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Int. J. Emerg. Sci., 1(2), 95-107, June 2011
ISSN: 2222-4254
© IJES
95
The Development of Entrepreneurial Companies
through Business Incubator Programs
Hanadi Mubarak Al-Mubaraki, Michael Busler
College of Engineering
Kuwait University, Kuwait
pro5383526@yahoo.com
Richard Stockton Collage, USA
michael.busler@stockton.edu
Abstract: Purpose: This paper explores, investigates and identifies the
business incubators (BI) that are used worldwide for the development of
entrepreneurial companies. Business incubation is a public and/or private,
entrepreneurial, economic and social development process designed to nurture
business ideas and start-up companies, and through a comprehensive business
support programme, help them establish and accelerate their growth and
success. Researchers and practitioners alike are claiming positive potential of
BI diversify economies, commercialise technologies, create jobs and build
wealth. The purpose of the study is, therefore to identify and develop the best
practice of business incubation process based on successful implementation of
case studies. Methodology/approach: The research methodologies adopted in
this research study are desk-research and case study of 10 incubator
organisations in the developing countries. Findings: The findings of this study
indicate the business incubators as an effective and innovative tool in
supporting the start up businesses. Practical implications: The empirical
results highlight some implications for successfully developing and
implementing best practice of business incubation program. Originality/value:
This study makes a contribution to knowledge about the process of business
incubation
Keywords: Process of Business Incubators, Commercialise Technologies, Jobs
Creation, Developing Countries, Incubation Program.
1. INTRODUCTION
The national business incubation association [16] defines the incubator programs
accelerated the successful development of entrepreneurial companies through an
asset of shared resources and services, guided by incubator management and offered
both in the incubator and through its network of contacts. In addition, the successful
completion of a business incubation program increases and the start-up company
will stay in business for the long period such as 87% of graduates companies stay in
the market.
Hanadi Mubarak Al-Mubaraki, Michael Busler
96
Researchers and practitioners proven the potential of incubators support the
SMEs and start-ups with the guidance needed to develop and grow their businesses,
provided many services such as virtual support, rent and laboratories. Furthermore,
the direct access to intensive business support, finance and experts and aid the
entrepreneurs to grow. Moreover, the objective of business incubation is to increase
the percentage of success of the start-up companies, and reduce the time and cost of
establishing and expansion of business. Finally, the successful business incubation
reflects on the growth of the employment.
The objective of this paper is to identify and develop the best practice of
Business incubators based on successful implementation of case studies. It will
focus four criteria namely, definitions, types of incubators, services provided by
incubators and goals of each business incubation program.
The structure of this paper is as follows: Section 2 provides literature review of
the business incubation (BI) such as definitions, types of incubators, services
provided by incubators and goals of each business incubation program. In Section 3
the research methodology included the evidence from literature review and ten
successful case studies to illustrate different key performance of the business
incubation. In Section 4, the authors briefly discuss the finding of the study drawn
from quantitative approaches of incubators. Section 5 concludes with implications
of the business incubators from successful developing countries.
2. RELATED LITERATURE REVIEW OF BUSINESS INCUBATION
2.1 Definition
National Business Incubation Association (NBIA) [16] is a leading organization in
business incubators more than 50 year supporting the start-up of business
incubation. Today there are more than 7,000 incubation programs worldwide [19]. It
is expected that the number will continue to grow as other nations also are looking
in to business incubators as a way to stimulate economic growth [14]. There are
more than 1000 incubators in Asia [5] [11] [12]. In addition, NBIA [19] defines the
incubators is the process to accelerates the success of the start-up companies by
guided the Entrepreneurs with a matrix of resources and services. These services
guided by business incubator management and offered networking contacts for the
incubatee.
The critical outcomes from the definition of the incubators such as, 1) the
guidance of management, 2) assistance in technical activity, 3) advisor for young
start up companies, 4) access to rental space, 5) common business services and
equipment, and 6) guided to obtain the finance required for company expansion and
any technology support required by the start up companies.
The UK Business Incubation Association [22] defines the Incubation is the
mixture of business development processes, infrastructure and people, to support the
growth of the start up companies by supporting them through the process of the
development.
International Journal of Emerging. Sciences, 1(2), 95-107, June 2011
97
INFODEV–an arm of the World Bank Group [10] defines a Business
Incubation is aimed to motivate the economic development of its community by
guided the start-up companies and their business development.
Business Incubation Programs defines [10] are aimed at promoting economic
development of its community by guided the start-up companies and their business
development. These programs offer asset of services to support the start up
companies. In addition the programs provide the incubette with: 1) advisor and
planning activity for the start up; 2) coach the entrepreneur in any required services
for development; 3) access to finance sources; and 4) training and networking.
2.2 Goal and Objectives
Business incubation program demonstrate different set of objectives reflecting their
own particular operating environment and stakeholders. It is known by incubators
manger and it is important to define the goals and objectives of the program. Each
program will be driven by one or more objectives, 1) National, regional or local
economic development, 2) Property/real estate, 3) Rural/urban industrial
regeneration, 4) Small firm and/or venture creation, 5) Technology transfer, 6)
Innovation and its commercialization, 7) Increases in new firm formation/spin-outs,
8) Creation of new and sustainable jobs, 9) Acceleration of business
growth/development of fast-track companies, 10) Reduction in the failure rate of
new enterprises, 11) Creating value for stakeholders, 12) Empowerment/
opportunities for specific groups of entrepreneurs, and 13) Development of an
entrepreneurial culture/role models (NBIA, 2006).
2.3 Services
Business incubation programs provide the start-up companies asset of services. The
most common incubators services (NBIA, 2006; Al-Mubaraki 2008): 1) provide the
business support, 2) business incubation networking , 3) guidelines to the market,
4) internet services, 5) cancelling in financial management, 6) Access to funds and
letter of guarantee, 7) presentation skills, 8) lead to the higher education resources,
9) advisor for best partners, 10) link to venture capital, 11) any training programs
required for the start up companies, 12) guided the boards and mentors, 13) identify
the management activity, 14) technology transfer, and 15) aid the regulatory
compliance services.
According to the above general services the incubators provide the common
services such as email account, internet address, access to copy machine, access to
fax machine, telephone, access to the meeting room and access to the exhibition
hall, etc.
Hanadi Mubarak Al-Mubaraki, Michael Busler
98
2.4 Types
Business incubation types are divided in to more than 6 categories based on
program objectives; 1) Technology incubator, 2) Incubation of services, 3)
Incubation of Mixed–use type, 4) Manufacturing incubation, 5) Web-related
business incubation, and 6) Incubation of community .
According to the National Business incubator association (NBIA, 2000), the
main 5 categories are: 1) the Mixed–use type of incubator linkage client from wide
variety of business and supported by governments to lead the economic
development and jobs creation, 2) the Technology incubators type focus on
establishment of community research and high-technology development this type
of incubators lead to a long–term impact on economic development and jobs
creation, 3) the Manufacturing incubators type shared the physical space and
technical assistance for the industries in manufacturing, 4) the Targeted incubator
type focus on manufacturing the software, food, multimedia, arts, etc., and 5)
Empowerment incubators type focus on advisors the specific populations to
support and develop the entrepreneurial companies [4].
3. RESEARCH METHODOLOGY
The research methodology that has been used in this research study is compromised
of desk-research, interviews and case study of 10 incubator organisations in the
developing countries.
3.1 Desk-Research: The process designing of business incubation programs
From the current literature, it is evident (see section 2 above) that the number of
business incubators is growing rapidly. Today the number of incubators worldwide
is approximately 7,000, where in the beginning of 1980, the number was 200 [14]
The Business incubation program become more popular amongst entrepreneurs and
the strategic benefits such as: First, the business incubation program must have clear
mission to provide business advisory to start up companies. Second, business
incubation program should have resources to deliver and coordinates with the client
companies. Finally, business incubation program establish to lead the start up
company to self sustainability [1].
The process of designing and implementing business incubation programs
really consists of nine stages. In addition, for the benefits of maximum survival of
the incubation program required the steps be in order.
Step 1: The Analysis of the community context to identify economic development
opportunities and constraints. The Analyzing characteristics of community
context can be defined in terms of its boundaries, size, composition, internal
linkages, external linkages and level of control over local resources. With
International Journal of Emerging. Sciences, 1(2), 95-107, June 2011
99
this information, planners can systematically explore the influence of these
characteristics on the potential for economic development.
Step 2: Choose economic development goals and objectives for the community. For
example, job creation involves not just the number but the type of new jobs
that a community hopes to generate.
Step 3: Select a business development strategy to help meet those goals and
objectives. There are four of these available to communities: 1) Business
attraction, 2) Business retention, 3) Business expansion, and 4) Incubating
new enterprises. Furthermore, each approach has a different set of rules,
resources and players.
Step 4: Select the appropriate business incubation program design. Incubation
program managers must evaluate their clients' required resources and
obstacles in order to design a package of practices. If the goal is a more
diversified economy, the incubation program can focus on start-up
enterprises that will introduce new products and services to the community.
Step 5: Evaluate the economic feasibility of the program design the availability of
clear data about the economic conditions that are necessary to make the
program viable, and the probability that those conditions will be met.
Step 6: Specify the set of incubation practices to be used. There are too many
program planners make the mistake of selecting practices with little idea of
the resources their targeted clients require, or the obstacles that stand in
their way.
Step 7: Implement the selected practices. Incubation practitioner can refer to these
descriptions for the specific actions they should take to implement the
practices they have selected.
Step 8: Evaluate the program's performance. The Evaluation of an incubation
program's performance focus on the three elements of the overall situation;
1) Input: the community context and program client needs that were
identified, 2) Process: the effectiveness of the practices that were
implemented, which should be jointly assessed by program manager and
client, and 3) Outcome: changes in individual firms' access to required
resources and in their overall business viability, along with how much those
changes contributed to the community's economic outlook.
Step 9: Use the evaluation results to redesign the incubation program and practices.
An incubation program cannot evolve unless those who run it learn both
from their mistakes and their successes, and a program that does not evolve
will ultimately fail.
3.2 Case Studies: Business Incubators in the Developing Countries
Interviews were conducted with senior executives of 10 incubators organisations
across the developing countries. As a result of the interviews, it was identified that
currently, there are 21 incubators across Middle East, 900 in Europe, 1000 in Asia,
and 1400 in Latin America [19], [3]. Also it has been noted that in developing
countries the business incubators could be particularly valuable in contributing to
Hanadi Mubarak Al-Mubaraki, Michael Busler
100
the economy, promote technology transfer, and create new enterprises and impacts
on job creation. Table 1 shows summary of case studies included the country name,
objectives, services, incubator start date, type and financial information.
Table 1: Summary of Case Studies
No.
Country
Objectives Services Start
Date
No. of
Client
Firms
No. of
Graduated
Firms
1 China
•
Job Creation
• Profitable
• Enterprises
• Research
Commercialization
Business information,
advisory services
business management
and business
development
2004 2123 609
2 Australia
•
Job Creation
• Profitable
• Enterprises
Training, mentoring,
advisory, angel investing
1997 358 90
3 Bahrain
•
Entrepreneurship
Awareness
• Export Revenues
• Job Creation
• Policy Impact
• Profitable
Enterprises
• Research
Commercialization
•
ICT work, office space
• Financial management
training, financial
management/
accounting services,
linkages to financiers,
loan and venture capital
• Business information,
business management
and business
development advisory
services, incubation
program for non-
resident clients (virtual
incubation) , incubation
program for resident
client,
mentoring/coaching ,
pre-incubation services,
training in business
management
• The linkages between
incubates, networking
events and referrals to
business professionals
• To commercializing
technology and help
with intellectual
property/patent advice
2003 35 30
4 Jordan
•
Entrepreneurship
Awareness
• Income Generation
• Job Creation
• Profitable
•
To Shared laboratories
and shared workshops
• Platform to the
financiers
• Business information,
2004 6 3
International Journal of Emerging. Sciences, 1(2), 95-107, June 2011
101
Enterprises
• Research
Commercialization
business management
and business
development advisory
services,
• Provide the linkages
between incubates,
events networking
• technology
commercializing and
help the patent
5 Morocco
•
Entrepreneurship
Awareness
• Export Revenues
• Job Creation
• Policy Impact
• Profitable Enterpri
ses
• Duplicate the
Casablanca
Technopark Incubation
Model to other
locations in Casablanca
and across Morocco
•
Share the services and
office space, workshops
• Financial training
management, overlap
financiers with venture
Capital
• Advisory services,
business development and
coaching the business
• Incubates program
networking, and n
etworking
events
• Technology
commercializing
2005 8 4
6 Syrian
Arabic
Republic
•
Entrepreneurship
Awareness
• Generation support
• Creation Jobs
• Impact of Policy
• Successful
Enterprises
•
Accommodate services
such as Workshops,
laboratories and office
• Advisory services and
business development,
coaching and training
services
• Technology
commercializing
2006 7 6
7 China
•
Entrepreneurship
Awareness
• Income Generation
• Job Creation
• Policy Impact
• Enterprises Profit
•
Office space services
• Connect to
financiers and management
services, advisory services
and mentoring, coaching
services
• Connect
incubates programs
together, events networking
2000 70 37
8 Indonesia
•
Entrepreneurship
Awareness
• Income Generation
• Job Creation
• Policy Impact
•
Profitable Enterprises
• Research
Commercialization
•
Office
services
space,
common laboratories and
workshops
• Connect to financiers and
capital venture
• Connect between
incubates programs and
events networking
• Technology
commercializing
1995 9 11
9 Philippine
s
•
Entrepreneurship
Awareness
•
Office services space,
common laboratories and
2001 13 2
Hanadi Mubarak Al-Mubaraki, Michael Busler
102
•
Export Revenues
• Income Generation
• Job Creation
• Policy Impact
•
Profitable Enterprises
• Research
Commercialization
workshops
• Connect to financiers and
capital venture
• Connect between
incubates programs and
events networking
• Technology
commercializing
10 Thailand
•
Strengthening the
Thai business
incubation system by
fostering networking
and collab
oration along
the supply chain of
entrepreneurial support
in Thailand including
the Thai business
incubators, Thai-
BISPA – the network
of business incubators,
and the other
innovation support
organizations
• Leveraging ICT
through integrating an
electronic knowledge
management system
(eKMS) into a project
website to support the
performance
monitoring and
evaluation and to
create knowledge of
good practices in
incubator management
• Networking to
quantify and improve
the impact of the
incubation system in
Thailand;
• Elaborating a
standard for
performance
monitoring and
evaluation of Thai
business incubators and
to test its applicability
Improving the
monitoring and
evaluation skills of
Thai business incubator
managements in order
to increase their
capacities for self-
assessment.
2002 173 145
International Journal of Emerging. Sciences, 1(2), 95-107, June 2011
103
4. FINDINGS AND DISCUSSION
The development of business incubators might lead to the following issues [6], [15]
[21]: 1)Economic development effort in jobs creation and diversity of the local
economic; 2) The transfer of technology and commercialisation of research and into
new applications; and 3) The sustainability of start up companies to success with
survival rate 90%. Table 2 summarizes the economic development for the case
studies with total number of job created inside the incubators 2802 and the number
of graduated companies 937 these figure lead the diversity of local economic and
sustainability of companies.
Business Incubators are attractive and have grown in numbers because the start
up business growth through the direct support structure for fragile enterprises. Their
attraction based on jobs creation with low public cost [13]. The assistants of
Incubator managers assigned to support the incubate with array of services [20].
This assistance can take the form of flexible lease terms for space, shared services
in office support, on-site business assistance, opportunities for tenant networking,
and resource matching by incubator management [7]. The incubators flexibility in
terms of the types of benefits and services offered to entrepreneurs accommodates
several types of growth of economic development. Table 3 summarize the goals,
types and services provided by the incubation programs.
A business incubator provides the transformation of their ideas into start up business
or viable business ventures. In addition, the Entrepreneurs companies receive
support and guidance to market their business concepts, work effectively to reduce
the failures and ability of free standing in the market after graduation from the
incubation program [8].
Table 2: Summary of the countries’ economic development
Country Economic Development
No. of Client Firms No. of Graduated Firms
China 2123 609
Australia 358 90
Bahrain 35 30
Jordan 6 3
Morocco 8 4
Syrian Arabic Republic 7 6
China 70 37
Indonesia 9 11
Philippines 13 2
Thailand 173 145
Total 2802 937
Hanadi Mubarak Al-Mubaraki, Michael Busler
104
Table 3: Summary of goals, services and types
Incubators Types Incubators Goals Incubators Services
Technology
incubator
Incubation of
Services
Incubation of
Mixed – use type
Manufacturing
incubation
Web- related
business incubation
Incubation of
Community
revitalization
Jobs Creation in l community
Entrepreneurial climate
community's and value it
attributes to entrepreneurship
Provide the business in the
community
Building/accelerating growth
local industry
Diversifying local economies
Encouraging minority or women
entrepreneurship
Opportunities of analysis of the
spin-in/spin-out business
Commercializing technologies
to support the entrepreneurs in
the community
Generating complementary
benefits for the sponsoring
organization
Revitalizing distressed
neighbourhood
Transfer the people to the work
Support the business
Activities of Network with others
programs
Advise to the Market
Access to Internet
Services share with office and
administrative
Easy access to bank loan
Linkage to higher education
resource
Help with accounting/ financial
management
Access to loan funds
Access to guarantee Loan
programs
Linkages to strategic Partners
Help with presentation skills
Shadow advisory boards/mentors
Human resources/personal
development/ training
Linkages to angel or venture
capital investor
Help with business etiquette
Comprehensive business training
program
Assistance with E-commerce
Specialized equipment/facilities
Business management
process/customer/ assessment
Services/inventory/
management
Federal procurement assistance
Commercializing Technology
Management team identification
Assistance with manufacturing
practices, process and technology
General legal services
International trade assistance
Intellectual property management
5. CONCLUSION AND REFLECTION
In this study, the positive impact of the adoption of incubators as stimulus for the
jobs creation and economic development has been pursued. This paper describes the
International Journal of Emerging. Sciences, 1(2), 95-107, June 2011
105
important goals of business incubators programs, local economic development,
urban industrial regeneration, venture creation, technology transfer, innovation and
its commercialization, increases in new firm formation, creation of new and
sustainable jobs, development of fast-track companies, reduction in the failure rate
of new enterprises and opportunities for specific groups of entrepreneurs with this
goals supporting lessons from the current literature. In conclusion and throughout a
careful review of the published literature, with the analysis of the incubation
program as effective tool for the development of the economic and
entrepreneurship. The study supports previous work of researcher and practitioners.
The paper establishes that, ten case studies are analysis and illustrate the most
important criteria in each country such as programs objectives, services, types, start
date and finical information. The paper shows the incubators are potential tool for
economic development at significantly higher cost than originally anticipated.
However, the evidence shows that there is strong potential of business
incubation in 1) jobs creations and economic development diversification; 2)
technology transfer and commercialisation the research into new applications; and
3) the sustainability of stat up business success with survival rate 90%. The
incubators types categories based on program objectives: 1) Technology incubator,
2) Incubation of Services, 3) Incubation of Mixed–use type, 4) Manufacturing
incubation, 5) Web-related business incubation, and 6) Community revitalization
incubator. Furthermore, the services provided by business incubators; 1) Help with
business basics, 2) Networking activities, 3) Marketing assistance, 4) High-speed
Internet access, 5) Help with accounting/financial management, 6) Access to bank
loans, loan funds and guarantee programs, 7) Help with presentation skills, 8) Links
to higher education resources, 9) Links to strategic partners, 10) Access to angel
investors or venture capital, 11) Comprehensive business training programs, 12)
Advisory boards and mentors, 13) Management team identification, 14) Help with
business etiquette, 15) Technology commercialization assistance, and 16) Help with
regulatory compliance services.
Finally, this study has clearly stated that the Business Incubation Programs
goals are supporting economic development of its community by advise and
guidelines the start-up companies and their business expansion. This is evident in
both the United States of America and the developed countries. Furthermore, future
studies it should be taken place for developing the best practice model for the
developing countries based on the analysis and achievement of international case
studies.
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