The role of business incubation in company development

Incubation has become in recent years a generic term with a meaning much wider than the term 'incubator house' current in Hungary. It frames many means of company development, especially small, technology-oriented firms. It seems an urgent task to spread the new interpretation -combining market-developing company development with innovation policy - as this policy means is gaining importance in EU business policy. The first part draws on published international findings to support the need for technology-oriented incubation. The article goes on to present a new systematization of incubator services and the local business environment. The local business environment is examined in the light of incubation success, in terms of the ability of the services to add value and treat market deficiencies. Finally, an attempt is made to fit business incubation to two basic paradigms of business development - market-substituting and market-developing - and draw conclusions about its economic-policy applications.