10 Chapter 3

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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

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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

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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.

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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


S.No Item No


Maximum 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

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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


S.No Item No


Maximum 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


S.No Item No


Maximum 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

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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

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FIGURE 3.3: Business Assistance Services - Item Wise Percentage Analysis

FIGURE 3.4: Management Guidance and Consulting Services Item Wise Percentage Analysis

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FIGURE 3.5: Enabling Environment Services - Item Wise Percentage Analysis


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.


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 dont 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


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 centres 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 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

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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

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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

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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).

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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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10 Chapter 3

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