January 21, 2014

EDITORIAL: In Support of Start-Up Incubation in Ithaca

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Correction appended

The Downtown Ithaca Incubator, a University initiative announced Thursday, aims to revitalize the Ithaca economy by providing a space for local businesses to launch. Tax benefits associated with the incubator have also been put in place to encourage those businesses to stay in Ithaca and create jobs. The tax incentives do not guarantee that incubated businesses will succeed or that they will remain in the area promoting economic development. Still, as some have criticized Cornell’s two billion-dollar investment in Cornell Tech as a move that could siphon resources away from both the Ithaca campus and the City of Ithaca, the incubator is a positive step that demonstrates the University’s commitment to its home base.

The creation of Cornell Tech, a new campus in a city hundreds of miles away, has from its inception raised concerns about the diversion of resources from Ithaca to NYC. The administration has continued to stress that the tech campus will not redirect financial resources away from Ithaca. While some of these concerns may have merit, we respect that Cornell is working to bring to Ithaca the same entrepreneurial spirit that inspired Cornell Tech.

We believe that it is crucial for the University to continue to launch projects like the Downtown Ithaca Incubator to reaffirm its dedication to the economic vitality of the city. New businesses in Ithaca bolster the energy and health of the city where students, faculty and staff work, eat and play. The incubator is a good example of strengthening this commitment to Ithaca both in name — as a collaboration between Cornell, Ithaca College and Tompkins County Community College that is open to the larger community — and in practice, as a potential engine of job growth.

We do note that business incubators are not definitively strong promoters of economic growth. In one of few empirical studies of the effects of incubation, a 2010 study of 35,000 firms conducted by Prof. Alejandro Amezcua, entrepreneurship, Syracuse University, found that while incubation seemed to improve employment and sales growth, it negatively affected the longevity of the venture. Additionally, the success of the Downtown Ithaca Incubator as a driver of economic growth will be contingent upon successful businesses remaining in the area. Tax breaks associated with the incubator and state programs like Start-Up NY encourage businesses to stay in the region, but they are not foolproof ways to prevent relocation.

Given the difficulty of assuring both the success of incubated startups and their continued presence in Ithaca, we are not sure of the ability of incubators to seriously improve economic vitality in the region. Nonetheless, the Downtown Ithaca Incubator is a welcome display of the University’s commitment to the economic health of the city Cornell first called home.

Correction: A previous version of this editorial incorrectly described Cornell Tech as a “billion-dollar investment.” In fact, the applied sciences school will cost $2 billion to complete.