Business Incubators(BIs) can enhance the success rate of new small firms by providing the office space at cheaper rent, pooling many initial investment and offering advise, consulting services and perhaps financing packages that reduce many early stage risks. Therefore, the establishment of BIs can be a good policy measure to the local governments because BIs can create many benefits such as creating new firms and new jobs and revitalizing local economy. The purposes of this study are ⅰ) to identify and propose policy directions for the promotion and diffusion of BIs at the macro, national and regional level to be implemented by central and local autonony. and ⅱ) to suggest management practices for the effective operation of BIs at the micro and incubator level to be implemented by BI managers. The result shows that the role of local governments as BI investors and the role of local universities as BI mechanism for the regional economic and technological development. Also it is emphasized that "planned" and "phased" approaches for the nationalwide diffusion of BI systems are very required. Within BIs, managers should provide tenant firms with higher quality support along the full support cycle such as entering, incubating and graduating BIs of tenant firms. Some other policy and managerial issues are also discussed.