A study on the performance of technology business incubators with reference to members of infodev network

Abstract

Entrepreneurshipis the dynamic process of creating incremental wealth.  This wealth is created by individuals whoassume the major risks in terms of equity, time, and/or career commitment ofproviding value for some product or service. Entrepreneurship is critical forthe economic development of a country by creating jobs, developing new productsand processes through innovation, identifying new markets and increasing theproductivity through new competition. The entrepreneurs involved inestablishing the knowledge based ventures come across various constraints andproblems in terms of infrastructure, financial support, manpower, mentoring,credibility, networking and other business related challenges.                Tominimise the risks faced and to maximise the success of the individuals who areinvolved in enterprise creation, the concept of Business Incubator has evolved in the last 40 years. The businessincubator plays a vital role as a common platform, which brings together thefour major dimensions – individual, organisation, environment, and process.                The Technology BusinessIncubators (TBIs) is a unique model in promoting enterprises in the KnowledgeBased Economy. TBI is an economic development tool designed to accelerate thegrowth and success of entrepreneurial companies through an array of businesssupport resources and services. TBI is a place where new knowledge based ideas,methods, processes or products are inspired, developed and commercialized.                Technology Business Incubators(TBIs) aim explicitly at incubating enterprises with high or advancedtechnology content. A typical TBI provides its clients with a comprehensiverange of services, not only the rental space at an affordable price but also afull range of business and specialized services aimed at intensifyingtechnology utilization.                The incubators have beenestablished with different technologies as thrust areas. This has lead to differentoperational models to meet the objectives of the incubator. The very littleexposure on the functioning of the incubators has led the incubation managersto face the challenges in identifying the basis on which the performance of anincubator is ascertained, the key factors that lead to the good practices ofthe incubator, the factors that influence the performance of the incubator andthe strategies to be adopted for the growth of the incubator.Theobjectives of the study are:To identifythe key parameters for evaluating an incubator.To identifythe factors influencing the performance of the incubatorsTo identifythe key elements of the success factors influencing the performance  of incubatorsTo evaluatethe importance of the elements listed in achieving the performance level of theincubator.To analyzethe relationship between the factors that lead to the performance of theincubators.                The research process is executedin two phases.  Phase one includes theliterature survey, finalization of the objectives of the study, identificationof the variables and development of the theoretical framework.                        In phase two of the study, theresearcher carried out the exploratory research to identify the nature of thedata required for the research and tried to define the problem moreprecisely.  The researcher also attemptedto identify the relationship among the variables under study to develop thetheoretical framework to be tested in the study.  In this study, the incubators which extendsphysical incubation facility to the start-ups and which has registered asmember in the infoDev incubator network were considered as the population. Thesample frame comprised of incubators listed in the infoDev incubators network.                The success of the incubatorswas measured on four parameters viz., Occupancy level, Sustainability of theincubators, Number of incubatees in 1000 sq.ft of space and Survival Rate of incubatees.  The incubators wereclassified based on their ability in achieving the above four parameters andthe key elements of each factors that influenced these performance parameterswere analysed.                  From the analysis itwas found that most of the incubators are established in the universityenvironment and as a non-profit organization. The majority of the incubators are industry specific or mixed useincubators.  It was found that thesuccess of the incubator depends on effective implementation of the servicesprovided by the incubator to the clients. The government plays a critical role in establishing theincubators.                   The incubatorfacilities, selection criteria and incubator support services are the keyresources as inputs for the operation of an incubator.  The study further revealed that the maximumutilization of the facilities of the host institutional resources improves theefficiency and effectiveness in the operations of the start-ups.  Flexibility in the incubation program and inthe services provided by the incubator ensures the success of the incubatee andincubator.  The study also identifiedthat the early stage funding to the start-ups through the incubator helps theincubatee to acquire the second round of funding from other sources.  The higher the networking capability of theincubator, the greater the success rate of incubator and its incubatee.                 The study resultedin assisting the incubator management to develop a unique model which suitstheir operating environment that includes the objectives of the incubator,nature of the incubator and the ownership of the incubator.