Technological Incubators as Creators of New High Technology Firms in Israel

The Israeli High-Tech industry boom in the past decade deserves a thorough study of the local reality as well as an appraisal of the efficiency of existing programs. This paper sets as its main objective an analysis of the effectiveness of the Incubator Program in Israel at the national, regional and local economy level. First, we evaluate the High-Tech incubators as a filter of new technological ideas that subsequently become new technology-based companies. Second, we identify the kind of investors who are willing to participate in funding a project during and after the incubation period. Finally, we analyze the geographical dispersal of the incubators and their contribution to local economic development. Our general conclusion is that although technological incubators constitute an efficient program at both the national and the local level, their wide geographical dispersal negatively effects their performance, since it contrasts with the general tendency of High-Tech industries to agglomerate. It is our belief that the total number of incubators should be reduced, their size enlarged and their locations more precisely determined.