Bureaucratic constraints and investment attraction: how operational practices influence technology transfer performance in publicly funded business incubators

Publicly funded business incubators serve as critical intermediaries in technology transfer ecosystems, yet their effectiveness is often constrained by bureaucratic requirements stemming from their government support. We examine how bureaucratic versus informal operational practices affect incubator performance in attracting private investment-a key indicator of successful technology commercialization. We analyze data from 167 publicly funded business incubators belonging to the European Business Incubator Centers Network. Specifically, we investigate how selection and coaching approaches influence investment from venture capitalists and business angels. We use hurdle models to capture the two-stage investment decision process and bivariate probit models to address unobserved factors driving investment decisions. We find that incubators adopting less bureaucratic practices attract significantly more private investment for their tenant firms, with informal selection procedures proving particularly important. Venture capitalists show stronger preferences than business angels for specialized coaching approaches that resemble their own mentoring practices. These findings reveal a fundamental tension in technology transfer organizations: while bureaucratic procedures aim to ensure accountability, they can simultaneously constrain the organization's effectiveness in achieving its market-oriented objectives. We contribute to technology transfer literature by empirically demonstrating how bureaucratic practices affect performance in publicly funded organizations, identifying specific operational approaches that drive incubation outcomes, and providing insights for European innovation policy. We also offer practical implications for incubator managers seeking to optimize investment outcomes and policymakers designing accountability frameworks for innovation infrastructure.