Some Entrepreneurial Aspects of Technology Business Incubators in Indian Context

Doctoral Thesis / Dissertation, 2010

165 Pages




Candidate’s Declaration




List of Figures

List of Tables


List of Publications


1.1 Pretext

1.2 Entrepreneurial Synergy of Small Scale Industries in India.

1.2.1 Performance and Importance

1.2.2 Challenges and Opportunities

1.3 Business Incubation: Concept and Evolution in India

1.4 Business Incubation: Quality and Performance issues

1.5 Motivation for the Present Work

1.6 Objectives and Research Plan for Present Work

1.7 Organization of Present Work


2.1 Introduction

2.2 Business Incubators: Definitions and Concept

2.2.1 Period: Before 1985

2.2.2 Period: 1986-1990

2.2.3 Period: 1991-1995

2.2.4 Period: 1996-2000

2.2.5 Period: 2001 Onwards

2.3 Business Incubation Models

2.3.1 Independent Commercial Incubators

2.3.2 Regional Business Incubators

2.3.3 University Incubators

2.3.4 Company-Internal Incubators

2.3.5 Virtual Incubators

2.4 Business Incubators: Role and Functions

2.5 Business Incubators: Competitive Scope

2.6 Business Incubators: Challenges

2.7 Business Incubators: Performance and Quality Issues

2.8 Business Incubators: Status in India

2.9 Business Incubators: Status in Other Countries

2.10 Conclusions


3.1 Introduction

3.2 Enablers for Entrepreneurship Development in India

3.3 Technology Business Incubators in India: A Preview

3.3.1 Initiatives on Business Incubation

3.3.2 Working Mechanism

3.3.3 Models and Characteristics

3.3.4 Major Performance Determiners

3.4 Conclusions



4.2Research Design and Methodology

4.3 Research Span

4.4 Profiling

4.4.1 Need for Profiling

4.4.2 Survey Design

4.4.3 Survey Findings

4.4.4 Result Appraisal

4.5 TBIs: Relevance in India

4.5.1 Relevance: Concept

4.5.2 Survey Design

4.5.3 Survey Methodology

4.5.4 Survey Findings

4.5.5 Result Appraisal

4.6 TBIs in India: Role Analysis (Effectiveness)

4.6.1 Effectiveness: Concept

4.6.2 Survey Design

4.6.3 Survey Methodology

4.6.4 Survey Findings

4.6.5 Result Appraisal

4.7 Sustainability Issues for TBIs in India

4.7.1 Sustainability: Concept

4.7.2 Sustainability Parameters

4.7.3 Sustainability Model

4.7.4 Survey Findings

4.7.5 Result Appraisal

4.8 Conclusions


5.1 Conclusions

5.2 Scope for Future Work



List of TBIs in India


TBIs in India (Geographical Location)


Forwarding Letter and Questionnaire


Group Score for ‘Relevance Index’ (RI)


Descriptive Calculations and t-Test Calculations


Forwarding Letter and Questionnaire


Group Score for Effectiveness


Figure 1.1 Entrepreneurship; Why

Figure 1.2 Year Wise Growth of SSI Units in India

Figure 1.3 Growth Rate of SSI and LSI Sector in India

Figure 1.4 Incubated Entrepreneurship: Why?

Figure 1.5 Incubated Entrepreneurship; How?

Figure 1.6 Incubated Entrepreneurship; Impact

Figure 1.7 Evolution of TBIs

Figure 1.8 Rural Business Hub Model

Figure 1.9 Research Plan

Figure 2.1 Business Incubator Framework.

Figure 2.2 Smilor Business Incubator Framework

Figure 2.3 Growth of Incubators over the World

Figure 2.4 Growth of Incubators over the Developed and Developing Nations

Figure 3.1 Growth Rate of Incubators Over Different Countries

Figure 3.2 Working Mechanism of a TBI in India

Figure 3.3 A Typical Networked TBI

Figure 4.1 Working Models

Figure 4.2 Thrust Areas

Figure 4.3 Regional Location

Figure 4.4 Age of Incubators

Figure 4.5 Occupancy Rate

Figure 4.6 Business Objectives

Figure 4.7 The Interactive Mechanism for Business Development Supports

Figure 4.8 ‘Relevance Index’ for TBIs in Different Thrust Areas

Figure 4.9 Alternate Mechanisms for TBIs

Figure 4.10 Growth Stages of an Enterprise

Figure 4.11 BDS Groups for Growth of Enterprises

Figure 4.12 Networking among Partners

Figure 4.13 Sustainability Issues of TBIs

Figure 4.14 Sustainability Model (by Age and Performance)

Figure 4.15 Performance Levels of Indian TBIs (Macro Level)

Figure 5.1 Macro Level Performance of TBIs on Sustainability


Table 1.1 Contribution of SME’s Worldwide

Table 1.2 Year-Wise Growth of SSI Units in India

Table 1.3 Growth Rate of SSI and LSI Sector in India

Table 1.4 Sickness in SSI Sector in India

Table 2.1 Incubation Services

Table 2.2 Taxonomies of Incubators

Table 2.3 Key Dimensions of the Research and Technology Institutes

Table 2.4 Differences between Types of Technological Infrastructure (TI)

Table 3.1 Enabling Factors for Incubation Mechanism

Table 3.2 Economic Indicators in India

Table 3.3 Characteristics of Incubators

Table 4.1 Survey Analogy for Profiling

Table 4.2 Working Model and Characteristics

Table 4.3 Thrust Areas and Characteristics

Table 4.4 Regional Location and Characteristics

Table 4.5 Age of Incubators and Characteristics

Table 4.6 Occupancy Rate

Table 4.7 Value Addition Services by TBIs

Table 4.8 Survey Analogy for ‘Relevance’ of TBIs

Table 4.9 Tabulated t-Values

Table 4.10 ‘Relevance Index’ for TBIs in Different Thrust Areas

Table 4.11 Acceptability of Hypothesis H1at Various Levels

Table 4.12 Determiners and Their Impact on TBIs’ Relevance

Table 4.13 TBIs Surveyed and Their Thrust Areas

Table 4.14 Category Wise Business Development Supports

Table 4.15 Tabulated t-Values

Table 4.16 Descriptive Calculations for Group-I (Physical Facilities)

Table 4.17 t-Test Calculations for Group-I (Physical Facilities)

Table 4.18 Descriptive Calculations for Group-II (Technical Advisory Support)

Table 4.19 t-Test Calculations for Group-II (Technical Advisory Support)

Table 4.20 Descriptive Calculations for Group-III (Business Management Support)

Table 4.21 t-Test Calculations for Group-III (Business Management Support)

Table 4.22 Expansion of Venture Capital Funding in India

Table 4.23 Descriptive Calculations for Group-IV (Financial Services)

Table 4.24 t-Test Calculations for Group-IV (Financial Services)

Table 4.25 Descriptive Calculations for Group-V (Networking Support)

Table 4.26 t-Test Calculations for Group-V (Networking Support)

Table 4.27 Acceptability of Hypothesis H2at Various Levels

Table 4.28 Important Criteria Used for Selecting Tenants

Table 4.29 TBIs Analyzed for Sustainability

Table 4.30 Sustainability Score for Bio-tech Based TBIs

Table 4.31 Sustainability Score for Agro Based TBIs

Table 4.32 Sustainability Score for ICT Based TBIs

Table 4.33 Sustainability Score for Services Based TBIs

Table 4.34 Sustainability Score for Advanced Technologies Based TBIs


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International Journals

1) Khanduja D, Singh S S and Wani V P, Incubation Potential of Engineering Education for Entrepreneurship in India, International Journal of Applied Engineering Research , Vol. 3 (5), 2008, pp. 635-64
2) Singla N, Khanduja D and Singh S S , Enigma and Growth of Business Incubators in India, International Journal of Applied Engineering Research, Vol. 3 (10), 2008, pp. 1415-1423 .
3) Khanduja D, Wani V P and Singh S S, A Systems Model for Performance Appraisal in Small Manufacturing Industries, International Journal of Globalization and Small Business, Vol. 3 (1), 2009, pp. 41-5
4) Singh S S and Khanduja D, Efficacy of Business Incubators for Triggering Entrepreneurship in India, International Journal of Entrepreneurship Practice Review, (paper accepted), 200

National Journals

1) Khanduja D, Singh S S and Wani V P, Technical Education as an Incubator for Tailor-Made-Entrepreneurs, The RIMT Journal of Strategic Management & Information Technology, (paper accepted), 2009.

International Conferences

1) Entrepreneurial Opportunities to Engineering Students with Technology Business Incubators in Indian Context, paper presented at International Conference on “Mechanical Engineering in Knowledge Age” at Delhi College of Engineering, Delhi (12-14 December, 2005
2) Business Incubation: A Strategic Choice for Rural Development in India, paper presented at International Conference on “Bridging the Gap: Entrepreneurship in Theory and Practice” (EDGE Conference) at Singapore Management University, Singapore (3-5 July, 2006
3) Entrepreneurial Ambience of Indo-British Technology Partnership: A Case Study of Rural Business Hubs in India, paper presented at Second European Conference on “Management of Technology” (IAMOT) at Aston Business School, Birmingham, United Kingdom (10-12 September, 2006
4) Unfolding Entrepreneurial Attributes of Engineering Graduates in India: A Case Study, paper presented at “USF International Conference on Entrepreneurship” at University of San Francisco, USA (27-30 March, 2007
5) The Ambience of Incubated Entrepreneurship in Indian Economy, paper presented at “The International Conference on Small Enterprises in Digital Age” at Charles Sturt University, Sydney, Australia (15-17 September, 2008).

National Conferences

1) Business Incubation: A Paradigm Shift in Industry–Institution–Interaction, paper presented at National Seminar on “Emerging Trends in Mechanical Engineering” at National Institute of Technology, Kurukshetra. (March 29-30, 200
2) Future of Incubated Entrepreneurship for Sustainable Development in India, paper presented at 15th EDIC National Conference on “Advances on Frontiers of Entrepreneurship” at NITTTR, Chandigarh, (November 17-19, 2008)



1.1 Pretext

The profound political and economic changes that have taken place over the last decade pose serious challenges for governments, private business and the international development community. The conversion of command systems to more open markets and the restructuring of enterprises, with the consequent need to find employment outside big government and large corporations, have given rise to a tide of entrepreneurism. Concurrently, the new computing and communicating techniques are changing our concepts of time and space, altering traditional patterns of work and spurring the growth of small entrepreneurial companies. But in both the developed and developing countries, many new ventures fail and for the few that survive and grow, there are numerous problems. A challenge, then, is to transform the traditional ways of supporting small enterprises and the related programs of international assistance - in order to make them more cost effective for today’s competitive environment. ‘Business Incubation’ is emerging as one of the most innovative instruments to support small enterprise creation and development. Business incubation is a relatively recent and innovative system, derived from the earlier SME support programs but with its own distinctive characteristics. The concept of nurturing start-up and early-stage groups at managed workspaces appears straightforward but is complex in structure and execution. Incubators provide on the spot diagnosis and treatment of business problems, dramatically lowering the early stage failure rate. Essentially these are programs designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts. Incubators vary in the way they deliver their services, in their organizational structure and in the types of clients they serve. Successful completion of a business incubation program increases the likelihood that a start-up company will stay in business for a long term. Incubators differ from research and technology parks in their dedication to start-up and early-stage companies. Research and technology parks, on the other hand, tend to be large-scale projects that house everything from corporate, government or university labs to very small companies. Most research and technology parks do not offer business assistance services, which are the hallmark of a business incubation program. However, many research and technology parks house incubation programs.

Incubators also differ from the ‘Small Business Centers’ (and similar business support programs) in that they serve only selected clients. These centers are required by law to offer general business assistance to any company that contacts them for help. In addition, they do not target start-up and early-stage companies; instead they work with any small business at any stage of development. Many business incubation programs partner with their local business centers to create a "one-stop shop" for entrepreneurial support.

In this direction in India, following on the world pattern, a scheme on establishment of ‘Technology Business Incubators’ (TBIs) in and around academic/R&D institutions was initiated by NSTEDB (National Science and Technology Entrepreneurship Development Board) during 2000-2001. These TBIs are being promoted to achieve objectives like:

- Creation of technology based new enterprise
- Creating value added jobs & service
- Facilitating transfer of technolog
- Fostering the entrepreneurial spiri
- Speedy commercialization of R&D outpu
- Specialized services to existing SMEs.

In Europe, US and many countries like China, Singapore and Thailand the concept of incubation has developed significantly. The exceptional fast growth of business incubators all over the world has baffled even the researchers. In 2005 alone, North American incubation programs have assisted more than 27,000 companies that provided employment for more than 100,000 workers and generated annual revenues of $17 billion. Business incubation theories, systems, strategies and techniques are getting transformed every day. But in India this concept still has not received wide public popularity. Perhaps an analysis of quality issues to improve the performance of these TBIs is needed in Indian context to improve this public acceptability. ‘Best will survive’ is the success slogan of all service organizations and in pursuit of excellence these incubators also must set benchmark for themselves to strive, achieve and be internationally competitive. Indian incubators are also participating in the quality race although slowly. They are facing multiple challenges and constraints in this volatile age of liberalization, privatization and globalization. In this context, the TBIs in India are in dire need of new ideas, approaches and techniques for attaining a competitive edge. As continuous improvement is the key for excellence, so these incubators require regular development of their systems, structures, strategies and people. Of late, host institutions for TBIs are realizing that the desired improvement in quality on some entrepreneurial aspects can be achieved if they understand not only what the various quality options are but also the time when a particular approach should be applied. The present quality movement needs a learning organization which understands the key concepts and knows the method for their implementation. The concept of TBIs in India is nascent in origin and so primary research evidences are minimal in this regard. However, keeping in mind the importance of this concept, the present work attempts to explore certain entrepreneurial aspects of TBIs so that some useful directions could be set to make these TBIs as paradigm forums for triggering the entrepreneurial culture among small industries. The present research work dwells on four important entrepreneurial aspects related to TBIs, namely relevance, profiling, effectiveness and sustainability. Findings from these studies can help to design strategic plans and set new directions for sustainable future for the incubators in India.

1.2 Entrepreneurial Synergy of Small Scale Industries in India

The challenges and opportunities of economic liberalization and global market have shaken the economies of developing countries like India where industrial growth often gets retarded because of higher population growth, declining GDP, growing inflation, illiteracy and unemployment. It today’s dynamically changing society there is an urgent need to create an environment of entrepreneurship to effectively counter these socio-economic ills (Sanghvi, 1996) (refer figure 1.1). Entrepreneurship is a dynamic process of vision, change and creation. Vision is to recognize the opportunity where others see chaos, contradiction and confusion (Kuratko and Hodgetts, 2004). Change and creation involve application of energy and passion towards creating and implementing new ideas and creating solutions (Kent, 1990). An extensive array of research in the past decade has shown that the entrepreneurial movement led by the small units has contributed significantly to the economic growth of any nation. These enterprises serve as the seedbed of entrepreneurship due to following features:

- They create more employment opportunities with comparatively low capital investmen
- SSI units are generally local resources / demand base
- They can be located anywhere more easily, resulting in horizontal growth and removal of regional imbalanc
- This sector gives quick returns and has a shorter gestation perio
- These units help to maintain / retain traditional skills and handicraft
- These units assist large and medium industries by acting as ancillarie

Figure 1.1: Entrepreneurship: Why?

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Table 1.1: Contribution of SSIs Worldwide

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There is also a growing worldwide appreciation of the fact that the small and medium enterprises play a catalytic role in development process of most of the economies. This position gets reflected in the form of increasing number, rising proportion in overall product manufacturing, exports and manpower employment by these units (refer table 1.1). This makes them the backbone of industrial economy in a developing nation like India.

1.2.1 Performance and Importance

As per Nimbalkar (2001) within the SME sector, the small-scale sector is a green field for nurturing of entrepreneurial talents and helping the units to grow in size. In developing countries like India, small-scale industry is the potent way by which maximum employment can be generated with comparatively low investment. It is also helpful in removal of regional imbalance in industrial development. The performance of SSI sector in terms of critical parameters such as number of units, production, employment generation and export is significant. This sector in India contributes about 40 percent of national industrial production, 35 percent of total national exports and provides employment to over 18.6 million people . The growth pattern of this sector is represented in table 1.2 and figure 1.2. Table 1.2 also represents the performance of small scale sector in terms of critical parameters such as number of units, production, employment generated and exports during the last decade.

Table 1.2: Year-Wise Growth of SSI Units in India

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The small scale industry sector in India, generally termed as small-scale units (including tiny sector), has emerged as the most dynamic and vibrant sector in recent years. This sector is defined by the criteria of scale of capital investment, unlike in many other countries where they go by different criteria for identifying small and medium scale units (Mukharjee, 2001). These criteria include number of workers employed; level of output/production, level of exports for export oriented units, space requirement and so on. Table 1.3 and figure 1.3 represent the comparative analysis of growth patterns of small sector and large sector in India. Though the small units form the most important part of manufacturing sector yet these units compliment the large units and so do large units to them. But still, small scale undertakings have their own specific dimensions and scale of operations, objectives to perform and problems to resolve.

Table1.3: Growth Rate of SSI and LSI Sector in India

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Figure 1.2: Year Wise Growth of SSI units in India

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Figure 1.3: Growth Rate of SSI and LSI Sector in India

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1.2.2 Challenges and Opportunities

Contemporary transformation of the business environment due to liberalization, privatization and globalization has increased competitive pressure on the small-scale enterprises in India. Small-scale enterprises are facing an entirely new paradigm of competitive threats like major shift in product and process technology; changes in preference from customer segment; increased customer awareness etc. Under the changed circumstances, ability to generate and utilize knowledge is the only way to sustain one self. As per Wani et al. (2002), technological innovation is a key to survival and growth for small enterprises in India and so technical entrepreneurship plays a pivotal role in the process of industrialization. The Government of India ever since independence has consistently encouraged this sector as is evident from the policies framed from time to time through the industrial policy of 1956 and 1977. The basic accent of India’s policy for small-scale sector had been defensive, aiming to protect this sector from the dynamics of the competitive growth. The changing economic and liberalized scenario has removed this protection. The new environment for small-scale industries consists of changes emerging from the ongoing process of economic reforms conforming to the WTO agreement and to the fast changing economic, technological and information environment. In this process as per Vasundhra (2000), the liberalized policy has posed certain challenges and provided opportunities to the small-scale sector. The challenges are in the form of increased competition; reduced protection due to lowering of tariffs and market determined rates of interest. On the other hand opportunities have come in the form of access to better technology, availability of raw materials and components; impetus to quality, efficiency and opportunity to restructure and diversify. Further the challenges to small-scale sector can also be expressed as:

a)Increased competition (both domestic and international) in most of the spheres of manufacturing activities including those in rural are
b) Increased penetration of branded consumer products from large-scale unit
c)Deep penetration of media increased awareness of consumers leading to:
- Quality consciousnes
- Preference for branded product
- Wider choice of brand/ products and services to satisfy similar need
d) Limited scope for quality price trade of
e)Increased purchasing power among the rural populace/masses.

These challenges are resulting in widespread sickness in this sector. Sickness in industrial sector results in locking up of resources, wastage of capital assets, loss of production and increasing unemployment, besides affecting the circulation of bank credit. Table 1.4 reflects the magnitude and nature of sickness and its growth in the last ten years as per Reserve Bank of India.

Table 1.4: Sickness in SSI Sector in India

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1.3 Business Incubation: Concept and Evolution in India

Globalization has led to new business paradigms. New opportunities and different threats are unfolding every day. Open markets have led to intense competition where only the ‘best’ would survive and this ‘best’ shall be determined by the customer driven market only. So to accept challenges, to check the growth of sickness and sustain the growth of SSI sector, the entrepreneurs need to be creative, innovative, well acquainted with the latest technology, sophisticated machines and equipments so that ventures could compete in the market and have sustainable development (refer figure 1.4).

Figure 1.4: Incubated Entrepreneurship; Why?

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To survive in this intensely competitive market, strategies need to be reinvented by the entrepreneurs for venture management. Strategic partnerships and strategic alliances have become compelling for the entrepreneurs to achieve success in the existing business turbulence (refer figure 1.5). Hence “Incubated Entrepreneurship” is getting focused to meet sustainability challenges by attracting private sector support for generating an environment of capacity building, knowledge sharing and networking (refer figure 1.6).

Figure 1.5: Incubated Entrepreneurship; How?

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Figure 1.6: Incubated Entrepreneurship; Impact

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The ‘National Science and Technology Entrepreneurship Development Board’ (NSTEDB) was established in 1982 by the Government of India under the aegis of Department of Science & Technology as an institutional mechanism to help grow knowledge-driven and technology-intensive units. The Board, having representations from various ministries/departments, aims to convert "job-seekers" into "job-generators" through Science & Technology (S&T) interventions. Major objectives of NSTEDB are:

- To promote and develop entrepreneurship by using scientific methods and utilising science and technology infrastructur
- To provide various informational services relating to entrepreneurship promotio
- To create networking in academic institutions, supporting agencies, research and development organisation to foster entrepreneurship by special focusing on the development of backward area
- To act as a policy advisory body with regard to entrepreneurship.

These objectives of NSTEBD lead to some sort of protection or incubation for the entrepreneurship. Hence growth of modern incubators can be traced to various initiatives taken by NSTEBD (refer figure 1.7) and some major initiatives can be chronologically described as: STEPs in 1984, EDCs in 1986-87, TBIs in 2000-2001 and RBHs in 2005.

Figure 1.7: Evolution of TBIs

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STEP (Science and Technology Entrepreneurs Park) program was initiated by the NSTEDB in 1984 in collaboration with different Indian financial institutions like IDBI, IFCI, ICICI etc. STEP basically enables science and technology persons to cultivate entrepreneurship culture and foster close linkage between universities, academic and R&D institutions on one hand and industry on the other. The STEP program was initiated to provide a re-orientation in the approach to innovation and entrepreneurship involving education, training, research, finance, management and the government. A STEP creates the necessary climate for innovation, information exchange, sharing of experience and facilities and opening new avenues for students, teachers, researchers and industrial managers to grow in a trans-disciplinary culture; each understanding and depending on the other's inputs for starting a successful economic venture. STEPs are hardware intensive with emphasis on common facilities, services and relevant equipments. STEPs are functioning in around 20 locations primarily in the engineering colleges and the technical universities throughout the country. Under ‘Societies Registration Act’ these are autonomous bodies registered as societies under the Act. In order to achieve synergetic benefits and also to harness the knowledge and expertise available in academic and R&D institutions of excellence, every STEP was promoted around a host institution which could launch, sustain and help the STEP grow. By 2006, some salient achievements of STEPs included conversion of 750 S&T persons into job generators by way of starting industries, capital mobilization of Rs 500 million through promotion of new enterprises with estimated annual turnover of Rs 900 million. STEPs had also been instrumental in development of around 150 new improved products and commercialization of 80 products by 2006. In addition, nearly 5000 jobs were generated through the units set up and about 11,000 additional jobs were generated through imparting skill development training to the youth belonging to various sections of society. Objectives of these STEPs include:

a) To forge a close linkage between universities, academic and R&D institutions on one hand and industry on the othe
b) To promote entrepreneurship among Science and Technology persons, many of whom were otherwise seeking jobs soon after their graduatio
c) To provide R&D support to the small-scale industry mostly through interaction with research institution
d) To promote innovation based enterprises.

Facilities and services provided by STEPs include facilities like nursery sheds, testing and calibration facilities, precision tool room/central workshop, prototype development, business facilitation, computing, data bank, library and documentation, communication, seminar hall/conference room, common facilities such as phone, telex, fax, photocopying etc.


The scheme for establishment of ‘Entrepreneurship Development Cell’ (EDC) in academic institutions was next such initiative taken by NSTEDB in 1986-87. In December 2006, more than 60 EDCs were working in academic institutions. EDC scheme was initiated to develop institutional mechanism to create entrepreneurial culture in S&T academic institutions and to foster techno-entrepreneurship for generation of wealth and employment by S&T persons. The EDCs were established in academic institutions (science colleges, engineering colleges, universities, management institutes) havin requisite expertise and infrastructure. The mission of the EDC scheme was to develop institutional mechanism to create entrepreneurial culture in science & technology academic institutions to develop technocrat entrepreneurs for generation of wealth and employment. Presently, more than 100 EDCs are working in different academic/R&D institutions in India. Various objectives of EDCs are:

a) To act as an institutional mechanism for providing various services including information to budding S&T entrepreneur
b) To create entrepreneurial culture in the parent institution and other institutions in the region and to promote the objectives of NSTEDB, including programs related to women and weaker sections of the societ
c) To foster better linkages between the parent institution, industries and R&D institutions in the region and other related organizations engaged in promoting Small and Medium Enterprises (SMEs) including NGOs and other voluntary organization
d) To catalyse and promote development of S&T based enterprises and promote employment opportunitie
e) To respond effectively to the emerging challenges and opportunities both at national and international levels relating to SMEs and micro enterprises.

With these objectives, EDCs established in academic institutions, perform various functions like:

a) To organize Entrepreneurship Awareness Camps, Entrepreneurship Development Programs and Faculty Development Programs in the region for the benefit of S&T person
b) To develop and introduce curriculum on Entrepreneurship Development at various levels including degree/diploma courses of the parent institution and other institutes in the regio
c) To conduct research work and survey for identifying entrepreneurial opportunities (particularly in S&T areas and service sector
d) To guide and assist prospective entrepreneurs on various aspects such as preparing project reports, obtaining project approvals, loans and facilities from agencies of support system, information on technologies et
e) To organize guest lectures, TV and radio talks, seminars etc. for promotion and growth of S&T based entrepreneurshi
f) To arrange visits to industries for prospective entrepreneur
g) To extend necessary guidance and escort services to the trainees in obtaining approval and execution of their project
h) To act as a ‘Regional Information Centre’ on business opportunities, processes, technologies, market etc. by creating and maintaining relevant database
i) To provide testing, calibration, quality assurance, design, tool room, pilot plant and other facilities for entrepreneurs besides expertise in intellectual property rights, patent search et
j) To render advice to sick enterprises and assist the entrepreneurs in rehabilitating the
k) To conduct skill development training programs leading to self/wage employment.

The results from these EDCs have never been appreciable and encouraging for the planners and government alike. The institutions have mostly ignored the real objectives of EDCs and provided meager funding for the development of these cells. Managements of the institutes have mostly ignored the perceived benefits of these cells and so have not integrated these cells in student building resources.


After STEPs and EDCs, "Technology Business Incubators" (TBIs) are the recent initiative in the evolutionary line to create an environment for innovation and entrepreneurship; for active interaction between academics and industries and for sharing ideas and experience towards the development of new technologies and their rapid transfer to the end user. A scheme on establishment of TBIs in and around academic / R&D institutions was initiated by NSTEDB during 2000-2001. The need for instruments such as TBI has been recognized the world over for initiating technology led and knowledge driven enterprises. Studies also show that such mechanisms help not only in the growth of technology based new enterprises but also in improving their survival rate substantially (from 30 per cent to over 70 per cent). TBIs also facilitate speedy commercialization of research outputs. There is notable difference between a technology park and an incubator, as the incubator incorporates new feature “graduation”, which implies that a start up firm attains certain level of maturity after a specific period of probation. Other major distinction between the two is that the latter caters to wide range of tenants not necessarily technology intensive firms. Certain similar initiatives such as innovation centers, business parks, techno polis etc. are also being tried the world over. Under this scheme, grant-in-aid is provided by the department both on capital and recurring account for a stipulated period. Presently, TBIs are being established to provide following types of services:-

- Market survey/ marketing assistanc
- Business planning and trainin
- Organizing management/ technical assistanc
- Assistance in obtaining statutory approval
- Information dissemination on product ideas/technologie
- Syndicating finance
- Arranging legal and IPR service
- Using facilities of the Host Institute (HI) at nominal charge
- Work space for a limited perio
- Common facilities of TBI such as communication, conference, computer

Thus, the TBIs besides providing a host of services to new enterprises (and also to existing SMEs in the region) also facilitate an atmosphere congenial for their survival and growth. The essential feature of a TBI is that the tenant companies leave the incubator space within 2-3 years after getting assistance.

Presently, TBIs are successfully running at more than 40 academic institutes in India and some of these are:

- Composite Design Centre (CDC), RV-TIFAC, Bangalo
- International Advanced Research Centre for Powder Metallurgy and New Materials, Hyderab
- Amity Technology Incubator, Amity University, Noi
- Centre for Biotechnology, Anna University, Chenn
- Nirma Labs, Nirma University, Ahmedab
- MDI, Centre for Entrepreneurship, Gurgao
- J.S.S. Mahavidyapeetha, J.S.S. Academy of Technical Education, Noid
- International Crops Research Institute for the Semi-Arid Tropics, Patanche
- Maharashtra Industrial & Technical Consultancy Organisation (MITCON), Pu
- Kongu Engg.College (KEC), Perundurai, Ero
- Birla Institute of Technology and Science Pilani, Pila
- National Institute of Design (NID), Ahmedab
- University of Delhi, South Campus, Del
- TBI, KIET, Ghaziab
- Vellore Institute of Technology (VIT), Vello
- Indian Institute of Chemical Technology, Hyderab
- National Institute of Technology (NIT), Calic
- India Institute of Technology (IIT), Del
- Indian Institute of Management (IIM), Ahmedab
- Indian Institute of Technology (IIT), Mumb
- Indiaco, Pu

Unlike many business assistance programs, business incubators do not serve any and all companies. Entrepreneurs who wish to enter a business incubation program must apply for admission. Acceptance criteria varies from program to program, but in general only those with feasible business ideas and a workable business plan are admitted. It is this factor that makes it difficult to compare the success rates of incubated companies against general business survival statistics. Although most incubators offer their clients office space and shared administrative services, the heart of a true business incubation program is the services it provides to start-up companies.

Some incubation programs surveyed during present study also reported that they also served affiliate or virtual clients. These companies do not reside in the incubator facility. Affiliate clients may be home-based businesses or early-stage companies that have their own premises but can benefit from incubator services. Virtual clients may be too remote from an incubation facility to participate on site and so receive counseling and other assistance electronically.


‘Rural Business Hubs’ (RBHs) represent the first ever public/private/panchayat (village council) partnership (PPPP) to improve and refine locally available resources and produce goods to enable larger market access (refer figure 1.8). Sustainable solutions to rural problems can be formulated only when these adhere to prevailing rural economy, ecology and societal structure. Technological applications are essential features in the socio-economic development of any society. In the widespread spheres of production and utilization pertaining to the necessities of life and uplifting its quality in the present day world, technologies in their appropriateness play crucial role (Kaul, 2003).

Figure 1.8: Rural Business Hub Model

illustration not visible in this excerpt

Technological inputs for rural area will depend very much on local requirements & resources, level of available human skills, investments, employment potential etc. Thus, in any developing nation like India, downsizing technology should be recognized as a key parameter for rural development (Chidambaram, 2003) . If rural development is treated as a social movement, then the role of skilled persons must be glorified, as they have always been full of energy, innovation, aptitude and skills. They must take the lead and adopt those entrepreneurial ventures which are rural friendly i.e. use rural resources , employ rural work force, prefer rural sites and utilize rural expertise. This will ensure:

- Equitable development of the countr
- Optimal utilization of natural endowments and social awakening of rural masse
- Optimal utilization of academic talent and expertis
- Downsizing of technology to rural peopl
- Improvement in national industrial productivit

Rural hubs are groups of entrepreneurs, including farmers and artisans, working together under the aegis of a village/block panchayat to enhance the value of their products with private-sector participation for greater market access and prosperity. These are the centres to channel public and private investment by setting up industrial units at the block level based on local raw materials like crop waste, agricultural by products, bamboo, vegetables and fruits. These hubs are expected to create an additional income in the farm sector, besides jobs for unskilled and semi skilled rural youth, thus encouraging rural entrepreneurship in a big way. Various rural development schemes with an annual allocation of about 4000 million dollars need optimal synchronization with entrepreneurial spirit but driven by lack of opportunity, not enough youth are coming into agro-business. These hubs represent a holistic version of rural development and can set new paradigms for agro-entrepreneurship. In agriculture there is tremendous scope for taking advantage of the panchayats to assess and meet local needs for supplying inputs, for meeting storage and post-harvest needs, for engaging in contract farming and direct procurement, for marketing agri-produce and for agro-processing. Besides this, opportunities also exist in other sectors like energy, crafts, rural credits and finance. Future plans have to be strategically drawn up to set up new ventures in the rural sectors. Village people shall become entrepreneurs and equity partners, by offering land to private ventures.

Several financial instruments are available to agro-entrepreneurs as an additional incentive from the government. These include: (a) agro business consortium in the form of venture capital fund; (b) agricultural credit that has doubled in last three years; (c) increased availability of rural infrastructure financing; and (d) emergence of profitable rural banks. The government has identified 846 products for which the business community could have a partnership with panchayats for establishing rural business hubs based on Chinese model. So far 30 MoUs had been signed by 2005 for such hubs in around 10 states of the country and government expected to double the number of MoUs for such business hubs in the country by December 2006 and the target is to have as many as 30,000 such hubs by 2010. These hubs would result in a greater synergisation in schemes of various ministries than any other route.

1.4 Business Incubation: Quality and Performance Issues

Over the past few decades quality propositions developed by quality gurus such as Deming (1986), (Juran and Gryna, 1993), Crosby (1979) etc. have gained significant acceptance throughout the world. Their insights provide a good understanding of quality philosophy, principles and practices. Quality is still a subject of debate (Easton and Jarrell, 1998) and still a hazy and ambiguous concept (Dean and Bowen, 1994). So far, from literature review it appears that quality means different things to different people (Hackman and Wageman, 1995). ‘Best will survive’ is the success slogan of all organizations and in pursuit of excellence ‘Technology Business Incubators’ also must set benchmarks for them to strive to compete and fulfill aspirations of stakeholders like tenants, government, industry and the society. The meanings of quality include excellence, value, conformance to specifications, conformance to requirements, fitness for use, customer satisfaction, meeting and exceeding customers’ expectations and minimizing the loss imparted to society. High quality of goods and services gives an organization a competitive edge and according to Mohanty (1997), good quality generates satisfied customers, who reward the organization with continued patronage and favourable world-of-mouth advertising. So quality has become the focal point for the industry and organizations to survive and succeed. ISO 9000 defines quality as “totality of features and characteristics of a product, or service that bears on its ability to satisfy given needs of the customers” (Arora, 2002; Besterfield, 2001; Charantimath, 2003; Khanna and Vrat, 2002). Quality is determined by what a customer wants and individuals have different wants and needs and hence there are different quality standards. So the most applicable definitions are ‘fitness for use and conformance to specifications’ and both are necessary for customer satisfaction (Lakhe and Mohanty, 1994).

In addition to including safety, cost, productivity and delivery in the definition of quality, today ‘total quality’ is emerging as the new concept which includes management participation and corporate responsibility in the definition of quality. Successful companies over the years have not fundamentally redefined the word quality; they have expanded it to design and service quality. Incorporating the customer’s requirements into the product design and services requires companies to change the way they treat their customers. Companies now need to translate the words and ideas of customers into product and service specifications. This is called total quality and managers have to further understand what should be included in the definition of total quality (Ahire, 1996 and Silos, 1999).

Organizations have widely implemented quality strategies throughout the world and arrived at varying conclusions on their impact. Many organizations have arrived at the conclusion that effective quality implementation can improve their competitive abilities and provide strategic advantages in the marketplace (Anderson et al., 1994). Several studies have shown that the adoption of quality practices can allow service organizations to compete globally (Easton, 1993; Handfield, 1993; Hendricks and Singhal, 1996, Womack et al., 1990). Researchers are emphasizing quality of performance and TQM for the service organization like incubators. Some of them have reported that TQM implementation has led to improvements in quality, productivity and competitiveness in only 20-30% of the organizations that have implemented it (Benson, 1993; Schonberger, 1992). But a study conducted by Rategan (1992) has indicated a 90% improvement rate in employee relations, operating procedures, customer satisfaction and financial performance due to TQM implementation. However, Burrows (1992) has reported a 95% failure rate for initiated TQM implementation programs; Eskildson (1994) and Tornow and Wiley (1991) have reported that TQM implementation has uncertain or even negative effects on performance. Longenecker and Scazzero (1993) have indicated that achieving high service quality and pursuing successful TQM implementation are highly dependent on top management support. However, Motwani et al. (1994) have reported that there is no association between top management support for quality and the level of service quality achieved. Many Indian organizations have started realizing the importance of ‘Total Quality Management’ and new quality system improvement standards. Keeping in view the growing importance of performance quality standards, the present study has been undertaken so that incubators could get some directions for quality implementation on performance issues. Indian incubators are participating in the quality race although slowly. They are facing multiple challenges and constraints in this volatile age faced with economic turbulence. In this context, the TBIs in India are in dire need of new ideas, approaches and techniques for attaining a competitive edge. As continuous improvement is the key for excellence, so these incubators require regular development of their systems, structures, strategies and people. Of late, host institutions for TBIs are realizing that the desired improvement in quality of performance can be achieved if they understand not only what the various quality options are but also the time when a particular approach should be applied. The present quality movement needs a learning organization which understands the key concepts and knows the method for their implementation. The tenants in the incubators are the foremost and primary customers who expect such services from the incubators that help them to grow sustain and get true value for the price they pay to the incubators.

1.5 Motivation for the Present Work

The government of India has laid down an ambitious program for establishing a vast network of TBIs by 2012. For this concept, enormous financial support, favourable policies and official guidance are readily available to all those who are capable and feel interested to take initiatives in this regard. The concept of TBIs was introduced in 2000-2001 and during last 8 years, only around 70 incubators have been established in different parts of the country. General observations emerging on these forums are:

(a) Rate of growth of TBIs (in numbers) is very smal
(b) Adequate support from the customers (tenants) is seriously lacking on a broader leve
(c) Incubators are not emerging as self supportive dynamic business models as most of them are dependent on government aids even after 5-6 years of inceptio
(d) Capacity utilization in terms of infrastructure, expertise and loans/funds is low (30% to 40%) for most incubators.

A developing country like India cannot afford this enormous waste of funds, talent and infrastructure. There must be some faults and fallacies in designing the concept and some pertinent questions arise in this context. These are:

(a) Do incubators have relevance to the societal needs in India? Presence of need in a favourable environment leads to ‘role determination’ and based on significance of this role, an organization becomes acceptabl
(b) With what effectiveness, the TBIs are serving their stake holders? Incubator managements need to do introspection on this issue and some external bodies also should assess their performance as per some acceptable benchmark
(c) Will these TBIs survive and sustain in Indian environment? Some determiners must be identified to evaluate the sustainability issue and either the concept should be redesigned for better performance or concept could be shelved to avoid wastage of government funds.

All these questions and total absence of any literary evidence on performance of TBIs in India were the main motivational factors to do this research on entrepreneurial aspects of these TBIs.

1.6 Objectives and Research Plan for Present Work

The present work has been carried out with some objectives and these are:

- To initiate a discussion on role and performance of ‘Technology Business Incubators’ in Indian econom
- To explore the relevance (need) for their TBIs in thrust areas (Identified by GOI) vis-a-vis available support for entrepreneurship development outside the incubator
- To initiate systematic studies on TBIs in India by drawing a profile of existing TBIs on various aspect
- To explore ‘Effectiveness’ (role analysis) of these TBIs on two aspects: (a) usefulness (b) impac
- To explore sustainability issues for there TBIs and compare with role models in the other countrie
- To suggest some directions for these TBIs for improving performance to have better sustainability.

The whole research work had been planned over a period of almost 4 years (2005-2009) and various steps of research plan carried out to achieve the objectives are schematically presented in figure 1.9.

Figure 1.9: Research Plan

illustration not visible in this excerpt

1.7 Organization of Present Work

Present work “Some Entrepreneurial Aspects of Technology Business Incubators in Indian Context” has been divided into five chapters. Chapter–1 describes the pretext, entrepreneurial synergy of SSIs in India, concept and evolution of business incubation in India, motivation, objectives and the research plan. Chapter–2 presents literature review on major aspects of incubators like growth of incubation concept;, business incubation models; competitive scope; performance and quality issues; status in India and other countries etc. Chapter–3 explores business incubation initiatives in India and describes the working, models and operational determiners for TBIs in India. Chapter–4 presents the findings of the present work. It also describes the research design, research span and the methodology adopted. Besides findings on profiling and characteristics, the chapter includes survey findings and result appraisal on major issues like relevance of TBIs in India, effectiveness of TBIs in providing business development supports and sustainability of TBIs as a business entity in themselves. Chapter–5 discusses conclusions, limitations and scope for future work.



2.1 Introduction

Incubator-incubation research began in earnest in 1984 with the promulgation of the results of ‘Business Incubator Profiles: A National Survey’ Temali and Campbell, (1984). According to Sean et al (2004), just after three years two more literature reviews were generated by Campbell and Allen (1987) and Kuratko and LaFollette (1987). However, since these early efforts to synthesize and analyze the state of incubator-incubation science and despite the fact that the body of research has grown considerably in the intervening years, a systematic review of the literature remains conspicuously absent. As per Sean, when examining the literature chronologically, five primary research orientations are evident: incubator development studies, incubator configuration studies, incubatee development studies, incubator-incubation impact studies and studies that theorize about incubators-incubation. During an extensive review of various journals (like Journal of Small Business, Economic Development Review, Entrepreneurship Theory and Practice, Harvard Business Review, IEEE Transactions on Engineering Management, Journal of Business Research, Journal of Business Venturing, Journal of Developmental Entrepreneurship, Journal of Product Innovation Management, Journal of Property Management, Journal of Small Business Management, Policy Studies Journal etc.), it is amply clear that researchers have carried out a detailed synthesis and analysis of concepts, empirical findings and problems related to extant incubator-incubation research as well as an identification of potential areas for future research.

There is literature available on various aspects of incubators all over the world in the form of diagnostic, descriptive, formative as well as empirical studies on services provided by the incubators. Researchers also have carried out case studies in different countries to find out the quality requirements, growth patterns, strategic trends, management models and working characteristics for incubators all over the world. In this chapter the literature reviewed relating to incubators and quality issues for incubation has been categorized and analyzed in different sections. The objectives of literature review are to identify the research gaps in the area of entrepreneurial ambience of ‘Technology Business Incubators’ in India.

2.2 Business Incubators: Definitions and Concept

The modern concept has evolved after facing unprecedented turbulence in economic, social and political fields all over the world. Chronologically observing the definitions of business incubators by various researchers, it is observed that there is a gradual shift in the priorities and nature of functions which have led to the development of the concept of ‘Technology Business Incubators’. From merely being a facility in early eighties, these incubators are being described as a system now. All these definitions can be described and analyzed periodically to assess the gradual shift in perspectives and prospects of business incubators all over the world. These definitions and concept development over recent years can be analyzed as follows:

2.2.1 Period: Before 1985

Researchers have observed that the phenomenon of incubation has been prevalent since 1960s, though in a vague form. It is generally accepted that the first incubator was established as the Batavia Industrial Centre in 1959 at Batavia, New York (Lewis, 2002). As per Adkins (2001), a local real estate developer acquired an 850,000 square feet building left vacant after a large corporation exited the area and unable to find a tenant capable of leasing the entire facility, the developer opted to sublet subdivided partitions of the building to a variety of tenants, some of whom requested business advice and/or assistance with raising capital. In the 1960s and 1970s incubation programs diffused slowly and typically as government sponsored responses to the need for urban economic revitalization. Notably, in the 1960s interest in incubators-incubation was piqued by the development of University City Science Centre (UCSC), a collaborative effort at rationalizing the process of commercializing basic research outputs (Adkins, 2001). In the 1970s interest in the incubator-incubation concept was further catalyzed through the operation of the National Science Foundation’s Innovation Centres Program, an effort to stimulate and institutionalize best practices in the processes of evaluating and commercializing selected technological inventions (Bowman et al., 1989 and Scheirer, 1985). In the 1980s the rate of incubator diffusion increased significantly when:

- The passage of the Bayh-Dole Act in the U.S. Congress in 1980 decreased the uncertainty associated with commercializing the fruits of federally funded basic researc
- The U.S. legal system increasingly recognized the importance of innovation and Intellectual property rights protection a
- Profit opportunities derived from the commercialization of biomedical research expanded.

In this environment several incubator development guides as well as non-academic reports and articles with a geographic and normative focus on current or potential business incubation efforts were generated. This surge in report generating activity in the early 1980s and the formation of the NBIA in 1985 underscored the growth in popular interest in business incubation in the 1980s. Concurrent to these and other local efforts at studying and unleashing the potential of business incubation to foster economic development, academic incubation studies began in earnest. Much of this early research addresses the questions ‘‘what is an Incubator?’’ and ‘‘what do we need in order to develop an effective incubator?’’

2.2.2 Period: 1986-1990

Allen and Rahman (1985) defined a business incubator as ‘a facility that aids the early-stage growth of companies by providing rental space, share office services and business consulting assistance’ where as Plosila and Allen (1985) described them as ‘a facility which promotes the early stage development of a for-profit enterprise’. In 1986, researchers like Brooks (1986) viewed them as a multi-tenant facility which provided entrepreneurs with:

- Flexible leases on small amounts of inexpensive spac
- A pool of shared support services to reduce overhead cost
- Some form of professional and managerial assistance; a
- Access to or assistance in acquiring seed capital.

Campbell et al. (1988) developed a framework offering the first explicit linkage of the incubator-incubation concept to the business development process of incubatees. This framework, reproduced in figure 2.1, suggests four areas where incubators-incubation create value: the diagnosis of business needs, the selection and monitored application of business services, the provision of financing, and the provision of access to the incubator network. In figure 2.2 Smilor (1987) extends the Campbell et al. framework by elaborating various components (incubator affiliation, support systems, impact of tenant companies) of the incubator-incubation concept. Unlike Campbell et al., however, the Smilor framework takes an external perspective and fails to account for the incubation processes occurring internally.

Figure 2.1 Business Incubator Frame-work

illustration not visible in this excerpt

(Source: Campbell et al, 1985).

Figure 2.2 Smilor Business Incubator Framework

illustration not visible in this excerpt

(Source: Smilor, 1987).

Utilizing data gathered from a national survey as well as from interviews, analysis of case studies and observation, Smilor casts the incubator as a mechanism for reshaping the way that industry, government and academia interrelate (Smilor and Gill, 1986). He categorizes the benefits that incubators extend to their incubatees along four dimensions: (1) development of credibility, (2) shortening of the learning curve, (3) quicker solution of problems, and (4) access to an entrepreneurial network (Smilor, 1987). Smilor also conceptualizes the incubator as a system that confers ‘‘structure and credibility’’ on incubatees while controlling a set of assistive resources: ‘‘secretarial support, administrative support, facilities support, and business assistance’’ (Smilor, 1987). Smilor’s effort is perhaps the most comprehensive effort at identifying and explaining the various components of the incubation system.

According to Smilor and Gill (1986), by controlling four types of resources like secretarial support, administrative assistance, facilities support and business expertise including management, marketing, accounting and finance; the business incubator seeks to effectively link talent, technology, capital and know-how in order to leverage entrepreneurial talent and to accelerate the development of new companies. As per Kuratko and LaFollette (1987), incubators aim at reducing the rate of failure in small business by assistance in the critical stage of business development in the early years. As per Smilor, a new business incubator is an innovative system designed to assist entrepreneurs, particularly technical entrepreneurs, in the development of new firms where as Campbell and Allen (1987) describe an incubator as a building, section of a building, or adjacent buildings that provide a nurturing environment to assist in the growth and development of new enterprises.

Fry (1987) describes business incubator as a new concept in entrepreneurship and economic development which utilizes large, often old, building to house new small businesses. According to him the unique aspect of incubators is that the businesses share administrative services in addition to renting space in the building. Typically, the incubator provides clerical and receptionist staff, computer and copying equipment, accounting/bookkeeping help and conference rooms. Management assistance is generally provided by either the incubator staff or outside consultants and financing is often available. But as per Merrifield (1987), business incubators provide secure, affordable, flexible, well equipped space in which the entrepreneurs can work (often day and night) and these provide professional business management and technical consulting, together with access to seed and working capital, state and federal grants, loan financing, venture capital and R&D. It was also felt that business incubators are ‘change agents’ in the transformation of our economy from one that is based on large manufacturers to one with many new, small ‘information age’ firms. (Campbell,1987).

Later on, a small shift was observed in the concept of business incubators as Lumpkin and Ireland (1988) saw ‘Business Incubation’ as an organized effort to bring together new and emerging businesses in a controlled environment. As per Hisrich (1988), by providing a variety of services and support to start-up and emerging companies, the incubator seeks to effectively link talent, technology, capital and know-how to leverage entrepreneurial talent, accelerate the development of new companies and thus speed up the commercialization of technology. Business incubation was being looked upon more as a program to accelerate the development of entrepreneurial companies.

2.2.3 Period: 1991-1995

Allen and McCluskey (1990) felt that new and distinct about incubators is that the features of entrepreneurship like multi-tenancy, shared office services, business counselling etc. occurs at one location. Researchers saw in them the buildings in which a number of new or growing businesses can locate and operate at much lower costs than in conventional space where market rates prevail. Udell (1990) felt that incubator facilities are characterized by access to shared, centralized facilities such as clerical and administrative help, receiving and shipping facilities, conference rooms, computers, and word processors and other business assistance.

The functions and services of incubators started getting centralized and specialized under one roof. Business incubator was now defined as a strategy whose focus is understood in relation to science parks and innovation centres and as a function of emphasis on business development and research development (Swierczek, 1992). According to Swierczek, a business incubator’s strategic focus is on business development with low involvement in research development where as a science park’s strategic focus is on research development with little concern for business development. An innovation centre’s strategic focus represents a happy medium of business and research development. Mian (1994) described them as mechanisms for communities to collaborate and to promote the development of technology-based firms. Markley and McNamara (2005) observed a business incubator as a locally based institution created to encourage and support new business development.

2.2.4 Period: 1996-2000

According to Jain (1994), the economic crisis of the 1970s brought technology to the forefront again and so Ravenscroft et al (1995) have added cooperative learning as the new dimension in incubation functions as far as a multidisciplinary industry project (MDIP) team, comprising of engineers, marketers, accountants, industrial designers and educational technologists (as envisaged by Monash University), is concerned. In 1996, Mian has described that the university technology business incubator (UTBI) is a modern enterprise development tool employed by some entrepreneurial universities to provide support for nurturing new technology-based firms (Mian, 1996). Greene and Butler (1996) felt that the purpose of a business incubator is to provide some combination of necessary resources in order to nurture a new and/or growing business to some level of maturity. Some researchers have pointed out that one popular vehicle to encourage new businesses in local economies is the business incubation program introduced to facilitate the creation and growth of small start-up businesses (Sherman, 1999; Sherman and Chappell, 1998).

Roper (1999) has pointed that business incubators provide one mechanism by which start-up businesses with high growth potential can be helped to succeed in an economically turbulent environment. As per Hansen et al. (2000), these incubators nurture and grow start-ups in the internet economy and they offer fledgling companies serviceable office space, funding and basic services such as recruiting, accounting and legal- usually in exchange for equity stakes. Lavrow and Sample (2000) have observed that the first recorded incubators originated in schools and universities in the 1940s to give students and professors the opportunity to commercialise their research ideas. Later, incubators were based on regional economic support and business facilitation programs. The primary objective of these public-mission driven incubators was to create local small and medium-sized enterprises, and hence a sound base for regional employment and wealth (Starzynski, 2000).

2.2.5 Period: 2001 Onwards

In recent years the subject of technological infrastructures has commanded increasing interest, from several socio-economic and political segments, including policy-makers, development agents, entrepreneurs, and the academic and research communities. The focus of industrial and innovation policies has been gradually shifting away from the exclusive or dominant use of direct instruments of support to other more indirect forms of assistance. In order to improve the competitive environment of firms, huge amounts of money have been pouring into buildings and reinforcing of technological infrastructures, namely the implementation and development of business incubators.

The UNIDO (2001) defines a business incubator as an undertaking set up to support entrepreneurs – mainly those involved with start ups and linked to SMEs, in all their business phases. This support may be translated as the provision of:

- Adequate physical workspac
- Supporting services, to be shared with other on-incubators enterprises, such as communication facilities, conference room, furniture et
- Counselling on the viability of the business through marketing and technology studies, legal and financial issues, standardisation, development of a business plan and training.

As per NBIA (National Business Incubation Association) (2002), table 2.1 summarises the set of activities/services in which incubators have been engaged. Moreover, two other relevant aspects may result from the location of a new SME in an incubator:

- Strengthening of the links between incubators and firms a
- The improvement of the firms’ internal dynamics as a result of work specialisation and sharing of the same physical space.

Table 2.1 Incubation Services

illustration not visible in this excerpt

Rice (2002) describes a business incubator in collaboration with the community in which it operates since it is a producer of business assistance programs. Another definition is provided by the UK Centre for Strategy & Evaluation Services which reads as: “A business incubator is an organization that accelerates and systematizes the process of creating successful enterprises by providing them with a comprehensive and integrated range of support, including: incubator space, business support services, and clustering and networking opportunities. By providing their clients with services on a ‘one-stop-shop’ basis and enabling overheads to be reduced by sharing costs, business incubators significantly improve the survival and growth prospects of new start-ups. A successful business incubator will generate a steady flow of new business with above average job and wealth creation potential. Differences in stakeholder objectives for incubators, admission and exit criteria, the knowledge intensity of projects and the precise configuration of facilities and services, will distinguish one type of business incubator from another (CSES, 2003). As per NBIA (2005), during a conference, representatives of 17 national incubation associations adopted an international definition of a business incubator program as: “A business incubator program is an economic and social development process designed to advise potential start-up companies and help them establish and accelerate their growth and success through a comprehensive business assistance program. The main goal is to produce successful businesses that will leave the program in a timely manner, financially viable and freestanding. These graduates create jobs, revitalize communities, commercialize new technologies and create wealth for local and national economies”. NBIA Website further cites that ‘A business incubator is an economic development tool designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services. A business incubator’s main goal is to produce successful firms that will leave the program financially viable and freestanding’. Another interpretation by Gibbsons (1994) states that a business incubator tries to effectively join talent, technology, capital and knowledge in order to stimulate the entrepreneurial talent, accelerate commercialisation of technology and encourage the development of new enterprises. According to Murphy (1996) the chain of concept to development of technologies and commercialisation of R&D necessarily crosses transnational boundaries today. The globalisation of R&D is closely linked to globalisation of business and consequently to global competition of skills. In the decade from 1985-1995, companies from United States of America doubled their research spending overseas, principally in Europe and Japan, from 5 percent to 10 percent of their overall budgets.


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