities, whereas larger incubators like Progress Tech Transfer and Mr. Smart Innovation developed a proactive incubation activity, assembling new ventures and developing new technologies that they are sure will have a follow-up in the market.

On this line of thought, the interviews also highlighted that the approach to sustainability is often shaped by the business interactions among incubators, companies and start-ups. Depending on the embedding network, the incubator will be focused on sustainability-related innovations. As the incubator Romagna Tech noted, some companies see the sustainability issue like an obstacle to deal with rather than an opportunity to exploit and therefore the possibilities to introduce start-ups with that kind of innovation are reduced. In this case, the role of incubators appears to be crucial, as they help both start-ups and companies to realign their resources to introduce new technologies. However, it appears that the generational component, the policymakers push and the awareness of more innovative companies foster the pursuing of this trend. Notably, there are also incubation organizations, such as Iren, which foster the development of new ventures exploiting sustainability as business opportunity, achieving market and institutional goals.

4.2 Differentiating incubation processes on sustainability

Incubators’ organizational structure and embedding network seems therefore to shape their approach to sustainability.

On the one hand, smaller and locally oriented incubators rely heavily on actor bonds within local ecosystems. Their approach to sustainability is holistic but pragmatic, driven by the immediate needs of the surrounding community. For instance, both Serre Art-Er and Kilowatt prioritize socially responsible projects, reflecting a community-driven approach to sustainability. Because their resources are limited, their approach to sustainability is demand-driven by the surrounding network. Moreover, as Romagna Tech pointed out, many small incubators face difficulties in retaining promising green start-ups, who are drawn to larger, better-funded networks located in hubs of innovation, such as the city of Bologna or even Milano. From this perspective, smaller organizations operate in the very early stages of business incubation processes, like business opportunity evaluation, design thinking and early structuring, while further and more technical development are pursued by larger and more structured entities.

On the other hand, larger, venture-backed incubators focusing on cutting-edge technologies and deep-tech solutions. Their strategy revolves around resource ties with global corporations, aiming to commercialize high-tech innovations. Mr. Smart Innovation emphasizes the importance of engaging with public research institutions, demonstrating how resource ties facilitate the transfer of sustainable technologies from research to market. As highlighted by Cariplo Factory and Iren, trendy scouts actively pursue European funding and investment opportunities, positioning themselves as key players in the sustainability space thanks to the application of sustainability-driven advanced framework such as the ESG (Environmental, Social and Governance) into their operations. Within In-Er, these incubators appear to be the main promoters of sustainable innovations and start-ups. Given their involvement in policy-led programs and their resource availability, it is not surprising the gravitational effects on start-ups from surrounding incubators and nearby cities.

Thus, this process of differentiation is explained by two different innovation drivers that appear to exert a significant influence on the network behavior of local incubation organizations. The first driver has a top-down dynamic and is driven, as noticed, by policies at various institutional levels – in our case down to the regional level. These policies are intercepted by incumbent companies, which mainly seek to seize emerging network opportunities:

Then it certainly started […] with the new European programming and new POR ERDF programming. In consequence of the new calls for tenders that commenced in our region in September-October, the Tecnopolo call for tenders also emphasized the importance of allocating a minimum of 15 per cent of the budget to initiatives related to circularity and a further minimum of 15 per cent to climate change. (Fondazione REI).

The second trend comes from the field of start-ups and is purely bottom-up. As previously stated, this phenomenon can be attributed to the emergence of a new generation of entrepreneurs, who are introducing novel concepts, values and capabilities that are shaped by a pronounced emphasis on sustainability, encompassing both environmental and social considerations:

It is evident that there is a generational aspect to this phenomenon, with start-ups established by younger individuals often displaying a preference for choice as a value. This is not merely a matter of opportunity but rather a reflection of deeply held convictions (Romagna Tech).

The analysis of the new generation of start-ups reveals the emergence of distinct profiles, which can be indicative of two macro-areas of sustainability: environmental and social. The first area encompasses “laboratory” start-ups, which originate primarily in universities or technology-based incubators and are focused on the development of novel and specific technologies. In contrast to the recent past, which has been characterized by the emergence of the so-called “first digital wave” and the Silicon Valley model for startups, new sustainability-oriented innovations are witnessing the advent of more so-called “deep tech” solutions:

Deep tech can be defined as a category of innovations that may belong to disparate fields, but which are all characterized by a common feature: the presence of intense research and development activity, typically conducted in university laboratories or public research organizations. (Progress Tech Transfer).

The second strand of this emerging new generation of start-ups is made up of associations and new businesses of a more social and cultural nature. These organizations choose to address the problems and issues of sustainability not through the specific development of technology-based resources and solutions – an element that is often outside their sphere of intervention and competence – but rather through the construction of virtuous business models from the bottom up, making use of existing and available technologies, reconfiguring them to create innovative models that can replace the more polluting models of the past.

This group of new organizations often operates by influencing the reconfiguration of social and cultural contexts and resources. It is not by chance that we can observe ways of developing and experimenting with new models and lifestyles based on the community as the basic social unit of relationships and networks for sharing economic resources, for reducing the growing costs and environmental impacts of human economic and subsistence activities, for building alternative ways of living and working to the dominant mainstream market of technology and industrial production. These new ventures promote the rediscovery of a new sustainable relationship between human economic activity and nature and make the value of respect for the natural environment and a more balanced relationship between man and nature their driving force. Naturally, in these initiatives, the theme of the territory becomes a valuable community resource, as the territory becomes the site of the construction of the new relationship between community, economy and nature:

In our hinterland, we have a social promotion association that has created resilience, new residents, young people, new job opportunities, new economies, extraordinary experiences of environmental education, territorial enhancement, and so on. And this in the form of social promotion associations (Appennino L'Hub).

In such cases, incubators are responsible for assisting start-ups in building complex heterogeneous local networks of both social and business relationships. Nevertheless, while the emergent business network of the venture provides the necessary conditions for its continued existence and growth, the surrounding local community and environment represent the optimal context for the venture to pursue a significant impact that extends beyond mere economic sustainability. The role of the incubation organization is therefore to ensure that the economic, environmental and social objectives of the new venture are clearly defined and pursued in a balanced way that ensures the survival and growth of the venture. The role of the incubator is also to channel the resources made available by the local government to the local innovation system toward enterprises that might otherwise be excluded from the local entrepreneurial system. Despite their sustainability objectives, these social and cultural enterprises find it difficult to integrate technological innovation pathways into their development plans. Consequently, communication between the technology sector and the social enterprise sector remains a challenge, even in the face of the new protocols, guidelines and investments made by the region for sustainability, which are often tailored to the former type of enterprise.

4.3 Challenges ahead on sustainability

Interviewed informants suggest that the BII in Emilia Romagna is therefore evolving in response to sustainability challenges, with incubators adopting varied strategies based on their network positions and internal resources.

While the general opinion highlights a positive trajectory toward sustainability developments, certain challenges are also revealed. Small Incubation organizations, for example, often struggle to exploit their full potential given their resource limitations and their need to rely on public funding to support sustainability initiatives. On the other hand, the focus of larger incubators around deep-tech sustainable solutions rather than social sustainability measures and their tendency to meet large firms interests that can provide higher revenues appear to cut out SMEs from more impactful sustainable innovations. This reflects critical weaknesses of certain business networks, where actor bonds and resource ties are unevenly distributed across networks, influencing the ability of incubators to support sustainable innovation.

5. Discussion

The BII consists of a diverse and complex set of organizations that share the goal of supporting new ventures to grow successfully. For the most part, incubators’ activity has standardized around providing a basic set of support services – such as business support and networking activities – and resources – such as facilities, coworking spaces and sometimes financial resources in terms of direct funding (Lamine et al., 2018; Bergmman and Ukital, 2021). However, incubation organizations tend to coevolve in tune with the content of both the internal (startups) and external environment (social, institutional and business) in which they interact (Petrucci and Bocconcelli, 2014). Our investigation reveals that incubators evolve and differentiate themselves due to spontaneous dynamics of specialization that can be traced back to the specific interactions that they have – in a broad sense – with their embedding environments. In line with previous studies (Cantù, 2015; Shih and Aaboen, 2019), we have found that the BII has taken on a key role in declining programs and resources allocated by policymakers for startups, and they work to respond to innovation needs coming from businesses through strategic scouting and matching activities of emerging projects and resources in new venturing contexts. However, unlike previous research, this study highlighted how the phenomenon of “green transition” is largely triggered and shaped by a strong strategic and financial top-down push, that is EU policy programs for the green and digital transition and EU public investment frameworks for research and industrial development like Horizon Europe. The global implementation of this initiative, with uniform objectives and modalities, had a significant impact on BII’s framework, objectives and rules of intervention about the development of new business ventures (Liu, 2020)

For this reason, incubation organizations can be a privileged observatory of emerging changes related to sustainability both because they take in the pushes coming from the top through policymakers – which work to codify, regulate and implement increasingly effective sustainability standards and guidelines for businesses – and because they are the referent for the growing demand of sustainable-driven innovation that generates from every-day activities in business networks and often look to startups for finding solutions. The push toward the green transition has certainly created an evolutionary and renewal drive within the business incubation industry that was coming from a time of decline due to the difficult years of the pandemic on the one hand, and certainly from the partial exhaustion of the innovative and entrepreneurial drive given by the rise of the digital business era in the previous 20 years. During this period, the incubation industry has certainly undergone a kind of homogenization and standardization of service offerings, resulting in a loss of value added both qualitatively and innovatively. Because of this, incubation industry has suffered from the emergence of many (often publicly driven) similar and homogeneous organizations in terms of supply, quality, resources, organization and networks because, in addition, policy has tried to integrate these sectors within territory-based ecosystem structures (Audretsch et al., 2023; Lin-Lian et al., 2021).

The present research shows the ongoing change and the re-emergence of a new dynamism in the wake of several transformative thrusts by tracing back an evidence-based map regarding the sustainability-driven changes emerging in the business incubation industry. Regarding the issue of sustainability, the BII can be classified (at least) according to two macro-groups. The first group, the “local scouts,” is characterized by small and medium-sized incubators highly dependent on the surrounding business ecosystem nature. These incubators do not have specific strategies, plans, or resources dedicated to sustainability and are characterized by distinct specializations related to their embedding context (Welter, 2011). Notably, these incubators configure their activities to meet the specific demands of the local business community and reverberate the emerging sustainability issues in tune with the needs shown by local stakeholders. Even if local scouts are not active promoters of sustainability, they are configured as careful observers of the changes taking place at both the institutional and local business network levels, trying to connect instances and logics that nevertheless still appear to be far apart.

Such incubators perceive that they play a connecting role between new demands and opportunities from the world of sustainability policy and the world of business and entrepreneurship. However, given the current bland impact of sustainability policies and investments from public actors, the actual innovative thrust of these incubators comes from emerging needs in the real business contexts in which they operate. This situation determines that the action of local scouts toward sustainability is dictated by the dynamics of change taking place in their embedding networks at a local level, thus reflecting the given resources, activities and actors present locally. As a result, local scouts demonstrate less ability to influence the business dynamics of their embedding areas, given the low impact innovative startups can have on the innovation process of existing business networks. Accordingly, many local scouts have complained about the difficulty of retaining locally promising green startups, pointing to the attractive power of larger organizations and networks.

The positioning of the local scouts in the network frames the incubation business and new venture embedding process in the emergent network. These incubation organizations consider network-specific needs implying that new ventures are required to adapt their sustainable offerings to those requirements. In this context, the new venture resources are only of value to the pre-existing network actors when those resources can be combined with the existing resources. For this reason, the business incubation regarding the embedding process seems to be limited to the incubator-relevant network. This also means that the incubation process is heterogeneous in terms of the connection between the policy and the business network.

Thus, the local scout tends to assume an idiosyncratic translator role in two ways:

1. by brokering knowledge about sustainable policies and promoting policy-related change in the pre-existing network; and

2. by fostering the offering adaptation by new ventures for seizing opportunities that emerge from their relevant network.

On the one hand, the incubation process deals with the out-of-control factor of the emergent network. On the other hand, the incubation process is perceived as stable considering that new sustainable solutions are addressing specific needs. The process of embedding new businesses, incubation or acceleration, beyond the relevant network of the incubation organization seems to be demanding for both, as the incubation process is centered on the pre-existing network requirements.

The second macro-group of identified organizations has been named “trendy scouts.” This category includes larger incubators, investment funds and organizations such as business angels and venture capitalists. Trendy scouts often develop dedicated strategic incubation and acceleration programs and funds to invest in strategic and future-relevant high-tech sectors. Unlike the previous ones, trendy scouts are not passive in the market of new technologies and scientific solutions and perform scouting and technology transfer of the most promising scientific research in the field to promote the emergence of new enterprises and stimulate the innovative action of large companies by going to propose solutions and development projects. Sustainability is considered one of the most relevant sectors to preside over.

These incubators typically work to intensively develop their startups by presiding over networks of large companies, promoting open innovation actions and startup challenges to attract further external investors and potential customers. Such organizations often develop specific scouting initiatives in peripheral regions and territories to unearth the most promising startups and attract them to larger centers, thereby aggregating critical resources and actors for new venture development. Also, these organizations develop specific strategic plans and often have the in-house expertise and resources to tap into national and European public funds that target sustainability. The dark side of this process is that trendy scouts tend to operate within networks designed for large players in sectors where new green technologies can significantly impact return on investment. Therefore, they tend to cut out small and medium-sized companies – that need to develop small, customized solutions – by penalizing the development and entry of new innovative companies within sectors considered less relevant for sustainability.

Trendy scouts seem to have an instrumental view of the business networks and new ventures. We can argue that the business network is not seen as the mean, it is seen as the beginning and the end. The business incubation process is centered on the sustainable policy and the new venture’s technological solution. This implies that often the new ventures’ resources are to be framed into a wider project or to be developed in response to homogeneous and transversal opportunities. As a result, relatively standardized solutions deeply rooted in sustainability policy are promoted. These solutions can then be adapted to the specificities of business network actors. The goal is to create big solutions that generate new markets.

Thus, these incubation organizations also influence the dissemination of the new venture sustainable solution. The embedding process of the new venture is expected to involve an easier combination of the new venture’s resources with the resources of the other network actors. On the one hand, the acceleration process seems to be less demanding for both the new venture and the trendy scouts. On the other hand, misfits between the offering and the emergent network needs can happen strongly affecting the incubation process and the new venture network positioning. Table 2 highlights the contrast between the two emergent typologies of incubators from a business network perspective.

6. Conclusions

The present research explores how environmental sustainability is met by incubation organizations, from a business network perspective. This research contributes to theory and practice in several ways. Despite being heterogeneous considering the types of organizations, incubators are essentially homogeneous in terms of the services provided, such as physical space, administrative support and business assistance (Bergman and McMullen, 2022). Nevertheless, in comparison with the past, it is possible to observe a notable decline in the degree of specialization among individual incubators. In contrast, the case of the In-ER network of Emilia Romagna appears to exemplify a contemporary trend whereby incubation organizations tend to establish a localized composite cluster comprising bundles of incubation services and aggregated resources, particularly when a central coordinating body – in this case, the regional government – is in place to promote and support the local network. Thus, It appears that the contemporary business incubation industry – particularly in relation to small and medium-sized organizations – can be most effectively understood not so much through the lens of the specific operational or descriptive characteristics of its constituent individual organizations, as previous research on the subject has done (Allen and McCluskey, 1991; Bøllingtoft and Ulhøi, 2005; Woolley and MacGregor, 2022), but rather by examining the specific entrepreneurial network (both local and non-local) in which the incubation organization is embedded, and the related network strategies adopted by the organization for the development of its incubation resources and processes (Audretsch et al., 2023; Lin-Lian et al., 2021). Therefore, adopting an IMP perspective on the case, we argue that the high degree of overlap between the local entrepreneurial network and the proper business network of an incubation organization is noteworthy. Although the IMP concept of business network assumes that spatial boundaries can be ignored in the identification of a firm’s business network (as evidenced in this case by the trendy scout organizations), the empirical construct of “entrepreneurial network” can be a powerful analytical tool for understanding the structure of incubation resource and processes of an incubation organization. Thus, we want to emphasize, therefore, that the network dimension and the space dimension (in this case understood as territory) represent powerful analytical tools for understanding the structure of incubation organizations’ resources and activities and their strategic behavior with reference to both how these organizations use and develop resources to approach business incubation and react to emerging instances of sustainability.

Accordingly, this study’s main contribution was to identify diverse ways of strategizing in networks in terms of resource combination and activity coordination (Guercini et al., 2024). From this study, the possibility of classifying incubators into two macro-categories emerged, that is between local scouts and trendy scouts. The differentiation between these two types of actor’s rests on two bases: the approach to sustainability and the characteristics of the reference network. Local Scouts have a more holistic approach to sustainability, looking above all at the social implications and have relationships with the closest entrepreneurial and institutional ecosystem from which they obtain a pragmatic view of entrepreneurial needs and opportunities for sustainable start-ups and projects. Trendy scouts, on the other hand, are very focused players around specific sustainability-related topics and technologies, mainly with high technological content. They are equipped with highly qualified resources and have access to a network that is generally international or otherwise capable of supporting large-scale projects.

This study also contributes to the IMP literature on the topic of sustainability by providing a filtered view through the eyes of incubators that are aware of the opportunities and obstacles to the development of new sustainable business models, resources and processes (Guercini et al., 2024).

From the perspective of managerial implications, the research provides a new key to the structure of the incubation industry thus highlighting the different development paths that can arise within it. These elements may be important for the drafting of new strategies of intervention and behavior by incubators. Not only that but there is also an emphasis on the theme of sustainability and how this element is implying the emergence of a new generation of entrepreneurs whose mindset is renewed with respect to the digital business era. This new generation of entrepreneurs is renewing its goals, values and mission by virtue of the demands of environmental sustainability, and through this it is also transforming the way young businesses relate to the territory and support systems. Furthermore, this research is believed to be useful in informing new public policies to support new businesses for example and the construction of territorially based entrepreneurial ecosystems.

This study has limitations that may represent directions for future research. The reference sample of interviewed incubators belongs to the same region. Therefore, future research may broaden the pool of interviewees by looking for empirical evidence in different ecosystems. Furthermore, this study is part of an initial attempt to deepen our understanding of incubation organizations by looking beyond the walls these organizations (Bergman and McMullen, 2022), not delving into the business relationships between incubators and network actors. However, it lays the groundwork for analyzing the incubator ecosystem from an industrial perspective, highlighting the importance of considering business relationships and networks for incubation organizations. Future research can also explore the topic of incubation as an industry. More research is also needed to understand how the push for environmental sustainability is energizing the business incubation sector allowing for a renewal of traditional actors.

Table 1

Informant list

Incubator	Location	Key informant role	Interview length
Fondazione REI	Reggio Emilia	CEO	46 mins
Impact HUB	Reggio Emilia	President and Co-Founder	45 mins
Romagna Tech	Cesena	Start-up area manager	61 + 45 mins
Kilowatt	Bologna	Director	40 mins
Appennino l’Hub	Rimini	Project leader	30 mins
Emil Banca	Modena	MUG manager	45 mins
Officina Digitale	Imola	CEO	80 mins
Serre Art-Er	Bologna	Division coordinator	56 mins
CoLABoRA	Ravenna	Director	35 mins
Officine On/Off	Parma	Fundraiser	58 mins
Cariplo factory	Milan*	Head of startup and investment	20 mins
Progress Tech Transfer	Milan*	Advisor	22 mins
Iren	Parma	Head of open innovation	23 mins
Mister Smart Innovation	Bologna	Director	55 + 35 mins
Motor Valley Accelerator	Modena	Director	45 mins

Note:

*Incubators from Milan have multiple collaborations with InER network

Source: Authors’ own work

Table 2

A business network-based typology of incubators

Incubators	Resources	Activities
Trendy Scouts (Cariplo Factory, Emil Banca, Progress Tech Transfer, Iren, Mr Smart Innovation)	Resources are to be combined through a more standardized interface Aim at developing standardized resources – technological solutions for “more homogeneous” requirements	Take into account sustainable policy and the new venture’s technological solution Aim for shaping the practices of the network actors
Local Scouts (Fondazione REI, Impact HUB, Romagna Tech, Kilowatt, Appennino l’Hub, Officina Digitale, Serre di Art-Er, CoLABoRa, Officine On/Off, Motor Valley Accelerator)	Resources are to be combined with the pre-existing resources Aim at developing context-specific resources by matching sustainable policies with the needs of pre-existing network	Take into account network-specific needs Aim for emergent and interdependent coordination of activities between the new venture and the network actors leading to changes over time (after an initial phase of framing the new venture’s offering)

Source: Authors’ own work