Startups and clients perspective on technology business incubators performance

1. Proceedings of the 2nd International Conference on Current Trends in Engineering and Management ICCTEM -2014
INTERNATIONAL JOURNAL OF MECHANICAL ENGINEERING
17 – 19, July 2014, Mysore, Karnataka, India
AND TECHNOLOGY (IJMET)
ISSN 0976 – 6340 (Print)
ISSN 0976 – 6359 (Online)
Volume 5, Issue 9, September (2014), pp. 141-144
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© I A E M E
STARTUPS AND CLIENTS PERSPECTIVE ON TECHNOLOGY BUSINESS
INCUBATORS PERFORMANCE
Vinay K B1, Dr. Santosh Kumar A. N2
1Department of Mechanical Engineering, Vidyavardhaka College of Engineering, Mysore, Karnataka, India
2Department of Mechanical Engineering, Sri Jayachamarajendra College of Engineering, Mysore, Karnataka, India
ABSTRACT
Technology and entrepreneurship often push national economies towards their developmental destinations.
Technology business incubators have become popular because of economic development strategies like promoting
technology/knowledge-based businesses, culture of techno-preneurship, creation of value added new jobs, Technology
commercialization, interfacing and networking of academic – RD – industries and financial institutions, value added
services to its tenants as well as to the existing technology dominated Small and Medium Enterprises (SME) and also
technology upgradation activities. Though TBI’s are generally considered to be a major facilitator of Technology
Business Enterprises (TBI’s), the experience of their effectiveness has been mixed, especially in the emerging
economies’ context. Even though few of the factors have been identified there is no evidence of it being considered by
the practicing incubators. Also, most of the researches done so far are incubators centric but has not given due
importance to Startups and Clients who actually graduate out of it. It is against the background of such diversity of
experiences that comprehensive investigation has been undertaken to assess the roles played by the Startups and Clients
and identify key drivers and inhibitors.
Key words: TBI, Startups, Clients, Drivers, Inhibitors.
1. INTRODUCTION
The importance of new technology-based firms to the economy is now widely recognized not only by the
western industrialized world, but also by many countries at large, from Asia to Africa. New technology-based firms make
significant economic growth in the creation of new jobs.
Another important contribution of new technology-based firms is their catalyzing role to technology and
knowledge accumulation process of innovation system. However in reality, among the success stories of the emerging of
new technology-based firms, many have failed and collapsed in the early years of their establishment. The firms found a
difficulty to develop their innovation capacity. The dilemma that always appears is the choice between to keep
innovating (exploring a new market) and exploiting the existing market.
Technology based enterprises are especially attractive to policy-makers because of their higher potential for job
creation and wealth generation through business growth as well as their lower disappearance rates compared to non-technology
based firms. As new technologies are often developed in RD institutions, it was such institutions in the
Western nations that first took the initiative of providing incubation facilities to transfer these new technologies to the
market. The model was later used by public and private agencies for facilitating technology development for new
ventures. Such initiatives are now known by the common name of Technology Business Incubators (TBI), some of which
are focused on technology transfer and others on Technology development for new ventures.

2. Proceedings of the 2nd International Conference on Current Trends in Engineering and Management ICCTEM -2014
17 – 19, July 2014, Mysore, Karnataka, India
142
In spite of the fact that development of SME are key to economic growth and achievement, many believe that
new firms and to some extent even the established firms fail due to poor managerial skills, capital deficiency and
difficulty in understanding and capturing the market. In order to overcome these deficiencies, entrepreneurs have started
looking towards incubators for value added services. Though TBI’s are generally considered to be a major facilitator of
Technology Business Enterprises, the experience of their effectiveness has been mixed, especially in the emerging
economies’ context. It is against the background of such diversity of experiences that this study undertaken.
2. LITERATURE REVIEW
Best practice may be defined as a process that is better at delivering a particular result than any other process.
According to Mosselman et al. [1], better means effectiveness of performance which says doing right things rather aimed
at attainment of an activity or scheme.
Storey [2] and Vedung [3] argue that attainment of goal is not enough to measure the outcome of an activity but
related to expected outcomes. How the incubators are organized and managed, form the incubator best practices.
Allen and McCluskey [4] use three criteria namely, occupancy rate, jobs creation and firms graduation to
measure the outcome of incubators performance. Phillips [5] further adds tenant revenues, number of patent applications
per firm and number of unsuccessful businesses for measuring best practice.
The larger numbers of papers identifying lists of outcome criteria are by Chan and Lau [6], Colombo and
Delmastro [7], OECD [8]. Perhaps, Mian [9], [10], provided the most comprehensive list by adding management
policies and their effectiveness as well as value added services as outcome indicators in relation to goals.
Alireza [11] in his research has identified influential factors that improve the effectiveness of incubators
between developed and developing countries. According to his research, organizational procedures and entrepreneurial
behaviors were the meaningful mediators. Organizational procedures were stronger mediator for the improvement of
Technology Business Incubator's effectiveness in comparison to entrepreneurial behavior.
Bearse [12] and Sherman [13] states that incubators are usually examined as if they have the same outcome
objectives, regardless of the fact that no two incubators are alike.
According to Allen and McCluskey [4] and Mian [9], incubators articulate objectives differently depending
upon their sponsor’s interests. While, Bollingtoft and Ulhoi [14] say that different priorities exists within the same basic
goals.
Bollingtoft and Ulhoi [14], Lyons and Li [15] and Peters et al. [16] accentuates that it is not difficult to
distinguish between incubators with different goals whether incubators are run for profit or not. Enhancing economic
development and reducing unemployment and stimulating firms with emerging technologies are the main goals of any
incubator.
William and Thompson [17] have highlighted that key underlying dimensions of facilitators in a business are
innovative needs, competitive position, environment, economies of scale and top management guidance while the
inhibitors are the lack of economies of scale and the lack of innovative needs.
In fact, most of the literature available focuses on business incubators, but very few literatures available on
Technology Business Incubators. Based on the current knowledge and research of incubators there is a strong need to
identify the various factors that contribute to the survival, growth and success of incubators that too in technology driven
business incubators. Even though few of the factors have been identified there is no evidence of it being considered by
the practising incubators. Also, most of the researches done so far are incubators centric but has not given due importance
to Startups and Clients who actually graduate out of it.
3. OBJECTIVES OF THE STUDY
From the literature it is clearly evident that systematic and objective feasibility study of business incubators has
been performed to identify the best practices being followed to ensure the survival of graduate firms at a significantly
higher rate than the general population of new ventures. Graduated firms in the local area of host incubator are expected
to benefit the incubators too and help in restoring public confidence and support.
It becomes very essential especially in a developing country like India to identify the various factors that
contribute to the survival, growth and success of incubators that too in technology driven business incubators. Even
though few of the factors have been identified there is no evidence of it being considered by the practising incubators.
Also, most of the researches done so far are incubators centric but has not given due importance to Startups and Clients
who actually graduate out of it. Hence, the objectives of this study are to investigate and assess the roles played by the
Startups and Clients and to identify key drivers and inhibitors that contribute further for economic growth, innovation,
regional development, job creation and create a good entrepreneurial climate.

3. Proceedings of the 2nd International Conference on Current Trends in Engineering and Management ICCTEM -2014
17 – 19, July 2014, Mysore, Karnataka, India
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4. METHODOLOGY
Research instruments was developed, tested and administered to managers of Technology Business incubators.
Their responses were analyzed through factor analysis, one sample t – test and correlation analysis using statistical
packages.
The research results for Technology Business Incubators obtained through the statistical tool have identified 11
dimensions. Analysis includes factor analysis for data reduction, one sample t - test to know the significance of factors
under each dimension, followed by correlation to understand the relationship between the dimensions.
5. RESULTS AND DISCUSSIONS
Table 1: Significance value for various dimensions
Dimensions
No. of
Factors
Degree of
freedom
Sig.
(2-tailed)
Program Management 15 14 .000*
Financial Support 9 8 .000*
Incubator Goals 2 1 .048*
Entrepreneurial Support 3 2 .000*
Support Services 4 3 .000*
Contribution Development 2 1 .036*
Graduation Policy 2 1 .027*
Client Selection Review 3 2 .001*
Incubator Staff Evaluation 4 3 .000*
Post graduation Support 3 2 .001*
Incubator Resource 3 2 .001*
* Significant at 0.05 level
TABLE – 1 specifies the significance of each factor at 95% confidence level under the each dimension, which signifies
the hypothesis stated for the purpose. Further, Correlation analysis is used to describe the strength and direction of the
linear relationship between the two dimensions. The relationship was investigated using Pearson correlation coefficient.
6. CONCLUSIONS AND SUGGESTIONS
Based on the results of statistical analyses and the findings of the study following conclusions have been drawn
as detailed below:
Program management are regarded as the key drivers in rolling out successful entrepreneurs.
Financial supports have an adverse impact with other relevant dimensions of the study. These are key inhibitors
and sincere efforts must be made to overcome them.
Incubator Goals have a positive impact on the performance of incubators and are the key drivers.

4. Proceedings of the 2nd International Conference on Current Trends in Engineering and Management ICCTEM -2014
17 – 19, July 2014, Mysore, Karnataka, India
Entrepreneurial support factors, being key drivers have positive impact on program management, incubator goals
144
and incubator resources leading to successful entrepreneurship.
Factors of support services are the key drivers in contributing positively towards incubator goals, contribution and
development and graduation policy.
Contribution Development as the key drivers to ensure success of startups and clients.
Factors of Graduation Policy are the key drivers in ensuring successful entrepreneurs.
Client Selection Review, being a significant dimension contributes positively towards other relevant dimensions
of the study and is the key drivers in effective incubation.
Factors of Incubator Staff Evaluation have an impact on the incubation program and hence regarded as the key
driver.
The significant factors of Post graduation Support have a positive impact on the incubator performance and are
one of the key drivers.
Incubator Resource have adverse impact on all the dimensions considered in the present investigation, thus its
factors are the key inhibitors.
7. REFERENCES
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SMEs”, Final Report to the European Commission.
[2] Storey D (2000),” Six steps to heaven: Evaluating the impact of public policies to support small business in
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[5] Phillips R. G. (2002),”Technology business incubators: how Phillips R. G effective as technology transfers
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[6] Chan K. F, Lau, T. (2005),”Assessing technology incubator programs in the science park: the good, the bad and
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[7] Colombo M. G, Delmastro M. (2002),”How effective are technology incubators? Evidence from Italy. Research
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[8] OECD (1997),”Technology incubators: nurturing small firms”, Background report for the Workshop on
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[16] Peters L, Rice M, Sundararajan M (2004),”The Role of Incubators in the Entrepreneurial Process”, Journal of
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[17] William R. King, Thompson S.H. Teo (1996), “Key Dimensions of Facilitators and Inhibitors for the Strategic
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