A multi-stakeholder view on business incubator effectiveness

Abstract

The unemployment rate in South Africa and around the world has a crippling effect on economies. Many studies have shown that an improvement in entrepreneurial activity frequently leads to a decrease in unemployment and increase in economic growth rate. Young firms play an essential role in new job creation through both start-ups and firm growth, and business incubators have been shown to be highly effective tools for developing these new ventures and contributing to job creation and economic development. Gaining a greater understanding of the factors driving business incubator effectiveness will lead to an increase in the number of successful early stage firms, thus contributing to job creation and economic growth. In addition, having an understanding of the differences in perceptions between incubator managers, tenants and key stakeholders with regards to business incubator effectiveness will help tenants and stakeholders make better decisions on which incubators to work with, as well as helping business incubators to align their offering to the needs of tenants and stakeholders. This study explored the factors that drive business incubator effectiveness from the perspective of entrepreneurs, incubator managers and stakeholders as well as to identify differences in opinions between these three groups. This was done using a phenomenological approach, focused on gathering qualitative data using in-depth semi-structured interviews from 16 participants. A success framework for business incubation emerged from the research findings and was found to represent the 16 components that are crucial to incubator effectiveness from the perspective of the three sample groups. The results of this study could help to improve effective incubation by highlighting the factors driving effectiveness and discovering new factors relevant to the South African context. This could in turn provide incubator managers with knowledge to better tailor their offerings to tenants and key stakeholders. This improved value proposition would lead to greater success for all involved.