Business incubators as an economic development strategy : a case study of Oakland's communications technology cluster

Abstract

Business incubators are a rapidly growing trend in economic development. The National Business Incubator Association estimates there are nearly 600 incubators in North America today which each help create over 500 jobs. Through the provision of real estate, physical amenities, and business services, incubators can improve the success rates of small businesses, which in turn translates into jobs, diversification of the local economy, and tax base expansion. The growth of the high technology sector promises to generate quality, well-paying jobs. Therefore, communities are pumping large sums of public dollars to support and sustain high tech business incubators. However, without a full understanding of how incubators impact local communities, it is difficult to justify these public investments. Moreover, without evaluating its strengths and weaknesses, and how the incubator fits within the communities' larger business development strategy, opportunities to further improve this economic development tool in practice may be overlooked. This thesis assesses the impact of the Communications Technology Cluster (CTC) located in Oakland, California. Using business attraction, job creation, business retention, and effects on city image as evaluation measurements, this research shows that CTC has produced mixed results. In the process of evaluating CTC, several larger issues emerge, of which workforce development, business services, and the city's hard and "soft" infrastructure are identified as key impediments to the realization of the city's economic development goals. In light of these findings, this thesis proposes an action strategy for improving the incubator's operations and for considering new ways of thinking about the incubator's role in the overall economic development strategy. The thesis concludes with the argument that the publicly affiliated incubator should be integrated into the community's overall strategy in order to achieve its full impact. This has implications for economic development practitioners. By extracting lessons from the case study of CTC in Oakland, economic development practitioners can begin to consider the existing assets and liabilities of the city, and design an incubator strategy tailored to best meet the needs and objectives of the local community.