Money Don't matter? How incubation experience affects start-up entrepreneurs' resource valuation

According to the resource-based view, for start-ups to gain a sustainable competitive advantage their resources should be valuable, rare, inimitable, and non-substitutable (VRIN). However, early-stage entrepreneurs often do not have the capability to properly value resources. Incubators are popular tools for supporting early-stage entrepreneurs. Many entrepreneurs initially prefer that incubators provide tangible non-VRIN resources such as funding and office space. While in incubators, entrepreneurs increasingly learn to value intangible resources as VRIN. It is unknown whether this change in resource valuation is caused by the incubator or a learning process common to all entrepreneurs. The aim of this study is to discern whether the change in valuation of resources is a result of the incubation experience or a consequence of a normal learning process. This contributes to a better understanding of the impact of incubation on start-up development. We pose the following research question: What are the effects of incubation experience on start-up entrepreneurs' valuation of different tangible and intangible resources offered by incubators? We develop hypotheses about how incubators change the valuation of specific resources. We test these hypotheses using data from 935 entrepreneurs in North America and Western Europe who completed a survey containing a discrete choice experiment in which entrepreneurs with and without incubation experience were asked to choose between two hypothetical incubators that offer different resources. Our results reveal that incubators indeed contribute to entrepreneurs' capacity to value resources. First, we find that entrepreneurs of incubated start-ups value non-VRIN resources less than entrepreneurs of non-incubated start-ups. Second, start-up entrepreneurs generally value most VRIN resources more than non-incubated startup entrepreneurs.