An Overview of Global and Indian Business Incubation...

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his chapter describes the research methodology employed in the study to

achieve the focused objectives defined in the previous chapter. The choice of the

methodology is complicated because of the availability of a large variety of methods,

techniques, procedures and the numerous combinations spawned by the abundance of

tools. A review of the extant literature reveals that the earlier studies on business

incubation are mainly either exploratory attempts or are descriptive. Questionnaire

based research (Allen and Rahman 1985, Lumpkin and Ireland 1988, Allen and

McCluskey 1990, Hansen et al 2000) and case studies (Kumar and Kumar 1997,

Autio and Klofsten, 1998) have dominated the research into incubation. While the

quantitative studies have compared incubators on various parameters, the qualitative

studies have tried to identify best practices and capture intangibles which are not

easily quantifiable. Regardless of the methodology, the manager of the incubator has

been an important source of information due to the fact that most incubators have very

few staff members and the manager generally has the best overview of the companies

within the incubator. We will begin our discussions with an overview of global and

Indian business incubation landscape and then discuss the research methodology in

detail.

An Overview of Global and Indian Business Incubation

Centres

Business incubators are designed to nurture the development of newly formed

entrepreneurial companies by providing them with an array of targeted business

support services and resources, which include: management guidance, technical

advice, consulting, appropriate rental space, shared basic business services and

equipment, networking support, marketing assistance, and financing necessary for

company growth. The most common goals of incubation programs are to improve the

survival and growth of new start up firms substantially, create jobs and wealth,

enhance entrepreneurial climate, create and retain businesses, commercialize new

technologies, build or accelerate growth in a local industry, and diversify economies.

The earliest incubation programs focused on a variety of technology companies or on

a combination of light industrial, technology and service firms. However, in more

recent years, they are targeting industries such as food processing, medical

technologies, space and ceramics technologies, arts and crafts, telecommunications

T

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and software development. Incubator sponsors have also focused on microenterprise

creation, the needs of women and minorities, and environmental endeavors. Although

the business incubation centres have come of age, the unavailability of adequate and

reliable information about them is a major concern which needs to be addressed.

The definitions of business incubation vary markedly from country to country and

information flows are sporadic. Therefore, the numbers of incubators worldwide are

estimates and are provisional. As of October 2006, there were nearly 7000 incubators

of various types in the world.1 Out of these, approximately 1400 were in North

America (1115 in United States, 191 in Mexico and 120 in Canada), 1000 in Europe

(including 370 in Germany), 400 in China, 355 in Korea, 265 in Japan, and 220 in

UK. The remaining are in other parts of the world. India has around 120 incubators

including 40 Science and Technology Entrepreneurs’ Parks (STEP).2

Business incubators originated in the United States of America and the first incubator

came into being in an abandoned Massey Ferguson manufacturing plant in Batavia in

1959. A number of initiatives were undertaken between 1985 and 1995 to strengthen

the incubation movement and as a result, it evolved into an ecosystem with a plethora

of models ranging from public to private incubators.

Business incubation took a growing role in Canada’s economic development. During

the year 2005, there were more than 83 operating business incubators generating

funds in excess of $45 million. Within them, 900 client businesses raised revenues

over $93 million and created full and part-time employment for more than 13,000

people.3

China also has a well-developed incubation market space, with the government

playing a predominant role to accord with its mandate of high technology led

economic growth. Although the creation of small businesses through the incubation

model started only in late 1980s, it has been able to develop about 400 variants in a

short span. These incubators have helped bridge the gap between research and the

marketplace, fostered entrepreneurial attitudes, and facilitated the re-entry of scholars

abroad. Between 2002 and 2006, the number of client firms increased from 20993 to

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41434, and their real value added increased from 41 billion to 133 billion Yuan (at the

2000 price).4

National Business Incubation Association (NBIA) estimated that in 2005 alone, North

American incubators assisted more than 27,000 start-up companies that provided full-

time employment to over 100,000 workers and generated annual revenue of $17

billion. Another study in the mid 1990s found that 87 per cent of all firms that had

graduated from NBIA member incubation programs were still in business and about

84 per cent of them remained in the incubator’s community.5 A 2008 study conducted

by consulting firm Grant Thornton for the US Department of Commerce Economic

Development Administration found that business incubators produced new jobs at low

cost to the government.6

Over the last 12 years, United Kingdom Business Incubation (UKBI)7 has measured

the impact of incubators on local economy and workforce. The research proved that

an incubator's client firms provided an average of 167 jobs (full time equivalents) per

incubator and were home to roughly 30 entrepreneurial companies at any one time.

About 60 per cent of them also operated "outreach" services and were able to support

150 additional ventures. Most importantly, businesses had an average success rate of

98 per cent when they were located in the incubator as compared to a national average

of less than 30 per cent and around 87 per cent of them survived beyond five years.

Thus, business incubation centres have not only grown in numbers and geographic

spread, but also in terms of its impact on promoting entrepreneurship, job creation and

economic development across the world.

So far as the Indian scenario is concerned, the National Science and Technology

Entrepreneurship Development Board (NSTEDB) launched the Science and

Technology Entrepreneurs Parks (STEP) in the early 1980’s, and the Technology

Business Incubators (TBI) in the beginning of 2000.8 Our country has nearly 120

incubators and science parks which have nurtured over 1150 entrepreneurs up to

2008.9 NSTEDB has so far created 53 TBIs in collaboration with premier academic

and research institutes with an investment of Rs. 100 crores and the cumulative

revenue generated by these incubated enterprises now stands at Rs. 595 crores.10

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Although no comprehensive study has been carried out to measure the impact of these

mechanisms put together, the estimates are that all these incubators help to graduate

about 500 enterprises every year and out of these, 60 per cent are technology based

startups.11 The report of the Working Group on science and technology for small and

medium scale enterprises for the Eleventh Five Year Plan (2007-2012)12 recommends

that a total of 170 Technology Business Incubators and 50 Technology Innovation

Centres should be set up with a total outlay of Rs. 1100 Crore.

Though the origin of Incubation Centres in India is recent, they have played a

significant role in promoting entrepreneurship which could be reviewed from the

unique contribution of few Business Incubation Centres.

Founded in 2000, SIDBI Innovation & Incubation Centre (SIIC), set up by Indian

Institute of Technology, Kanpur has incubated 15 startups, of which 5 have already

graduated. SIIC incubates ventures in technology, engineering and all

interdisciplinary areas. The incubatee firms have created employment for 94

individuals and generated revenues exceeding Rs 67 million.

Centre for Innovation, Incubation and Entrepreneurship (CIIE), Ahmedabad which

came into being in 2001 facilitates the conversion of hi-tech and mass-impact

innovations into enterprises. From amongst the 16 companies that have been

incubated, 2 have already moved out successfully. CIIE’s incubatees currently employ

over 150 individuals across western India.

Technology Business Incubator, National Institute of Technology, Calicut, (TBI-

NITC) was established in 2003 and has completed incubation of 4 out of the 17

ventures that have been admitted so far.

Vellore Institute of Technology-Technology Business Incubator (VIT-TBI)

commenced its operations in 2003 and focuses on Auto Components, Biotechnology

and Consumer Durables. It has enrolled 18 enterprises out of which 5 companies have

already achieved their agreed upon milestones. The firms have created more than 65

jobs and contributed Rupees 16 million to the economy.

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Technology Business Incubator, Kongu Engineering College (TBI KEC) has

incubated 22 companies since its inception in 2003 and 12 of them have left with

sustainable businesses. Located in a region known for its entrepreneurial culture TBI

KEC incubatees have collectively generated more than 200 jobs till date.

TBI Composites was instituted in 2003 with the aim of incubating ventures in

materials, technology, product and process development. It has graduated 53 of the 56

firms it has incubated. The firms have generated 1500 jobs and added Rupees one

billion in revenues.

With a focus on serving poor farmers of the semi-arid tropics through business

incubation approach, Agri Business Incubator-ICRISAT has incubated 17 companies

out of which 5 have left after fulfilling the purpose of incubation. These firms have

created employment for 543 individuals till date.

Launched in 2004, Society for Innovation and Entrepreneurship, SINE, a broad-

spectrum technology business incubator, focuses on promotion of entrepreneurship at

IIT Mumbai. Of the 32 Companies admitted so far, 10 have generated employment

for more than 200 people.

Working towards the creation of a new class of entrepreneurs, the Designpreneurs,

National Design Business Incubator, NDBI was founded in 2004. The process of

incubation has already been completed for 14 firms who have created 30 new jobs and

generated revenues of Rupees 60 million.

With a strong thrust on Agriculture Biotechnology and Pharma sectors, MITCON

Biotechnology Centre (MPBC) was initiated in 2004 and graduated 15 companies out

of the 35 which were incubated. Its incubatees have created jobs for more than 150

people and revenue to the tune of Rupees 40 million.

The Life Science Incubator - ICICI Knowledge Park, Hyderabad which came into

existence in 2005 is structured as an independent centre within ICICI Knowledge Park

(IKP). The incubator was the joint recipient of the Best TBI award from DST for the

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year 2007. It has incubated 9 firms of which 3 have exited successfully after attaining

the desired level of growth.

Trivandrum based Technopark Technology Business Incubator has incubated 72 firms

so far, of which 40 have already become viable. The incubator focuses on technology

development and product-based companies.

With a single-minded focus on promoting ventures in the herbal medicine space,

Periyar Technology Business Incubator has incubated 7 companies since its founding

in 2006.

Amity Innovation Incubator (AII) was founded in March 2006. AII has chosen to

focus on nurturing enterprises in the domains of ICT & Bio-Informatics. Of the 25

ventures that have been incubated by AII, 3 have graduated after becoming

freestanding businesses.

IITM’s Rural Technology and Business Incubator was set up in 2006 and focuses on

nurturing enterprises, building rural inclusive business ventures through designing

products and services for rural needs which have a technology component. RTBI has

incubated 12 companies of which 2 have accomplished the purpose of incubation.

An upcoming incubator, Krishna Path Incubation Society (TBIKIET) was established

in 2007 with a focus on ventures in the ICT, electronics and mechanical engineering

domains. It has incubated 11 companies.

Established five years ago with a thrust on VLSI design and an embedded system,

TBI-BITS has incubated 9 ventures of which 2 have made an exit after reaching their

milestones. All the current incubatees have developed their products through virtual

incubation and created 127 jobs and generated revenues of about Rupees 10 million.

A newly established incubator, Amrita Technology Business Incubator was started a

year ago and is currently incubating 4 companies. It focuses on incubating ventures in

the Information Technology (IT), Electronics & Instrumentation domains.

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Thus, on the basis of above description, we may summarize that the business

incubation centres in India are growing in numbers steadily over the years and have

started contributing to job and business creation. Although most of them have focused

on information technology, emerging industries like ceramics, space, biotechnology,

telecommunications, and bioinformatics are also being targeted.

Research Design

The present research is exploratory cum descriptive in its nature. It is exploratory in

the sense that very little research work has been done on the role of business

incubation centres in promoting entrepreneurship in India and abroad. It is descriptive

because the practices followed by business incubation centres to promote

entrepreneurship, which have already been identified and studied by earlier scholars

were also analyzed in the present research endeavour. Moreover, the observations

made by the scholars have provided base for the formulation of this research project.

Universe of the study

The universe of the study is confined to 37 business incubation centres and their

incubatees existing in India during the year 2009-2010.

Survey population

We employed a simple validation process to determine whether each individual

business incubation centre qualified for inclusion in the survey population, and

included only those incubation centres which have a physical facility and housed

incubatees. Thus, based on the criterion, the survey population is confined to only 34

business incubation centres and their incubatees.

Survey Sample

The survey sample consists of 10 business incubation centres and 42 incubatees.

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A state wise list of Business Incubation Centres existing in the country during 2009

was obtained from the National Science and Technology Entrepreneurship

Development Board, Department of Science and Technology, Government of India. A

total of 37 Business Incubation Centres were indicated in the list (Please refer: Table

2.1) which served as a sampling frame for the survey.

TABLE 2.1: State Wise List of Business Incubation Centres in India During 2009

S.No State Number of Business Incubation Centres

1 Andhra Pradesh 4

2 Delhi 2

3 Gujarat 4

4 Haryana 1

5 Karnataka 3

6 Kerala 3

7 Maharashtra 4

8 Orissa 1

9 Rajasthan 1

10 Tamil Nadu 8

11 Uttar Pradesh 5

12 West Bengal 2

Total 37

The study followed a two step sampling procedure to gather data from Incubators and

the Incubatees. The first step involved the selection of Business Incubation Centres.

Since their exact numbers were not known, the researchers searched various websites

and directories and sought references from experts in the field. However on

establishing contacts based on these references, in most of the cases, they were

informed that either the business incubation centres did not exist or were not

operational. It was, therefore, decided to follow the list provided by the DST. Given

our interest in the subject, the small number of respondents and anticipated low

response rate, we decided to include all the Business Incubation Centres in our study.

However, given that four of them were established only in late 2008 or early 2009 i.e.

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just when the data collection for this study was about to begin, it was decided to

exclude them and the sampling method in that respect can be considered to be

judgment sampling.

The second step involved a selection of incubatees. According to NSTEDB-DST, the

average number of incubatees per incubator was 10-15. Thus, based on this feedback,

we decided on a “convenient” sampling procedure and targeted five incubatees per

Business Incubation Centre. To improve an expected low response rate, it was

decided to over sample and send the survey material to ten incubatees per Business

Incubation Centre. Incubator managers were the target contact respondents for the

survey of Business Incubation Centre and to help facilitate the survey of in house

incubatees.

Profile of Sampled Business Incubation Centres

Most of the respondent business incubation centres were established within five years

before the survey (Please refer: Table 2.2). In case of the respondent incubatees, most

of them were admitted during the last three years of the survey. The year of admission

and nature of business of these incubatee companies is presented in table 2.3 and table

2.4.

TABLE 2.2: Year of Establishment of Sampled Business Incubation Centres

Year of Establishment Number of Business Incubation Centres

2000 1

2001 1

2004 3

2007 5

Total 10

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TABLE 2.3: Year of Admission of Sampled Incubatee Companies to the Incubator

Year of admission to business

incubation centre

Number of incubatees

2003 1

2004 1

2005 1

2006 4

2007 5

2008 15

2009 12

2010 3

Total 42

TABLE 2.4: Nature of Business of the Sampled Incubatee Companies

Nature of business Number of incubatee companies

Healthcare 2

Information Technology 21

Electronics 3

Manufacturing/Mechanical/Engineering 7

R&D 1

BPO 1

IPR 1

NGO 1

Fashion 1

Telecom 1

Design Solutions 1

Robotics 1

Motion Picture Processing 1

Total 42

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Technopark Technology Business Incubator, Trivandrum

Technopark Technology Business Incubator (T-TBI), a joint initiative of Technopark,

Trivandrum and the Department of Science and Technology (DST), Government of

India, is avidly helping the technology business start-ups with all the necessary

resources and support they need to evolve and grow as a ripened business. It provides

the incubatees with necessary infrastructure support, technology/ prototype

development support, research assistance, help in getting funding, business consulting

assistance and do whatever is necessary to make the start-up a success. The primary

focus is on developing the ICT opportunities for building global enterprises. The

incubator aims to spot and attract potential entrepreneurs through intensive training

programmes undertaken on a regular basis.

Venture Center, Pune

Venture Center strives to nucleate and nurture technology and knowledge-based

enterprises by leveraging the scientific and engineering competencies of the

institutions in the "Pune region" in India. It is a business incubator specializing in

technology startups offering products and services exploiting scientific expertise in

the areas of materials, chemicals, biological sciences and engineering. The Venture

Center is the trademark of Entrepreneurship Development Center, a not-for-profit

company hosted by the National Chemical Laboratory, Pune, India.

Centre for Innovation, Incubation and Entrepreneurship, IIM, Ahmedabad

CIIE aims at fostering innovation-driven entrepreneurship through incubation,

research and dissemination of knowledge. It was setup by IIM, Ahmedabad in

2001 in collaboration with Government of Gujarat and the Department of Science and

Technology, Government of India. Since its inception, a host of organizations,

professionals, academicians and networking partners within India and across the

globe have been closely associated with the initiatives of CIIE. Expertise at IIMA in

areas of technology network, management, grassroots level innovations and

entrepreneurship development, provided the necessary impetus and the intellectual

basis for this initiative.

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JSSATE, NOIDA

The JSS Mahavidyapeetha has established the Science and Technology Entrepreneurs

Park in the campus of the JSS Academy of Technical Education, Noida. It is a

registered society under the Society Registration Act 1860. This initiative is one of the

first instances of such a Park being established in the initial years of an Engineering

Institution to provide value added programmes and services for the students,

unemployed youth, working professionals and aspiring entrepreneurs in the National

Capital Region. The Science Park has been established drawing from the rich

experience of the host institution in successful implementation of similar programmes

in its other institutions at Bangalore and Mysore. SJCE-STEP, located at the Sri

Jayachamarajendra College of Engineering, Mysore is one of the 14 STEP's

established by the Department of Science and technology (DST), Govt. of India.

JSSATE-STEP focuses on two principal sectors of Information Technology (IT) and

Manufacturing Technology (M.T). Under the IT umbrella, an Information Technology

Business Incubator (ITBI) has been established with a vision to nurture and facilitate

IT based startup companies to develop and grow into successful free standing

business in a viable timeframe. Under the MT initiative a unique project “Product

Lifecycle Management Competency Center” (PLMCC) with the association of the

Ministry of Youth Education and Research, Govt. of France and Dassualt System,

France aims to be a center of excellence in education training and research in the

PLM segment.

Birla Institute of Technology and Science (BITS) Incubator, Pilani

The Birla Institute of Technology and Science (BITS), Pilani in association with the

Department of Science and Technology (DST), Government of India has established a

Technology Business Incubator (TBI) in the area of Embedded Systems and VLSI

Design. BITS has set up a Center for Entrepreneurial Leadership (CEL) to give a

specific boost and emphasis to entrepreneurship development. TBI jointly with CEL

shall promote entrepreneurial leadership across all disciplines, facilitate

entrepreneurial activity amongst students, and invite entrepreneurs to use TBI services

so as to develop end products for commercialization.

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National Design Business Incubator, NID, Ahmedabad

NDBI is an initiative of the National Institute of Design (NID), Ahmedabad set up

with the support of Department of Science and Technology, Govt. of India, New

Delhi. It is incorporated as a non profitable Section 25 Company and is internationally

recognized as one of the foremost multidisciplinary institutions in the field of design

education, research, training and service. NID has been a catalyst in disseminating

design awareness amongst Indian industry, as its graduates are active in every sphere

of economic activity in the country. The mandate of NDBI is to nurture a culture of

entrepreneurship in the creative minds of young designers, so that their ideas

metamorphose into newer and niftier products or services capable of being marketed

and sold. The outcome is creation of a new class of entrepreneurs, the

Designpreneurs.

The National Institute of Technology – TBI, Calicut

The National Institute of Technology Calicut has set up a Technology Business

Incubator with the support of National Science and Technology Entrepreneurship

Development Board (NSTEDB), Department of Science and Technology, Govt. of

India, to incubate start up industries in the IT and electronics domains with the

following objectives:

• To provide Regional Development through nurturing the growth of technology

based small enterprises and generation of highly skilled employment. It helps

in incubating knowledge based startups into sustainable business by providing

specialized guidance, critical support, innovative financing and networking

support within an affordable and well equipped workspace.

• To assists the units to identify and evaluate the technology and know-how.

• To help the entrepreneurs in conducting their feasibility study, project

appraisal, market research and economic study.

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• To support the units in training their employees for improvement of technical

and management skills.

Amity Innovation Incubator, Amity University

Amity Innovation Incubator (AII) is a registered not for profit society supported by

an advisory body consisting of industrialists, venture capitalists, technical specialists

and managers to help entrepreneurs realize their dreams through a range of

infrastructure, business advisory, mentoring and financial services. Its mission is to

foster entrepreneurial spirit amongst students, faculty and society at large and to

promote technology-based start-up companies in the region. The objectives of the

incubator are:

• To identify potential entrepreneurs with a viable business plan.

• To provide managed workspace with low cost office facilities.

• To cover some of the risks involved in the early stages of incubation of

emerging technologies and provide various forms of business and professional

services.

NSIC Training-cum- Incubation Centre, OKHLA

National Small Industries Corporation (NSIC) is working to fulfill its mission of

promoting, aiding and fostering the growth of Micro, Small & Medium Enterprises

(MSMEs) in the country. One of the programmes implemented by NSIC is to create

self-employment opportunities by imparting training in entrepreneurship building to

the unemployed people who want to set up new small business enterprises in any of

the manufacturing / services sectors.

NSIC Training-cum-Incubation Centre provides an opportunity to first generation

entrepreneurs to acquire skills for enterprise building and incubate them to become

successful small business owners. At these centres, exposure in all areas of business

operations such as business skills development, identification of appropriate

technology, hands on experience on working projects, product selection, and

opportunity guidance including commercial aspects of business is provided. In

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addition, low cost project technologies required for setting up new small business

enterprises are displayed in working condition.

Krishna Path Incubation Society –TBIKIET

TBI-KIET was established in 2007 jointly by National Science & Technology

Entrepreneurship development board (NSTEDB), Ministry of Science & Technology,

Government of India and Krishna Institute of Engineering & Technology. It provides

support for commercialization of any innovative idea by way of startup firms through

development strategies, linkages and consultancy in the relevant field. TBI-KIET has

a dedicated five storied state-of-art and energy efficient building to accommodate 35

incubatees. 8 incubatee companies have received SEED fund support of Rs. 50 Lacs.

Data Collection

Secondary Data

To identify the sources of relevant data, we conducted an electronic search using key

terms associated with business incubation. After retrieving all relevant

articles/research papers/reports etc, we read their bibliographies to access other

sources of data and repeated the process till we were reasonably confident that all

extant data on incubation had been identified and retrieved. In addition to this, we

sifted through hard copies of various books, journals, reports, brochures, newspapers

and magazines that were accessible to us on the subject.

Primary Data

Initial contacts were established with the incubator managers even before the research

was started. They were informed of the research and most of them showed a high

level of enthusiasm and expressed their willingness to participate in the survey. Their

response to the pre notification was very positive and they stated that the study was

timely and needed.

The researchers initially planned to visit the incubators where observations could also

be made. However, this proved to be difficult because of long-distances between the

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incubators and the time it could take to execute all the visits. The research was,

therefore, conducted using a survey approach and most preferred strategy for

collecting the information proved to be through the self administered questionnaires

supplemented by interviews. The researchers, however, managed to visit four

incubators. Our data analysis plan included factor wise and item wise analysis of the

role of business incubation centres in promoting entrepreneurship and, therefore, an

arbitrary five point likert type response scale was found to be most suitable.

Construction of Data Collection Instrument

For developing the questionnaires, we began by reviewing several existing survey

instruments related to business incubation and built on them by refining the relevant

questions and adding additional ones as necessary to meet the objectives of this

research. We started listing down the various business incubation services identified

through a review of literature and once the list was ready, it was reviewed and pruned

to reflect only those services which were relevant to the purpose of the study. They

were then translated in the form of structured statements and incorporated in the

questionnaire. Most of the research work on business incubation has been done

outside India, and therefore, it was imperative to check the relevance and coverage of

the selected incubation services incorporated in the questionnaire to the Indian

context. For this purpose, consultations were held with business incubation centre

heads, incubatees and experts in entrepreneurship development. In addition to this,

the questionnaire was discussed with the head of the overall incubation programme in

India at Department of Science and Technology, Government of India. The feedback

received from these discussions was used to make suitable changes to the

questionnaire.

Different studies have used different terminology and ways in describing or

classifying the services provided by business incubation centres. However, in general,

no marked dissimilarities were found in their concept and practices between

incubators in India and other countries. Prior to launch of the survey, the researchers

conducted a pilot test to assess the instrument’s clarity, content and user-friendliness.

The questionnaire was finalized after incorporating suggestions that emerged as a

result of pretesting and pilot testing.

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Reliability and Validity

To examine the reliability, various coefficients such as Cronbach alpha, Spearman

Brown split half coefficient, and Guttman’s split half coefficient were calculated

using SPSS. (Please refer: Table 2.5)

TABLE 2.5: Reliability Analysis

R E L I A B I L I T Y A N A L Y S I S - S C A L E (S P L I T)

Reliability Coefficients N of Cases = 10.0 N of Items = 82 Correlation between forms =.9267 Equal-length Spearman-Brown = .9620 Guttman Split-half = .9609 Unequal-length Spearman-Brown = .9620 41 Items in part 1 41 Items in part 2 Alpha for part 1 = .9253 Alpha for part 2 = .9039

R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A)

Reliability Coefficients N of Cases = 10.0 N of Items = 82 Alpha = .9586

A Cronbach alpha value of above .70 is considered acceptable. In the present case, the

high reliability coefficients: Cronbach alpha (r = .95), Spearman Brown (r = .96) and

Guttman split half (r = .96) reveal that the test halves are highly correlated and the

questionnaire has high reliability. In order to assess content validity, the final

questionnaire was reviewed with incubation experts and they revealed that the

questionnaire was exhaustive and possessed validity.

Data was gathered using two separate self administered questionnaires, one for

incubator managers and another for incubatees. At the time of the survey being

conducted in 2009, information about the precise number of operating incubators in

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India was not available. Therefore, the list of business incubation centres provided by

Department of Science and Technology, Government of India was considered as a

sampling frame. There were a total of 37 business incubation centres in the list, out of

which 4 were excluded as they were established only in late 2008 or early 2009 i.e

just when the data collection for this study was about to begin. Given our interest in

the subject, the small number of respondents and anticipated low response rate, we

decided to include all of them in our study. Therefore, the questionnaire was mailed to

33 business incubation centres and 330 incubatees. After follow up, a total of 12

questionnaires from business incubation centres and 45 questionnaires from

incubatees were returned. Out of these, 10 and 42 responses respectively were

considered valid for analysis.

The self administered questionnaire for the incubator managers is divided into

following parts. The first part is devoted to collect the demographic information of the

respondents. The second part consists of 25 statements pertaining to the role of

business incubation centres in promoting entrepreneurship. 57 statements related to

the practices followed by business incubation centres to promote entrepreneurship

constitutes the third part of the questionnaire. The last part comprises of open ended

statements providing the respondents an opportunity to express their view point and

give suggestions since all the other parts included structured statements where this

opportunity was denied. The respondents were requested to indicate their level of

agreement with each statement on an arbitrary five point likert type response scale.

A separate questionnaire was administered to the incubatees to make an assessment of

their perception regarding various services provided by the business incubation

centres. In addition to the demographic information, there were 25 structured

statements and two open ended statements in this questionnaire. The respondents were

requested to rank the relative importance of each service and indicate their level of

agreement with each statement on an arbitrary five point Likert type response scale.

They were also requested to indicate whether they asked the incubator to provide the

particular service to them. The questionnaires were put to pilot test and revised before

sending them to the respondents.

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In the present study, 25 incubator services were classified into four main groups:

Physical infrastructure, Business Assistance, Management guidance and consulting,

and Enabling environment services. In addition to this, 57 incubation good practices

followed by the business incubation centres to promote entrepreneurship were

classified into 7 categories namely: Management practices, Promotional practices,

Networking practices, Tenant Management practices, Human Resource practices,

Assessment practices and Host Institution Involvement practices. How these roles and

practices are linked to the Questionnaire “A” (For Incubators) and Questionnaire “B”

(For Incubatees) is indicated below:

Roles of Business Incubation Centres:

Physical Infrastructure Services

1. Providing below market rate rental space - Questionnaire A, question 4 /

Questionnaire B, question 4

2. Providing communication facilities like phone, fax, internet - Questionnaire A,

question 5 / Questionnaire B, question 5

3. Providing library facilities - Questionnaire A, question 7/ Questionnaire B,

question 7

4. Providing laboratory facilities - Questionnaire A, question 15 / Questionnaire

B, question 15

Business Assistance Services

1. Providing secretarial services - Questionnaire A, question 6 / Questionnaire B,

question 6

2. Providing technical assistance - Questionnaire A, question 8 / Questionnaire

B, question 8

3. Providing marketing assistance - Questionnaire A, question 9 / Questionnaire

B, question 9

4. Providing legal services - Questionnaire A, question 10 / Questionnaire B,

question 10

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5. Providing networking support - Questionnaire A, question 11/ Questionnaire

B, question 11

6. Providing human resource management services - Questionnaire A, question

12 / Questionnaire B, question 12

7. Providing assistance in obtaining statutory approvals - Questionnaire A,


8. Providing assistance in product development activities - Questionnaire A,


9. Providing assistance in securing capital - Questionnaire A, question 16 /


Management Guidance and Consulting Services

1. Providing Information on business ideas - Questionnaire A, question1 /


2. Providing assistance in conducting feasibility studies - Questionnaire A,


3. Providing assistance in developing business plans - Questionnaire A, question

3 / Questionnaire B, question 3

4. Providing business counseling - Questionnaire A, question 17 / Questionnaire

B, question 17

Enabling Environment Services

1. Creating environment where entrepreneurs learn from each other -

Questionnaire A, question 18 / Questionnaire B, question 18

2. Reduced time required to develop marketable products/services -

Questionnaire A, question 19 / Questionnaire B, question 19

3. Reduced early stage operational costs - Questionnaire A, question 20/


4. Accelerated development of new firms - Questionnaire A, question 21/


5. Reduced chances of failure of new firms - Questionnaire A, question 22/


89

6. Helped companies establish credibility - Questionnaire A, question 23/


7. Take periodic feedback about services – Questionnaire A, question

46/Questionnaire B, question 24

8. Formal procedure for handling grievances - Questionnaire A, question

54/Questionnaire B, question 25

Practices followed by the business incubation centres to promote

entrepreneurship:

Management Practices

1. Feasibility study before establishing incubation centres – Questionnaire A,

question 33

2. Formal Business Plan- Questionnaire A, question 34

3. Advisory Board - Questionnaire A, question 35

4. Suitable MIS - Questionnaire A, question 39

5. Availability of funds- Questionnaire A, question 67

6. Decision making process- Questionnaire A, question 69

7. Autonomy- Questionnaire A, question 77

Promotional Practices

1. Entrepreneurship promotion programmes- Questionnaire A, question 25

2. Well maintained website- Questionnaire A, question 36

3. Advertising/promotion plan- Questionnaire A, question 37

4. Awareness about incubation centre- Questionnaire A, question 66

Networking Practices

1. Assistance to existing SME’s - Questionnaire A, question 28

2. Sharing information with other incubation centres- Questionnaire A, question

38

3. Support from local industry- Questionnaire A, question 40

4. Understanding of industrial needs- Questionnaire A, question 68

90

Tenant Management Practices

1. Assistance after leaving incubation centre- Questionnaire A, question 24

2. Formal admission policy- Questionnaire A, question 41

3. Tenant selection through selection committee- Questionnaire A, question 42

4. Formal exit policy- Questionnaire A, question 43

5. Periodic collection of information on tenant companies- Questionnaire A,

question 45

6. Periodic assessment of tenant companies’ progress- Questionnaire A, question

47

7. Periodic assessment of tenant companies needs- Questionnaire A, question 48

8. Difference in expectation between tenant companies and incubation centres-

Questionnaire A, question 49

9. Difference in priorities of tenant companies and incubation centres-


10. Difficulty in finding appropriate tenant companies- Questionnaire A, question

51

11. Difficulty in organizing funds for tenant companies- Questionnaire A,

question 52

12. Availability of suitable space to tenant companies on leaving incubation

centre- Questionnaire A, question 53

Human Resource Practices

1. Providing business related skills training to students- Questionnaire A,

question 29

2. Improvement in number and quality of students placements- Questionnaire A,

question 30

3. Hiring of consultants- Questionnaire A, question 44

4. Well laid down criteria for selection of staff- Questionnaire A, question 55

5. Incubation centre head’s experience of working with start up companies-


6. Trained staff- Questionnaire A, question 57

7. Periodic assessment of training needs of staff- Questionnaire A, question 58

91

8. Periodic appraisal of staff performance- Questionnaire A, question 59

9. Equity stake in incubated companies for incubation centre staff- Questionnaire

A, question 60

10. Sufficient salary for incubation centre head- Questionnaire A, question 61

11. Willingness of staff to change- Questionnaire A, question 62

12. Risk taking behavior of staff- Questionnaire A, question 63

13. Attracting and retaining incubation centre staff- Questionnaire A, question 64

14. Shortage of incubation centre staff- Questionnaire A, question 65

Assessment Practices

1. Exploiting business opportunities- Questionnaire A, question 26

2. Transforming innovation into products/services- Questionnaire A, question 27

3. Creation of job opportunities- Questionnaire A, question 31

4. Regenerate public confidence in entrepreneurship- Questionnaire A, question

32

5. Periodic assessment of entrepreneurial market- Questionnaire A, question 78

6. Adapts quickly to change- Questionnaire A, question 79

7. Periodic assessment of performance- Questionnaire A, question 80

8. Well defined criteria for measuring success- Questionnaire A, question 81

9. Self sustainability of incubation centre- Questionnaire A, question 82

Host Institution Involvement Practices

1. Integration of objectives- Questionnaire A, question 70

2. Provision of land and building- Questionnaire A, question 71

3. Sharing of facilities/expertise- Questionnaire A, question 72

4. Promotion of entrepreneurial culture- Questionnaire A, question 73

5. Review of incubation centre activities- Questionnaire A, question 74

6. Leveraging of resources - Questionnaire A, question 75

7. Clearly defined roles- Questionnaire A, question 76

To elicit information from individual incubation centres and its incubatees,

questionnaires along with self addressed stamped return envelope were sent to all the

92

incubator managers, who in turn, and where possible, distributed the questionnaire for

incubatees/ entrepreneurs. Where it was not possible to collect information on

incubatees through incubator managers, the incubatees were contacted personally for

information through e-mail, meetings and over the telephone. The respondents were

requested for an early response without setting a deadline for the return of the filled in

questionnaires. One day after sending the questionnaires, a confirmation e-mail was

sent to all the respondents. Follow up e-mails were then sent as a reminder to those

who had not responded. Telephone calls were also used to follow-up until a

satisfactory number of responses were received.

Even though some of the questions could be regarded as sensitive, the incubator

managers did not have any difficulty answering them mostly because the initial trust

had already been established. In most cases, respondents just completed and returned

the self administered questionnaires in the provided self addressed stamped envelope.

At four of the incubators where the researcher made personal visits, the responses

were collected by hand. After receiving all the responses, telephone calls were made

to a couple of respondents in order to verify the correctness of the responses both

from incubators and incubatees.

Analysis Pattern

Identified Variables:

Independent variables

1. Physical Infrastructure services

2. Business Assistance Services

3. Management Guidance and Consulting services

4. Enabling Environment services

Dependent Variable

Promotion of Entrepreneurship

93

Content Analysis of Role of Business Incubation Centres in

Promoting Entrepreneurship

TABLE 2.6: Content Analysis of Role of Business Incubation Centres

S.No

Item

No Description of Items

Response Categories and Weight

Assigned to Each Category of

Response

SA

(5)

A

(4)

I

(3)

D

(2)

SD

(1)

Physical Infrastructure Services

1 4 Provides work space to tenant companies at below market rate rent

2 5 Provides communication facilities

3 7 Provides library facilities to tenant companies.

4 15 Provides laboratory facilities

Business Assistance Services

1 6 Provides secretarial services

2 8 Provides technical assistance

3 9 Provides marketing assistance

4 10 Provides legal services

5 11 Provides networking support

6 12 Provides human resource management services

7 13 Assists tenant companies in obtaining statutory approvals

8 14 Assists the tenant companies in product development activities

9 16 Helps tenant companies in securing capital

Management Guidance and Consulting Services

1 1 Disseminates information on business ideas

2 2 Helps the tenant companies in conducting feasibility studies

94

3 3 Helps the tenant companies in developing business plans

4 17 Provides business counseling to tenant companies

Enabling Environment Services

1 18

Creates an environment where tenant companies learn from one another

2 19

Reduces the time required to develop marketable products/services

3 20 Reduces early stage operational costs

4 21 Accelerates the development of new firms

5 22 Minimizes the chances of failure of start up firms

6 23 Helps the tenant companies to establish credibility

7 46

Makes periodic assessment of tenant companies’ satisfaction with incubator services.

8 54 Has formal procedure for handling tenant companies’ grievances

To examine the role of business incubation centres in promoting entrepreneurship, we

have identified four categories of services namely: Physical Infrastructure services,

Business Assistance services, Management Guidance and Consulting services, and

Enabling Environment services. Within each category, we have isolated various

services and these services are further translated in statements and for each statement

we have assigned five response categories which are SA for Strong Agreement, A for

Simple Agreement, I for Indifferent/Don’t Know, D for Simple Disagreement and SD

for Strong Disagreement. If the nature of the statement is positive, then the maximum

weight assigned to Strong Agreement is 5, Simple Agreement is 4, Indifferent is 3,

Simple Disagreement is 2 and Strong Disagreement is 1.

To investigate the role of Physical Infrastructure services and their impact on

promoting entrepreneurship, four statements have been incorporated in the

questionnaire. In the above content analysis, the nature of all the statements is positive

95

and, therefore, the maximum score obtained by one respondent on account of physical

infrastructure services is 20, whereas the minimum score is 4 and neutral score is 12.

For scrutinizing the impact of Business Assistance services, we included nine

statements in the questionnaire. Since the nature of all the statements is positive, the

maximum score obtained by one respondent on account of business assistance

services is 45, whereas the minimum score is 9 and neutral score is 27.

The role of Management Guidance and Consulting services is perused by assimilating

four statements in the questionnaire. All of the statements are positive and, therefore,

the maximum score obtained by one respondent on account of management guidance

and consulting services is 20, whereas the minimum score is 4 and neutral score is 12.

In order to evaluate the contribution of Enabling Environment services and their

impact on promoting entrepreneurship, eight statements have been retained in the

questionnaire. The nature of all the statements is positive and, therefore, the

maximum score obtained by one respondent on account of enabling environment

services is 40, whereas the minimum score is 8 and neutral score is 24.

For example, in case of one respondent, for physical infrastructure services, he

indicates neutral (I) for 1st item, Disagreement (D) for 2nd item, Strong Agreement

(SA) for 3rd item and Simple Agreement (A) for 4th item, his total obtained score on

account of physical infrastructure services rendered by business incubator centre

comes to 14 as indicated below:

Item Response Weight

1 Neutral (I) 3

2 Disagreement (D) 2

3 Strong Agreement (SA) 5

4 Agreement (A) 4

Total obtained score = 14

96

This respondent has a total score of 14 out of 20 maximum possible score on account

of physical services which indicates that incubator’s services are highly significant for

the entrepreneur.

Content Analysis of Practices Followed by Business

Incubation Centres to Promote Entrepreneurship

TABLE 2.7: Content Analysis of Practices Followed by Business Incubation

Centres to Promote Entrepreneurship

S.No

Item

No Description of Items

Response Categories

SA

A

I

D

SD

Management Practices

1 33

Feasibility study was conducted before establishment of Incubation Centre.

2 34 Incubation Centre has a formal business plan.

3 35 Incubation Centre is managed by an Advisory Board.

4 39

Incubation Centre has implemented a suitable Management Information System (MIS).

5 67

Lack of funding is a major impediment to the success of Incubation Centre.

6 69

Decision making process of Incubation Centre is long with multiple decision points.

7 77 Incubation Centre has autonomy.

Promotional Practices

1 25

Incubation Centre conducts entrepreneurship programmes such as workshops/trade fairs etc

2 36 Incubation Centre has a well maintained website.

3 37

Incubation Centre carries out a well designed advertising /promotion plan for promoting the Incubator

97

4 66

There is lack of awareness about Incubation Centre and its services.

Networking Practices

1 28

Incubation centre provides business assistance to existing Small & Medium Enterprises (SME)

2 38

Incubation Centre shares information with other incubators on a regular basis.

3 40

Incubation Centre has support from the local industry for its activities.

4 68 Incubation Centre has a poor understanding of industrial needs

Tenant Management Practices

1 24

Incubation Centre continues to provides assistance to tenant companies even after graduation (i.e. exit from the incubator)

2 41

Incubation Centre has a formal policy for admitting tenant companies to the Incubator.

3 42

Tenant selection is determined by a Selection Committee for your Incubation Centre.

4 43

Incubation Centre has a formal policy for graduating tenant companies from the incubator.

5 45

Incubation Centre periodically collects information on key business parameters like employment, revenue etc from the tenant companies.

6 47

Incubation Centre makes a periodic assessment of tenant companies’ progress in the Incubator.

7 48

Incubation Centre makes a periodic assessment of tenant companies’ needs in the Incubator

8 49

Differences between Incubation Centre and tenant companies in terms of expectations.

9 50

Differences between your Incubation Centre and tenant companies’ priorities.

98

10 51

Incubation Centre has difficulty in finding appropriate tenant companies.

11 52

Incubation Centre has difficulty in organizing sufficient funds for tenant companies

12 53

Suitable space is available to tenant companies outside Incubation Centre upon graduation.

Human Resource Practices

1 29

Your Incubation Centre provides business related skills training to students.

2 30

Your Incubation Centre has improved the number and quality of students’ placements.

3 44

Incubation Centre hires consultants with expertise to provide assistance to tenant companies.

4 55

Incubation Centre has a well laid down criteria for selection of its staff.

5 56

Incubation Centre head has a successful track record of working closely with start-up companies.

6 57

Incubation Centre staff is trained in business skills like finance, budgeting, organizational analysis etc.

7 58

Incubation Centre makes periodic assessment of training needs of its staff.

8 59

Incubation Centre makes periodic appraisal of its staff's performance.

9 60

Incubation Centre staff is permitted to have an equity stake in the companies created in the Incubator.

10 61

Incubation Centre head’s salary is sufficient to attract an experienced incubator professional

11 62 Incubation Centre staff is usually reluctant to change.

99

12 63 Incubation Centre staff has risk taking behaviour.

13 64

Incubation Centre has problems with attracting & retaining skilled staff.

14 65 Incubation Centre has a shortage of skilled staff.

Assessment Practices

1 26

Incubation Centre has created successful businesses by exploiting opportunities.

2 27

Incubation Centre has transformed innovations into marketable products/services.

3 31 Incubation Centre has created direct job opportunities

4 32

Incubation Centre has helped regenerate public confidence in entrepreneurship.

5 78

Incubation Centre makes periodic assessment of the entrepreneurial market.

6 79 Incubation Centre adapts quickly to the changing conditions.

7 80 Incubation Centre makes periodic assessment of its performance.

8 81

Incubation Centre has well defined criteria for measuring its success

9 82 Incubation Centre is self sustainable.

Host Institution Involvement Practices

1 70

Host Institution (Institution establishing the Incubator) has integrated the objectives of Incubation Centre into its strategic planning.

2 71

Host Institution has provided adequate land & building for Incubation Centre.

3 72

Host Institution shares its facilities/ expertise with Incubation Centre.

4 73 Host Institution promotes an entrepreneurial culture.

5 74

Host Institution periodically reviews the activities of your Incubation Centre.

100

6 75

Incubation Centre is leveraging all available resources from the Host Institution.

7 76

The role of Incubation Centre and the Host Institution is clearly defined.

The practices followed by business incubation centres to promote entrepreneurship

have been investigated with respect to seven categories namely: Management

Practices, Promotional Practices, Networking Practices, Tenant Management

Practices, Human Resource Practices, Assessment Practices, and Host Institution

Involvement Practices.

Within each category, we have isolated various practices and these practices are

further translated in statements and for each statement we have assigned five response

categories which are SA for Strong Agreement, A for Simple Agreement, I for

Indifferent/Don’t Know, D for Simple Disagreement and SD for Strong

Disagreement. If the nature of the statement is positive, then the maximum weight

assigned to Strong Agreement is 5, Simple Agreement is 4, Indifferent is 3, Simple

Disagreement is 2 and Strong Disagreement is 1. However, in case of negative

statements, the weights are reversed and the maximum weight assigned to Strong

Agreement is 1, Simple Agreement is 2, Indifferent is 3, Simple Disagreement is 4

and Strong Disagreement is 5.

In order to evaluate Management Practices, seven statements have been retained in

the questionnaire.

The Promotional Practices have been explored with the help of four statements that

formed a part of the questionnaire.

For perusing the Networking Practices, four statements have been isolated and

incorporated.

The Tenant Management Practices were assessed through twelve statements that have

been assimilated in the questionnaire.

101

To examine the Human Resource Practices, fourteen statements were included.

The Assessment Practices were explored using nine statements.

In order to analyze Host Institution Involvement Practices, seven statements have

been incorporated in the questionnaire.

For example, in case of one respondent, for Management Practices, he indicates

neutral (I) for 1st item, Disagreement (D) for 2nd item, Strong Agreement (SA) for 3rd

item, Simple Agreement (A) for 4th item, Strong Agreement (SA) for the 5th item,

Disagreement (D) for 6th item and Strong Disagreement (SD) for 7th item, his total

obtained score on account of Management Practices is as under:

Item Response Weight

1 Neutral (I) 3



4 Simple Agreement (A) 4



7 Strong Disagreement (SD) 1

-------------------------------------------------

Total obtained score = 22

--------------------------------------------------

This respondent has a total score of 22 out of 35 maximum possible score on account

of Management Practices which indicates that these Practices are perceived to be

effectively implemented by the business incubation centre.

Statistical tools applied for analysis of data

For the analysis of the collected primary data, we have used both descriptive as well

as standard statistical tools such as central tendency, standard deviation and ANOVA.

Measures of central tendency as means and standard deviation were computed in

102

relation to various categories of services provided by the Business Incubation Centres.

A comparison of mean scores was done and an independent sample test “t test” for

equality of means was employed at a significance level of 5 per cent. Further an

ANOVA table was created for item wise analysis. The practices followed by Business

Incubation Centres to promote entrepreneurship were investigated using descriptive

mean scores.

We may summarize that the present study is exploratory cum descriptive in its nature.

The choice of the research design is justified because very little research work has

been done on the role of business incubation centres in India and abroad, and the

practices followed by them which have already been identified by earlier scholars

have provided base for the research project. The data was gathered during 2009 –

2010 using self administered questionnaire which contained 82 questions. While the

survey population consisted of 34 business incubation centres, the sample comprised

of 10 business incubation centres and 42 incubatees. The research team employed

both descriptive as well as standard statistical tools for data analysis.

---------------X---------------

References

1. http://www.nbia.org/resource_center/bus_inc_facts/index.php

2. Government of India, ‘Conceptual Document on Technology Business

Incubators-Developing Eco System for Knowledge to Wealth Creation’,

Department of Science & Technology, National Science and Technology

Entrepreneurship Development Board, , Chapter 1, p. 10

3. http://www.cabi.ca/CABI_Report_07_Final.pdf

4. Haiyang Zhang and Tetsushi Sonobe, ‘Business Incubators in China: An

Inquiry into the Variables Associated with Incubatee Success’, Economics e-

journal, 5, 2011 accessed from www.economics-ejournal.org

5. http://www.nbia.org/resource_library/works/index.php/ Construction Grants

Program Impact Assessment Report

103

6. http://www.nbia.org/resource_library/works/files/EDA_study_PR_FINAL.pdf

7. http://www.ukbi.co.uk/about-ukbi/business-incubation.aspx

8. Government of India, ‘Status Report on Technology Business Incubators’


Entrepreneurship Development Board, Chapter 1, p. 3

9. Government of India, ‘Conceptual Document on Technology Business

Incubators-Developing Eco System for Knowledge to Wealth Creation’,


Entrepreneurship Development Board, p. 39

10. Ibid., p. 6

11. Ibid., pp. 10-11

12. http://www.dst.gov.in/about_us/11th-plan/rep-subsme.pdf

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