Critical Success Factors for the Business Incubation Process in Kenya

A Project Report Submitted to the School of Business in Partial Fulfillment of the Requirement for the Degree of Global Executive Masters in Business Administration (GeMBA)The focus of this study was on the business incubators as an enabler of entrepreneurship development. The purpose of this study was to determine the Critical Success Factors for the Business Incubation Process in Kenya. The study was guided by the following research objectives: to determine the primary objectives of business incubators; to examine the challenges of developing business incubators and to investigate the best practices for business incubation. The study was carried out through descriptive research design. It adopted the judgmental sampling method. The total population of the study was 125 respondents including both incubators and incubatees. The sample size was 100 target respondents and the response rate 72%. The data was analyzed using qualitative and quantitative techniques. Qualitative method involved content analysis and evaluation of text material. Data was collected through the use of questionnaires where the questions were structured in such a manner that all the objectives of the study were captured. The researcher used descriptive statistics where frequencies and percentage of responses were obtained. The mean and standard deviation measures of dispersion were also used. In determining the primary objectives of business incubators, the findings established that the most important objective for business incubators is to promote entrepreneurship. This was followed by creating employment and then to provide hands-on business and management assistance to businesses. In examining the challenges of developing business incubators, the results indicated that business incubator management should be equipped with knowledge, skill and expertise to run the incubator, as well as the incubators having both short and long term business plans, and a clear vision. The study also found that most of the incubators received no funding from outside the incubator operations, which calls for the incubators to remain self-reliant in funding all of its activities. In investigating the best practices for business incubators, the findings established that developing sustainable operational processes, having a framework to monitor incubatees, hiring qualified incubator managers and developing clear revenue generation models were among the best practices for the success of business incubators. The main conclusions from this study were that promoting entrepreneurship, creating employment and boosting local and regional development are key objectives of business incubators. In addition, most business incubators aim to provide hands on business and management assistance which is important to incubate firms’ growth and success. The main challenges include lack of clear strategic business plans, poor governance and lack of access to funding. The best practices were found to include the employment of staff with high education qualifications as well as having clear goals for both the incubator and incubatee firms. The study recommends the need to develop framework models that will categorize business incubators according to their nature. A Business Incubation Policy to govern the process would assist in streamlining the various activities. The infrastructure for funding by governments through subsidies, loans or grants should be made transparent and its awareness highlighted. Involvement of other stakeholders and players in addition to business incubator owners and entrepreneurs in the process is recommended. A post incubation strategy would be ideal in reviewing the success or failure of graduate firms, and also integrate them into the market and link them back to the related industry. A corporate membership organization which can enlist business incubators countrywide is also recommended. This study recommends further studies to be carried out on categorized incubator types in order to gain an in-depth view on their operations. A broader sample can be taken for study and incorporate other towns and cities outside of Nairobi. An assessment on the impact of the evolving information technology platform on the business incubation process could also be studied. And finally, a study into the ecosystem developed by business incubators could be of interest to researcher