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A New Business Model for Technology-Based Business Incubators: The Case of Innovation Works in China. No. 2014-009 Featured

  • Written by  Mingfeng Tang, Cuiwen Li, Yu Chen and Angathevar Baskaran
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Abstract

In recent years China has become the world’s second largest hub of technology-based business incubators (TBIs). The traditional business model of TBIs focuses on providing new ventures with traditional services, such as office, one-stop administrative service and some consulting services. The prevailing model does not create as many successful high-tech ventures as expected. Our paper aims to study an emerging new business model of TBI which combines angel capital with traditional incubator business model. To analyse this phenomenon, we take the TBI called the Innovation Works in Beijing, which pioneered this new business model in China, as a case study. We examine the following main research questions:  (1)  What is the inner logic of the angel capital-based incubator business model? (2) What are the major critical elements that help to build the angel capital-based incubator business model and how does angel capital-based incubator come into being? (3) How does the angel capital-based incubator business model operate and how different it is from traditional incubator business model? We employed mainly primary data gathered through from interview, on-site visits, and survey and value chain approach analytical framework to find answers to the research questions. We found that unlike many traditional Chinese TBIs, the emerging business model does not generate money from office rent but focuses on the provision of value-added services. It tightly combines the profit of incubator with the success of incubation tenants. Incubator and tenants cooperate with each other particularly in value creation, value transfer and value reward. The success of building-up of angel capital-based incubator business model needs four important elements: external entrepreneurial environment (national environment in China), strategic motivation of incubator leader, incubator culture and inner source. Our findings from the analysis of Innovation Works have some major policy implications for the future development of TBIs in China and other emerging economies.

Last modified onThursday, 11 December 2014 10:31

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