Dynamic efficiency evaluation of state-level business incubators in China by using a slacks-based measure approach

It is important to evaluate the efficiency of business incubators for their performance improvement. Because few enterprises can successfully graduate from the incubation process in one incubation period, the incubating enterprises will be carried over to the successive periods. In this context, the number of incubating enterprises can be regarded as a carry-over variable linking different incubation periods, which can also be treated as an undesirable output in the current period. This paper proposes a dynamic slacks-based measure model to evaluate the efficiency of China's state-level business incubators during 2010-2012. The empirical results show that neglecting new entrants and the typical carry-over variable may underestimate the incubation system's efficiency. Moreover, the operational efficiency of China's state-level business incubators is relatively low, which is largely caused by the lower pure technical efficiency. There exist great disparities between pure technical efficiency and scale efficiency for all considered incubators in China. Some important insights and policy suggestions are presented.