Research pick: Improving incubators in India - "Assessing the effectiveness of business incubators"

Business incubators can provide the requisite infrastructure, mentoring, and nurturing environment to allow startup companies to grow and thrive. At least that is the theory. Writing in the International Journal of Innovation and Learning, a team from India has investigated whether this is indeed the case.

Monika Dhochak of the Goa Institute of Management and Satya Ranjan Acharya and S.B. Sareen of the Entrepreneurship Development Institute of India in Ahmedabad, have looked at 29 such business incubators created under the Department of Science and Technology (DST) model.

“In today’s competitive business world, business reinvention model based on disruptive innovation and technology has become the new source of sustainable competitive advantage,” the team writes. “India being a developing and competitive economy aspires to realise the sustainable development through innovative startups,” they add.

The team points out that business incubators offer four clear benefits to startups: First, they provide access to debt and equity capital to launch and sustain growth. Secondly, they allow links to be formed with investors through contacts. Thirdly, they create in-house equity and debt funds to seed a deal and to fill financing gaps. Finally, an incubator can create relationships with other entities and service providers that might otherwise be inaccessible.

In the context of the Indian incubators, there are limitations, such as inadequate computing facilities and a lack of mentoring in some areas. These issues could be overcome now that they are known, the team suggests. Virtual incubation and soft services might also be worth investigating further. “Offering such support could contribute significantly to the sustenance and growth graduated companies on one hand and offer a new revenue stream to the incubator on the other hand,” the team concludes.

Dhochak, M., Acharya, S.R. and Sareen, S.B. (2019) ‘Assessing the effectiveness of business incubators’, Int. J. Innovation and Learning, Vol. 26, No. 2, pp.177–194.