10 Chapter 3

B
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

Entrepreneurship Factor Wise Analysis
in
Promoting
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
107
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
108
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
Incubatees
Business Incubation Centres

Std.
N
Mean
Std.
Error
Scores
Deviation
Mean
Std.
N
Mean
Std.
Error
Scores
Deviation
Mean
Physical
10
4.2750
.57070
.18047
42
3.4762
.60185
.09287
10
3.9444
.38222
.12087
42
2.9153
.50817
.07841
10
4.3500
.57975
.18333
42
3.1190
.74334
.11470
10
4.0500
.38222
.12087
42
3.3363
.50817
.07841
Total Mean Score
16.6194
12.8468
4.15485
3.2117
Infrastructure
Business
Assistance
Management
Guidance &
Consulting
Enabling
Environment
Average Mean
Score
FIGURE 3.1: Role of Business Incubation Centres in Promoting

Entrepreneurship - Factor Wise Analysis
109
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 (

Environment (
= 4.05) and Business Assistance (
= 4.27), Enabling
= 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 (
management guidance and consulting services (
= 3.47),
= 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.
110
TABLE 3.2: Role of Business Incubation Centres in Promoting

Entrepreneurship - Item Wise Percentage Analysis
Physical Infrastructure Services

S.No
Item
No
Description of Items
Obtained
Maximum
Score
Score
44
50
46
Incubatees
Obtained
Maximum
Score
Score
88
186
210
88.57
50
92
175
210
83.33
42
50
84
109
210
51.90
39
50
78
114
210
54.28
200
85.50
584
840
69.52
Percentage
Percentage
Your Incubation Centre
provides work space to

tenant
companies
at
below market rate rent.

provides
communication
facilities like Phone, Fax,

to tenant companies.
provides library facilities

to tenant companies.
15
provides
facilities
laboratory
to
tenant
companies.
Total 171
Business Assistance Services

S.No
Item
No
Obtained
Maximum
Score
Score
38
50
43
50
Incubatees
Obtained
Maximum
Score
Score
76
98
210
46.66
86
104
210
49.52
Percentage
Percentage
provides
services
secretarial
to
tenant
companies.
provides
assistance
technical
to
tenant
companies.
111
provides
marketing
assistance
to
tenant
40
50
80
110
210
52.38
36
50
72
123
210
58.57
45
50
90
129
210
61.42
37
50
74
148
210
70.47
36
50
72
127
210
60.47
37
50
74
126
210
60.00
43
50
86
137
210
65.23
450
78.88
1102
1890
58.30
companies.
10
provides legal services to

tenant companies
provides
11
support
networking
to
companies
tenant
(e.g.
with
suppliers/customers etc)
12
provides human resource

management services to
tenant companies.
13
assists tenant companies

in obtaining approvals
14
assists
the
companies
in
tenant
product
development activities.
16
helps tenant companies

in securing capital.
Total 355
Management Guidance and Consulting Services

S.No
Item
No
Obtained
Maximum
Score
Score
42
50
40
50
Incubatees
Obtained
Maximum
Score
Score
84
159
210
75.71
80
106
210
50.47
Percentage
Percentage
disseminates information
on business ideas.
helps
the
tenant
companies in conducting
feasibility studies.
112
helps
the
tenant
companies in developing
46
50
92
147
210
70.00
46
50
92
112
210
53.33
200
87.00
524
840
62.38
business plans.
17
provides
business
counseling
to
tenant
companies.
Total 174
Enabling Environment Services

S.No
Item
No
Obtained
Maximum
Score
Score
42
50
41
Incubatees
Obtained
Maximum
Score
Score
84
151
210
71.90
50
82
120
210
57.14
41
50
82
167
210
79.52
39
50
78
149
210
70.95
42
50
84
111
210
52.85
Percentage
Percentage

has
18
created
an
environment
where
tenant companies learn

from one another.
19
has
reduced
required
the
to
time
develop
marketable products.
has reduced early stage
20
operational costs helping

tenant companies start
the business with lower
initial investment.
21
has
accelerated
the
development of new firms

by tenant companies.
22
has
minimized
chances
of
failure
the
of
tenant companies.
113
23
has helped the tenant

companies to establish
44
50
88
143
210
68.09
39
50
78
119
210
56.66
36
50
72
161
210
76.66
400
81.00
1121
1680
66.72
credibility.
46
takes periodic feedback

about tenant companies
satisfaction with services.
54
has a formal procedure

for
handling
tenant
companies grievances.
Total 324
FIGURE 3.2: Physical Infrastructure Services - Item Wise Percentage Analysis
114
FIGURE 3.3: Business Assistance Services - Item Wise Percentage Analysis
FIGURE 3.4: Management Guidance and Consulting Services

Item Wise Percentage Analysis
115
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
116
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 (
support (
= 3.70), product development guidance (
= 3.60) and assistance in obtaining statutory approval (
= 3.70), legal
= 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 (
support (
= 2.33), technical assistance (
= 2.62), and legal services (
= 2.48), marketing
= 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 (

117
= 4.20), minimizing
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 (
= 3.40), and formal grievance handling (
= 3.55), establishing credibility
= 3.83). They dont find them to be
effectual in reducing time to develop marketable products/services (

minimizing chances of failure (
= 2.64), and taking periodic feedback (
= 2.86),
= 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.
118
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.
119
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.
120
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.
121
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
Physical
Infrastructure
Business
Assistance
Management
Guidance
and
Consulting
Enabling
Environment
Mean
Std. Error
Difference Difference
95% Confidence
Interval of the
Difference
Lower
Upper
df
Sig (2tailed)
-3.807
50
.000
-.7988
.20984
1.22029
-.37733
-5.994
50
.000
-1.0291
.17168
1.37393
-.68427
-4.882
50
.000
-1.2310
.25217
1.73744
-.72446
-5.994
50
.000
-1.0291
.17168
1.37393
-.68427
122
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
Sig.
.007
.007
.011
.918
1.517
1.517
1.983
.165
20.800
20.800
12.423
.001
11.355
11.355
6.346
.015
Physical Infrastructure
4. Your Incubation Centre provides work
space to tenant companies at below market
rate rent.
5. Your Incubation Centre provides
communication facilities like Phone, Fax, to
tenant companies.
library facilities to tenant companies.
laboratory facilities to tenant companies.
Business Assistance
secretarial services to tenant companies.
technical assistance to tenant
companies.
marketing assistance to tenant
companies.
17.374
17.374
21.223
.000
26.866
26.866
23.743
.000
15.403
15.403
10.711
.002
10. Your Incubation Centre provides legal

services to tenant companies.
3.641
3.641
2.710
.106
123
11.Your Incubation Centre provides

networking support to tenant companies
(e.g. with suppliers/customers etc)
12. Your Incubation Centre provides human
resource management services to tenant
companies.
13.Your Incubation Centre assists tenant
companies in obtaining statutory approvals
14. Your Incubation Centre assists the
tenant companies in product development
activities.
16. Your Incubation Centre helps tenant
companies in securing capital.
16.484
16.484
14.908
.000
.251
.251
.410
.525
2.682
2.682
3.091
.085
3.958
3.958
2.353
.131
8.704
8.704
5.048
.029
1.386
1.386
2.122
.151
17.601
17.601
8.113
.006
9.773
9.773
9.993
.003
30.190
30.190
17.205
.000
2.954
2.954
4.970
.030
12.476
12.476
9.741
.003
.124
.124
.135
.715
1.003
1.003
.941
.337
19.584
19.584
14.562
.000
8.000
8.000
4.847
.032
9.190
9.190
10.272
.002
.440
.440
.682
.413
Management Guidance and Consulting

1. Your Incubation Centre disseminates
information on business ideas.
(Product/service ideas)
2. Your Incubation Centre helps the

tenant companies in conducting
feasibility studies.
3. Your Incubation Centre helps the
tenant companies in developing
business plans.
business counseling to tenant
companies.
Enabling Environment
18. Your Incubation Centre has created
an environment where tenant companies
learn from one another.
19. Your Incubation Centre has reduced
the time required to develop marketable
products/services.
20. Your Incubation Centre has reduced
early stage operational costs helping tenant
companies start the business with lower
initial investment.
21. Your Incubation Centre has accelerated
the development of new firms by tenant
companies.
22. Your Incubation Centre has
minimized the chances of failure of
tenant companies.
23. Your Incubation Centre has helped
the tenant companies to establish
credibility.
24.Your Incubation Centre takes periodic
feedback about tenant companies
satisfaction with incubator services
25. Your Incubation Centre has a formal
procedure for handling tenant companies
grievances.
124
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).
125
TABLE 3.5: Comparative Mean Scores of Incubatees and Business Incubators
Incubatee
Respondent
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
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
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
3.60
4.20
3.71
Business Assistance
Management Guidance and Consulting
Enabling Environment
18. Your Incubation Centre has created an
environment where tenant companies learn from
one another.
126
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
3.40
4.40
3.60
2.83
3.90
3.04
3.83
3.60
3.79
23. Your Incubation Centre has helped the tenant

companies to establish credibility.
24.Your Incubation Centre takes periodic
feedback about tenant companies satisfaction
with incubator services
25. Your Incubation Centre has a formal procedure
for handling tenant companies grievances.
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.
127
TABLE 3.6: Relative Importance Ranking of Various Services

Item No
4
3
20
15
5
6
7
12
10
14
19
21
1
13
8
16
18
23
25
22
9
2
17
11
24
Service
Providing below market rate rental Work Space
Business Plan Writing Assistance
Reduced Operational Costs
Laboratory Facilities
Providing Communication Facilities
Secretarial Services
Library Facilities
Human Resource Management
Legal Services
Product Development
Reduced Product/service Development Time
Accelerated Development of Firm
Dissemination of Information on business ideas
Statutory Approval
Technical Assistance
Securing Capital
Synergistic Learning Environment
Establishing Credibility
Grievance Handling
Minimized Chances of Failure
Marketing Assistance
Conducting Feasibility Studies
Business Counselling
Networking Support
Periodic Feedback
Score
4.76
9.00
10.21
10.26
10.59
10.59
10.66
11.04
11.50
12.00
12.02
12.26
12.33
12.69
13.09
13.28
13.28
13.40
13.45
13.69
13.76
14.00
14.00
14.02
15.73
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
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.
128
TABLE 3.7: Responses of the Incubatees on their Request for Services
Response Category
S.No
N=42
Yes Percentage
1
No
Percentage
78.57
21.42
Dissemination of Information on 33
business ideas
Conducting Feasibility Studies
39
92.85
7.14
Business Plan Writing Assistance
41
97.61
2.38
92.85
7.14
Providing below market rate rental 39

Work Space
Providing Communication Facilities
39
92.85
7.14
Secretarial Services
21
50.00
21
50.00
Library Facilities
32
76.19
10
23.80
Technical Assistance
31
73.80
11
26.19
Marketing Assistance
42
100.00
0.00
10
Legal Services
38
90.47
9.52
11
Networking Support
40
95.23
4.76
12
Human Resource Management
33
78.57
21.42
13
Statutory Approval
37
88.09
11.90
14
Product Development
37
88.09
11.90
15
Laboratory Facilities
33
78.57
21.42
16
Securing Capital
39
92.85
7.14
17
Business Counselling
38
90.47
9.52
18
Synergistic Learning Environment
29
69.04
13
30.95
19
83.33
16.66
20
Reduced
Product/service 35
Development Time
Reduced Operational Costs
41
97.61
2.38
21
Accelerated Development of Firm
37
88.09
11.90
22
Minimized Chances of Failure
39
92.85
7.14
23
Establishing Credibility
40
95.23
4.76
24
Periodic Feedback
29
69.04
13
30.95
25
Grievance Handling
39
92.85
7.14
129
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
130
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 effectively 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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B

usiness Incubation Centres have been receiving increasing attention as a tool to

While the Indian Government is trying to aggressively promote entrepreneurship, the

Role of Business Incubation Centres

services provided to the incubatees. A total of 12 business incubation centres and 45

In the content analysis to explore the role of Business Incubation Centres in

Similarly to investigate the impact of Business Assistance Services, we incorporated

For exploring the contribution of Management Guidance and Consulting services,

Likewise in order to analyze the effect of Enabling Environment services, we isolated

Business Incubation Centres

Total Mean Score

FIGURE 3.1: Role of Business Incubation Centres in Promoting

= 4.35) service is recognized to be most

efficaciously furnished followed by Physical Infrastructure (

= 4.05) and Business Assistance (

= 3.94) services. It was quite

surprising to find that there is relatively lesser agreement on the adequacy in

= 3.11), and enabling environment

= 2.91) as the mean value for

= 3.47) is perceived to be most proficiently provided

service followed by enabling environment services ( = 3.33), management guidance

Role of Business Incubation Centres in Promoting

TABLE 3.2: Role of Business Incubation Centres in Promoting

Physical Infrastructure Services

Business Incubation Centres

Your Incubation Centre

provides work space to

below market rate rent.

facilities like Phone, Fax,

provides library facilities

Business Incubation Centres

Your Incubation Centre

Your Incubation Centre

provides legal services to

provides human resource

assists tenant companies

helps tenant companies

Management Guidance and Consulting Services

Your Incubation Centre

Your Incubation Centre

Enabling Environment Services

Business Incubation Centres

Your Incubation Centre

tenant companies learn

operational costs helping

development of new firms

Your Incubation Centre

has helped the tenant

takes periodic feedback

has a formal procedure

FIGURE 3.2: Physical Infrastructure Services - Item Wise Percentage Analysis

FIGURE 3.3: Business Assistance Services - Item Wise Percentage Analysis

FIGURE 3.4: Management Guidance and Consulting Services

FIGURE 3.5: Enabling Environment Services - Item Wise Percentage Analysis

Physical Infrastructure Services

= 4.17) are above 3.00, which means that the

= 2.71) and library facilities (

= 2.60) have mean scores of

that they discover themselves to be most competent in imparting networking support

= 3.70), product development guidance (

= 3.60) and assistance in obtaining statutory approval (

incubatees however fathom them to be imparting human resource management

= 3.02) as revealed by mean

= 2.33), technical assistance (