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usiness Incubation Centres have been receiving increasing attention as a tool to
promote entrepreneurship, both in the developed and developing countries.
They have become an integral part of the business assistance framework to offer
critical support to newly formed enterprises. Recognizing its importance, all major
stakeholders are trying to define, identify, measure, formulate and evaluate various
aspects related to these programmes. Business incubation initiatives have arisen
especially over the last decade with varying degrees of success in different parts of the
world. Many countries including India are still experimenting with it to foster
entrepreneurship.
While the Indian Government is trying to aggressively promote entrepreneurship, the
entrepreneurs continue to face numerous challenges and the new venture failure rate is
very high. In view of this, the Business Incubation Centres have assumed a lot of
significance as they provide an enabling environment to deal with the difficulties in
the process of entrepreneurship by providing comprehensive and integrated support to
the entrepreneurs, thereby reducing the new venture failure rate substantially. These
Centres provide start-up businesses with a variety of services such as physical space,
office equipment, business services, management guidance and an enabling
environment to facilitate their development until they are capable of surviving on their
own after exit from the incubator. At the macro level, they regenerate public
confidence in entrepreneurship and help create an entrepreneurial environment.
Prior researches in other parts of the world have proved the benefits of a good
incubation programme, but no comprehensive study has been carried out by scholars
on the role of business incubation centres in promoting entrepreneurship in the Indian
context. This chapter aims to fill this information gap and provide valuable insights on
the efficacy of business incubation initiatives in the country.
Role of Business Incubation Centres in Promoting
Entrepreneurship – Factor Wise Analysis
This segment describes the results of the first part of the survey on the role of
Business Incubation Centres in promoting entrepreneurship in terms of the various
B
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services provided to the incubatees. A total of 12 business incubation centres and 45
incubatees participated in the survey, out of which two business incubation centre
responses and three incubatee responses were discarded as the questionnaires were
incomplete. Therefore, the valid number of responses was 10 and 42 respectively.
The respondents were requested to indicate their level of agreement in terms of
provision of various business incubation services on an arbitrary 5 point Likert type
response scale. In order to assess the role of business incubation centres in promoting
entrepreneurship, we have analyzed 25 services which have been categorized into four
groups: Physical Infrastructure, Business Assistance, Management Guidance and
Consulting, and Enabling Environment services.
In the content analysis to explore the role of Business Incubation Centres in
promoting entrepreneurship in terms of providing Physical Infrastructure services, we
included items like providing below market rate rental workspace, communication
facilities, laboratory facilities etc.
Similarly to investigate the impact of Business Assistance Services, we incorporated
items like technical assistance, marketing assistance, networking support etc.
For exploring the contribution of Management Guidance and Consulting services,
items like help in conducting feasibility studies, developing business plans, providing
business counseling etc were retained.
Likewise in order to analyze the effect of Enabling Environment services, we isolated
items like reduced early stage operational costs, reduced time to develop marketable
products, accelerated development, synergy in tenant learning etc.
For testing the first objective of this investigation pertaining to the role of Business
Incubation Centres in promoting entrepreneurship, mean scores of sampled
organizations were taken on the basis of 25 items included in the second part of the
questionnaires. Furthermore, a t-test was also performed to analyze the gaps between
perceived and actual services rendered by the business incubation centres. The level
of significance was set at a conventional level of 5 per cent. Table 3.1 presents the
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results of the statistical analysis expressed in terms of the mean values of perceived
effectiveness.
TABLE 3.1: Role of Business Incubation Centres in Promoting
Entrepreneurship - Factor Wise Analysis
Factors Business Incubation Centres Incubatees
N
Mean
Scores
Std.
Deviation
Std.
Error
Mean N
Mean
Scores
Std.
Deviation
Std.
Error
Mean
Physical
Infrastructure 10 4.2750 .57070 .18047 42 3.4762 .60185 .09287
Business
Assistance 10 3.9444 .38222 .12087 42 2.9153 .50817 .07841
Management
Guidance &
Consulting 10 4.3500 .57975 .18333 42 3.1190 .74334 .11470
Enabling
Environment 10 4.0500 .38222 .12087 42 3.3363 .50817 .07841
Total Mean Score 16.6194 12.8468
Average Mean
Score 4.15485 3.2117
FIGURE 3.1: Role of Business Incubation Centres in Promoting
Entrepreneurship - Factor Wise Analysis
110
The factor wise analysis of the data reveals that the sampled business incubation
centres render all the four categories of services to the incubatees reflected by the
mean values of above 3.0 on a five point scale. The differences in the mean values of
responses across various categories of services are attributed to the difference in the
perception regarding degree of efficiency in providing these services. The
Management Guidance and Consulting ( = 4.35) service is recognized to be most
efficaciously furnished followed by Physical Infrastructure ( = 4.27), Enabling
Environment ( = 4.05) and Business Assistance ( = 3.94) services. It was quite
surprising to find that there is relatively lesser agreement on the adequacy in
imparting Business Assistance services because most of the incubatee firms are new
businesses and these services are very critical for them.
The incubatee data, however, suggests that while they acknowledge the business
incubation centres to be providing physical infrastructure facilities ( = 3.47),
management guidance and consulting services ( = 3.11), and enabling environment
services ( = 3.33) as implied by the mean values of above 3.0, they do not recognize
them to be imparting business assistance services ( = 2.91) as the mean value for
this service category is less than 3.0. The results betoken that the physical
infrastructure facilities ( = 3.47) is perceived to be most proficiently provided
service followed by enabling environment services ( = 3.33), management guidance
and consulting services ( = 3.11), and business assistance services ( = 2.91).
Thus, the factor wise analysis of the data implies that while the business incubation
centres claim to be rendering all the four categories of services namely: (1) Physical
Infrastructure Services (2) Business Assistance Services (3) Management Guidance
and Consulting Services and (4) Enabling Environment Services to the incubatees
during their period of incubation, the incubatees do not acknowledge the provision of
business assistance services to them. A more detailed item wise analysis follows.
Role of Business Incubation Centres in Promoting
Entrepreneurship – Item Wise Percentage Analysis
Table 3.2 presents an item wise percentage analysis of the role of Business Incubation
Centres in promoting entrepreneurship.
111
TABLE 3.2: Role of Business Incubation Centres in Promoting
Entrepreneurship - Item Wise Percentage Analysis
Physical Infrastructure Services
Business Incubation Centres Incubatees
S.No Item
No Description of Items
Obtained
Score
Maximum
Score Percentage
Obtained
Score
Maximum
Score Percentage
1 4
Your Incubation Centre
provides work space to
tenant companies at
below market rate rent.
44 50 88 186 210 88.57
2 5
Your Incubation Centre
provides communication
facilities like Phone, Fax,
to tenant companies.
46 50 92 175 210 83.33
3 7
Your Incubation Centre
provides library facilities
to tenant companies.
42 50 84 109 210 51.90
4 15
Your Incubation Centre
provides laboratory
facilities to tenant
companies.
39 50 78 114 210 54.28
Total 171 200 85.50 584 840 69.52
Business Assistance Services
Business Incubation Centres Incubatees
S.No Item
No Description of Items
Obtained
Score
Maximum
Score Percentage
Obtained
Score
Maximum
Score Percentage
1 6
Your Incubation Centre
provides secretarial
services to tenant
companies.
38 50 76 98 210 46.66
2 8
Your Incubation Centre
provides technical
assistance to tenant
companies.
43 50 86 104 210 49.52
112
3 9
Your Incubation Centre
provides marketing
assistance to tenant
companies.
40 50 80 110 210 52.38
4 10
Your Incubation Centre
provides legal services to
tenant companies
36 50 72 123 210 58.57
5 11
Your Incubation Centre
provides networking
support to tenant
companies (e.g. with
suppliers/customers etc)
45 50 90 129 210 61.42
6 12
Your Incubation Centre
provides human resource
management services to
tenant companies.
37 50 74 148 210 70.47
7 13
Your Incubation Centre
assists tenant companies
in obtaining approvals
36 50 72 127 210 60.47
8 14
Your Incubation Centre
assists the tenant
companies in product
development activities.
37 50 74 126 210 60.00
9 16
Your Incubation Centre
helps tenant companies
in securing capital.
43 50 86 137 210 65.23
Total 355 450 78.88 1102 1890 58.30
Management Guidance and Consulting Services
Business Incubation Centres Incubatees
S.No Item
No Description of Items
Obtained
Score
Maximum
Score Percentage
Obtained
Score
Maximum
Score Percentage
1 1
Your Incubation Centre
disseminates information
on business ideas.
42 50 84 159 210 75.71
2 2
Your Incubation Centre
helps the tenant
companies in conducting
feasibility studies.
40 50 80 106 210 50.47
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3 3
Your Incubation Centre
helps the tenant
companies in developing
business plans.
46 50 92 147 210 70.00
4 17
Your Incubation Centre
provides business
counseling to tenant
companies.
46 50 92 112 210 53.33
Total 174 200 87.00 524 840 62.38
Enabling Environment Services
Business Incubation Centres Incubatees
S.No Item
No Description of Items
Obtained
Score
Maximum
Score Percentage
Obtained
Score
Maximum
Score Percentage
1 18
Your Incubation Centre
has created an
environment where
tenant companies learn
from one another.
42 50 84 151 210 71.90
2 19
Your Incubation Centre
has reduced the time
required to develop
marketable products.
41 50 82 120 210 57.14
3 20
Your Incubation Centre
has reduced early stage
operational costs helping
tenant companies start
the business with lower
initial investment.
41 50 82 167 210 79.52
4 21
Your Incubation Centre
has accelerated the
development of new firms
by tenant companies.
39 50 78 149 210 70.95
5 22
Your Incubation Centre
has minimized the
chances of failure of
tenant companies.
42 50 84 111 210 52.85
114
6 23
Your Incubation Centre
has helped the tenant
companies to establish
credibility.
44 50 88 143 210 68.09
7 46
Your Incubation Centre
takes periodic feedback
about tenant companies
satisfaction with services.
39 50 78 119 210 56.66
8 54
Your Incubation Centre
has a formal procedure
for handling tenant
companies grievances.
36 50 72 161 210 76.66
Total 324 400 81.00 1121 1680 66.72
FIGURE 3.2: Physical Infrastructure Services - Item Wise Percentage Analysis
115
FIGURE 3.3: Business Assistance Services - Item Wise Percentage Analysis
FIGURE 3.4: Management Guidance and Consulting Services
Item Wise Percentage Analysis
116
FIGURE 3.5: Enabling Environment Services - Item Wise Percentage Analysis
Physical Infrastructure Services
With regards to the provision of physical infrastructure services, the item wise data
analysis reveals that the mean scores of business incubation centres for all the four
items are above 3.00 and ranging from 3.90 to 4.60 signifying that they consider
themselves to be rendering all these services. The communication facilities ( =
4.60) are most effectively provided followed by work space ( = 4.40), library
facilities ( = 4.20) and laboratory facilities ( = 3.90). The analysis of the incubatee
data on the other hand reflects that the mean scores of two items, work space ( =
4.43) and communication facilities ( = 4.17) are above 3.00, which means that the
incubatees acknowledge only these services to be furnished. The remaining two items,
laboratory facilities ( = 2.71) and library facilities ( = 2.60) have mean scores of
less than 3.00 suggesting that these services are not imparted.
Business Assistance Services
So far as business assistance services are concerned, the results point out that the
business incubation centres believe themselves to be tendering all the nine services as
reflected by the mean scores ranging from 3.60 to 4.50. The results further indicate
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that they discover themselves to be most competent in imparting networking support
( = 4.50), followed by technical advice ( = 4.30), assistance in securing capital (
= 4.30), marketing support ( = 4.00), secretarial service ( = 3.80), human resource
management service ( = 3.70), product development guidance ( = 3.70), legal
support ( = 3.60) and assistance in obtaining statutory approval ( = 3.60). The
incubatees however fathom them to be imparting human resource management
service ( = 3.52), assistance in securing capital ( = 3.26), networking support ( =
3.07), and assistance in obtaining statutory approval ( = 3.02) as revealed by mean
scores of above 3.00. They do not notice the business incubation centres to be
rendering secretarial services ( = 2.33), technical assistance ( = 2.48), marketing
support ( = 2.62), and legal services ( = 2.93). The incubatees were indecisive
about provision of product development assistance ( = 3.00).
Management Guidance and Consulting Services
In connection with the provision of management guidance and consulting services, the
business incubation centres recognize themselves to be furnishing all the four services
as denoted by the mean scores ranging from 4.00 to 4.60. Further, they discover
themselves to be most capable of providing business counseling ( = 4.60), assistance
in writing business plans ( = 4.60) followed by conducting feasibility studies ( =
4.00) and dissemination of information on business ideas ( = 4.00). Though the
incubatees concur with the business incubation centres in terms of rendering
information on business ideas ( = 3.79) and developing business plans ( = 3.50),
they do not find them to be imparting business counseling ( = 2.67) and assistance in
conducting feasibility studies ( = 2.52).
Enabling Environment Services
In terms of provision of enabling environment services, the data analysis reflects that
the business incubation centres conceive themselves to be tendering all the eight
services as revealed by the mean scores in the range of 3.60 to 4.40. We find that they
perceive themselves to be most accomplished in establishing incubatee credibility
( = 4.40), followed by creating synergistic environment ( = 4.20), minimizing
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failure ( = 4.20), reducing time to develop marketable products/services ( = 4.10),
reducing early stage operational costs ( = 4.10), accelerating development of new
firms ( = 3.90), taking periodic feedback ( = 3.90) and formal grievance handling
( = 3.60). The incubatees however figure out their business incubation centres to be
providing only synergistic environment ( = 3.60), reducing operational costs
( = 3.98), accelerating development of firms ( = 3.55), establishing credibility
( = 3.40), and formal grievance handling ( = 3.83). They don’t find them to be
effectual in reducing time to develop marketable products/services ( = 2.86),
minimizing chances of failure ( = 2.64), and taking periodic feedback ( = 2.83)
since the mean scores for all these services have been found to be less than 3.00.
Based on the results of data analysis presented above, it could be made out that the
business incubation centres in India are adept at rendering three out of four categories
of services to the incubatees during their period of incubation. These are: (1) Physical
Infrastructure services, (2) Management Guidance and Consulting services, and (3)
Enabling Environment services. The fourth category of services, namely, Business
Assistance is not imparted. Particularly, out of a total of 25 services, 13 are provided,
11 are not furnished and one service has neutral effectiveness.
Interpretation of the findings
Physical Infrastructure Services
Most of the start up ventures require physical infrastructure facilities but typically
cannot afford it since these facilities constitute a major expenditure and even finding
them is a major challenge for new businesses. The business incubation centres assist
the entrepreneurs in this regard by providing them with affordable and flexible work
space along with shared office services and equipment. Affordable means that the rent
is usually charged at a rate below market rent and flexible means that the size of the
space can be increased or decreased as per the need of the business. The rent can also
be paid in installments spreading over a period of time. Services related to building
facilities such as conference rooms, cafeteria, building security and other amenities
are also made available.
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Previous research studies have found that the physical infrastructure services
furnished by the business incubation centres have a positive impact on the start up
businesses. By offering these services, they reduce early stage operational costs, save
time of the entrepreneurs (Von Zedtwitz, 2003; Hannon, 2005) allowing them to focus
on product development (Finer and Holberton, 2006). These services also enhance the
visibility, credibility and legitimacy of the incubatee businesses through the use of
business incubation centre’s postal address and positive word of mouth (Smilor and
Gill, 1986; Singh et al, 1986; Martin, 1997), besides yielding a synergistic cost
advantage (Govindrajan and Fisher, 1990).
We have also found in the present study that the business incubation centres reduced
early stage operational costs, accelerated development of new firms and established
credibility for incubatees. Secondly, both the business incubation centres and the
incubatees recognize the physical infrastructure services to be provided as indicated
by overall mean scores of 4.27 and 3.47 respectively. It may, therefore, be inferred
that the business incubation centres are making a significant contribution in
promoting entrepreneurship by tendering physical infrastructure services.
Business Assistance Services
Business assistance covers a wide range of functional areas such as technical,
marketing, legal, human resource, product development, networking and finance.
Previous research studies (Allen and Rehman, 1985; Campbell et al, 1987;
Johannisson, 1988; Allen and McCluskey, 1990; Sherman and Chappel, 1998 ;
Hansen et al, 2000; Klofsten et al 2000; Lewis, 2001; Hellmann and Puri, 2002;
Wilber and Dixon, 2003 ; Pena, 2004 ) have shown that management problems, lack
of business skills, under capitalization, and poor access to business network hamper
survival rates among new ventures and this is where the business incubation centres
play a key role by rendering business assistance services as a remedy to the various
disadvantages faced by start up ventures. These services help entrepreneurs’ access
capital, broaden information sources, lower business costs and time, capitalize on
opportunities, shorten learning curve and access resources needed for business
survival and growth.
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However, in the present study we did not find the business incubation centres to be
imparting technical, marketing, legal, and product development services adequately. It
was also found that while they consider themselves to be providing these services as
denoted by a mean score of 3.94, the incubatees with a mean score of 2.91 did not
concur with them. It may, therefore, be inferred that the business incubation centres
are not making any significant contribution in promoting entrepreneurship in terms of
providing business assistance services.
Management Guidance and Consulting services
Management guidance and consulting services include assistance in developing
business plans, business counseling, help in conducting feasibility studies, and
providing business ideas.
Previous research studies (Birley, 1985; Sullivan, 2000; Hackett and Diltz, 2004b;
Tulchin and Shortall, 2008) have shown that the entrepreneurs not only need
resources of equipment, space and money but also advice, information and
reassurance. Start up ventures need a good business plan for securing capital and
ensuring smooth flow of funds. Business advice is indispensable at each stage of
business for faster problem solving and mentoring support enhances management
ability and confidence. The business incubation centres deliver value to incubatees
through providing business plan development support, mentoring, management
consulting, business advice and counseling services. (Fry, 1987; Deakins et al, 1998;
Robson and Bennett, 2000; Delmar and Shane, 2003; Birrell and Waters, 2004)
We have also discovered in our study that the business incubation centres
disseminated information and provided support for developing business plans to the
incubatees. Both the business incubation centres and the incubatees comprehend the
management guidance and consulting services to be furnished satisfactorily as
indicated by mean scores of 4.35 and 3.11 respectively. It may, therefore, be deduced
that the business incubation centres are making a significant contribution in
promoting entrepreneurship by rendering management guidance and consulting
services.
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Enabling Environment services
Enabling environment refers to a synergistic environment created and maintained by
the business incubation centres wherein the start up ventures save on operational costs
and develop marketable products and services faster. Such an environment accelerates
the development of new firms and minimizes their chances of failure. The business
incubation centres make periodic assessment of the incubatees’ satisfaction with
incubator services and redress their grievances promptly.
Research studies (Lichtenstein, 1992; Davidsson and Honig, 2003; McAdams and
McAdams, 2006) have shown that business incubation centres create opportunities
and environment that are conducive to incubatees to interact and create synergy. This
environment allows incubatees to share resources, experience, feelings of ups and
downs leading to reduction of isolation, and learn from each other to advance through
the start up process. The importance of having a good fit between incubatee needs and
incubator services has also been emphasized. (Autio and Klofsten, 1998)
The present study also indicates that the business incubation centres have created an
environment for tenant companies to learn from each other. They along with the
incubatees realize the enabling environment services to be imparted as revealed by
mean scores of 4.05 and 3.33 respectively. It may, therefore, be reasoned that the
business incubation centres are making a significant contribution in promoting
entrepreneurship by providing enabling environment services.
We may thus infer from the above analysis that the Indian Business Incubation
Centres are making a significant contribution in promoting entrepreneurship through
the provision of Physical Infrastructure services, Management Guidance and
Consulting services, and Enabling Environment services to the incubatees during their
period of incubation. The provision of Business Assistance services, however, is one
area that needs to be pursued further in order to make it more effective for incubatees
and enhance its contribution to the promotion of entrepreneurship.
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Analysis of gaps between perceived and actual services
rendered by business incubation centres
A thorough understanding of the perception of incubatees in respect of various
business incubation services is critical for the success of the business incubation
centres. This information serves as a feedback to enhance their utility and
effectiveness by making suitable changes in the level and type of services rendered.
Incubator resources are scarce and should be utilized for providing only those services
that benefit the incubatees most.
For an analysis of the gaps between perceived and actual services rendered by the
business incubation centres, a t-test (Please refer: Table 3.3) and ANOVA (Please
refer: Table 3.4) was performed. The level of significance was set at a conventional
level of 5 per cent. In order to determine the perceived differences, comparative mean
scores were also calculated (Please refer: Table 3.5).
t - test for equality of mean scores of business incubation
centres and incubatees regarding various business
incubation services
TABLE 3.3: t- test for Equality of Mean Scores
Independent Samples Test
Equal Variance Assumed
t-test for Equality of Means
t df Sig (2-
tailed)
Mean
Difference
Std. Error
Difference
95% Confidence
Interval of the
Difference
Lower Upper
Physical Infrastructure
-3.807 50 .000 -.7988 .20984 1.22029 -.37733
Business
Assistance -5.994 50 .000 -1.0291 .17168 1.37393 -.68427
Management
Guidance
and
Consulting
-4.882 50 .000 -1.2310 .25217 1.73744 -.72446
Enabling
Environment -5.994 50 .000 -1.0291 .17168 1.37393 -.68427
123
The statistical results of the t-test reveal vital gaps between perceived and actual
services rendered by the business incubation centres as denoted by the critical
negative mean difference and significance value of less than 0.05 across all categories
namely: Physical Infrastructure services (-.7988), Management Guidance and
Consulting services (-1.2310), Enabling Environment services (-1.0291), and
Business Assistance services (-1.0291). It is important to note that although the first
three categories of services have statistically significant gaps, they are acknowledged
to be provided by the incubatees since their mean scores are above 3.00. (Please refer:
Table 3.1). The analysis, therefore, reveals that the incubatees’ expectation of the
degree of effectiveness in provision of these services is higher than its current level.
However, in case of Business Assistance services, the mean value is below 3.0
suggesting that the incubatees did not discern them to be provided.
Analysis of Variance
TABLE 3.4: ANOVA between Incubatees and Business Incubation Centres
Sum of Squares
df Mean
Square F Sig.
Physical Infrastructure
4. Your Incubation Centre provides work space to tenant companies at below market rate rent.
.007 1 .007 .011 .918
5. Your Incubation Centre provides communication facilities like Phone, Fax, to tenant companies.
1.517 1 1.517 1.983 .165
7. Your Incubation Centre provides library facilities to tenant companies.
20.800 1 20.800 12.423 .001
15. Your Incubation Centre provides laboratory facilities to tenant companies.
11.355 1 11.355 6.346 .015
Business Assistance
6. Your Incubation Centre provides secretarial services to tenant companies.
17.374 1 17.374 21.223 .000
8. Your Incubation Centre provides technical assistance to tenant companies.
26.866 1 26.866 23.743 .000
9. Your Incubation Centre provides marketing assistance to tenant companies.
15.403 1 15.403 10.711 .002
10. Your Incubation Centre provides legal services to tenant companies.
3.641 1 3.641 2.710 .106
124
11.Your Incubation Centre provides networking support to tenant companies (e.g. with suppliers/customers etc)
16.484 1 16.484 14.908 .000
12. Your Incubation Centre provides human resource management services to tenant companies.
.251 1 .251 .410 .525
13.Your Incubation Centre assists tenant companies in obtaining statutory approvals
2.682 1 2.682 3.091 .085
14. Your Incubation Centre assists the tenant companies in product development activities.
3.958 1 3.958 2.353 .131
16. Your Incubation Centre helps tenant companies in securing capital.
8.704 1 8.704 5.048 .029
Management Guidance and Consulting
1. Your Incubation Centre disseminates information on business ideas. (Product/service ideas)
1.386 1 1.386 2.122 .151
2. Your Incubation Centre helps the
tenant companies in conducting
feasibility studies.
17.601 1 17.601 8.113 .006
3. Your Incubation Centre helps the
tenant companies in developing
business plans.
9.773 1 9.773 9.993 .003
17. Your Incubation Centre provides
business counseling to tenant
companies.
30.190 1 30.190 17.205 .000
Enabling Environment
18. Your Incubation Centre has created an environment where tenant companies learn from one another.
2.954 1 2.954 4.970 .030
19. Your Incubation Centre has reduced the time required to develop marketable products/services.
12.476 1 12.476 9.741 .003
20. Your Incubation Centre has reduced early stage operational costs helping tenant companies start the business with lower initial investment.
.124 1 .124 .135 .715
21. Your Incubation Centre has accelerated the development of new firms by tenant companies.
1.003 1 1.003 .941 .337
22. Your Incubation Centre has minimized the chances of failure of tenant companies.
19.584 1 19.584 14.562 .000
23. Your Incubation Centre has helped the tenant companies to establish credibility.
8.000 1 8.000 4.847 .032
24.Your Incubation Centre takes periodic feedback about tenant companies satisfaction with incubator services
9.190 1 9.190 10.272 .002
25. Your Incubation Centre has a formal procedure for handling tenant companies grievances.
.440 1 .440 .682 .413
125
In terms of physical infrastructure services, the ANOVA table indicates that the
significance value of library facilities (.001) and laboratory facilities (.015) is less
than 0.05 indicating vital gaps in the perception of business incubation centres and
their incubatees regarding provision of these two services.
The results of the ANOVA for business assistance services reveal a significance value
of less than 0.05 for secretarial services (.000), technical assistance (.000), marketing
assistance (.002), networking support (.000) and assistance in securing capital (.029)
implying critical differences in the conception of business incubation centres and their
incubatees regarding provision of these five services. It is, however, worth noting that
in case of networking support and assistance in securing capital, the results indicate
that although the incubatees figure out these services to be provided in general, the
degree of efficacy is perceived to be less in comparison to that of business incubation
centres. This is evident from the mean scores of above 3.00 for each of these services
(Please refer: Table 3.5).
In case of management guidance and consulting services, the significance value of
assistance in conducting feasibility studies (.006), assistance in writing business plans
(.003) and business counseling (.000) is less than 0.05, suggesting significant gaps in
perception of business incubation centres and incubatees regarding provision of these
services. The business plan writing assistance service though provided requires
considerable improvement.
With regards to the enabling environment services, the ANOVA table reveals that the
significance value of synergistic environment (.030), reduced time to develop
marketable products/services (.003), minimized chances of failure (.000), establishing
credibility (.032), and periodic feedback (.002) is less than 0.05, implying significant
differences in perception of business incubation centres and incubatees regarding
provision of these services. The creation of synergistic environment and credibility
enhancement services require special attention even though the incubatees consider
these services to be furnished as indicated by mean score of above 3.00 (Please refer:
Table 3.5).
126
TABLE 3.5: Comparative Mean Scores of Incubatees and Business Incubators
Respondent
Incubatee Incubator Total
Physical Infrastructure
4. Your Incubation Centre provides work space to tenant companies at below market rate rent.
4.43 4.40 4.42
5. Your Incubation Centre provides communication facilities like Phone, Fax, to tenant companies.
4.17 4.60 4.25
7. Your Incubation Centre provides library facilities to tenant companies.
2.60 4.20 2.90
15. Your Incubation Centre provides laboratory facilities to tenant companies.
2.71 3.90 2.94
Business Assistance
6. Your Incubation Centre provides secretarial services to tenant companies.
2.33 3.80 2.62
8. Your Incubation Centre provides technical assistance to tenant companies.
2.48 4.30 2.83
9. Your Incubation Centre provides marketing assistance to tenant companies.
2.62 4.00 2.88
10. Your Incubation Centre provides legal services to tenant companies.
2.93 3.60 3.06
11.Your Incubation Centre provides networking support to tenant companies (e.g. with suppliers/customers etc)
3.07 4.50 3.35
12. Your Incubation Centre provides human resource management services to tenant companies.
3.52 3.70 3.56
13.Your Incubation Centre assists tenant companies in obtaining statutory approvals
3.02 3.60 3.13
14. Your Incubation Centre assists the tenant companies in product development activities.
3.00 3.70 3.13
16. Your Incubation Centre helps tenant companies in securing capital.
3.26 4.30 3.46
Management Guidance and Consulting
1. Your Incubation Centre disseminates information on business ideas. (Product/service ideas)
3.79 4.20 3.87
2. Your Incubation Centre helps the tenant companies in conducting feasibility studies.
2.52 4.00 2.81
3. Your Incubation Centre helps the tenant companies in developing business plans.
3.50 4.60 3.71
17. Your Incubation Centre provides business counseling to tenant companies.
2.67 4.60 3.04
Enabling Environment
18. Your Incubation Centre has created an environment where tenant companies learn from one another.
3.60 4.20 3.71
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19. Your Incubation Centre has reduced the time required to develop marketable
2.86 4.10 3.10
20. Your Incubation Centre has reduced early stage operational costs helping tenant companies start the business with lower initial investment.
3.98 4.10 4.00
21. Your Incubation Centre has accelerated the development of new firms by tenant companies.
3.55 3.90 3.62
22. Your Incubation Centre has minimized the chances of failure of tenant companies.
2.64 4.20 2.94
23. Your Incubation Centre has helped the tenant companies to establish credibility.
3.40 4.40 3.60
24.Your Incubation Centre takes periodic feedback about tenant companies satisfaction with incubator services
2.83 3.90 3.04
25. Your Incubation Centre has a formal procedure for handling tenant companies grievances.
3.83 3.60 3.79
The comparison of mean scores point out significant gaps between perceived and
actual services rendered by the business incubation centres.
Incubatees’ perception of the Importance of services
The business incubation centres provide their incubatees with a wide range of services
ranging from tangible (e.g. physical facilities and office equipment) to intangible
services (e.g. counselling support). However, the incubatees do not attach equal
importance to all of them and their perception of the benefits of incubation services
for their business is a key indicator in assessing their effectiveness. Therefore, they
were requested to rank the importance of the services provided to them, with rank 1
assigned to the most important and rank 25 assigned to the least important service.
The mean importance ranking (Please refer: Table 3.6) varied widely with incubatees
and, therefore, could not be generalized. Since it is difficult to express it in absolute
terms, the results can be considered with reference to a continuum ranging from high
to low level of importance. On a scale of 1 to 25, with 1 being the highest importance,
25 being the lowest and 12.50 considered to be of neutral importance, we consider all
the services to the left of mid point as important and to the right as relatively not very
important.
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TABLE 3.6: Relative Importance Ranking of Various Services
Item No Service Score Rank
4 Providing below market rate rental Work Space 4.76 1
3 Business Plan Writing Assistance 9.00 2
20 Reduced Operational Costs 10.21 3
15 Laboratory Facilities 10.26 4
5 Providing Communication Facilities 10.59 5
6 Secretarial Services 10.59 6
7 Library Facilities 10.66 7
12 Human Resource Management 11.04 8
10 Legal Services 11.50 9
14 Product Development 12.00 10
19 Reduced Product/service Development Time 12.02 11
21 Accelerated Development of Firm 12.26 12
1 Dissemination of Information on business ideas 12.33 13
13 Statutory Approval 12.69 14
8 Technical Assistance 13.09 15
16 Securing Capital 13.28 16
18 Synergistic Learning Environment 13.28 17
23 Establishing Credibility 13.40 18
25 Grievance Handling 13.45 19
22 Minimized Chances of Failure 13.69 20
9 Marketing Assistance 13.76 21
2 Conducting Feasibility Studies 14.00 22
17 Business Counselling 14.00 23
11 Networking Support 14.02 24
24 Periodic Feedback 15.73 25
These findings pertaining to the importance ranking ought to be treated as a general
feedback based on the experiences and expectations of the incubatees.
Incubatees request for services
The incubatees were also requested to indicate whether they asked their business
incubation centre to provide the various services to them. Table 3.7 provides the
aggregate of responses. While marketing assistance was asked for by 100 per cent of
incubatees, secretarial services were asked for by 50 per cent of the incubatees
representing the maximum and minimum percentage of incubatees asking for a
particular service.
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TABLE 3.7: Responses of the Incubatees on their Request for Services
S.No Description of Items
Response Category
N=42
Yes Percentage No Percentage
1 Dissemination of Information on
business ideas
33 78.57 9 21.42
2 Conducting Feasibility Studies 39 92.85 3 7.14
3 Business Plan Writing Assistance 41 97.61 1 2.38
4 Providing below market rate rental
Work Space
39 92.85 3 7.14
5 Providing Communication Facilities 39 92.85 3 7.14
6 Secretarial Services 21 50.00 21 50.00
7 Library Facilities 32 76.19 10 23.80
8 Technical Assistance 31 73.80 11 26.19
9 Marketing Assistance 42 100.00 0 0.00
10 Legal Services 38 90.47 4 9.52
11 Networking Support 40 95.23 2 4.76
12 Human Resource Management 33 78.57 9 21.42
13 Statutory Approval 37 88.09 5 11.90
14 Product Development 37 88.09 5 11.90
15 Laboratory Facilities 33 78.57 9 21.42
16 Securing Capital 39 92.85 3 7.14
17 Business Counselling 38 90.47 4 9.52
18 Synergistic Learning Environment 29 69.04 13 30.95
19 Reduced Product/service
Development Time
35 83.33 7 16.66
20 Reduced Operational Costs 41 97.61 1 2.38
21 Accelerated Development of Firm 37 88.09 5 11.90
22 Minimized Chances of Failure 39 92.85 3 7.14
23 Establishing Credibility 40 95.23 2 4.76
24 Periodic Feedback 29 69.04 13 30.95
25 Grievance Handling 39 92.85 3 7.14
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Incubatee comments
Incubatees were requested to share information on their incubation experience and
provide suggestions for additional services that would have benefited them during
their incubation. Out of a total of 42, only 16 responses were provided to this
question, indicating that Incubatees were relatively satisfied with the range of services
provided to them. Suggestions for improvement in services included marketing
support, admission procedure, business advice, technical support, release of funds,
manufacturing processes support, and business counseling.
From the foregoing analysis, the following findings have emerged:
1. Overall, the business incubation centres in India are making a significant
contribution in promoting entrepreneurship by rendering three out of four
categories of services namely: (1) Physical Infrastructure Services, (2)
Management Guidance and Consulting Services, and (3) Enabling
Environment Services. The fourth category concerned with Business
Assistance Services is not provided. At the specific level, out of a total of 25
services, 13 are furnished, 11 are not imparted and one service has neutral
effectiveness.
2. There are statistically significant gaps between perceived and actual services
rendered by the business incubation centres across all categories. The
incubatees perceive a significantly lower level of efficiency in the provision of
various services as compared to their business incubation centres.
From the above discussions, we may summarize that business incubation has been
globally recognized as an important mechanism for upping the entrepreneurship
quotient through a well designed venture creation process. It is a potential component
designed to foster entrepreneurship more systematically and comprehensively through
tailored support to newly formed companies. India has a large pool of semi skilled
and unskilled workforce which can be harnessed and engaged in a productive manner
by encouraging them to set up their own business ventures. The findings of the
present study reveal that systematic interventions through business incubation centres
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have created enabling conditions for them, and thus, they assumes a lot of
significance in ameliorating unemployment and other socio-economic problems of the
country.
As the incubator concept has evolved, the range of services offered by them has
greatly expanded from providing basic equipment to a broad spectrum of professional
services. The quality, range, dependability, and accessibility of these services attract
entrepreneurs to an incubator and ultimately help them nurture their entrepreneurial
ventures successfully. Therefore, it is essential to ascertain whether they are effective-
ly meeting the needs of the incubatees or not? We observed critical gaps between
perceived and actual services rendered by the business incubation centres which may
be detrimental to the success and survival of the Indian business incubators.
We may, thus, conclude that although business incubation centres are playing a
significant role in promoting entrepreneurship, they need to continuously shape up
their offerings consistent with the needs and expectations of their incubatees. The
portfolio of services should be coalesced into a comprehensive business assistance
program designed to successfully nurture emerging ventures.
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