Survival Analysis of Incubated Firms in Maryland USA: Empirical Evidence of the Effectiveness of Business Incubation

Published statistics and quantitative analysis of incubator firm survival are limited, yet this information is critically important for incubator directors to report on the effectiveness of incubation as an economic development intervention to funding organizations. Using a unique establishment-level panel data provided by a commercial vendor (National Establishment Time-Series [NETS], Maryland State File), we develop a discrete-time survival analysis to examine how business incubators influence the length of years firms survive post incubation. Participation in an incubator program is associated with economically and statistically significant decrease in the risk firm failure. Our findings suggest that the odds of failing or closing are 7 times lower when a firm participated in an incubator program, even when controlling for industry, firm age, and years of operation post graduation.