Nurturing Innovation Beyond Metros: The Role of Business Incubators in TIER‐2 Startup Success

Business incubators (BIs) play a crucial role in fostering innovation, entrepreneurship, and economic growth by nurturing early‐stage startups. Tier‐2 cities have recently emerged as potential startup destinations in India, but the dynamics of their ecosystem and the effectiveness of incubation have not been thoroughly studied. The study is based on a survey of entrepreneurs and managers from Tier‐2 cities in India, where an initial 447 responses were collected, and after data screening and validation, 375 valid responses were retained for final analysis. This study is necessitated by the fact that there is an unequal allocation of resources and opportunities between metropolitan and non‐metropolitan areas. Tier‐1 cities are highly visible and attract a lot of investment, whereas Tier‐2 cities are not visible, even though they exhibit increasing entrepreneurial activity. To address this development gap and guide regional policy‐making, it is important to understand the role of incubation in startup growth in these cities. Survey results show that access to mentoring, funding networks, infrastructure, and training programs influences startup sustainability and scalability considerably. The three‐year survival rate for incubator‐related startups showed a 37% increase, which demonstrated that incubation support had a strong connection to startup business operations. Further, the quality of incubators, institutional relationships, and local support systems was found to be key differentiators. Research results show that Tier‐2 ecosystems are enabled by tailored incubation models, policy support, and collaborative platforms. By enhancing incubators in such cities, innovation can be decentralized, local jobs can be generated, and balanced development of regions can be achieved.