Entrepreneurial networks: A Triple Helix approach for brokering ...

J Int Entrep (2009) 7:215–235 DOI 10.1007/s10843-009-0038-x

Entrepreneurial networks: A Triple Helix approach for brokering human and social capital Savvas Papagiannidis & Feng Li & Henry Etzkowitz & Michael Clouser

Published online: 14 February 2009 # Springer Science + Business Media, LLC 2009

Abstract Through utilising currently available Internet technologies, academic and governmental organisations can provide seedling companies in their incubators with additional competitive advantage through efficient access to markets, partners, knowledge and services both locally and globally. This paper proposes a Triple Helix approach for brokering social and human capital based on the skills brokerage business model. The skills brokerage business model is primarily suited for individuals and firms operating in localised settings. However, by using information and communication technologies, it is also possible to apply the model internationally for firms that need strategic partnerships in countries or regions other than their own. Coupled with the Triple Helix of university–government–industry interactions, it can propel innovation and the commercialisation of it beyond traditional boundaries of geography, such as the region and nation state. The paper also presents an Internet-based service that could be used to facilitate the brokerage process among the firms and people with relevant expertise and resources, and it discusses the implications this would have for a number of stakeholders, such as entrepreneurs, established businesses, service providers and business support organisations. This is still an emerging area and several themes for future research will be highlighted. Keywords Skills brokerage . Triple Helix . Business support services . Human capital . Social capital . Incubators . Entrepreneurial networks S. Papagiannidis (*) : F. Li : H. Etzkowitz Business School, Newcastle University, Newcastle upon Tyne NE1 7RU, UK e-mail: [email protected] F. Li e-mail: [email protected] H. Etzkowitz e-mail: [email protected] M. Clouser School of Informatics, University of Edinburgh, Crichton Street, Edinburgh EH8 9LE, UK e-mail: [email protected]

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Introduction Regional support services provided by economic development agencies have traditionally relied on a localised approach for assisting young, growing companies. This included linking them to local resources and various types of capital, including social, financial and intellectual capital. Meetings were usually conducted in-person, and introductions were made in such a manner as well. Incubator assistance typically operated in much the same way. Both first- and second-generation incubators were characterised by the installation of local social networks. However, with the increased internationalisation of both client companies and incubators, the provision of services has come under review by sponsors, including government, universities and industry. Proximity still matters, but propinquity and its attributes can no longer be viewed solely in terms of geographical contiguity. Relationships are now often initiated via various channels on the Internet without prior face-to-face interaction. It is apparent that we are only beginning to utilise the ‘artificial social spaces’ that can be created with software tools. The European Commission Green Paper (2002) ‘Entrepreneurship in Europe’ called for more government-support services for entrepreneurial ventures, including incubators, and the development of skills. The UK in particular has been interested in facilitating entrepreneurship to stimulate economic growth and international competitiveness. However, many existing approaches, especially those based on subsided support, are not always the most effective, or even appropriate, support mechanisms. Any alternative approach aimed at improving the rate of new business start-ups and helping them survive and grow is going to be very significant for theory, practice and policy. This is especially true for mechanisms that do not depend on governmental interventions but encourage the market’s own forces to step in. After all, the existence of a market failure of ‘need’, even if it exists, does not mean that the government is the best or only option (Bennett 2008). To realise the above objective, we propose a Triple Helix approach for brokering human and social capital based on previous work (Etzkowitz 2004; Papagiannidis and Li 2005) on skills brokerage and networked incubation. In this paper, human capital is defined as the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic wellbeing, while social capital is defined as the networks with shared norms, values, and understandings that facilitate cooperation within or among these groups (OECD 2001). The paper starts by discussing the challenges that subsidised business support models face and how these could be potentially addressed using the skills brokerage model. A prototype Internet-based solution is presented to illustrate in action that such a mechanism is feasible. It then moves on to propose a Triple Helix approach of applying skills brokerage in incubators and the implications for the key stakeholders, i.e. entrepreneurs and businesses seeking support, the service providers and the business support organisations and policy makers.

The challenges of subsidised support A typical business support service based on subsidising services (e.g. through grants), or even just referring to external suppliers, usually follows a process similar

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to the one illustrated in Fig. 1 (or see Business Link 2008 for a real example). The client, i.e. the entrepreneur or the business seeking support, initiates an enquiry, and after the initial diagnostic stage, the client and the service broker agree on the output and on an action plan. The broker initiates the action plan by interrogating the supplier database, which returns a list of potential suppliers. The client then selects one among the potential suppliers. During the next step, the service broker assists the client with the funding application and the client contracts with the supplier. Following this, the supplier delivers the services agreed and payment is arranged. Once all work is finished, the client provides feedback to the service broker regarding the supplier’s performance. Finally, the broker contacts the client at a predetermined interval to ask if further work is required or to follow up any longer-term action agreed at the first meeting.

Fig. 1 A typical process for providing subsidised business support

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A model like the one described above poses a number of challenges. First of all, subsided support is constrained by the financial resources available. In regions where funding is limited or the number of applications exceeds the available resources, not every business may benefit from the support services if demand exceeds supply. In addition, funding usually covers only part of the expenses that a business will incur, while attempting to address an area in which it requires support, and up to a certain amount. For example, enough support may be given to help a business initiate a marketing campaign, but not for the full duration of the campaign and its aftermath. Moreover, in cases where the total cost of the project is much higher than the support offered, there may not be a great incentive for a business to engage with the support agency. Of course, funding is capped and support only subsidised in order to ensure that many businesses receive support and that these businesses share the risks, instead of pursuing funding for the sake of it. On the other hand, one would have expected that financial constraints primarily restrict areas where demand for support is higher, i.e. areas where high economic incentives are needed to encourage entrepreneurship and economic growth, for example less developed, peripheral or declining regions, and areas in which support is needed (e.g. because of the highly entrepreneurial culture). This does not necessarily imply, though, that the business requirements involved are different. For example, for Britain, Bennett (2008) states that government quite validly targets certain places for reasons of social or regional policy objectives, and not because they have different business needs. Moreover, by subsidising services, local and national government bodies assume a certain amount of risk, which equates to the total cost of the support provided in each case. Helping businesses by lowering the barriers they need to overcome in order to access services may have a detrimental effect on the region’s entrepreneurial culture. Also, the significant time and effort that application processes often require defocuses businesses, which end up spending more time chasing support instead of focusing on their business operations. Advice and suggestions, although provided by people who have business experience and knowledge, is often not sector specific and, therefore, cannot hope to match the owner’s knowledge of their market and industry (e.g. Mole 2002), neither is it provided by the actual service providers. The business engages with the service provider only at later stages of the support process. In the case of a typical brokerage model, this is often after the diagnostic step, which plays a significant role in determining what the support specification actually is. This is especially true when it comes to innovative projects for which specialised knowledge is required. Apart from the above challenges, such a business support model does not promote networking. A business may get to engage only with a very small subset of service providers, assuming it has met the pre-defined support criteria, or even just one. One or more of the remaining providers may have been a better candidate for helping out the business. It is of interest to note that the selection process has to be impartial and fair for both the firm looking for support and the service providers. Finally, service providers do not have an incentive to provide anything more than what is required by the agreement and covered by the fees they receive. Service providers do not have an incentive to engage with the company in the opportunity


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recognition process other than suggesting possible ways of bringing a project forward, for which they will be compensated by the appropriate fee. Business support agencies may not fund such additional activities, or even worse, the business may not be able to afford the provider’s recommendations. Besides, opportunities may be outside the provider’s array of services, in which case there is no incentive, other than ‘commercial altruism’, to consult the supported business.

The skills brokerage business model as a support mechanism ‘Local synergy among local actors as well as between them and external players, forms the factor that compensates for the lack of other, more traditional competitive advantages such as economies of scale, advanced production of diffused competence. These synergies can be identified in informal as well as in explicit and formalised relationships: customer–supplier relationships, co-operative sharing revenues, horizontal contracting, wide circulation of information through skills labour mobility inside and towards the district, fast imitation of successful practices in technology, organisations and marketing’ (Ritsilä 1999). The skills brokerage business model (Papagiannidis and Li 2005) is aimed at facilitating this kind of synergy among market actors. The model aims to address one of the main reasons for companies underperforming: the lack of skills (Kakati 2003). As skills are important for all phases that a business has to go through, the skills brokerage business model could be applied to both start-ups and established businesses. In the skills brokerage business model, an entrepreneur or an established company exchanges skills; resources; access to networks and, more generally, other forms of human and social capital with a skills provider, who in exchange receives equity or direct access to the venture’s returns or a combination of both. This suggests that the provider assumes part of the risks in exchange for a potentially higher return compared to the return that would have been earned in a ‘traditional’ cash-for-skills deal. For example, if a software company has already developed an electronic shop, it could licence it for X to a new client. If that client’s venture ends up being successful, even a small percentage in the company could potentially be worth far more than X, for something that did not incur significant, or even any, costs to the software company. From the client’s point of view, reducing entry barriers allows not only entry to the market, but also the diversion of resources to more pressing areas. The client would also gain access to skills and resources at rates much lower than the typical commercial rates, while there will be tax incentives for both parties to engage in such a deal. The exchange leads to a medium or long-term partnership from which the venture benefits from the combined human and social capital and access to resources and networks that the provider brings throughout the agreed period. The above are based on the assumption that everyone has an entrepreneurial propensity, which is only translated into action, i.e. entrepreneurship, when environmental conditions favour such behaviour (Papagiannidis 2006). Ultimately, the decision to engage in a brokering deal lies with both the receiver and the provider, based on their judgements and perceptions of opportunities and risks.

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As illustrated by the above example, skills brokerage can facilitate this kind of nurturing of environmental conditions for the actors to assume entrepreneurial roles. In the next section, we discuss how the skills brokerage model could be adapted and used as a business support model.

The proposed business support process In the proposed process, every client seeking support is presented with two options: support based on existing models like those based on subsidised work, or the skills brokerage business model. If the company selects the skills brokerage business model, then the support agency presents the company with the list of relevant providers. The company can select a number of them or even choose to engage with all of them. The first step will be taken by the support agency broadcasting the ‘call for brokerage’ (i.e. an invitation to consider investing in a venture) on behalf of their client. This includes the firm’s details, the kind of support needed and type of potential revenues, e.g. equity, revenue stream sharing or a mixture of the two. Interested skills providers could engage with the company either directly or even through an auction-based process, which will effectively facilitate the terms of engagement. The client may prefer auctions, as they would minimise the ‘cost’ of the investment, while, at the same time, each offer will reflect the skills broker’s interest and commitment to the project. Potential skills providers could also be given the opportunity to pitch their ideas before the final selection is made. Once an agreement is reached, the two sides can start working on the project under the terms agreed. The terms are up to the client and the skills provider to decide and will vary from project to project. In this way, particular skills are offered by individual providers and potential customers, including large firms (Howe 2006), are directed to relevant providers. This model presumes a fairly high degree of analytical capability to assess needs, which may not exist in many small and medium enterprises (SMEs) or start-ups. Large firms typically call in consultants to provide an independent perspective. In cases where no interest in the skills brokerage business model exists, the company can revert to other support options provided by the support agency, as shown in Fig. 2 below. Hence, the proposed process does not replace existing business support options but, rather, complements them by involving the market itself. As most support provided is service-oriented, the skills brokerage business model can be an ideal platform for providing support. For example, areas of support may involve information technology services, legal services, accounting services and marketing and public relation services. The proposed process requires very little resourcing from the business support agency, which is now only required to facilitate the process. In fact, agencies that already have a database of service providers only need to ask these providers if they would like to be considered as potential skills providers. In the long term, a potential revenue stream could be derived from brokering such relationships through, for example, an annual fee from the service providers.


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Fig. 2 Complementing traditional business support options with the skills brokerage business model

Implications of skills brokerage as a business support model Start-ups and established businesses seeking support By offering the skills brokerage business model, the supported business has the option of an alternative support model. As the model may not require any funds from the client, it can be more appealing than having to pay for a subsidised service. Also, equity and revenue sharing do not pose the same initial financial stress on the business, which can be of critical importance for start-ups, growing ventures and businesses in crisis. This should not be taken lightly, though, as it will have longterm implications for the entrepreneurs who have to surrender part of their business to an external service provider. Still, as the exchange is not shares for cash, the service provider may have less negotiating leverage than they would have had in a typical investment scenario. In fact, as they are not a typical venture capital firm but

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an ad hoc investor, they may not be as demanding. In addition, the company gets to establish medium- to long-term relationships with the skills broker, which now has a greater incentive to help the new partner succeed. As a result, it may get to benefit from skills, resources and networks that the service provider may not otherwise have brought to the table. Moreover, for serial entrepreneurs who work on multiple projects in parallel, this may be a route for bringing projects to market, by involving external service providers. These projects may not have made it otherwise and remained in the conceptual stage. In such cases, the entrepreneur is essentially faced with the dilemma: is it better to have 100% of an idea or x% of an established project? A potential issue for businesses looking for support may be confidentiality. When broadcasting a call for support, information about the type of support needed and the nature of the business or the project will be required. Even more information will be required for skills providers that express an interest in the call. The business looking for support may be reluctant to offer sensitive information, rendering any negotiations impossible. The difference with the brokerage model, as discussed above, is that a supplier engages with a client only when selected from the list provided by the support agency. As a result, no one else gets to find out about the request for support. It is expected that the vast majority of requests will not require the provision of sensitive information, and probably, only few clients will have to deal with such an issue. It could be argued, though, that this is not any different from explaining to potential investors what the business idea is. Negotiations between the business support client and service provider may raise other issues, such as trust. These are left to the two negotiating sides to address, as there is no panacea for such issues. The proposed model can accelerate the development of rapport between the networking agents as they get to engage in the context of a real project and not just as part of a networking exercise, making it possible to reach the sharing of social capital stage and build trust quicker than the process suggested by Anderson and Jack (2002) (Fig. 3). This is important, as it helps circumvent the bureaucracy often involved in such exchanges, enabling the stakeholders to focus on the business issues enabling the business to develop faster. In fast-paced markets, e.g. those involved with providing Internet services, this could provide a competitive advantage by reducing the time required to bring an idea to the market. Service providers From the skills providers’ point of view, the real cost of engagement is often much less than it’s actual market value. For example, if a company seeks help to build an online shop and a skills provider already has one built, then the real cost is the costs incurred while customising and installing the software. Skills providers can generate value by re-applying skills, information, experience and technology from previous projects, which could be used to enter new markets, products or technologies (Zahra and Dess 2001). Moreover, skills providers have the opportunity to earn substantially higher returns for their services. As mentioned in the example given above, if the new online shop turns out to be the next Amazon.com, then even a small percentage in the company can translate to high returns. It should be pointed out that the model does not provide a risk assessment framework; it just facilitates


Encounter (an)other

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Call for brokerage

Exploring Affinities

Identifying Communality

Skills business model

Establishing Congruencies

Discovering Potentials

Negotiations

SHARING SOCIAL CAPITAL

Fig. 3 Accelerating the development of rapport between networking agents using the skills brokerage business model. Adapted from Anderson and Jack (2002)

the interaction. The final decision making has to be based on criteria similar to those used by small informal investors (Landström 1998), even if the exchange may not be a cash-only one. As skills providers need to assess the potential of a project when they receive a call for brokerage, they may be required to possess skills outside their core skills. They will also need to be ‘entrepreneurial in nature’, as they will have to manage the risk of their decision to get involved in a project. For such entrepreneurial firms, money may not be the main motivation (Amit et al. 2001), and, as with other kinds of investors, they may not be interested in short-term economic returns (Landström 1998). Instead of being cash-driven, these firms may look at the strategic implications that their decision to invest may have, e.g. how their investment complements their existing product and service line or whether they will gain access to a new market.

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Business support organisations Business support organisations get to offer a different support service model to their clients, i.e. the individual and companies seeking support, when the other support models offered do not appeal to them. They only need to maintain the database of skills providers and facilitate the ‘call for brokerage’. These could be complemented by a rating system based on their clients’ experiences from previous projects. Such services can be easily set up using electronic means, which would not require significant resources (such a service is discussed below). Funds saved by clients selecting the skills brokerage business model over models that require subsidising services could then be diverted to companies that are not interested in the skills brokerage business model. When it comes to regions where funding is limited, the skills brokerage model could provide an incentive for new start-ups. Support agencies could set aside part of their budget for companies that are willing to cooperate with other companies. The provision of funding could be the catalyst for networking that now has a clear role to play: create value. Of course, this is not to say that support based on skills brokerage cannot be offered in other regions. It just highlights the fact that there is minimum financial impact for business support organisations and that additional funding is not required. Business support can be in favour of entrepreneurs, businesses and skills providers who excel at networking within the skills brokerage business model platform in creating value. In such cases, the business support service is actually assuming the role of a strategic investor, selecting ventures that are supported by individuals and companies that have a track record. If the new venture succeeds, the returns could be reinvested in business support. Favouring ‘value creation hubs’ (i.e. individuals and companies that have received funding and consistently performed in the past creating new value and significant returns through a number of projects for the business support organisation) is, as Barabasi (2003) suggests for controlling epidemics, ‘a bold, but cruel solution: as long as resources are finite we should treat only the hubs’. Of course, such a selective policy would raise important political and ethical questions, even though, when it comes to business support services, policy has to set rules for such selections anyway. In fact, it could be argued that the principal criteria for selection are the same: the potential impact of the support for the business and the economy, for example the number of jobs created, and the chance of success. This kind of entrepreneurial value creating hubs may not necessarily need any financial assistance. They may simply need to attract skills providers, something that support services could help them with. One could extend such a case by having the support agencies set aside part of their support budgets specifically for this kind of client, i.e. ‘entrepreneurial cooperatives’ that were formed through the skills brokerage business model. In doing so, they will be providing a significant incentive for their clients to work together, increasing the chances that their efforts will be successful. Such a scenario could be of particular interest for specialist ethnic minority support agencies. ‘While it must be recognised that there is currently a proliferation of small, typically under-resourced and often unrepresentative ethnic based business support organisations, some of these enjoy the patronage and trust of their


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communities that the mainstream providers lack. In such cases, these organisations could provide the platforms on which such networks are developed, with modest resource implications’ (Ram and Smallbone 2003). The skills brokerage model could also help the informal capital market, especially those falling in the ‘analytical investors’ category (categorisation was based on investment activity and competence: lotto investors, traders, analytical investors and business angles) suggested by Sørheim and Landström (2001): ‘Analytical investors are investors who have a low investment activity level, but possess a fairly high competence. They are labelled “analytical” because they seem to possess the competence, but they are either not able or not willing to commit themselves to substantial investment activity in the informal venture capital market’. Sørheim and Landström suggest that analytical investors may welcome some kind of business introduction service coupled with local or regional oriented incentives: ‘To attract these investors, business introduction services should offer consultant services to the entrepreneurial ventures, engaging the analytical investors as their consultants’. The skills brokerage business model could help reduce the costs incurred, while looking for potential projects to invest in and help the support agencies catalyse the investment process. As Sørheim and Landström found, while studying 425 informal investors, public support agencies acted as information sources for only 2% of the investments made by analytical investors and 3% of the investments made by business angels.

Skillsbrokerage.net: A prototype In an era of social networking, business support providers need to consider new modes and mechanisms for assisting businesses that embrace technology and better serve the next generation of entrepreneurs who have grown up taking the Internet as a given. A prototype Internet-based solution, SkillsBrokerage.net (www.skillsbro kerage.net), based on the skills brokerage model, is proposed to assist growing businesses, especially SMEs, in acquiring the skills, resources and brainpower these companies need. Essentially, it links ‘skills providers’ with companies and individuals and provides a platform for negotiation of access to a variety of resources and expertise, such as market representation, research and development alliances and compensation packages, including those surrounding equity and royalties. Equally importantly, such a platform could enable growing firms to network not only locally, but also internationally, potentially acquiring skills and resources from different countries and regions. The aim of this section is not to present the solution itself, but to illustrate vividly how skills brokerage could work in practice. As all the skills and resources needed were available, only 1 week of development time was required to set up the site and deploy a working solution. The only costs incurred while developing SkillsBrokerage.net was the registration fee paid for the domain name. All other resources were available through previous projects, and hence, they did not incur any other expenses. This also applied to the software that was required to develop the solution. A platform for building the site was already available and code from previous projects was used as a starting point.

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The service allows users to post their profiles, outlines of their skills, the available resources and access to networks and their projects. Each project is assigned a type (proof of concept, growing venture, turn-around, tender or social responsibility) which allows the filtering of projects for investors. Similarly, entrepreneurs can browse the database and look for providers who have the skills required. In fact, the service does not differentiate between entrepreneurs and providers. One is considered an ‘entrepreneur’ when one posts a project, and one is considered a ‘provider’ when one outlines the skills, resources and networks available for investing. Of course, developing the solution is only one face of the coin. The most challenging part will be to attract entrepreneurs and skills providers on the site, in order to examine the feasibility of facilitating the interactions and even the negotiations among them. This will require marketing the service to local and national organisations that already have the critical mass to attract users. This could be achieved by negotiating appropriate deals with such organisations in exchange for access to their client base. SkillsBrokerage.net also demonstrates that support agencies and networking organisations can deploy such services with minimum investment and possibly only small changes in their existing business processes. Skillsbrokerage.net may be considered as a virtual incubator, linking companies to relevant services much as an incubator director would do for the firms in their fold. In the next sections, we discuss the opportunities and challenges of setting up such a virtual incubator within the context of the Triple Helix model.

The Triple Helix model The Triple Helix model comprises three basic elements: (1) a more prominent role for the university in innovation, on a par with industry and government in a knowledge-based society; (2) a movement toward collaborative relationships among the three major institutional spheres, in which innovation policy is increasingly an outcome of interaction rather than a prescription from government and (3) in addition to fulfiling their traditional functions, each institutional sphere also assumes the role of the other operating on a y axis of their new role, as well as an x axis of their traditional function. Institutions taking non-traditional roles are viewed as a major potential source of innovation. University, industry and government enter into a reciprocal relationship, in which each attempts to enhance the performance of the other (Etzkowitz 2003). The skills brokerage support model could be applied within a Triple Helix context and linked to incubators, as shown in Fig. 4. The service could involve a small number of staff that will proactively act, identifying synergies among firms and suggesting collaborations. Most such initiatives traditionally occurred at the regional level, where gaps in clusters, problems in technology transfer and lack of governmental capacity have hindered development. Innovations to address these issues may involve syntheses among organisational formats, in order to develop a coherent strategy for regional innovation. Innovations in information and communication technologies have made it possible to fill gaps at the local and regional levels by drawing on resources from


Fig. 4 An integrated model linking customers to a variety of services and resources

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elsewhere. However, there is still much to be done to link potential providers to users, bridging knowledge and social capital gaps. For businesses that are not wellconnected, or those that are connected but not in the area where they need support, accelerating the formation of social capital is very important for timely provided support. A reservoir, or network of resources and information, may represent and offer a rich source of explicit and implicit knowledge, experience and privileged access to physical resources (Anderson and Jack 2002), which could be directly injected into the support process. Littunen et al (1998) argue that, for new firms, their starting and their functioning should be studied in the context of their environment: & & &

The general prerequisites for entrepreneurial activities offered by the region The effects of the region on characteristics of the firms in it The effects of the region on the entrepreneurs heading these firms

Such an argument could also be extended to include established organisations, in particular, those that want to grow and expand and those in crisis. We now need to develop a more systematic way to network start-up firms and SMEs in general. The incubator has traditionally been a support structure for the creation of firms. If we look throughout the innovation field, there are other mechanisms that have also been created and applied to this problem of linkage. For example, the technology transfer office operates as a search mechanism looking within the university for research, with the potential to be commercialised externally for market opportunities. As we already have experience with technology transfer offices and how they work as a linkage mechanism, we can apply this to incubators and their firms. Can some of that technology transfer capacity be created and put into the space between incubators to link their firms? This requires members of staff that are knowledgeable about a particular technology area and the incubator firms to make those introductions. This is also the basis of building trust, if there is someone in the middle that both sides feel is knowledgeable and they can talk to. Such staff can then make those introductions and follow them up, addressing issues in an emerging relationship. Incubator cooperation can also be enhanced through social technologies such as video conferencing, dating service software, social networking platforms and data mining that can be creatively applied to upgrade the capacities of incubators. It used to be the case that phone and fax were the common services offered. The Internet has moved us from thinking of the computer as a local stand-alone entity to considering it as a linking mechanism among computers and people. We should also be thinking about how to create new kinds of linking mechanisms for firms—incubator to incubator, firm to university, firm to government and firm to industry. Another important parameter when considering technology-oriented firms is innovation, not only as far as the technology itself is concerned, but also the application it enables. As Porter (2001) suggests: ‘basic applications will become table stakes—companies will not be able to survive without them, but they will not get any advantage from them’. Then, understanding how to use the technology becomes the key to success, or in Porter’s words: ‘the key question is not whether to deploy Internet technology—companies have no choice if they want to stay competitive—but how you deploy it’. Extending this argument, possessing human


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and social capital and other resources, like technology, is not enough. These have to be utilised in new ways if they are to deliver additional value. Based on the dynamic complementarities theory, Autio and Yli-Renko (1998) argue that a skilful combination of large and small firms can offer advantages to both parties when it comes to innovation. Large firms are usually associated with their relatively greater financial and technological resources, which are scale-intensive in nature, while new technology-based firms have strengths, like entrepreneurial dynamism, internal flexibility, responsiveness to changing circumstances, strong links with universities and technological expertise in highly specialised fields, which cannot be easily replicated by a large firm (Autio and Yli-Renko 1998). Bringing SMEs and larger organisations together via the skills brokerage business model, by coupling the resources of parent firms and the dynamisms and personal skills of entrepreneurs, can be of great importance for a region that aims to excel in innovation and, consequently, in creating new value.

Supporting the incubator The incubator is a hybrid organisation, with multiple functions, combining the teaching, research and economic development missions of the university. Fundamentally, incubation is a process of training individuals to act as an organisation. An incubator is not primarily a physical facility, although it can operate in one. As a support structure for firms, it can also operate virtually. Incubation should be seen not only in terms of firm formation and transmission of companies into the society, but as part of a recombinant methodology of university– industry interaction. Incubation is part of a continuum of university–industry relations at the heart of the academic enterprise. The role of the university in transferring knowledge, in linking industry to the university, begins with the original idea of the liaison office to introduce academics and potential partners in industry. The technology transfer office takes the next step, moving intellectual property out of the university, through patents and licences. Tying all this together, the incubator then takes the intellectual property, couples it with an entrepreneur, and moves it out as a company. A great deal depends upon conditions in the region. In a Greenfield site, the incubator has a large task. It must internalise various elements to assist the entrepreneurs and provide a place for business assistance, such as visiting lawyers and accountants. For these businesses, support structures were in place at the University at Stony Brook incubator in an exurban area of Long Island. However, when the same incubator director moved to Albany to establish an incubator at the University at Albany, none of these activities were present. The director said that, in the Albany context, it was not necessary, as the region had all of these activities. His role in this context was to network the firms in the incubator to these resources and activities, and as such, there was no need to reduplicate them in the incubator (Etzkowitz 2002). Thus, if we are benchmarking incubators, we can not benchmark them as individual stand-alone entities because that may be irrelevant to where they fit. We must look at their role in the region and the conditions in the region and ask: what

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role are they playing in that region, and therefore, what role must they play as an organisational entity? The answer to this question can be quite different depending upon regional conditions. Benchmarking cannot be looked at in an isolated fashion by simply looking at what programmes and activities an individual incubator has within its own framework. For example, acquiring skills through a brokerage scheme is one that many incubators do not offer as a service.

Triple Helix e-property We often think of the incubator primarily as a stand-alone entity; yet, it is networked in its region, a member of an association in its country, or even linked through associations cross-nationally. However, what about the firms in the incubator; how can they be linked? How can they be introduced to each other? The need for international linkage was expressed in visits to incubators such as Symbion in Copenhagen, with software firms looking for markets in New York. Similarly, SOFTEC, a Brazilian initiative, has established offices in several US cities to play an introductory linking role for software start-ups and growth firms (see http://www. apoio.inf.br/tecsoft/). Such efforts, to date, are typically occasional and bi-lateral rather than systematic and multilateral, although SOFTEC points the way to a more intensive format. Indeed, a broader framework can be derived from the model of Brazilian incubators as members of networks, sharing projects among firms from different incubators. A model of networked incubators and incubator firms could be generalised from the national to the international level. What is needed is a lean web organisation to operate a portal that functions like a social networking site or ‘dating service’, aggregating information about what is going on in firms in different incubators around the world, especially those with firms that have technologies with international potential. Currently, these interactions take place individually and idiosyncratically. In particular, a portal or networking site, like SkillsBrokerage.net, would address the needs of young growing companies that seek international markets. The site design would focus on linking firms to potential partners. These partners would include those that might co-develop, distribute or market the firm’s product or solution. These partners may be other incubated companies, surrogate entrepreneurs or larger firms without the incubator but interested in partnering with innovative firms for their own competitive advantage. Other linkages would be to potential customers, service providers, universities and governmental organisations that might be able to assist the small firm in accessing markets. The website would thus become a ‘Triple Helix hybrid e-property’ itself, as it would be a new construction that is found between the intersection of the institutions of academia (in this case, universities and incubators), government (economic development agencies and other local agencies) and industry (incubating start-up firms with international potential). Delivered electronically, entirely new crossborder links between the institutions will result in new interactions that will facilitate further innovation within a worldwide network of innovators. Designed properly and keenly, a networking site for incubating firms could potentially generate its own content. Firms in one country would interact directly


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with firms in another, often asking for contacts and information. Content generated through these conversations would be indexed and accessible via a search function. Social networking sites that focus on business which should be looked at as examples include Linkedin, Ryze.net, and Friendster and MySpace. University linkages In addition, a Triple Helix hybrid site would link to universities, especially research universities, and vice versa, in the various regions in which its client incubators are found. Such electronic relationships might provide university research, through the technology transfer office and other mechanisms with an additional channel for commercialisation. For example, a co-linking relationship to share traffic between the website and the University Technology website at http://www.universitytechnology.com/ could be mutually beneficial to both efforts. The University Technology website is a collaborative effort between Scottish universities to promote their technologies with commercialisation potential. Incubators not only in Scotland, but in England, and throughout the world for that matter, are potential partners for Scottish universities. Likewise, outside visitors, namely surrogate entrepreneurs, who are looking for new technology opportunities while on University-technology. com might be interested in seeking incubator space in which to hatch their new companies. In addition, incubator firms themselves may be seeking complementary or strategic technologies to expand their competitive advantage globally. Other linkages into the websites of universities might be into entrepreneurship and business programmes. Students might find interesting technologies or other start-up opportunities to prepare business or marketing plans around, or even take themselves forward as, nascent entrepreneurs. Additionally, job opportunities, including internships, might be promoted. Again, because the e-property is international in scope, students will be able to find opportunities outside their region, and similarly, incubator firms will be able to connect with students in other regions who can add value to their business plans and models. Utilising the skills brokerage functionality, university professors and researchers might be able to locate consulting or advising opportunities within the site. Likewise, the pool of potential advisors and consultants increases for the start-up itself. Moreover, contacts made internationally at universities may assist in opening up global markets to the incubating start-up, which otherwise would not have been found using a fax or a telephone. Finally, the website could link into university career services offices. Through mining career services offices data and interacting with its job search functionality, the portal will be able to offer additional choices as far as skills are concerned, including recently graduated engineers and designers, for instance. These freshly graduated students offer a fresh pool of talent to start-up firms that was formerly difficult to tap into without considerable cost and effort. Government linkages Government linkages, the third component of a Triple Helix website, can add value in a variety of ways. Often, local economic development agencies house databases

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of local companies on their websites, often broken down by industry or category. In addition, start-ups that wish to expand internationally can be informed about the regulations and other various legal issues of trading in a given country. Government websites often provide demographic information on their regions as well, and this can be quite helpful to start-ups when exploring new markets and/or writing business and marketing plans. In addition, economic development agencies offer an increasing array of support services and programmes, helping start-ups obtain capital, both social and financial. For example, Scottish Enterprise, the economic development arm of the Scottish Executive, offers a ‘co-investment’ scheme where Scottish Enterprise will buy an equity stake alongside an approved early stage investor in a high-growth start-up, thus increasing the amount of working capital available to an incubating firm. Moreover, a recent immigration scheme, the Fresh Talent Scotland programme, allows a graduate from anywhere in the world to stay in Scotland for a minimum of 2 years to either work in or start a new business, provided that the graduate obtains a degree at a Scottish university. Such a programme would otherwise not be known by an incubating firm in another country, say, that wants to establish an office in Scotland and is seeking a newly minted Master of Business Administration from Scotland to run it. Other industry linkages Apart from the aforementioned linkages to other incubating and innovating firms, as well as to potential partners for distribution and marketing, the Triple Helix e-property could also increase its influence and attractiveness through additional linkages on the industry side. This might include links to early-stage investors, including venture capitalists and business angels. While the US National Business Incubation Association does currently offer its members an electronic capital network, this property could be expanded to include international business angels and venture capital firms. There are a variety of sites that currently offer databases of business angel and venture capital contacts, and the e-property could strike a partnership with these, or even set out to build and maintain its own database, if it was funded at a high enough level. A unique database might be built that was specifically populated with investors interested in firms starting in incubation programmes. The site would also offer its members benefits through linkages with trade associations and groups that may be able to assist the youngling firm at various points early in its lifecycle. Finally, it may be worth strategically partnering with private research organisations, many of which sell valuable market research, often in the form of electronic reports and presentations that could be of great use to start-up firms in incubators. However, traditionally, this market research has been beyond the budget of the cash-strapped incubating start-up firm. Future research Future research could examine whether nascent entrepreneurs and established businesses would be interested in selecting the skills brokerage business model over other available business support services. Where this is the case, and as the agreements are open to negotiation, it would be of interest to look at what kind of


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collaboration models would appeal to different types of ventures. In addition, at a service level, future research should also examine whether business support organisations and policy makers would be interested in adopting the skills brokerage business model as a support mechanism. Ultimately, the model could be tested in action by the support agencies implementing a pilot programme, testing it in the real business environment. If the prototype was to be fully implemented and adopted by a business support organisation, future research would be in a position to systematically test the hypothesised relationships, moderators, mediators, antecedents or consequences, using a combination of qualitative and quantitative approaches. The model’s performance could then be measured against criteria such as those set by the Regional Development Agencies for England (2005), with a particular focus on the creation and support of businesses and employment. Moreover, future research could compare and contrast the above when the model is applied in the local and the international setting, paying particular attention to trust issues among the stakeholders. Finally, future research could consider other kinds of linking mechanisms in order to bring together entrepreneurs and firms, which can either extend existing mechanisms or even be autonomously implemented.

Conclusion The Triple Helix model suggests the extension of firm alliance and cluster models to the arenas of academia and government. As universities become increasingly involved in firm creation and support, as an extension of their research and teaching missions, they become a source of skills and resources to assist firms that go well beyond providing trained graduates and consultation. Similarly, government moves from its traditional regulatory functions to become a promoter of innovation, through providing facilitative legal frameworks, tax incentives, loans and grants. Integrating resources across the institutional spheres to promote economic development requires a broader approach to innovation, both theoretically and practically. The Triple Helix and skills brokerage models are designed to leverage the transformations that are taking place in the roles of industry, university and government in order to promote innovation. Hybrid entities such as incubators exemplify the application of an academic model to firm formation. Incubation is part of the teaching, research and economic and social development missions of the university. The incubator is a core academic activity that should be marketed and sold as part of the emerging entrepreneurial university paradigm. Designers of an academic building or locality in the future should consider incubator facilities as of critical importance to that structure or geography. The incubator and incubator firms will increasingly be a part of global as well as regional networks. Consequently, governments and universities should consider the resource base of the incubator to be beyond that available in the traditional geographic region, and recognise the benefits of client firm interactions with international partners, including other incubating organisations. Synergy from firm interaction with international partners may be catalysed through linkages, including those of an electronic nature which utilise existing Internet technologies. Such benefits may

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include new international markets for growing firms, which will bring an export benefit to the region and the country. Governments and universities which have sponsored or are affiliated with incubators may wish to consider encouraging these operations to join electronic networks and internationalise themselves and their client companies in the early stages of their growth. Linkages and networks comprise intangible assets for early stage firms that may be exploited at various stages in the firm lifecycle. Such Internet services represent a future possibility for the realisation of a central ‘hub’ and network of incubator firm activity, and an opportunity for national incubation organisations to collaborate in creating a property and service that would add real value to the cause of incubation, innovation and the internationalisation of young, growing firms. Assuming the current trends of globalisation and the knowledge economy continue, a hub where linkages to skills may be harvested by young, growing, innovative firms should be of interest to many members of the global Triple Helix of government, university and industry. Incubating firms, especially those affiliated with universities and governmental projects, would be well-situated as the first members to benefit from such a worldwide electronic linkage of skills. International connections will speed innovation and time-to-market of exciting new products and services, thus fulfiling the new third role of universities of catalysing economic development and the traditional role of governments of spurring value in society. Acknowledgements The authors would like to thank the anonymous reviewers for their constructive comments. They would also like to thank the editor for his continuous support throughout the review process.

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