The definition of the legal status of the incubator means, firstly, deciding whether it will be an independent unit (with its own legal structure) or if it will be connected to an existing institution (a university, company, research center, etc.).The definition of the legal status is a strategic decision and the flexibility of the incubator will depend on this decision. There are advantages to each of the legal situations cited above:

Independent Unit:

• Advantages:
  • Flexibility in obtaining funding.
  • Managerial/decision-making agility.
  • Lesser possibility of political interference.
  • Flexibility/agility in complying with agreements/contracts.

• Advantages:

• Uses the administrative structure of the "maintaining body" (financial statements, finances, materials, etc.);
• Benefit from the "name"/credibility of the "host body";
• Facilitate interaction with other departments of the "host body". For example: in the case of a university, the incubator will have easier access to researchers in different departments.

The team responsible for defininition of the legal status should consider several points:

• Connected Unit:
  • Clearly define the degree of autonomy (budget, spending decisions, hiring, etc.);
  • Ensure managerial continuity;
  • Obtain a source of internal and external support. Even though it is a connected unit, it must not become a simple "internal project", but must create strong ties to other organizations. Apart from diminishing internal resistance, this can facilitate entry of companies into the market.
• Specific legal status: a detailed analysis is made of advantages/disadvantages of the types of legal status permitted by local legislation. Among incubators that are already operating, there are two leading types of legal status: the Non Government Organization (NGO) and Foundations.

The team in charge of the project must determine the legal status of the incubator using professional legal advice to provide direction on advantages/disadvantage of the various options.

Definition of the legal status of the incubator makes it possible for the team responsible for the project to comprehend the different types of interaction with other institutions, as well as marketing potentialities/difficulties.

Legal status of the incubator, NGO, foundations.

Publications and Other Forms of Reference

• DORNELAS, J.C.A. Planning Business Incubators. São Paulo: Campus, 2003.
• LAVROW, M. and SAMPLE, S. Business Incubation: Trend or Fad?
• MARKLEY, D. and McNAMARA, K. T. A Business Incubator: Operating Environment and Measurement of Economic and Fiscal Impacts. Available on-line: http://www.agecon.purdue.edu/crd/pdffiles/wp0594.pdf.
• PEREIRA, E.G. & PEREIRA, T.G. Planning and Implementation of Business Incubators. Brasília: ANPROTEC, 2002.
• PIRES, Sheila O. Incubator Leadership and Management. Available on-line at: http://idisc.net