Analysis of Incubatee Selection Process and Technology-Based New venture Creation in Business Incubators in Kenya: Selection Criteria and Actors

Abstract

Business incubation process entails two major components; incubatee selection process and provision of an array of business support services in new venture creation in an incubator’s environment. Systematic selection of new and nascent ventures is a prerequisite for exercising real options by providing business support through business coaching and access to resources that increases the chances of successful new venture creation. Therefore incubatee selection emerges as a determinant of successful new venture creation. Business incubation in Kenya is relatively a new phenomenon. Review of literature reveals inadequate extant data and empirical evidence on what should constitute an effective incubatee selection process. Specifically, there exist gaps in literature concerning structuring of the selection process that takes cognizance of the a balanced selection criteria and a heterogeneous selection team It is against this back drop that this study sought to analysis incubatee selection process and technology- based new ventures in Kenyan Business incubators. The study was informed the Hackett & Dilts Logic Business Incubator Model (2004) on incubatee selection process. The study used descriptive research design. The study population was 9 business incubator managers and 364 incubatees located in Nairobi Metropolitan. Stratified sampling was undertaken to obtain strata based on each business incubator involved in the study. For the incubatees, simple random sampling was then applied to obtain a sample size of 186 incubatee. A Semi-structured questionnaire was used to collect both quantitative and qualitative data from the incubatees. An interview schedule was used to collect data from incubator managers. Quantitative data was analyzed using SPSS that generated both descriptive and inferential statistics. Pearson’s correlation coefficients indicated a positive correlation between incubatee selection process and technology based new venture creation; r=0.401, p<0.05. Bivariate analysis indicated incubatee selection process had a significant effect on technology based new venture creation, with the beta coefficients; β = 0.439, p<0.05). Majority of the business incubation managers indicated that success rate of the incubated ventures was approximately 50%. Move rover, majority of the entrepreneurs gave a low rating on harmonization of incubator objective and selection criteria. Therefore, this study recommends that business incubators in Kenya need to relook at how incubatee selection is structured to ensure that new ventures admitted to business incubators have a high success rate at the end of the incubation process. Specifically this study recommends that Kenyan business incubators need to set out very clear selection criteria that are properly harmonized with the incubator’s objective. This will ensure that only deserving ventures with potential for product launching and business growth are admitted to the business incubators, and therefore increase successful new venture creation. Concerning incubatee selection actors, the study recommends the structuring of selection process that ensures that multiple actors are used in the selection process to utilize a wider pool of experts and professionals. Involvement of heterogeneous multiple teams of actors can lead to the selection of incubatees with higher chances of success in technology- based new venture creation.
Key Words: Incubatee selection process, new venture creation, Business incubator model