i University of Wales Trinity 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 [email protected]Submitted to Dr. Stanley Lees Declaration
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i
University of Wales Trinity Saint David
Dissertation
MBA SBMA7049-L
“Evaluating Business Incubation Services : A Case Study of Business Incubation
APPENDIX C- List of Key- Informant ............................................................................... 48
APPENDIX D - List of Participant Incubatee .................................................................... 49
APPENDIX E -Records of Meeting ................................................................................... 50
APPENDIX F-Introduction Letter ..................................................................................... 55
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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 activities targeted for enterprise development are under government programs or through donor assisted projects. The programs ranges from technical and management training, counseling, information providing, credit facilities, infrastructure facilities through public sector. In year 2003, Information Technology Professional Forum (ITPF) initiated to assess the enterprise environment and design. The environment and need assessment study suggested about possible Business incubation program. In 2004-2005 ,with grant assistance by infoDev Incubator Initiative ,project of The World
Bank, 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 and identify possible stakeholders, and network for nurturing the economic growth of Nepal. The study suggested some models for BIC development . one was suggested as Business incubation 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 and Small Industry, Government of Nepal. It was administered by Government Development Committee Act, 2013 with a governing board comprising representation from the government, Academic Sector, Business Sector, Technical and Research Centers, I/NGOs and experts in the field of incubation. The initiation was taken by preparing a business plan to operate ―Business Incubation Program‖ (BIP) under the DoCSI. Since then, the one and only Business Incubation Program in Nepal, is running in DoCSI premises located at Kathmandu, 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 micro industries 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 affected
by 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 firm
growth. 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 of
company. 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 characteristics
from 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
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
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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:
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
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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.
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 Selection
Selection 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 diagnosis
of 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.
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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 other
selection criteria. In the ―picking-the-winners‖ approach, incubator managers try to identify a
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‖ of
incubatees.
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)
2.4.5 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 requiring
incubatees 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 combination
of internal and external factors to each business incubation service are different so it is
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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
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
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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
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 of
incubatee ,creation of business network. Similarly ,the criteria like graduation from
incubation, development of sustainable business structure, increase in number of jobs or
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sales over time, product innovation, and incubator manager-incubatee relationship are the
measure of incubatee‘s success.
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
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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
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 it
is 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.
Positivism research philosophy is not quite applicable for my research as my research focuses on the evaluation of which cannot be scientifically proved as this philosophy supports . My research deals with tangible and intangible services, policies, problems facing, measure of success which are hard to prove by scientific basis. So, I reject this research philosophy.
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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)
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 business incubation and business growth which comprises business services provided, problems of growth faced, measuring perceived effect and success. Direct realism and critical realism approach will help me to understand theoretical and real understanding on the topic deeper. level .Both philosophy are of important for my research. so I prefer this philosophy.
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). Phenomenology
is 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 insight and evaluate a business incubation service .This also has to deal with connection to society, human behavior and experience for perfect understanding to the topic. The information to be derived from understanding the topic are fact basis and judgment basis as well. This approach will help me in some part to assess perceived effect of
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incubation but not as a whole .so I reject this approach as my primary approach for research.
3.2 Purpose of Research Robson, (1993) as cited in Saunders, Lewis and Thornhill, 1997 has classified the purpose
of research as exploratory ,descriptive and explanatory.
3.3 Research Strategy
The Research Strategy is a general plan of how to answer research question set. It will
contain clear objectives, derived from research question; specify the source from which data
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 Survey
Survey 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).
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3.3.3 Case Study
Case 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.
My research aim is to evaluate business incubation services. The theoretical
framework for business incubation will be studied with help of a business
incubation service provider .the problems and real challenges that business
incubator faces would be under consideration for deeper understanding. A
study on a real business incubator in practice will help me to observe and
analyze the phenomenon and real perspective of business incubation. So, for
my research I have chosen a case study strategy where questionnaire will be
supplied for data collection to both incubator and incubatees.
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.
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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)
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)
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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 both
quantitative 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
3.5 Methodology in practice
The 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
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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
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.
Theoretical and practical both aspects of Methodology have equal importance
for research papers. Acknowledging this fact, I have gone through careful
planning to all aspects of research methodology. For reliable and authentic
data ,the questionnaires were pilot tested. This blend of both aspects of
methodology will help me to get better finding of my 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
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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.
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.
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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 most
agreeing 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. Similarly
minimum response range for incubatees was 12 and maximum was 48 as N=12.
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<2.5< 4) for those unanswered responses and
weighted factor analysis was carried on.
4.3.1 Incubatee Background Information
a. Age
Figure 5-Age of Incubatees
The total number of Incubatees under business incubation are 16 till date.5 of them were
incubated as first batch in 2007 since the program started and are graduated from Business
Incubation Program . 5 of them were under business incubation since 2008 and remaining 6
were under business incubation since 2009. In Nepal, the population of 15-64 age groups is
61.1% (CBS, Nepal 2011). High percentage of 18-34 age groups in business incubation was
encouraging.
b. Gender
Figure 6-Gender ratio
62% 25%
13%
Age of Incubatees
18-34
35-50
51-above
N=16
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The number of women in business was relatively less .There were only 3 females among
total number of Incubatees. In Nepal, Women participation is generally low in all business
activities where majority of women are active in house-hold activities. Women are always
encouraged to actively participated in all business activities by government and non-
government organizations.
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.
81%
19%
Gender ratio
Male
Female
N=16
12%
50%
38%
Educational background
Under High School
High school
Graduate
N= 16
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Figure 8-Importance of Selection criteria as perceived by Incubator