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University of WalesTrinity Saint David

Dissertation

MBA SBMA7049-L

“Evaluating Business Incubation Services : A Case Study of Business Incubation

Program (BIP) in Nepal”

UWL MBA Entrepreneurship

Submitted by

Uran Joshi

CTL ID: 096274-83

UWL ID: 29002099

26th October 2011

Submitted to

Dr. Stanley Lees


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Declaration

This dissertation is submitted in fulfillment of the MBA Entrepreneurship of

University of Wales Trinity Saint David at College of Technology London.

I hereby declare that this dissertation is result of my own research and inputs ,all

sources are duly acknowledged and no portion of the work referred to in this

dissertation has been submitted in support of any application for another degreeor qualification of this or any other university or institute of learning.

…………………………………………………

Uran Joshi

UWL MBA Entrepreneurship

UWL ID: 29002099

26th October 2010


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Acknowledgment

I would like to take this opportunity to express my appreciation to my Supervisor Dr. Stanley

lees for attention, guidance and insight.

My gratitude also goes to Ms. Rakshya Aryal, Mr. Rabindra Kumar Neupane, Er. pradeep

Jha for support and valuable suggestions during research. I would also like to express

special appreciation to Ms. Heema Rai, Mr. Harish Bhusal ,Mr. Shashi Bhattari and all

Participant Incubatees of BIP for their full support in this research.

I would also like to thank specially to Mrs. Simona and Mr. Adeel for full support in my

study.

Lastly, I sincerely would like to thank my Parents, my Family and Friends , Mr. Saurav Joshi,

Ms. Mamta Amatya, for motivation and support during my study period.

Uran Joshi

[email protected]

London,United Kingdom

26th October ,2011


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Abstract

Government from both developed and developing countries has recognized themechanism of business incubation as way to support the development of micro, small and

medium enterprises. A business incubation service is an appropriate tool for economic

development which helps in job creation on one hand and less business failures on the

other hand. Selection, Infrastructure, Business Support, Mediation ,Graduation are found to

be the main incubator model components of business incubation

This research aims to focus on evaluating the selection process , infrastructure services

provided, business support provided, mediation and networking provided and graduation

policy of “Business incubation Program(BIP)” operated by Government of Nepal. The

research also aims to examine and identify the problems of growth facing by new start up

firms in Nepal. The methodology consisted of data collection by questionnaire with selected

key-informant from incubator and participant incubatees.

Selection of clients was found to be based on strict criteria that are in alignment with the

available resources and reasonable cost for development. The users of physical

infrastructure provided by Business incubator was seen low. The major reason for not using

was being enterprises located in different places of country.

The business support was found to be reactive and episodic. The leadership training,

financial management ,marketing management Accounting and taxation, business

registration services were provided to all where as other business services were provided

according to individual need. The mediation service provided by incubator was found to be

rated highly by incubator (provider side) but was perceived less by incubatees side. All the

mediation service was provided according to individual need of incubatees. The graduation

policy was found to be flexible. After a certain period , with mutual agreement between

incubator and incubatee ,the firm was graduated.


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List of FiguresFigure 1- Stages of Business Growth ( Greiner 1972) .......................................................... 4

Figure 2 -Stages of Business Growth, (Churchill and Lewis, 2007) ........................................ 4Figure 3- Campbell,Kendrick,and Samuelson framework(Campbell et al.,1985) ................... 9

Figure 4 - Business Incubation Framework for Research (incorporating Churchil and Lewis

Growth Stage, 1983 .............................................................................................................. 13

Figure 5-Age of Incubatees ................................................................................................... 25

Figure 6-Gender ratio ............................................................................................................ 25

Figure 7-Educational background ......................................................................................... 26

Figure 8-Importance of Selection criteria as perceived by Incubator .................................... 26

Figure 9-Importance of Selection criteria as perceived by Incubator .................................... 27

Figure 10-Infrastructure users ............................................................................................... 28

Figure 11- Perceived Quality of Infrastructure service by Incubator ................................... 28Figure 12-Perceived Quality of Infrastructure service by Incubatees ................................. 28

Figure 13-Perceived Quality of business Support by Incubator .......................................... 29

Figure 14-Perceived Quality of Business Support by Incubatees ......................................... 29

Figure 15-Perceived Mediation by Incubator ........................................................................ 30

Figure 16- Perceived Mediation by Incubatees ..................................................................... 31

Figure 17-Incubatees Views on Mediation statements ......................................................... 32

Figure 18-Incubatees Views on Mediation Statements ......................................................... 32

Figure 19-Important criteria for Graduation as Perceived by Incubator ............................. 33

Figure 20-Important criteria for graduation as Perceived by Incubatees ............................ 33

Figure 21-Financial resource problem as perceived by Incubator ........................................ 34Figure 22-Financial resource problem as perceived by Incubatees ..................................... 34

Figure 23-Marketing resource problem perceived by Incubator ........................................... 35

Figure 24- Marketing resource problem perceived by Incubatees ........................................ 35

Figure 25-operational/production problems perceived by Incubator ..................................... 36

Figure 26-operational/production problem perceived by Incubatees .................................... 36

Figure 27-General management Problem perceived by Incubator ....................................... 37

Figure 28-General management Problem perceived by Incubatees .................................... 37

Figure 29 -Owner related problems perceived by Incubator ................................................. 38

Figure 30-Owner related problems perceived by Incubatees ............................................... 38

Figure 31-Perceived Effect of Business Incubation on Incubatees ....................................... 39

Figure 32-The success of business incubation perceived by Incubator ............................... 40

Figure 33- measure of success of incubatee as perceived by Incubatees ........................... 41


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List of TableTable 1- Business Incubation Program Board Members,source (BIP, 2007) ....................... 23

Abbreviations

I/NGO International/National Governmental Organization

ITPF Information Technology Professional Forum

DoCSI Department of Cottage and Small Industries

BIP Business Incubation Program

FNCCI Federation of Nepal Chamber of Commerce & Industry

KUSoM Kathmandu University, School of Management

NAST National Association of Science & Technology

ITPF Information Technology Professional Forum

MoEST Ministry of Environment, Science & Technology


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Table of Contents

Acknowledgment ................................................................................................................. iii

Abstract ................................................................................................................................ iv

List of Figures ....................................................................................................................... v

List of Table .......................................................................................................................... vi

Abbreviations ....................................................................................................................... vi

Chapter 1 . Introduction ...................................................................................................... 1

1.1 Background .............................................................................................................. 1

1.2 Research Strategy .................................................................................................... 1

Chapter 2. Literature Review ............................................................................................... 3

2.1 Business Growth .......................................................................................................... 3

2.1.1 Factors Related to Business Growth ..................................................................... 6

2.2 Business Incubation: Tool for Business Growth ............................................................ 7

2.3 Business Incubator ........................................................................................................ 8

2.4 Business Incubation ...................................................................................................... 9

2.4.1 Selection ................................................................................................................. 9

2.4.2 Infrastructure ......................................................................................................... 10

2.4.3 Business support .................................................................................................. 10

2.4.4 Mediation .............................................................................................................. 11

2.4.5 Graduation ............................................................................................................ 11

2.5 Measure of Incubator Success .................................................................................... 11

2.6 Measures of Incubatee success. ................................................................................. 12

2.7 Business Incubation Framework for Research ............................................................ 12

Chapter 3. Methodology ..................................................................................................... 14

3.1 Research Philosophy .................................................................................................. 14

3.1.1 Positivism .............................................................................................................. 153.1.2 Realism ................................................................................................................. 15

3.1.3 Phenomenology .................................................................................................... 16

3.2 Purpose of Research ................................................................................................... 16

3.2.1 Exploratory Studies ............................................................................................... 17

3.2.2 Descriptive Studies ............................................................................................... 17

3.2.3 Explanatory Studies .............................................................................................. 17

3.3 Research Strategy ....................................................................................................... 17

3.3.1 Experiment ............................................................................................................ 18


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3.3.2 Survey ................................................................................................................... 18

3.3.3 Case Study ........................................................................................................... 18

3.4 Research Conduct ....................................................................................................... 19

3.4.1 Primary Data Collection ........................................................................................ 19

3.4.2 Secondary Data Collection ................................................................................... 20

3.5 Methodology in practice .............................................................................................. 21

Chapter 4: Findings ............................................................................................................ 23

4.1 Business Incubation program (BIP) ............................................................................. 23

4.2 Summary of Data Collection Experience ..................................................................... 24

4.3 Findings ....................................................................................................................... 24

4.3.1 Incubatee Background Information ...................................................................... 25

4.3.2 Selection Policy .................................................................................................... 264.3.3 Infrastructure ......................................................................................................... 27

4.3.4 Business support .................................................................................................. 29

4.3.5 Mediation .............................................................................................................. 30

4.3.6 Graduation Criteria ............................................................................................... 33

4.3.7 Problems of Growth .............................................................................................. 34

4.3.8 Perceived Effect of Business Incubation on Incubatees ...................................... 39

4.3.9 Measure of Success of Business Incubation by Incubator. .................................. 40

4.3.10 Measure of Success of Incubatee firm as perceived by Incubatees ................. 41

Chapter 5: Discussion and limitations .............................................................................. 42

5.1 Discussion ................................................................................................................... 42

5.2 Limitations ................................................................................................................... 44

Chapter 6: Conclusion and Recommendation ................................................................. 46

6.1 Conclusion ................................................................................................................... 46

6.2 Reflections ................................................................................................................... 47

6.3 Recommendations ...................................................................................................... 48

6.4 Contribution ................................................................................................................. 49

Bibliography ........................................................................................................................ 50

APPENDIX A- Key-Informant (Incubator) Survey Questionnaire.................................... 53

APPENDIX B- Participant Incubatee Survey Questionnaire .......................................... 62

APPENDIX C- List of Key- Informant ................................................................................. 69

APPENDIX D - List of Participant Incubatee ..................................................................... 70

APPENDIX E -Records of Meeting ..................................................................................... 71

APPENDIX F-Introduction Letter ...................................................................................... 76


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Chapter 1 . Introduction

1.1 Background

There have been some isolated and uncoordinated activities for enterprises promotion

services in Nepal for past few decades. According to Nepal (2006), Notably ,the activitiestargeted for enterprise development are under government programs or through donorassisted projects. The programs ranges from technical and management training,counseling, information providing, credit facilities, infrastructure facilities through publicsector.

In year 2003, Information Technology Professional Forum (ITPF) initiated to assess theenterprise environment and design. The environment and need assessment studysuggested about possible Business incubation program.

In 2004-2005 ,with grant assistance by infoDev Incubator Initiative ,project of The WorldBank, ITPF conducted a study named as Business Incubation Initiative in Nepal Project .the objective was to study the feasibility of Business Incubation Center (BIC) concept andidentify possible stakeholders, and network for nurturing the economic growth of Nepal. Thestudy suggested some models for BIC development . one was suggested as Businessincubation center in Kathmandu under Department of Cottage and Small Industries,Government of Nepal. other one was suggested as Information Technology Park at Banepa, which would run under fund from Government.

According to Incubator Initiative Planning Grant (2006) the Business Incubation Center,Kathmandu was established in 2007 under the lead role of Department of Cottage andSmall Industry, Government of Nepal. It was administered by Government DevelopmentCommittee Act, 2013 with a governing board comprising representation from the

government, Academic Sector, Business Sector, Technical and Research Centers, I/NGOsand experts in the field of incubation. The initiation was taken by preparing a business planto operate “Business Incubation Program” (BIP) under the DoCSI. Since then, the one andonly Business Incubation Program in Nepal, is running in DoCSI premises located atKathmandu, Nepal.

The objectives of initiating the Business Incubation Program are to:

To graduate successful enterprises providing incubating facilities.

To improve and upgrade system and process in the areas of small and microindustries through innovation and new technology.

To create demand for further business incubation services in other parts of Nepal

through the demonstrative success of new enterprises. To create and enhance network of experts & mentor in management, marketing,

finance, Communication and other technical skills to be utilized by clients.

To create and enhance network of resource (laboratories, libraries, incubating space,finance, etc.) in the country for the possible use by clients.

1.2 Research Strategy

This study aims to evaluate Business incubation services and analyze the service provided

with focus on case study of Business Incubation Program running in Nepal .The objectives of

this study mainly are :


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-To critically review the literature on incubation and business growth

-To develop a instrument for evaluating the business incubation services in Nepal

-To explore the challenges and opportunities to incubator organization and tenant

companies

-To recommend conditions in which business incubation services can provide greater

benefit towards promoting successful enterprises in Nepal and other developing

countries.

The study first aims to review the literature with focusing on business growth and the factors

related to business growth of small business. The study will also study working framework

models and success measures of business incubation suggested by various authors .

The methodology incorporates interview administered questionnaire for Primary data

collection with selected key –informants from Incubator and Participant Incubatees of

Business Incubation Program.

Chapter 4 consists of findings from data collection which are interpreted and evaluated with

weighted factor analysis. Further analysis and discussions over the issues around the

literature review and in practice seen are discussed with limitations of study in chapter 5.

Lastly, chapter 6 summarizes the study with conclusion and some recommendations as

thought important.


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Chapter 2. Literature Review

2.1 Business Growth

Freel (1999) as cited by Beaver, 2002 states that the person or entrepreneur that enters

small business ownership can be classified as the one who go into self-employment to

pursue their own interest and the one who go into small business ownership with desire to

develop business, achieve growth ,increase employment and grow into a medium-sized or

large firm. The former are predominantly lifestyle businesses ( Burns and Dewhurst,1996).

They don’t display any aspiration to grow or develop beyond a certain size and complexion

and mainly concerned with survival and maintenance of lifestyle. The latter type will be

concerned with growth and expansion.

Those small firms who desire to achieve growth and enterprise development will be affectedby different factors related opportunity sets, managerial abilities and resources. Storey

(1994) as cited in Beaver (2002) mentions the background and access to resources, nature

of firm, and the strategic decisions taken by firm are three key influence on growth rate of

small independent firms.

Growth models are useful in benchmarking and draw lessons for survival and growth of firms

characterized with similar business features and operating in similar business climate

(Poutziouris, Binks and Bruce, 1999). Much of early theoretical work on business growth and

development of small firms are attempted in terms of stage , or life cycle ,models of firmgrowth. There are common problems which arise at similar stages of business development.

These common problems can be organized into a framework which helps to deeper

understanding of nature ,and problems of businesses.

Such an understanding of growth pattern of small firms and the factors that trigger growth

aspirations or conversely hamper growth can aid in assessing current challenges. It can help

in anticipating the key requirements at various points, during the start-up period and the

need for delegation and changes in their managerial roles (Churchil and Lewis, 2007).

The most commonly cited stage models of business growth are those developed by

Greiner(1972) and Churchill and Lewis(1983). Greiner (1972) offers a five-stage framework

for business development but considering the managerial changes faced by founder. The

phases are Growth through Creativity, Growth through Direction, Growth through Delegation,

Growth through Coordination, and Growth through Collaboration.


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Figure 1- Stages of Business Growth ( Greiner 1972)

Fig. 1 represents the stages of business growth of Greiner model. Each growth phase is

followed by crisis that shows need of changes in way of managing business if it has to

continue to grow. If crisis cannot be overcome then there is possibility of failure. The length

of time in each phase depends on nature of firm and industry.

Figure 2 -Stages of Business Growth, (Churchill and Lewis, 2007)


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Churchill and Lewis (1983) model Fig 2 link marketing, people and financial management

issues. The five stages are Existence, Survival, Success, Take-Off, and Maturity. The key

factor which affects the success or failure in different stages of its life is developed as

attributes of Owner-manager and Resources.

Stage I: Existence

In this stage the problem faced by business is obtaining customer and delivering of product.

The company’s first strategy is to remain alive. the owner is the one who performs the entire

important task and makes decision. If company is unable to get sufficient customer

acceptance or cannot deliver product ,owner closes the business as capital runs out . those

companies who can remain in business become stage II survival business.

Stage II: Survival

In this stage ,the business is now a workable business entity. The business provides and

satisfies the customers sufficiently with products or service. now the key problems have

shifted to relationship between revenue and expenses than mere existence.

In this stage, the company grows in size, the profitability also increases and moves to stage

III. Most of companies remain at survival stage, earns marginal returns on invested time and

capital , and eventually leave business after the owner retires or gives up.

Stage III: Success

There are alterative options for owner in this stage. The owner can either exploit the

company’s achievements and expand or keep the company stable and profitable.Thus, a

key issue is whether to use the company as a platform for growth—a sub stage III-G

company—or as a means of support for the owners as they completely or partially

disengage from the company—making it a sub stage III-D company.

In this stage, the company has very good economic condition. The size and product market

penetration is above average and earns profit. The company can stay in this stage for long

time unless the external business environment changes, and reduce its competitive abilities.

In success –growth sub stage the owner assesses the resources and decides for growth ofcompany. The owner arranges cash using borrowing power and risks for financial growth.

The owner is thus far more active in all phases of the company’s affairs than in the

disengagement aspect of this phase. If it is successful, the III-G company proceeds into

Stage IV. Indeed, III-G is often the first attempt at growing before commitment to a growth

strategy. If the III-G company is unsuccessful, the causes may be detected in time for the

company to shift to III-D. If not, retrenchment to the Survival Stage may be possible prior to

bankruptcy or a distress sale.


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Stage IV: Take-off

In this stage the key problems are how to grow rapidly and how to finance that growth. One

problem may be owner faces problem in delegating responsibility to others in a fast growing

and increasingly complex enterprise, controlling the performance and managerial

effectiveness. Other problem may be to satisfy the demand growth in cash and cash flow.There is needed to be competent to handle organization (divisionalized-usually in either

sales or production) in a growing and complex business environment.

In most cases, the business who are in success stage finds hard to achieve success in

stage IV .they find problems in cash management, or finds the growth rate was too fast.

They are unable to delegate effectively.

Stage V: Resource Maturity

The priority of the company in this stage is to get control over the financial success due to

rapid growth .it also gets advantage of small size with flexibility and entrepreneurial spirit.The need of professional services arises. The company can upgrade its motive by using

tools like budgets, strategic planning .all changes should not stifle its entrepreneurial

qualities. (Churchil and Lewis, 2007)

Notably, Storey (1994) and Burns and Harrison(1996) has acknowledged some criticisms.

Most small business experiences little or no growth and therefore never reaches stage 3,4,5

described in the models. Gray (1993) also states that these models do not provide an

explanation of why the firm was founded in the first place and what relation there is between

the founding motivations and objectives and subsequent development. The models do not

allow for a backward movement along the continuum or for the skipping of stages depending

on the operating context of firm. The models do not permit firms to exhibit characteristicsfrom one or more stage to become hybrids. The classifications of various stages do not

reflect the operational and strategic realities and capabilities of firms in relation its chosen

market and sector. Although highly critical, Gray (1993) acknowledges that if they are used

with some selectivity, they are capable of shedding some lights on aspects of the small

business growth.

2.1.1 Factors Related to Business Growth

Several factors are prominent in determining ultimate success or failure which changes in

importance as the business grows and develops. Churchil and Lewis, (2007) has identified

eight such factors, of which four relate to the enterprise and four to the owner.

The four that relate to the company are as follows:

Financial resources mainly cash and access to finance.

Personnel resources, mainly number of persons, capability of staffs

Systems resources, in terms of expertise in financial management, budget control,

technological sophistication etc.

Business resources, mainly Capacity of marketing activities, knowledge in

manufacturing and distribution process, customer relations supplier relations, etc


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The four factors that relate to the owner are as follows:

Owner’s goals and priorities for business

Owner’s abilities in management ,marketing skills, technical skills ,knowledge in

production and manufacturing skills .

Owner’s managerial ability and skills for delegation. Owner’s strategic abilities to think for future ,ability to assess business

environments.

Poutziouris, 1993 has pointed out as problems faced by small firms ( growth constraints) are

respectively ,General management, Operations/production, Finance and Marketing.

General managerial problems relate to factors which are poor time management, failure to

realize the benefits of specialization, resistance to modern management practices and poor

assembly and analysis of information.

Degree of disadvantage associated with the inability of small firm to capitalize on availablescale economies is key consideration in operational and production-related problems.

Financial problem ranges from narrow product orientation of small firms, absence of track

record, and lack of expertise in articulating financial need or financial forecasts in dealing

with potential financiers to non-existence of specialist financial managers.

Marketing constraints is due to neglect to longer-term strategic plan and focus in day-to-day

survival, limited penetration of market information systems and research, limited awareness

and capacity for marketing activities.

2.2 Business Incubation: Tool for Business Growth

Business incubation models assume the philosophy that when there is guidance and support

from fellow business experts and mentors, it creates positive environment for entrepreneurs

to thrive their business. Like a real Incubator for hatching chickens from eggs, the business

incubation houses can act as an incubator machine that provide essential environment to

knowledge and resource constraint entrepreneurs for growth.. (Nepal, 2006).

McAdam and Marlow, (2008) has emphasis that , durability and growth of new small firms

overcoming problems can be ensured via business incubators as they provide managed

business facilities , attract external investors and professional support advisors.

Most researcher like Kuratko and LaFollette (1987); Lumpkin and Ireland (1988); Markley

and McNamara (1995);Rice (1992); as cited in Hackett and Dilts, (2004b) assumes that

business incubation services can be appropriate tool for economic development which will

help in job creation on one hand and less business failures on the other hand.

Lalkaka (1997) explains the government from both developed and developing countries has

recognizing the mechanism of business incubation as way to support the development of

micro, small and medium enterprises.

(Monkman, 2009) has reported that there are various motivations for establishing business

incubation services around the world. It shows that the motivations have been:


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Creating local jobs

Fostering entrepreneurial climate

To Commercialize technology

To diversify local economies

To accelerate local industry growth

To retain firms in community to encourage minority or women entrepreneurship

To generate revenue

To identify potential spin-ins or spin-outs

To generate benefits for sponsors

Revitalize distressed neighborhood

To move people from welfare to work

2.3 Business Incubator

While defining Incubator ,a large number of detailed and in many ways similar definitions

have been put forward. Hackett and Dilts, 2004b states that:

“ A business incubator is a shared office space facility that seeks to provide its incubatees

(i.e. ‘‘portfolio-’’ or ‘‘client-’’ or ‘‘tenant-companies’’) with a strategic, value-adding intervention

system (i.e. business incubation) of monitoring and business assistance”.

Peters et al., 2004, p. 83 mentions generally an incubator can be viewed as “… a support

environment for start-up and fledgling companies”.

Zimmerer and Scarborough, 2005 defines business incubator as, “A business incubator is

an organization that combines low-cost, flexible rental space with a multitude of support

services for its small business residents.”

From various authors’ attention on business incubator, we can conclude that following

components are the particular key elements;

Shared office space which are for creating favorable condition to incubates

A shared business support services

Professional advice, mentoring and coaching

Networking with external and internal business environment

Moreover (UKBI, 2010) focuses incubator as not only a mission statement ,shared office

facility,infrastructure but is also a network of individuals and organization which includes

incubator manager ,staff ,incubator management board,incubatees,industrial contact and

service providers. It states that incubator can significantly reduce cost for start up to achieve

growth by reducing the time span that it often takes.

Norrman and Anna, 2008 has tries to identify the business incubator concept as different

from science parks ,technology parks . They are distinguishable. They are generally

designed for supporting mature firms . But business incubator are the ones who helps the

ventures on early stages ,immature potential ideas to develop into viable companies.


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2.4 Business Incubation

From the reviewed literature, Selection, Infrastructure, Business Support, Mediation

,Graduation seems to be the main incubator model components ( Hackett and Dilts, 2004b;

Peters et al., 2004).

2.4.1 SelectionSelection refers to decisions concerning which ventures to accept for entry and which to

reject. (Hackett and Dilts, 2004) describes it as challege to differentiate firms which are

promising and need business incubation.It requires good understanding of market and

process of new business creation.

(Holovnia et al., 2008) states that incubator should have clear vision for screeening of client

.There should be early evaluation of company for prospective succesful business. It is worth

while to carefully consider about selection criteria as it may have later on effect upon the

resources and reputation as well.

Campbell et al. (1985) as cited in Hackett and Dilts, 2004b emphasis the value of diagnosisof business needs and the selection and monitoring application of business service is

important for provision of financing and access to incubation network as well. The effect can

be seen ultimately in growth of business of tenant or incubatee as shown in figure 3

Figure 3- Campbell,Kendrick,and Samuelson framework(Campbell et al.,1985)

Norman and Anna (2008) have suggested appropriate selection criteria as two approaches:

Idea –focused approach and Entrepreneur-focus approach.

For an idea-focus approach, incubator managers should be able to evaluate the viability and

feasibility of idea. Relevant technological knowledge and knowledge regarding product

,market and profit potential is a must.

For entrepreneur-focus approach, it is required to evaluate the experiences, skills,

characteristics and driving forces of entrepreneurs. The ability to judge personality as well

as knowledge of more general business development is also sought.

As discussed by Clarisse et al. (2005) cited in Norrman and Anna, (2008) other two

approach: “picking-the-winners” approach and “survival-of-the-fittest” approach are otherselection criteria. In the “picking-the-winners” approach, incubator managers try to identify a


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few potentially successful ventures . In the “survival-of-the-fittest” approach, incubator

managers apply less rigid selection criteria, take on a larger number of firms and rely on

markets to provide the selection processes that over time will separate winners from losers.

Combination of these two types of approaches of the selection component gives four

“selection strategies”., which are likely to result in very different incubator “portfolios” ofincubatees.

Survival of the fittest & idea. This strategy will gather a large no of idea owners with

immature ideas which may be from wide range of fields.

Survival-of-the-fittest & entrepreneur . This strategy will collect diverse ventures

consisting of entrepreneurs/teams with strong driving forces.

Picking-the-winners & idea. This strategy will select highly screened ideas mostly

within a narrow technological area and are found commonly started from institutions.

Picking-the-winners & entrepreneur . This strategy will gather handpicked and well

evaluated entrepreneurs and generally the idea is linked with research.

2.4.2 Infrastructure

The infrastructure covers all the business premises, office facilities and administrative

services that an Incubator provides. Most incubators seems to supply or provide generally

same set of administrative services including office space, amenities, equipments as well as

office services like reception and clerical. (Rice, 2002); (Lalkaka, 1997)

2.4.3 Business support

Business support includes all coaching and training activities undertaken to provide to

incubatees. It has been seen that business support services generally provided are

business development advices and general business matters. It ranges from leadershiptraining, marketing and sales training, business planning, accounting, legal matters, financial

matters etc .It is viewed that the way these business supports are supplied are also crucial

factors to consider rather than concentrating only on business support.

Hackett and Dilts (2004a) observed that business assistance approaches widely depend

upon working hour devoted to developing incubatees ,the strategic and operational

approach taken by incubator and degree of quality of services that incubator aims to deliver.

Rice (2002) as cited in (Norrman and Anna, 2008), provides following approach for different

types of business counseling:

Reactive and episodic counseling,- Generally it is entrepreneur initiated . As the

entrepreneur feels the crisis or problem, they request help in dealing with specific

crisis or problem. The assistance is focused in solving the problem or crisis and is of

limited duration.

Proactive and episodic counseling-, It is initiated by incubator. The manager of

business incubation center generally engages directly with entrepreneurs in informal

or ad hoc counseling.

Continual and proactive counseling,-It is initiated by incubator. The selected

incubatee venture is under constant review and can be seen intense –aggressive

intervention by incubator managers.


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Incubator can define their role and boundary for interventions. The business services can be

provided as a manager led, as an external facilitator, or even with a complete management

team which can guide venture throughout the incubation process with help of staffs.

2.4.4 Mediation

One of major role of incubator is to act as intermediary or mediator between the incubatees

and the business environment (Peters et al., 2004). Thus the incubator acts like a bridge

between the incubatee and its environment.

Collinson and Gregson, 2003 as cited in (Norrman and Anna, 2008) states that the

information ,knoweldge and expertise gained through the mediation network are crucial for

the survival of new company and reduces the uncertainites that business faces in different

times. It is seen that Mediation has help in building networking of incubatees and external

factors like customers ,partners ,employees ,financiers ,researchers. ( Hackett and Dilts,

2004b).

( Collinson and Gregson, 2003) further states that through mediation ,incubator and

incubatees can understand ,interpret and even influence the institutional demands

introduced by regulations, law and rules. The incubatees can obtain legitimacy and social

acceptance ,and may also get credibility and understandability in eyes of external actors. .

2.4.5 Graduation

Graduation is related to exit policies, i.e. decisions concerning under what circumstances

incubatees should leave the incubator. Most incubators have formal exit rules requiringincubatees to leave the incubator after 3-5 years selection. Monkman (2009) mentions that

Graduation policies have become more sophisticated over the years. Graduation polices

have been based on business-related benchmarks rather than time limits. Clients achieving

milestones, outgrowing space, spending maximum time etc have been some of factors

guiding graduation policies.

2.5 Measure of Incubator Success

Framework developed by National Business Framework (NBIF) recognizes that there is no

single model or template for running and structuring of business incubation .The combinationof internal and external factors to each business incubation service are different so it is

problem to have common ‘one size fits all ’ Framework for benchmarking of business

incubation environments. (UKBI, 2010)

Previous research has been found to focus primarily on identifying suitable criteria and

indicators to measure outcomes. However , the fact is that “no two incubators are alike”

(Allen and McCluskey, 1990, p. 64).

Incubators articulate objectives differently depending upon their sponsor’s interests” (Mian,

1996b, p. 194) or at least make “different priorities” within the same basic goals, and that

“goals vary from one organization to another”. Incubator performance can be defined as the


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extent to which incubator outcomes correspond to incubator goals (Norrman and Anna,

2008).

According to (Hackett and Dilts, 2004b),Incubator goal may be set on following basis:

The incubator’s primary financial sponsorship – Public/non-profit/university/privately Whether incubatees are spin-offs or start-ups- spin-off/ start-up

The business focus of the incubatees - Product development/Manufacturing/Mixed-

use

The business focus of the incubator – Property Development/Business Assistant.

The Indicator of measure of success may be different for different goals .for example ,the no

of employees may be good indicator if the goal is to create jobs while growth in sales may

be indicator for measuring success of incubator whose goal is to commercialize new idea.

The fact is that the incubator most of time has multiple stake holders with different interests

and goal ,so incubator may have multiple goals according to stakeholders.(OECD, 1997).

Campbell and Allen (1987) has set ‘‘milestones’’ for measures of incubator success as

creation of a strong and responsive business consultation network, participation of financial

institutions in capitalization of incubatees, and trade relation development of incubatees.

2.6 Measures of Incubatee success.

One of simple measure of incubatee success is graduation from incubator with developed

sustainable business setup. The growth and development seen also can be applied as

measure of incubatee success. The growth measure may include increase no of jobs

,increase in sales over time,etc. one measure concern shown is while examining the

incubatee survival rate ,it may no t be meaning full to compare with non incubated ventures .

the use of selection criteria over incubatee result in selection bias.(Hackett and Dilts, 2004b)

2.7 Business Incubation Framework for Research

This literature review has identified selection, infrastructure, business support, mediation and

graduation (Hackett and Dilts, 2004b) as main incubator model components for business

incubation. . The incubators have objective and goals depending upon the sponsors and

stakeholder’s interest. The ultimate goal of business incubator is to help the start ups to

achieve its growth and result in more start-ups with fewer business failures. This support can

be very crucial for start up and growing a new business. The performance and success of

different incubators is related to their incubator models, i.e. How they organize and

manage the incubation process .however, the success of incubator tenants is not only

dependent on the nature of these services, but also on how they are supplied.

This research aims to focus on evaluating the selection process , infrastructure services

provided, business support provided, mediation and networking provided and

graduation policy of “Business incubation Program(BIP)” operated by Government of

Nepal. The research also aims to examine and identify the problems of growth facing by

new start up firms in Nepal. Business incubation Program (BIP) is the only non profit-mixed


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type Business incubator in Nepal which is nonprofits and run under lead role of Department

of cottage industries.

Figure 4 - Business Incubation Framework for Research (incorporating Churchil and Lewis Growth Stage,1983

Above literature review can be concluded in following notes and Business incubation

framework (Fig-4) will guide for methodology and finding for this research .

In different growth stages of a firm, there are several problems of growth which is developed

as attributes of owner-manager and resources. General management,

operations/production, finance and marketing are the known common growth constraints.

Various authors have endorsed emphasis that overcoming of these problems can be

ensured via business incubator as they provide managed business infrastructure, business

support, and mediation and networking. Incubator can be measured as successful according

to measured outcome .However the criteria and indicator may depend upon goal and

objectives, incubator models. The criteria may be creation of job, growth in sales ofincubatee ,creation of business network. Similarly ,the criteria like graduation from

incubation, development of sustainable business structure, increase in number of jobs or

sales over time, product innovation, and incubator manager-incubatee relationship are the

measure of incubatee’s success.


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Chapter 3. Methodology

3.1 Research Philosophy

With purpose of finding a solution or answer to a specific problem ,business research is

conducted. It is organized ,data-based ,critical and does a scientific inquiry or investigation

of problem. (Sekaran, 2003).

Even the purpose is answering a specific problem; it is a development of new knowledge so

research philosophy is associated with development of knowledge and nature of that

knowledge

There are some important assumptions about the way of viewing world which research

philosophy adopts. These assumptions govern the research strategies and methods. There

has to be some practical considerations of philosophy as well.

the major influencing factor is the relationship between knowledge and process of

development of knowledge (Saunders, Lewis and Thornhill, 2007) The major ways of

thinking about research philosophy are as follows:

Epistemology

Ontology

Axiology

Epistemology

i.Epistemology

Epistemology is related with what is considered acceptable knowledge in field of study. The

researcher who is more interested with finding facts is likely to have different approach and

view on the way a research is to be performed than with the researcher who is interested

with knowing feeling and attitudes. (Saunders, Lewis and Thornhill, 2007)

ii.Ontology

Ontology. Is more related with nature of reality. The questions of assumptions researches

make about the way world operates and the commitment held to specific opinion.

iii. Axiology

Axiology studies about the judgments about values. Heron(1996) (as cited in Saunders,

Lewis and Thornhill, 2007) states that researcher can show axiological skill by being

compentent to demonstrate their values as foundation of making judgemnt aobut what

research is being conductio and how they are doing it.

There are mainly three branches of research philosophies in practice;

Positivism

Realism

Phenomenology


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3.1.1 Positivism

This approach is based on philosophy of science and the approach is called as positivist

approach. Robson(1993)as cited in (Saunders, Lewis and Thornhill, 1997)has listed five

sequential stages through which positivist research goes:

Deducting a hypothesis from theory

Expressing the hypothesis in operational terms

Testing operational hypothesis

Examining the specific outcome of the inquiry. It will either tend to confirm theory

or indicate the need for modification.

If necessary ,modifying the theory in the light of findings. science

Easterby-Smith et al.(1991) as cited in Saunders, Lewis and Thornhill, 1997 has listed

eight features of positivism:

Independence- The viewer is independent of what is being seen.

Value-freedom-.the objective criteria are more deciding factor rather than human

beliefs and intrests for choice of ways of studying .

Casuality-.the motive of social science should be to find out the casual explanation

and basic laws that explain regularites in human behaviour.

Hypothetico-deductive - The final outcome of observations will point out truth or

falsity of hypothesis.

Operationalization - The concepts are needed to be worked in such a way that

enables the facts to be measured quantitatively.

Reductionism –.The problems can be well understood and can have better view if itis reduced to simple possible elements.

Generalization- The regularities in human social behavior can be generalized if

sufficient size of sample is selected.

Cross-sectional analysis- By making comparisons of differences across the samples

,regularities in human social behavior can be easily identified.

Posi t iv ism research phi losop hy is not qui te appl icable for my research as my

research focuses on the evaluat ion of which cannot be scient i f ical ly proved

as this phi losop hy su ppor ts . My research deals wi th tangible and intangibleserv ices, pol ic ies, problems facing, measure of su ccess w hich are hard to

prove b y sc ient if ic basis. So, I reject this research phi losop hy.

3.1.2 Realism

Realism is another epistemological position which relates to scientific enquiry. Realism is

branch of epistemology which is similar to positivism in that it assumes a scientific approach

to the development of knowledge. This assumption underpins the collection of data and the

understanding of those data and the understanding of those data. The meaning becomes

clearer when two forms of realism are contrasted. (Saunders, Lewis and Thornhill, 2007)


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Direct realism and Critical realism are two parts of Realism. Critical realist views that the

experiences we have are sensations, and points out that our senses often deceive us. The

direct realist on the other hand views as illusion; they are actually due to insufficient

information. In order to be able to understand what is going on in social world, the social

structures are to be understood which created the phenomena. Researcher can find what is

not seen through practical and theoretical processes of social sciences.

Dobson.2002 as cited in Saunders, Lewis and Thornhill, 2007 further clears the critcal

realist’s position that knowledge of reality is a result of social conditioning and cannot be

understood independently of the social actors involved in the knowledge derivation

process.Another important point is direct realist perspective would suggest the world is

relatively unchanging: that it operates in the business context. The critical realist on the other

hand,would recognize the importance of mulit-level study.Each of these levels has the

capacity to change the researcher’s understanding of that which is being studied (Saunders,

Lewis and Thornhill, 2007).

My research is to explore and evaluate on bus iness incubat ion and b usiness

growth which compr ises business serv ices provided, problems of growth

faced, measu ring perceived effect and succ ess. Direct real ism and cri t ical

real ism approach wi l l help me to understand theoret ical and real

understanding on the topic deeper . level .Both ph i losophy are of imp or tant for

my research. so I prefer this phi losophy .

3.1.3 Phenomenology

Phenomenology is an approach which is based on the way people experience social

phenomenon in the world they live. (Saunders, Lewis and Thornhill, 1997). Phenomenologyis characterized by a focus on the meaning that research subjects attach to social

phenomena; an attempt by the researcher to understand what is happening and why it is

happening. Easterby-smith et al., (1991) as cited in Saunders, Lewis and Thornhill, 1997

points out that researchers in this tradition are more likely to work with qualitative data and

use a variety of methods to collect these data in order to establish different views of

phenomenon.phenomenology approach is good at understanding social processes however

researcher may have to live with the uncertainity that clear patterns may not emerge.

My research aims is to have insigh t and evaluate a business incub at ion serv ice

.This also has to deal wi th connect ion to society, human behavior and

exper ience for per fect understanding to the topic. The informat ion to beder ived f rom un derstanding the topic are fact basis and judgment basis as

wel l . This approach wi l l help me in som e par t to assess p erceived ef fect of

incubat ion but not as a whole .so I reject this approach as my pr imary

approach for research.

3.2 Purpose of ResearchRobson, (1993) as cited in Saunders, Lewis and Thornhill, 1997 has classified the purpose

of research as exploratory ,descriptive and explanatory.


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3.2.1 Exploratory Studies

Exploratory studies are a valuable means to find out what is happening; to seek new

insights; to ask questions and to assess phenomena in a new light(Robson,1993: 42).they

are particularly useful to clarify understanding of a problem. Emory and cooper suggest

three ways of conducting exploratory research;

A search of literature;

Getting view from experts of subjects;

Having focus group interviews.

This study has advantage of being flexible and adaptable to change. As new data emerges

and new insights occurs ,researcher must be willing to change direction of research .Adams

and Schvaneveldt(1991) further strength the argument by arguing that the flexibility inherent

in exploratory research doesn’t mean the direction of enquiry is vague. The focus in research

is initially broad and it narrows down as there is progression in research.

3.2.2 Descriptive StudiesRobson,( 1993)as cited in Saunders, Lewis and Thornhill, 1997) explains descriptive

research portraying an accurate profile of person, events or situations. This may be an

extension of, or a forerunner to, a piece of exploratory research. It is necessary to have a

clear picture of phenomena on which data is to be collected. Description should be thought

as a means to an end rather than an end in itself. It’s always encouraged to go further and

draw conclusions from data.

3.2.3 Explanatory StudiesExplanatory studies are the studies which establish casual relationships between variables.

The study tries to focus in a situation or a problem in order to explain the relationship

between variables. Statistical tests such as correlation can be used with the data in order to

get a clearer view of the relationship.

My purpose of research is to evaluate the business incubat ion serv ices

provided, f ind out p erceived ef fect of incu bat ion serv ice and measure succ ess

of incubat ion serv ice. The data obtained wi l l be related and has to be

understoo d. Exploratory studies wi l l guide me to f ind out wh at is happening

and assess in clar i fy ing the un derstanding of prob lems. Explanatory studies.Descr ipt ive stud y w i l l be as an extension to the exploratory research of

incubat ion s erv ice provider . The explanatory study wi th some s tatis t ical test

wi l l help me to get clearer view of si tu at ion. Therefore, my research w i l l focus

in combinat ion of exploratory, descr ipt ive and explanatory studies to get

deeper understanding of to pic.

3.3 Research Strategy

The Research Strategy is a general plan of how to answer research question set. It willcontain clear objectives, derived from research question; specify the source from which data


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collection is intended; consider the constraints which will be inevitable .crucially, it should

reflect the fact for employing particular strategy. (Saunders, Lewis and Thornhill, 1997).Each

strategy can be used for exploratory , descriptive and explanatory research. Some of these

clearly belong to the deductive approach, others to the inductive approach. (Yin 2003 as

cited in Saunders, Lewis and Thornhill, 2007).Robson(1993) lists the three traditional

research strategies as:

Experiment;

Survey;

Case Study;

3.3.1 Experiment

Experiment is a research which owes much to the natural science. it is also featured strongly

for social science research ,psychology as well (Saunders, Lewis and Thornhill, 1997). In

experiment, the link between variables can be studied, and the magnitude of effect of one

independent variable can be studied upon another dependent variable. (Hakim

2000).Experiment typically involves:

Definition of a theoretical hypothesis;

Selection of samples of individuals

Allocation of samples to different experiments;

Introduction of planned change on variables;

Measurement on a small number of variables;

Control of variables.

3.3.2 SurveySurvey is tends to be used for exploratory and descriptive research. This strategy is common

and popular strategy in business and management study. It is commonly used to answer

who, what, where, how much and how many questions.The data is collected by using a

questionnaire. The data collected are standardized and easily comparable.

The data collected are quantitative data and can be analysis quantitatively using descriptive

statistics.In addition ,the data collected can also be used to give suggestion about possible

reasons for relationships between variables . However , There are other data collection

techniques as well for survey strategy. (Saunders, Lewis and Thornhill, 2007).

3.3.3 Case StudyCase study is a strategy for doing research which involves an empirical investigation of

particular contemporary phenomenon within its real life context using multiple source of

evidence’. Robson (2002:178).The case study strategy gives use good understanding of the

context of research and processes that are going on.( Morris and Wood 1991).

The case study strategy also can give answers to the what, how and why questions so it is

also a common approach for research strategy.

Case study strategy is most often used in explanatory and exploratory research. The data

collection techniques like interviews ,observation, documentary analysis, questionnaire etc

and are likely to be used in combination. (Saunders, Lewis and Thornhill, 2007). In case

study strategy it is also likely to need to use and triangulate multiple sources of data.


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My research aim is to evaluate business incu bat ion serv ices. The theoret ical

f ramework for bus iness incubat ion wi l l be studied wi th help of a business

incubat ion s erv ice provider .the problems and real chal lenges that business

incubator faces would b e under considerat ion for deeper understanding. A

study o n a real business incu bator in pract ice wi ll help me to observe and

analyze the phenomenon and real perspect ive of business inc ubat ion. So, for

my research I have chos en a case study st rategy wh ere quest ionnai re wi l l be

supp l ied for data col lect ion to b oth incu bator and incub atees .

3.4 Research Conduct

For any research data collection is one of important phase.The data which we collect will

help to support our view for finding of research.The ways of collecting data are;

Primary data collection

Secondary data collection

3.4.1 Primary Data Collection

The new data which are completely new are primary data. The purpose of data is to answer

the research questions or meet objectives of research.The ways to collect primary data are

observation, semi structured interviews, in-depth interviews and questionnaires.The nature

and area of research governs the selection of ways to collect data (Saunders, Lewis and

Thornhill, 1997)

Interview

The discussion with a view of a purpose between two or more people is an interview (Kahn

and Cannell, 1957, cited on Saunders, Lewis and Thornhill, 1997). The interview helps to

collect a reliable data which are relevant to research questions and obtain the objectives.In

structured interview ,the interview is based on predetermined and identical set of questions

to sample interviewees.It is generally formal and standardized .the interviewer reads

questions and answers from interviewee are recorded.

In such interview, the respondents should not feel any partiality even in the tone of voice.

Even voice inflection of interviewer may be cause of bias responses (Barath and Cannell,

1976, Benson, 1946).

The non-standardized interviews are semi-structured and unstructured interviews. The

questions vary and have different themes in interview.It is generally suitable for omitting

some questions for particular interview owing to the context and circumstances.The orders

of questions, way of conversations can be changed in semi-structured interview. There is

also chance of adding new question according to necessity (Saunders, Lewis and Thornhill,

1997)


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The unstructured interview doesn’t have specific questions and time length and they are

totally informal.This method is useful for exploring the depth of a general area of topic of

interest so it is also called as in-depth interview. While using this method even research

doesn’t have pre-determined list of questions to ask but they have to be clear of area of topic

to explore (Saunders, Lewis and Thornhill, 1997)

Questionnaires

One of best method to collect data is questionnaire method . There is room for being

confident on same interpretation by respondents as it has standardized questions. (Robson,

1993, cited on Saunders, Lewis and Thornhill, 1997).

Self administered questionnaires are one of best ways to collect data from respondents as

they feel free to complete at their convenience.Questionnaires are also cost effective than

face to face interview as there is no cost like travel and time .(Bachrack and Scoble, 1967).

The self-administered questionnaires are sent by post and after it is completed by

respondent, they return back by post or can also be delivered by hand and collected later at

later time.The problem with mail survey is that there is low response rate which reduce

accuracy in statistical analysis. There is also doubt that the returned questionnaire is same

person or not.

The interview administered questions on the other hand can be recorded either by using

phone or structured interviews which can be taken by face to face interview with

respondent.The physical presences will increase the reliability of data collected as physical

presence dilutes the dilemma of whether the respondent is same person or not. however,there is also possibility that in presence of interviewer ,some respondent may response to

please (Dillman, 1978, cited on Saunders, Lewis and Thornhill, 1997)

3.4.2 Secondary Data Collection

The secondary data are the data which are collected by other for some purposes. (Hakim,

1982, cited on Saunders, Lewis and Thornhill, 1997)

These data can be useful to answer the questions and research topic, so these data are also

used by many researchers. The data may be in published or may be raw. It includes bothquantitative and qualitative data.

One source is Documentary which can be records, information in websites, articles, journals

publications and the books published with information about organizations. Bryman (1989)

cited on Saunders, Lewis and Thornhill, 1997).Other secondary data are non-written data

like taped interviews, recorded audio and videos are also authentic source for research.The

survey data which are collected by organizations ,government like consensus of population

are also reliable data for research


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3.5 Methodology in practiceThe theoretical aspect of methodology is the foundation for any research which helps

researchers to reach conclusion of the research objective and get the solution of research

problem. There are various things in practice while following the steps of methodology for

the validity of data. There has to be test for data collection method for reliability and

authenticity of collected data.

Pilot Testing

Pilot testing includes steps of checking the questionnaire with experts or friends before the

questionnaires is handed or supplied to respondent .it is a vital step before the data

collection takes place.

This pilot testing helps to confirm unambiguous and refined questionnaire which are

without flaws so that respondents would be easily understand questions and answers the

questions easily (Saunders, Lewis and Thornhill, 1997)

In my research, I have chosen questionnaires as way of collecting data, so pilot test was

done for validity and reliability of data collected. The pilot test was done with my supervisor

and it was checked and approved. In addition ,suggestions were also taken from friends by

distributing to them for opinion.

Question of reliability of finding

My questionnaires include two separate sets of questions each for key-informant from

incubator and participant incubatee which are related from sections of my literature review.

In my understanding, these questions on the main subject matters are strong enough to

give the answer to reach the objectives and finding of my research. After pilot testing, the

questionnaires are handed to key-informant from incubator and participant incubatee by

meeting in person .

I have used Interview administered questionnaires as collecting primary data. My data

collector assistant from made contact to incubator team and incubatee team. A prior written

acknowledgment letter was presented. An appointment was fixed at convenient location of

respondent at convenient time before meeting and data was collected in meeting. The

physical presence of interviewer and respondents confirms the respondent and other points,

shared experiences and related notes can also be taken at the same time which is helpful for

analysis of data. Thus, interview administered questionnaires helped in increasing the

reliability on the collected data.

Choosing Samples

I have used Snowball Sampling for selecting key-informants from incubator which is

choosing sample through contact or network. Firstly we need to contact with one or two


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members and the same members later identify further members (Saunders, Lewis and

Thornhill, 1997). However, in this method, there may be chance that the respondent is likely

to suggest the other respondent who is in touch with them or like them which may lead to

biasness. (Lee 1993 cited in Saunders, Lewis and Thornhill, 2007). For participant

incubatee selection,. All of them were approached due to aim of research as sample was

low in number i.e. 16.

Theoret ical and p ract ical both aspects of Methodo logy h ave equal impo r tance

for research p apers. Ackn owledging this fact , I have gone throug h careful

p lanning to al l aspects of research methodolog y. For rel iable and authent ic

data ,the quest ionnai res were pi lot tested. This blend of both aspects of

method ology w i l l help me to get bet ter f inding of m y research .


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Chapter 4: Findings

4.1 Business Incubation program (BIP)

Business Incubation Program is a non-profit making organization under the ownership of

government but strictly operated as a private organization with an autonomous management

set-up. The BIP, Kathmandu, is located in the premises of DoCSI, within an available built-

up space of over 6,000 sq. ft. With a mission of being a center of excellence.

It is primarily focusing on the provision of proactive support and guidance tailor made for

its clients through a range of in-house as well networked services such as subsidized flexible

accommodation, logistics, testing and lab facilities, market and finance linkages and human

resources who can mentor and guide clients to successfully transform start-up companies to

a fast growing enterprise. It will also be a dynamic process for the production of future

generation of fast growing innovative enterprises that will be able to stand up with the best

and compete in the global market (Incubator Initiative Planning Grant, 2006).

Government of Nepal has formed a Business Incubation Board having members from

different industrial, science & technology, professional and experts from different sectors to

run and guide this program at top most level. Current Board of Directors of this program is as

follows:

Table 1- Business Incubation Program Board Members,source (BIP, 2007)

Business Incubation Program Board Members

Name of organizations Position

Director General, Department of Cottage & Small Industries (DoCSI) Chairman

Federation of Nepal Chamber of Commerce & Industry (FNCCI) Member

Kathmandu University, School of Management, (KUSoM) Member

National Association of Science & Technology (NAST) Member

Information Technology Professional Forum (ITPF) Member

Ministry of Environment, Science & Technology (MoEST) Member

Director, Department of Cottage & Small Industry (DoCSI) Member-

Secretary

The work of management team is supervised by one of Director level personnel as Program

Chief appointed by DoCSI. Currently, the DoCSI is funding this program from its regular

annual program budget. Program Chief and Management team are liable to present

progress reports to BIP board members.


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4.2 Summary of Data Collection Experience

Two set of questionnaire were prepared to be filled by pivot management persons from

Business incubator and another to be filled by incubatees. An acknowledgment letter for

data collection was provided to Business Incubation program .Business incubation program

helped to make contact with incubatees for data collection. As the research subject was in

different country, Nepal and data collection method was selected as face to face

questionnaire response collection. Researcher was unable to be physically involved in data

collection due to being in United Kingdom. So, A data collection assistant was carefully

selected to help in data collection. The data collection assistant was a graduate of rural

development and was well-informed about the research methodology. The questionnaires

are in English and the respondents are native Nepali language speakers. So, The Data

collection assistant translated each English medium question into Nepalese while performing

the questionnaire session and the answers was again noted down in English language. A

daily communication was set between researcher in United Kingdom and data collection

assistant in Nepal to coordinate and facilitate data collection process.

To collect data from incubator management side, 3 key informant was selected who were

involved directly into business incubation process. Altogether there were 16 incubatees with

whom attempts were made to contact. The number of participating incubatees was 12.

4 of them were out of contact (2 of them were graduated incubatees and were not in contact

with BIP recently. Remaining 2 incubatees were out of Kathmandu due to personal reasons.)

All the issues, suggestions, comments and various personal experiences were also noted

down during the filling of questionnaire.

4.3 Findings

In 2 sets of questionnaires for incubator and incubatees , the questions and statements were

on 4 point scale. The participants were allowed to rate them . The participants from

business incubator and incubatees were 3 and 12 respectively. So, number of key informant

for Incubator (N) was 3 and number of participant ( N) was 12 for incubatees.

For convenience of analysis ,Weighted Factor Analysis was used for each set of

questions. The Weighted factor was assigned to each choice in question .lowest weight

was assigned to least agreeing choice .Similarly, highest weight was assigned to mostagreeing choice. All the questions were with 4 point scale so,

Each choices were assigned as 1,2,3,4 weighted factor with starting from value of 1 with

least agreeing choice toward most agreeing choice with value of 4.

(For example-Poor-1,Average-2,Good-3,Excellent-4)

Each question was then multiplied with Frequency of response which gave a minimum and

maximum range. The response range hence was dependent on value of N (no of

respondent).

For response range of Incubator ,minimum was 3 and maximum was 12 as N=3. Similarlyminimum response range for incubatees was 12 and maximum was 48 as N=12.


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For Some choices of questions ,some incubatees did not respond as they had not deal

with such business support, mediation service i.e. Number of response N was less than 12,

.but N=12 was taken as number of respondent for all of graphical representation. Therefore

The weighted factor was given as 2.5 (1


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c.Education background

Figure 7-Educational background

The number of incubatee with high school education was found to be 8. The number of

incubatee with graduate level of education was found to be 6 and 2 incubatee were with

under high school level of education.

4.3.2 Selection Policy

Selection of clients was based on strict criteria that are in alignment with the available

resources and demand reasonable cost for development. After passing through a broad

selection criteria, BIP Nepal provided a pre-incubation course for developing business plan

of its incubatees. Between the time of business plan development, management team

assessed their needs and prepared a work plans for serving them according to their needs.

BIP Nepal support both type of incubates i.e. Virtual and In-house.

Figure 8-Importance of Selection criteria as perceived by Incubator

Note-weighted factor: doesn’t matter -1,moderate-2,Important-3,very important-

12%

50%

38%

Educational background

Under HighSchool

High school

Graduate

N= 16

3 5.25 7.5 9.75 12

Family Background

Business proposal

Stage of idea/business

Creativity of idea

Technical knowledge

Use of information technology

Plans to implement

Expected earning/expenditure

Selection criteria as perceived by Incubator

Selection Criteria

Response Range (N=3)


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Figure 9-Importance of Selection criteria as perceived by Incubator

Note-weighted factor: doesn’t matter -1,moderate-2,Important-3,very important-4

The response on importance of factors for selection gave knowledge on factors which were

thought more important than others. Some factors were agreed more important than others.

Business proposal, stage of idea, plans to implement and market potential was highly

agreed upon as important .However, available resources and cost, and range of desired

support was also seen as important. Family background, type of firm, employment history

was found to be assumed less important. There was also suggestion by Key informant on

basis of day to day activities that criteria of selection should also focus in commitment and

willing to pay additional services.

4.3.3 Infrastructure

The users of physical infrastructure provided by Business incubator was seen low. The office

space and meeting space was furnished and cost of use was with nominal charge. Similarly

phone, internet, computer, email were individually supplied and cost of use was with nominal

charge. Fax was shared service and cost of use was with nominal charge. R&D facilities

were nominally provided.

Almost all infrastructures were access by less than half of incubatees for various reasons.

The majority seemed to be non users of infrastructures as we can see in fig 4.5 . The major

reason for not using was being enterprises located in different places of country. Half of total

enterprises were located in Kathmandu where business incubation Program was stationed .

Most of them had self managed infrastructures or use of infrastructures was minimum.

Mostly the technology based enterprises were seen using infrastructures as much as

possible.

3 5.25 7.5 9.75 12

Range of desired support required

Expected duration of support

Market potential /commercialisation of idea

Previous training experience

Employment history

Patents/intellectual property

Type of firm

Available resources and cost

Reservation by government…

Selection criteria as perceived by Incubator

Selection Criteria

Response Range N=(3)


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Figure 10-Infrastructure users

Figure 11- Perceived Quality of Infrastructure service by Incubator

Note- weighted factors: Poor-1,Average-2,Good-3,Excellent-4

Figure 12-Perceived Quality of Infrastructure service by Incubatees

Note- weighted factors: Poor-1,Average-2,Good-3,Excellent-4

0

2

4

6

8

10

Infrastructure Users

User

Non user

N=16

3 5.25 7.5 9.75 12

Office space

Meeting room

Computer/Internet/email

Business postal address

Phone

Fax

Loan equipment

R & D facilities

Perceived Quality of infrastructure service by Incubator

Infrastructure


12 21 30 39 48

Office space

Meeting room

Computer/Internet/email

Business postal address

Phone

Fax

Loan equipmentR & D facilities

Perceived Quality of Infrastructure service by Incubatees

Infrastructure



38/86

29

The view from key-informants from incubator on quality of infrastructure gives us information

that they assess few infrastructures like fax ,phone, computer ,internet were better provided

where as they have rated other infrastructure facilities like R & D facilities ,loan equipments

were not being supplied as necessary.

The views about majority of infrastructure by incubatees were also nearly same as rated bykey-informants from incubator but for fax. Phone and computer, it wasn’t same. The

incubatee’s perceived quality about fax, phone, and computer was also as of other

infrastructure. the incubatees were of less need of these infrastructure so even these were

available, these were used less .In, Nepal, small business do not use fax, and computer

much due to low penetration of technology into business. The incubatees who were into

production industries showed dissatisfaction over R& D facilities and stated that

improvement in this particular infrastructure was vital and would help in their businesses .

4.3.4 Business supportFigure 13-Perceived Quality of business Support by Incubator

Note- weighted factor: Poor-1,Average-2,Good-3,Excellent-4

Figure 14-Perceived Quality of Business Support by Incubatees

Note- weighted factor: Poor-1,Average-2,Good-3,Excellent-4

3 5.25 7.5 9.75 12

Leadership training and coaching

Financial management

Marketing management

HR management

Legal issues

Entrepreneurial development

Accounting and taxation

Export assistance

Secretarial services

Business registration services

Perceived Quality of Business Support by Incubator

Business services

Response range (N=3)

12 21 30 39 48

Leadership training and coaching

Financial management

Marketing management

HR management

Legal issues

Entrepreneurial development

Accounting and taxation

Export assistance

Secretarial services

Business registration services

Perceived Quality of Business Support by Incubatees

Business services

Response range (N=12)


39/86

30

The leadership training, financial management, marketing management, Accounting and

taxation, business registration services were provided to all where

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Mba Desertation

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