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Deborah M. Markley and Kevin T. McNamara* The primary responsibility for designing and implementing economic development strategies in the 1990s rests with state and local governments and community leaders. The recession of the early 1990s brought increased pressure on local leaders to develop innovative ways to increase economic activity. There has been increased recognition that not all communities can grow through industrial recruitment, attraction of retirees, and development of recreational resources. And, concerns about the federal budget deficit have led 1 to fewer federal dollars available to support economic development activities. Consequently, policy makers at the state and local levels began exploring a range of policy options to support business survival and growth. One of these options is the business incubator, a locally based institution created to encourage and support new business development. Incubators provide a shared facility for start-up and young firms. Firms in incubators benefit from business assistance services, networking opportunities, and flexible, belowmarket rental space. Firms enter the incubator as tenants, spend a period of time within the facility, and then graduate when the business is viable and can be competitive in the market. Incubators provide tangible benefits to firms, such as lower operating costs and access to services, as well as intangible benefits such as moral support, advice from other tenants, and access to information.