Doctor of Philosophy
School of Accounting, Economics and Finance
Bhabra, Rekha Kaur, An examination of growth stages and factors affecting the performance of business incubators: the case of Australia, Doctor of Philosophy thesis, School of Accounting, Economics and Finance, University of Wollongong, 2014. http://ro.uow.edu.au/theses/4252
There has been an increased interest in examining the effectiveness of business-incubator programs due to heavy investment from public and private sectors. Given the complexities surrounding evaluating the effectiveness of incubator programs, there have been calls for an incubator-specific performance-evaluation framework. Although numerous researchers have attempted to address the issue of incubator performance, the incubation industry is still without an evaluation system. Practitioners and researchers have not reached a consensus with regard to the definition of “performance” and how it should be evaluated. There is also no consensus as to whether the focus of performance measurement should be the incubator or the individual businesses located in these incubators. Instead, incubator practitioners and researchers have focused on measuring performance based on tenants’ satisfaction with the services they receive, incubator occupancy levels, graduation and failure rates and number of jobs produced. These measures do not clarify tenant business development, which is fundamentally what an incubator’s role is. This research proposes a complete performance-evaluation framework that is based on the essence of the incubation, which is accelerating the successful development of a start-up business. This research proposes an evaluation system consisting of four monitoring components.
The first component is identifying the stages of growth. This component examines the nature of business development in the business incubator with the view of identifying the tenants’ activities and stages of growth. First, a list of 26 activities from Kazanjian 1988 stages of growth model were provided to 6 entrepreneurs from two separate incubators during a pilot study. The pilot study entrepreneurs confirmed the 26 activities and added 22 more that they had performed during their stay in the incubator. These 48 activities were then included in the surveys administered to the remaining 51 firms. The analysis of the results found that businesses located in incubators grow in a well-defined pattern. Tenants accomplish a set of activities in one stage before moving to the next. This finding therefore, will aid practitioners as well as entrepreneurs in assessing whether they accomplish the important business activities in each developmental stage.
The second component examines key personal attributes an entrepreneur needs to apply to support business development as the venture progresses from start up through its early stages of growth and towards maturity. Numerous scholars have highlighted the importance of taking entrepreneurial characteristics into account to more fully understand business decisions and their impact on firm development. Therefore this study tested the effects of entrepreneurs’ characteristics on business growth. It examined some personal characteristics of entrepreneurs - gender, age, education, previous employment experience, previous business ownership and parental background - that have been identified in entrepreneurship research as having an impact on business performance. The analysis of the results shows that certain attributes, such as having previous business experience, having a tertiary education, being a risk-taker and being creative, can result in better business performance in an incubator. However, gender and age did not affect incubator firm performance. Therefore, by gaining an understanding of entrepreneurs’ attributes, the incubator manager can better predict and manage the tools required for an entrepreneur to progress through the stages of growth in a business incubator.
The third component examines how services are delivered in a business incubator. Although this research found well-defined stages of business development, there is no distinct pattern for services needed for the corresponding stage of development. However, there is a distinction in the way services are delivered in the four types of incubators. The inputs from respondents through interviews and survey results found that the ad-hoc advice provided by incubator managers with an opendoor policy – that is, allowing tenants to “come in” anytime to discuss issues as well as internal programs run by the business incubator - are extremely valuable for firm growth.
Finally, based on the premises of institutional theory, the institutional pressures of adopting reporting practices are examined at the incubator and tenant levels. The survey results did not indicate any relationship between the type of incubator and the reporting practices of individual incubatees. This research found that technology incubators had tighter performance controls than other types of incubators. They had frequent board meetings, and fostered a close relationship among all three parties: the incubator managers, their individual sponsors and their tenants. Incubator managers at technology incubators met their tenants more frequently than those in any other incubator type. Managers met regularly with sponsors and tenants regularly met with their sponsors and discussed performance. This close-knit relationship resulted in better reporting and exchange of ideas.