In this paper, we present a model of 'collective innovation' built upon the business incubation network formation formalism. In our model, incubator and incubatee localized on a circle benefit from knowledge flows from other agents with whom they are directly or indirectly connected They support costs for direct connections which are linearly increasing with geographic distance by incubator. The dynamic process of business incubation network formation exhibits preferential meeting for close agents (in the relational network and in the geographic metrics). We show how the set of business incubation networks selected in the long run is affected by the degree of knowledge transferability. We find critical values of this parameter for which Incubation networks are dynamically selected.