The firms incubation in Argentina: A review on the sector’s 10th anniversary

VERSINO, MARIANA; HOESER, UTZ

Turín

Conferencia; 5th Triple Helix Conference "The Capitalization of Knowledge: cognitive, economic, social &cultural aspects"; 2005

Fondazione Roselli

5th Triple Helix Conference "The Capitalization of Knowledge: cognitive, economic, social &cultural aspects" Turin-Milan, 18 -21 May 2005 Empirical papers Suggested Track TRACK 3: TECHNOLOGY TRANSFER & ENTREPRENEURSHIP  The incubation of knowledge-intensive firms in Argentina: A review on the sector’s 10th anniversary Mariana Versino UNICAMP / UNLP / CONICET Argentina Utz Hoeser Universidad Argentina de la Empresa Argentina   Extended abstract The objective of this paper is to draw a picture of the Argentine incubation landscape 10 years after the birth of the first incubator in this country, and to understand how actors in various levels of government and universities constructed their incubation models and implemented their projects within the very specific Argentine context. Methodology and theoretical approach This paper is strongly based on our empirical research on the incubation phenomenon in Argentina over the past 8 years (Versino 1999, 2000, 2001, Thomas and Versino 2002, Hoeser 2003, Hoeser and Versino 2004). It also draws on unpublished empirical data. The theoretical approaches of our arguments draw heavily on recent advances in the sociology of science and technology and the sociology of markets, in particular the writings of Callon (1998). We are also heavily influenced by the writings on science and technology policy that analyzes the transfer of institutional models in Latin America by Oteiza (1992) and Dagnino et al (1997). A brief overview of the incubation landscape in Argentina The strongest impetus for the growth of the Argentine incubation sector can be found in the Columbus Project of the Conference of Rectors of European Universities, founded in 1987 and sponsored mainly by the UNESCO. This project sought to foster cooperation between European and Latin-American universities (from eight countries), promoting “institutional development and multilateral co-operation in order to help universities to better respond to the challenges posed by scarce resources, demands for diversification, internationalization…”. De facto it was a means to diffuse some European experiences and policies that were considered success stories at the time. One module of the Columbus project was on the “development and creation of technology-based business incubators” (Columbus 2003). William Bolton (1992, 1993, 1997) was a key promoter of the Columbus incubation program in Argentina. While there had been first experiences with municipal incubators in the province of Buenos Aires by 1995 and the case of an incubator co-founded by EMPRETEC and the National Space Agency in the province of Córdoba around the same date, the first university-based incubators sprung up by 1997 as a result of the Columbus program. Complementary, the regional government in the province of Buenos Aires started subsidizing a dozen university incubators with start-up funds. Today, there are about 15-20[1] operational incubators in Argentina, with a mix of university-based, municipal and mixed incubators. None of the incubators is for profit. Information on the exact number of incubators and incubatees is scarce, despite a series of studies on individual incubators (Logegaray 2003, Thomas and Versino 2002, Versino 1999, 2000, 2002) and surveys (AIPyPt 2001, AIPyPt 2003, JICA 2003). However, most authors share the view that the incubation sector in Argentina faces serious difficulties, due to a combination of different factors. One of the most frequently mentioned challenges is related to financing, both for incubators and incubatees (Hoeser 2003, JICA 2003). Financing has been scarce, sporadic, uncoordinated and has not received any kind of ex-post evaluation. Another frequently mentioned challenge is the lack of professionalism on behalf of the incubator managers. Although they follow well determined objectives, structures and processes, many of the managers do not have sufficient experience in selecting and nurturing projects. Despite efforts by the different actors involved in establishing public policies in the incubation field, coordination of the different economic development and science and technology policies remains another key problem (World Bank 2002). A related problem is the often mentioned discontinuity of adopted policies by all actors involved. Support for the different incubation initiatives is not guaranteed even over the medium-term: personnel changes in universities and local ministries can mean the end of an incubator or of an incubation policy.The process of construction of the incubation landscape In this paper, our approach to understanding the challenges of the Argentine incubation sector is different from the above in sense that we believe that an important part of the mixed results of incubation in this country lies in the historic circumstances which have stimulated the incubation program in the first place and in the way policy makers continue to implement it. The incubation concept was born in the context of developed countries confronted with the problem of optimizing the synergy between highly developed science and technology sectors and strongly diversified and productive socio-economic tissues, by stimulating the creation of innovative companies. The incubation models we find in Argentina are emulative of this models conceived in developed countries. The incubators in Argentina are organized mostly in the same way: they require business plans to select the best incubatee candidates, they promise “help” in realizing the project, they promise “help” in getting funding, etc. However, the context in Argentina is drastically different: there is not a great number of viable projects incubators can choose from, many future incubatees do not know how to write business plans due to a lack of education or business experience, there is virtually no capital to finance seed stage enterprises, etc. The doubtful premise of the founders of the Argentine incubators is that there is a “demand” for their services somewhere “out there”. However, it turns out that often there is outright no demand for the services these organizations offer, or that this demand is structured in a way that does not correspond to the standardized intervention mechanisms these organizations use. The result is that the incubators develop actions that try to replicate a market setting: they construct formal projects (business plans and formal companies) and evaluate them according to standardized criteria of worth (Return on Investment, Discounted Cash-flow etc.)[2]. Only this complex process of framing (Callon 1998) allows them to operate according to the basic principles upon which they were founded and which give meaning to their existence. Framing here not only refers to the social construction of meaning, but also to the very tangible creation of actors, organizations, material flows and observable structures. Framing allows members of organizations to act. The difference between the real and desired results of these actions can be unsatisfactory if the framing generates what Callon calls “overflows”[3]. The consequences of framing the local incubation landscape according to the parameters of developed countries and not taking into account the local reality has resulted in a series of overflows. Faced with a virtually inexistent offer of technology-based venture proposals that meet the strict incubation criteria, incubators in Argentina have begun to educate “entrepreneurs”, for example, in order to increase the number of project proposals. Indeed, one of the most important activities carried out by the technical teams of incubators has been the design and diffusion of entrepreneurship education, in order to increase the project flow. Incubators have been created as public policy instruments to promote economic growth, business and job creation. They have been created as intermediaries for governmental and non-governmental actors with the aim of achieving a specific objective of economic development of its “clients” or “beneficiaries” and indirectly their environments: regions and countries. However, the mere creation of an intervention mechanism or of a formal organization is not sufficient to actually act in a given context. That is why these organizations have had to act through actions that contributes to the help they offer, and in some cases reform the mechanisms through which they intervene. This obviously carries the risk of alienating the founding objectives from real-life functioning of these organizations.Conclusions The main conclusions consist in the consequences linked to these three general characteristics of our view/approach: 1) Our aim to go beyond traditional public policy analyses (policy making, implementation, evaluation) that usually end up being success or failure stories. 2) The fact that organizations actions of framing can be found in a series of circumstances, over and above those analyzed here, where organizations face highly complex situations, scarcely structured contexts and hard-to-identify or atomized actors involved. 3) The strong practical implications, in particular for public-policy makers, since the way organizations structure their interactions with beneficiaries or other actors, profoundly affects the results the organizations produces.   [1] The exact number depends upon the definition one adopts with regard to “operational”. Some incubators have a functioning structure, but no incubatees and others have incubatees, but lack formalization. [2] Our studies show that the most frequent motive of entrepreneurs in search of an incubator is direct or indirect financial help, followed by office space and the access to a network of (mainly commercial) contacts. They see the incubator as a source of economic and social capital, to which one can get access by writing a business plan (most potential incubatees do not have one and are incapable of writing one on their own), staying in the assigned incubator office (this is not always what incubates look for), accepting certain control (incubates not always see the interaction with incubator personnel as helpful). Accessing a set of resources thus becomes possible for entrepreneurs by accepting a certain formatting of their projects. [3] Any kind of formatting generates overflows because the concept of inclusion (inherent in framing) automatically produces exclusion.