An exploration of the influence of business incubators on the post-incubation success of small businesses

Abstract

The study explored influences that business incubators have or might have on the success of small businesses after being “incubated”. The study sought to discover whether and to what degree participants, having gone through business incubation, found factors present in the incubation important for any subsequent success. And if there were influential factors, how did they pre-dispose the participant entrepreneurs to success? The study focused on business incubators in South Africa, specifically in Johannesburg. An exploratory, qualitative method was used in the study. Data was collected from business owners who had been through incubation programmes; entrepreneurs who had themselves been through multiple incubation programs but who had also been employed by incubators to facilitate and train small businesses owners; and, lastly, an entrepreneur who is a start-up specialist and who had managed and run a business incubator. The findings of the research revealed that relationships and the effective management of stakeholders are a central factor in the success of business incubators. This is so because the factor is intrinsic to the incubators attended by successful business owners; and secondly those same owners credit much of their success to the presence of those factors in their own incubation. Being made aware of or even inducted into strong business networks by or at incubator programmes is of lasting value. Other factors included a specific criterion for the selection to an incubator programme; access to funding (through introductions at incubators); having facilitators on the programme who are themselves entrepreneurs; and the quality of the incubator programme management. These emerged as key factors leading to the success of small business start-ups and hence the success of the business incubators. While current literature on business incubators is limited, the study reviewed available literature on business incubators in South Africa. According to the literature, the function of business incubators is to stimulate entrepreneurial activity in order to promote the long-term survival of SMMEs. This, in turn, has been shown to stimulate economic activity, making business incubators strategically important in a developing economy such as ours in South Africa. Given the low economic growth rate and high unemployment numbers in South Africa, increased support of business incubators should be a focus of both government and corporate South Africa