Editor in Chief:
Bong Jin Cho (Korea, E-mail: [email protected] )
Editorial Board:
Check Teck Foo (Singapore, E-mail: [email protected])
Rolf P. Friedrichsdorf (Germany, E-mail:
[email protected])
Gwang Yong Gim (Korea, E-mail: [email protected])
Ahmad Ibrahim (Malaysia, E-mail: [email protected])
Lynn Kahle (U.S.A., E-mail: [email protected])
Tomoyo Kazumi (Japan, E-mail: [email protected])
Jin Soo Kim (Korea, E-mail: [email protected])
Zhan Li (China, E-mail: [email protected])
P. K. B. Menon (India, E-mail: [email protected])
Michael Schaper (Australia, E-mail: [email protected])
Zhen Wang (China, E-mail: [email protected])
Richard White (New Zealand, E-mail: [email protected])
Benjamin J.C. Yuan (Tawian, E-mail: benjamin@ faculty.nctu.edu.tw)
Proofreading:
William Cartwright (U.S.A., Professor, Keimyung University)
Graphic Design:
Seong Jae Song (Korea, Professor, Hoseo University)
ISSN 2071 - 1395
Special Topic:
National Innovation System and Business Incubation
Policy: Best Practices and Challenges (Ⅱ)
Asian Association of Business Incubation
Copyrightⓒ2009 by AABI, All Rights Reserved
CONGRATULATORY MESSAGE
I wish to congratulate the Editor-in-Chief, Professor Bong Jin Cho, and the Editorial Board
for another successful publication of Asia Pacific Journal of Innovation and Entrepreneurship
(APJIE).
For 2009, APJIE‘s editorial board has succeeded in issuing three (3) publications,
which is certainly a great achievement for a journal that was launched less than two years ago.
With the speed and regularity of APJIE‘s publications, I am sure APJIE will soon become the
journal-of-choice on the topic of innovation, entrepreneurship and business incubation. This third
publication again demonstrates the strength and collaborative commitment of both Asian
Association of Business Incubation (AABI) and Institute of Korea Entrepreneurship Development
(IKED), to publish this journal, despite facing difficulties during this challenging time.
I am also glad to know that our business incubation colleagues in United States, China,
Japan, Taiwan, Malaysia, and Australia have agreed to share their national policies, insights and
experiences related to their business incubation movement, in this third publication.
Business
incubation managers and practitioners, researchers, academicians, policymakers, etc. will find the
information in the papers written by our business incubation colleagues, invaluable.
With the
world economy improving from the recent financial crisis, it is a good opportunity for countries to
encourage innovation, technological development and entrepreneurship. It is also good time for
start-up companies to flourish, and business incubation to excel.
At the end of 2009, I will be finishing my term as President of AABI, and this publication
will certainly be my last opportunity to pen congratulatory words and gratitude. May I take this
opportunity to thank AABI members, IKED, and everyone who have supported AABI, and
business incubation in the Asia Pacific region.
As for APJIE, the official journal of AABI, I am hoping for the best. I foresee APJIE being
the ―journal-of-choice‖ on the topic of business incubation and entrepreneurship, in the years to
come: Not just in Asia-Pacific, but also the World over!
Thank you.
Annuar Mohd Saffar
President
Asian Association of Business Incubation
CONGRATULATORY COMMENTS
It is always my pleasure to publishing this journal, and I specially give my appreciation to
Dr. Cho, Bong Jin, who has been working for the third volume No.3. already this year. I believe
that passion and devotion of those who are willing to submit their studies have made this possible.
I also appreciate them for their willingness and effort.
The global economy is not yet to be considered to be active as in the past, but it is quite
evident that creativity, innovation, and entrepreneurship are the major factors that drive the
economy. In this sense, publishing and distributing the journal of Innovation and
Entrepreneurship hopefully devotes to spreading the main seeds that may bring us the brighter
future.
For Koreans, the year 2010 will be another year for challenge. The economy and job
creation will still be the number one priority of the government, and business incubation still
support these goals. IKED supported over 2,000 individuals and over 1,000 startup companies
with marketing, funding and other various areas in 2009. I hope and believe that continuous
seeding and spontaneous pioneering of the high-tech area shall bear fruit in the future. On a
personal level, it has been decided that I will work for another two years for the IKED, which I
humbly take as my opportunity and responsibility to involve in this precious job.
I also hope that in the year 2010, more cooperation and networking among the AABI
member countries—as well as with the other side of the world–will take place. I would like to
take this chance to invite you to the Entrepreneurship Festival Korea (EFK) to be held in June
2010 in Seoul. The EFK has taken place as one of the main exhibitions and gatherings of startup
companies and their supporters since 1999. I really hope that the event will spread and become
more pervasive among our member nations.
I would like to express my appreciation for Mr. Annuar Saffar, the President of AABI, the
AABI Secretariat in Shanghai, the Editor-in-Chief, Professor Bong Jin Cho and co-editors for
their contributions. I also thank the SMBA of the Korean government for their decision to support
this international journal in innovation and entrepreneurship area.
Thank you.
Yeung-Shik Kim
Chairman
Institute of Korea Entrepreneurship Development
CONGRATULATORY MESSAGE
Hearty congratulations to AABI & IKED, Korea for bringing out this Asia Pacific Journal
of Incubation and Entrepreneurship. It is indeed an unique attempt to provide insights on various
events and developments in innovation and entrepreneurship.
The Editor in Chief and the editorial team members deserve our sincere appreciation for the
significant efforts in bringing out the APJIE and for ensuring to showcase quality articles on
Business Incubation & Entrepreneurship.
The articles provide valuable inputs and suggestions for enhancing the performance levels
of the incubators and will be very handy for many of the new business incubation managers from
the region.
The APJIE as a platform to shares the various facets of incubation initiatives. I am sure that
the contribution for the journal by the academicians, business incubation practitioners and other
stakeholders of the incubation movement will grow over the years and on behalf of Asia Pacific
Incubation Network (APIN) I wish the initiative all success.
Thank you.
K Suresh Kumar
Asia Pacific Incubation Network - Secretariat
PSG-STEP
PSG College of Technology
Coimbatore, INDIA
CONTENTS
Introduction
Editor in Chief
1
No Policy Is a Good National Policy?
Dinah Adkins
5
Incubation Policy on Innovation and Entrepreneurship in Taiwan
Benjamin Yuan and Michael B.H. Lin
23
Business Incubation in Australia: Policies, Practices and Outcomes
Michael T. Schaper and John Lewer
37
Business Incubation Policy in Japan
Satoshi Hoshino
47
Business Incubators in China
Wang Rong
55
Entrepreneurial Leadership and Academic Entrepreneurship in
Malaysian Public Research Universities
Mohar Yusof
63
Technical Entrepreneurship and Technological Innovations: SMEs in
the Electronics Industry in Bangalore, India
M H Bala Subrahmanya, K N Krishnaswamy, and M Mathirajan
Call for Papers
85
109
INTRODUCTION
Bong Jin Cho, Editor in Chief
The volume 3, No.3 is a second round special issue under the topic of National Innovation
System and Business Incubation Policy: Best Practices and Challenges. In this volume, we are
happy to introduce another five foremost incubation leaders of Asia and Pacific region including
the U.S.A., Chinese Taipei, Australia, Japan and China in addition to the U.S.A., New Zealand,
India, and Korea in the previous volume 3, No.2. We also have published two referred papers in
this special topic issue. Unfortunately, selected representatives of two European leaders of
incubation, Germany and England, were unable to provide papers.
Volume 4, No.1 is to be published in April, 2010, and the deadline for manuscripts is
February 28, 2010. We, of course, welcome manuscripts anytime before the due date and will
proceed to the evaluation as soon as we receive the manuscript. It is the intention of the Desk to
invite one leading paper to introduce world class innovation and entrepreneurship practiced
recommended by the editorial board members of the APJIE.
It was our special pleasure to invite Dinah Adkins, the President emeritus, National
Business Incubation Association (NBIA), as the author of the leading paper of this volume, who
served as the president and CEO of NBIA for twenty-one years. As the title of the first paper
notes, ―No Policy Is a Good National Policy?‖ in the U.S.A., under this policy, American
business incubation history has led to wide experimentation in business incubator models with
differing goals and tailored to local needs. The author further discusses the evolving
understanding of business incubation among federal government leaders and current funding
initiatives. Through her twenty-one years of service to the NBIA, as the president and CEO, the
author suggests seven lessons to be shared among the AABI member countries as well as for the
U.S.A. This paper also introduces twelve exemplary North American incubators with websites
and the list of CEOs for contact points.
The second paper is ―Incubation Policy on Innovation and Entrepreneurship in Taiwan.‖
This paper introduces the progress of Taiwan incubation policy and the critical issues. This paper
Volume 3, No. 3, 2009
1
discusses how the Taiwanese government integrated an incubating function, information platform
and capital funding as the hub of ASIA Entrepreneurship Center (AEC). The three key bodies of
AEC such as the incubator, knowledge and seed money had spun into different elements
constructing the Taiwanese main policy from 2002-2008. As one of the best practiced cases of a
university-based incubator, this paper notes that National Chiao Tung Innovation Incubation
Center (NCTUIIC) made huge efforts in adjustment and leverage of the resources in the local
community.
The third paper is ―Business Incubation in Australia: Policies, Practices and Outcomes.‖
This paper outlines the characteristics of the Australian incubators. Most of the Australian
incubators have been initiated and managed by a local municipality, regional economic
development organization or business group. With support from government, almost all
incubators operate as not-for-profit ventures. Another distinguishing feature of the Australian
incubator is the relatively low level of involvement by universities and the formal research sector.
The federal and state/territory governments have no program to support business incubators once
established. It is anticipated that funding provided in response to the feasibility will enable the
incubator to be self-sustaining. It is evident that self-sustaining incubator is the ultimate goal of
federal and local municipality as well as all other countries.
The fourth paper is ―Business Incubation Policy in Japan.‖ This paper introduces the brief
industrial history and the business Incubation in Japan with the development of the Japan
Business Incubation Association (JBIA) through the Japan Association of New Business
Incubation Organization (JANBO).
Toward the fact that Japan is already entering into the ‗mature country‘ time, JBIA has
created a new policy that incorporates the following aspects: 1) More emphasis should be placed
on business incubation of small self-employed businesses in rural areas, rather than technology
oriented business incubation in urban areas; and 2) a more strategic approach should be employed
to educate individuals involved in business incubation such as a) incubation managers need to be
taught the latest marketing knowledge and skills, and b) the latest knowledge and importance of
business incubation need to be further spread and taught continuously to individuals related to the
industry, including government officials and entrepreneurs.
The fifth paper is ―Business Incubators in China.‖ This paper also introduces a brief history
of Chinese business incubation followed by the present status and development of business
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
incubators in China. This paper also covers the new trends of Chinese business incubators with
comments on the extended services of nurseries and accelerators. The Chinese policy includes
incubation tutorial system in which the internal and external resources are integrated through the
mentors. In this paper a shareholding incubation model of venture investment is also discussed.
To avoid the severe homogenization competition of the incubators, which causes the excess
mortality of clients with reputation damage, and decline in status and team stability, the
professional incubator system has been spurred by the government thus to achieve selfsustainability of the incubators. In addition, this paper discusses the promotion of the network
incubation.
The sixth paper is the “Entrepreneurial Leadership and Academic Entrepreneurship in
Malaysian Public Research Universities.‖ This paper is one of the two referred papers of this
volume. The purpose of this research paper is to find whether the entrepreneurial behavior of
leaders in the university significantly influences the level of academic entrepreneurship in the
university. To find the result, two hypotheses were formulated to be tested. According to the
research results, it is found that the entrepreneurial behavior of leaders in the university
significantly influences organizational innovation and creation in the university. The paper insists
that the research findings and results from this study will enable public research universities to
evaluate the level of entrepreneurial leadership, their leadership strategies and capabilities in
developing an entrepreneurial mindset, and the status of their entrepreneurial systems within and
outside the universities. Through these findings, the public research universities can also identify
enablers and barriers for academic entrepreneurship within their academic organizations and, thus
they can enhance decision making, especially in fostering academic entrepreneurship.
The seventh and the last paper is ―Technical Entrepreneurship and Technological
Innovations: SMEs in the Electronics Industry in Bangalore, India.‖ The specific objective of this
paper is to compare the achievements of product innovations of technical and non-technical
entrepreneurs. This paper also analyzes the economic performance of product innovative SMEs of
technical and non-technical entrepreneurs. This research also examined the labor productivity,
capital productivity and capital intensity of the technically qualified entrepreneurs and technically
not qualified ones. Technical entrepreneurs, relative to those of non-technical entrepreneurs, had
higher shares of technically qualified employees, more experienced employees and more
exclusive design offices, higher shares of innovated products in total sales and in the aggregate.
The technical entrepreneurs had higher partial factor productivities and returns to scale, however,
Volume 3, No. 3, 2009
3
differences in partial factor productivities are not statistically significant.
Upon the publication of this volume, we are mostly grateful to the five invited special topic
authors of Dinah Adkins, President emeritus, NBIA; professor and president elect, AABI,
Benjamin Yuan and Michael B.H. Lin; professors Michael T. Schaper and John Lewer; Satoshi
Hoshino, president of JBIA; and Wang Rong, president emeritus, AABI. For the competitive
section of the publication, we like to express words of thanks to professors Mohar Yusof and M H
Bala Subrahmanya, K N Krishnaswamy, and M Mathirajan who contributed their informative
manuscripts for the APJIE readers. I am very much grateful to the editorial board members and
many referees who gave their time and efforts for evaluation. Our special thanks go to the IKED
(Yeungshik Kim, Chairman), AABI (Annuar Saffar, President), and the SMBA (Sukwoo, Hong,
Administrator) for their financial support and their continued encouragement for publishing. With
their deepest commitment and never ending encouragement for a quality journal of innovation and
entrepreneurship, we are most grateful to the dedicated readers of APJIE all over the globe.
4
Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
No Policy Is a Good National Policy?
Dinah Adkins *
Abstract
In contrast to some nations of the world where central government has played a leading
role, business incubation in the United States developed in a helter-skelter fashion, with local
sponsors spearheading efforts and providing both initial start-up and ongoing operating support.
Central government funding of U.S. business incubators has primarily been reserved only for
bricks and mortar (building, land and infrastructure costs) and has been offered by a host of
different agencies having a wide variety of agendas. The author considers the fragmented and
limited support offered by central government and concludes that this history has led to wide
experimentation in business incubator models, with differing goals and tailored to local needs.
This environment also has served to strengthen the support of local entities. The author further
reports on the evolving understanding of business incubation among federal government leaders
and current funding initiatives. She concludes with lessons from this experience that might prove
of use both to incubator developers in the U.S. and in other nations.
Key words: Central government, business incubation, national policy, funding, U.S., business
models.
*
President Emeritus, Former President & CEO, National Business Incubation Association, USA(1989~2009), E-mail:
[email protected]
Volume 3, No. 3, 2009
5
One factor that distinguishes national business incubation systems in countries and regions
around the globe is the extent to which they have, or don‘t have, the support of central
government. And then if support is provided, the question becomes, ―What is the role of the
government and how do government‘s activities affect business incubation?‖
Business incubation in Asian and Western countries seems to vary significantly; for
example, many Asian countries appear to provide their business incubators more central
government support, in comparison to central governments in North America or the West
generally. My thesis is that this greater central government support and oversight has resulted, to
some degree, in developing more homogenous incubators in Asian nations, while experimentation
and variety characterizes business incubation in North America.
Even in the West, North America stands out for its historically limited and fragmented
central government support of business incubation when compared to other nations. At least it
seems so to me, and I have been associated with business incubation – and in particular
incubation as it has been practiced in the United States and North America generally -- for the last
27 years. As a result of this U.S. business incubators are to a much greater degree supported by
―grass-roots‖ organizations – local governments, economic development agencies, neighborhood
revitalization groups, research consortia, universities and colleges, and private investors and
corporations. This has led to the proliferation of widely varying models.
Perhaps the readers of APJIE, the journal to which this paper has been submitted, will be
able to compare and contrast best if I describe the situation in the U.S., with only brief comments
on observed differences elsewhere. Since the journal reflects the thinking and research of
academics and practitioners of various Asian countries, the situation in each nation will differ and
nationals will have a better picture of the contrasts between the West‘s practice of business
incubation and their own country‘s than I could offer.
To set the scene, therefore, I would like briefly to describe historical and potential
government support for business incubators – focusing on the U.S., recognizing that Canada‘s
situation is roughly similar. It is the English-speaking nations of North America that share the
greatest similarities and these similarities also are held in common to some extent with other
English-speaking nations including the United Kingdom, South Africa, Australia, New Zealand,
etc.
6
Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
In preparation of this paper, it was suggested to me that ―No [central government] policy is
a good national policy‖ if local governments and the private sector fill the void and take over the
responsibilities for business incubation instead. I will also address this idea.
History of U.S. Central Government Support for Business Incubation
In short, central government support for U.S. business incubation has historically been
limited. There has never been an overarching national business incubation program, or any central
government agency whose primary concern has been the support of business incubators, the
entrepreneurial economy, and of start-up companies and their innovations. For a very short period
of time, the U.S. Small Business Administration disseminated information about the then-new
concept of business incubation. The U.S. Department of Commerce‘s Economic Development
Administration (EDA) was the first significant financial supporter of incubators. But only now is
business incubation beginning to gain a greater level of federal support, including nominal
support by President Barack Obama. 1
The first business incubator in the U.S. opened in 1959 as the Batavia Industrial Center, a
large complex based at a former Massey-Ferguson farm implement-manufacturing plant. When
the company closed the plant and moved out of Batavia, New York, a rural city in the
northwestern part of the state, new owner Joe Mancuso and his family found they could not find
another large tenant and, instead, began to rent to many small companies including start-up firms.
Mancuso tried to help these companies raise investment and provided advice, and he coined the
term, ―business incubator.‖ While it is still in operation today, the Batavia Industrial Center in its
early days could be considered a prototype incubator. 2 The model has evolved considerably in the
half century since.
Then in the 1970s, the National Science Foundation issued the first grants for innovation
centers that were actually early technology incubators, at the University of Utah and a select
number of other locations. NSF didn‘t follow up on its experiment to provide ongoing financial
support for business incubators, however.
By 1980, there were 12 to 15 business incubators spread through the Eastern and
Midwestern states that had been largely dependent on manufacturing, and where the
manufacturing economy was shrinking as these regions lost plants to the American South and
overseas locations.3 Also, in
Volume 3, No. 3, 2009
7
1980, the Fulton Carroll Center for Industry, a mixed use incubator located in Chicago,
opened with funding from the Economic Development Administration (EDA). 4 This grant,
actually approved at least a year earlier, was the first of a long line of grants through which EDA
began funding a steady stream of incubators – many located at first in old, abandoned factories.
In 1984, the first research on business incubation, Business Incubator Profiles – A National
Survey, was authored by Mihailo Temali and Candace Campbell of the Hubert H. Humphrey
Institute of Public Policy at the University of Minnesota. 5 The same year, the U.S. Small Business
Administration‘s Office of Private Sector Initiatives began to disseminate information about
business incubators through a newsletter and series of conferences held around the nation. As a
result of these efforts, beginning by about 1985, new incubators began to open at the rate of nearly
one a week.6 But almost as quickly as it had taken up the cause of business incubation, the agency
stopped its support – after a period of only about three years. The SBA began to promulgate the
concept of business incubation during the administration of the late President Ronald W. Reagan,
but it ceased budgeting funds for this purpose when it suffered budget cuts late in Reagan‘s
presidency. The SBA never provided funding for individual business incubators, however, except
for on a few occasions when a powerful U.S. senator was able to have ―line item‖ financial
support inserted in SBA‘s appropriations for an incubation program located in their constituency.
Still business incubators proliferated, as many communities decided to try to ―grow their
own‖ businesses. The spurt of incubator development was also encouraged by the publication of
Job Creation in America, by David Birch of the Massachusetts Institute of Technology, which for
the first time gave recognition to the importance to local and national economies of small business
and entrepreneurial start-up firms.7 Over the ensuing years, in addition to the EDA, other federal
agencies began to approve grants to develop business incubators. These included the U.S.
Department of Agriculture (USDA), the Department of Health and Human Services Office of
Community Services (OCS), the Department of Housing and Urban Development (HUD) and,
eventually, the National Aeronautics and Space Administration (NASA), and others. Each agency
funded different types of programs: USDA financed mixed-use incubators in rural areas and
smaller cities, OCS and HUD targeted support for inner cities and among minority populations,
and NASA invested in technology incubators located near NASA installations.
Most of this federal money was and continues to be for incubator bricks and mortar – for
the acquisition of buildings and their renovation, or to purchase land and build incubator buildings.
In fact, the U.S. central government didn‘t know a lot about business incubators or incubator best
8
Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
practices, so these agencies felt comfortable investing in bricks and mortar and leaving to local
entities the management of the programs and provision of technical assistance to entrepreneurs. A
not-unsubstantial number of these early government investments were poorly made and the
buildings were soon or eventually converted to other uses, primarily shared space for a wide
variety of mostly mature companies. In the late 1980s a recession hit the United States and some
poorly-conceived and executed business incubation programs closed their doors as local funding
dried up.
It was in this atmosphere that the National Business Incubation Association was born, first
representing only U.S. incubators and by 2009 having more than 1,900 members from 67
countries. The association began to gather members and supporters at the same time that the SBA
stopped budgeting funds to promote business incubation. NBIA founders (including myself) had
decided the association should develop information and provide assistance to help in creation and
management of better incubator programs. In 1988, the association moved to its long-time home
in Ohio and shortly thereafter I began to seek government funds for incubator research and books
that could aid incubator managers and developers.
It is interesting to note that throughout that period until the present, the vast amount of
federal government funding was still only for incubator bricks and mortar, and local sponsors and
communities – and their business incubation programs – had to rely on themselves to generate at
good bit of start-up funding and virtually all operating funds. Today, approximately 12 central
government agencies provide some start-up funding for incubators under various programs, some
focused specifically on U.S. regions such as the Appalachian Mountains (Appalachian Regional
Commission) and Alaska (Denali Commission). These agencies, their programs and eligibility
requirements are detailed in an appendix first published in NBIA‘s publication, ―Developing a
Business Incubation Program – Insights & Advice for Communities.‖ 8
Except for specifying funding for minorities or rural areas, etc., however, federal agencies
put few requirements on these programs in regard to their performance or outcomes. As earlier
noted, the government bureaucrats really didn‘t know much about incubators and most never
followed up on their grants in any meaningful fashion. This meant that virtually every U.S.
incubator was primarily a product of the local community or the local sponsors (economic
development organizations, neighborhood revitalization groups, universities, research institutions,
etc.). Each sponsor attempted to tailor their program to their own needs and goals.
Volume 3, No. 3, 2009
9
Without any oversight, the process was one of doing and learning; many mistakes were
made, but also, the local nature of incubators meant there was terrific experimentation. The varied
local sponsors created incubators focused on commercializing technologies from universities and
other research generators, revitalizing distressed communities, diversifying rural areas, serving
industry sectors such as biotechnology or clean energy, serving minorities, assisting arts and craft
providers, and working with food processing companies, spinning companies in or out of
corporations, serving portfolios of investees, etc. Each incubator had its own sponsors, investors
and community supporters. Each had its own governance and business model.
Even in universities, incubators didn‘t look the same – some were housed under university
research foundations, some in the college of engineering, some under the vice president for
research, and others in a business college. Some universities chose not to develop their own
business incubation programs but, instead, to engage in collaborative arrangements with
successful business incubators already established in their communities. Likewise, incubators
created by private, for-profit groups varied significantly depending on whether they were
primarily created by real estate interests, investors in entrepreneurial firms or large corporations,
each with different motives for involvement.
To some extent, the lack of central government oversight or of a homogeneous business
incubation program was a weakness in that locally-based programs that were poorly planned or
lacked sufficient grass-roots support failed or did not live up to expectations. On the other hand, it
could be seen as the source of strength, since this environment resulted in so much
experimentation; as each community developed their own goals, customer base, sponsors, and
financing models, there were very few ―cookie-cutter‖ (look-alike) programs.
Even NBIA got virtually no support from central government, and in the early 1990s
visitors from other nations were shocked to find the world‘s largest organization of business
incubation professionals headquartered at a rural Ohio university. But because the organization
itself was never beholden to any central government financing, it was easier to focus on the needs
of business incubators and developers as our customers and create products and services they
would be willing to purchase.
By contrast, in some nations and regions – particularly in China and in Asia – many central
government agencies provided support for both incubator associations and simi lar business
10
Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
incubation programs, perhaps allocated at universities with professors as staff, or even more
common, all focused on commercializing university research. In the case of China, the TORCH
program funded so-called technology incubators that were not devoted to cutting-edge technology
but instead to growth of a market economy. While all these programs have evolved and each
nation has its star examples of business incubation, there is often more homogeneity among some
Asian nations‘ programs than would be found in the United States or Canada, perhaps because
many were funded by a single central government agency.
The Slow Emergence of U.S. Central Government Support for Business
Incubation
Importantly, EDA funded a research study, the report of which was published by NBIA in
1997 as ―Business Incubation Works.‖ 9 This was the first comprehensive large-scale study to
provide empirical evidence that business incubation contributed to community wealth. After this,
critics could no longer say that evidence of business incubators‘ success was only based on
anecdotal reports. U.S. business incubator development continued and grew from 390 in 1989,
425 in 1991, 497 in 1995, 587 in 1998, 950 in 2002 to approximately 1,100 in 2006. 10
Regardless, the U.S. central government kept its hands off business incubation, leaving
operations, oversight and outcomes to local authorities. This continued during the recession of the
early years of this decade following the dot com boom and bust and into the current year.
However, there are portents that the environment is changing. Candidate Barak Obama‘s platform
supported up to $250 million during each year of a five-year period to fund creation of new
incubation programs in distressed communities. After Obama became president and assumed
office in late January of 2009, he faced the then-raging economic crisis and approved economic
stimulus money that could be used for business incubators, mostly available through EDA grants,
and in late February he unveiled a 2010 budget that requested $50 million per year specifically to
fund business incubators. (We speculate that, with all the economic problems that had arisen since
the candidate‘s platform was developed, the money needed to be spread around and thus the final
funds requested for business incubation declined.) This represented the first presidential budget in
U.S. history to specifically name business incubation as an initiative the president saw value in
supporting.
Also in January 2009, NBIA publicized an EDA study conducted by Grant-Thornton, a
Volume 3, No. 3, 2009
11
large consulting firm, which was highly positive about business incubators‘ job creation impacts.
The study, ―Construction Grants Program Impact Assessment Report,‖ found that of all EDA
public infrastructure-supported programs, incubators had by far the greatest job creation effects
and the lowest cost per dollar. According to the report, incubators have a federal cost per job11 of
between $144 and $216, compared with $744-$1,008 for commercial structures, $1,291-$2,293
for roads and other transportation projects, $1,377-$1,999 for industrial park infrastructure, and
$2,920-$6,972 for community infrastructure.
Yet the report also notes that, by dollar invested and by number of projects funded, business
incubation programs have historically been the least well-funded of EDA‘s public infrastructure
projects.12
Given the great interest in job creation (at this writing in autumn 2009, 10.2 percent of the
U.S. workforce is unemployed, representing a 26-year high), the Grant-Thornton report seems to
have garnered additional interest and several U.S. senators have stepped forward with proposals to
increase business incubator funding and even make more dollars available for technical assistance
for entrepreneurs, and other activities, above and beyond bricks and mortar funding for buildings.
U.S. Sen. Sherrod Brown, an Ohio Democrat, in September introduced legislation that
would provide the most significant assistance to date to the business incubation industry. The
proposed legislation – the Business Incubator Promotion Act – acknowledges the effectiveness of
business incubation to job creation. If approved, the legislation would:

Give EDA the authority to provide operating funds to support activities that will help
incubators work toward financial self-sustainability

Support and specify EDA funding of programmatic and technical assistance activities for
new and expanding incubators (not just bricks and mortar and early-stage operations)

Specify EDA authority to fund incubator feasibility studies and plans for construction of
new or expansion of existing business incubators, as well as the implementation of those
studies and plans (acquisition of property, new construction, renovation of existing
buildings, etc.)

Modify the current scales used by the EDA to make it easier for regions to qualify for
increased funding (a greater federal share)
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
The proposed legislation also would require the Secretary of Commerce to publish criteria
used in making awards and specifying certain criteria as a basis for awarding grants. 13 The latter
requirement alone would probably result in NBIA being involved in suggesting appropriate
criteria.
Rep. Tim Ryan, also an Ohio Democrat, plans to introduce a companion bill to Sen. Sherrod
Brown‘s incubator bill in the House of Representatives. Both the representative and the senator
are still adding sponsors to their legislation. It appears that more and more, U.S. congressional
leaders have become familiar with the successes of business incubators in their constituent
regions and are recognizing the importance of entrepreneurship and innovation, as well as
business incubation.
As I write this, none of these bills have been approved either by the House of
Representatives or the Senate. Indeed, at this juncture, a 2010 budget has not been approved.
While the House of Representatives removed the president‘s proposed incubator funding from the
House version of the budget, the Senate Appropriations Committee report supported the
president‘s proposal. These differences would have to be reconciled in any final legislation.
Unfortunately, the issue of the economy and potential passage in late 2009 or early 2010 of
national health-care legislation, raising the percentage of Americans covered by insurance up to
92 or 96 percent of the populace (depending on which proposed bill the president signs), has
garnered almost all Congress‘s attention and it is unlikely that bills related to business incubation
will move until those discussions conclude.
Regardless, the current situation is one in which there is more Congressional interest in
business incubation than ever before. Whether this interest comes to fruition in the form of
appropriations or other bills specifically promoting business incubation, either in 2009, 2010 or
2011, remains unknown. But there is no doubt that – after a half-century of business incubation
and nearly 30 years of significant industry growth – the U.S. central government appears poised
to take business incubation more seriously. As in the Brown bill described above, this could
result in greater interest in ―criteria‖ for funding and even eventually for performance outcomes.
NBIA is currently participating in a large research project – led by the University of
Michigan and the University of Albany SUNY – that should update outcome data for incubators
and reveal more detail of what constitutes industry best practices. A report on this effort and
Volume 3, No. 3, 2009
13
helpful tools for incubator managers are due in approximately the fourth quarter of 2010. This
could result in further promoting interest in business incubation. 14
Conclusions
It is my belief that because U.S. business incubation historically developed through local
initiatives based on experimentation with different target populations, business models and goals,
it is unlikely that the practice of U.S. business incubation will ever become in any way
homogeneous. Additional funding, interest and research are likely to lead to greater knowledge
and implementation of best practices, and the dissemination of helpful tools to incubator
managers and developers. Certification of leading programs may become an option. However, if
anything the experimentation is likely to grow.
In another paper, I have written about the fast growth of new ―accelerators,‖ 15 mostly forprofit business incubation programs that invest in portfolios of technology start-ups and other
trends that are occurring in the U.S. entrepreneur support environment. In fact, this environment
has changed remarkably since the 1980s. In this paper, I discuss how incubators may, more and
more, need to expand services beyond their walls in order to maintain relevancy. It is likely they
will need to offer regional ―boot camps‖ bringing entrepreneurial stars in to talk to would-be
technology company founders and help them meet other early-stage milestones during a
concentrated program of activities. And they may need to ally themselves with entities that can
provide greater direct investment in their client companies.
They will also likely have to continue developing more sophisticated services and portfolios
of potentially successful start-ups in order to attract experienced entrepreneurs – including serial
entrepreneurs – to their programs to provide expertise that goes well beyond the capabilities of
small incubator staffs. While many incubators have developed successful relations with those
with wide experience in entrepreneurship – who have started companies, attracted financing,
brought them to scale and sold them – others will need to compete with accelerators to gain the
interest of these serial entrepreneurs and investors.
All of this change and evolution in the current environment suggest a potentially wild ride
ahead. I myself expect that just as business incubation today in the United States is vastly
different than it was 20 or more years ago, 20 years from now, if we were to be closeted from the
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
developments of the intervening period, we would hardly be able to recognize the business
incubators of today in the large, regional, entrepreneur support organizations of the future.
So is it true that ―No policy is a good national policy?‖ Obviously, the situation in the
United States is unique. It is a very large country with a history of entrepreneurship and,
compared with many other nations, rich resources of investment capital and experienced investors,
entrepreneurship education programs, serial entrepreneurs, and universities and corporations
committed to identifying and commercializing new technologies. Government initiatives also may
be carried out at local, state and national levels, all of which have their own taxing authority
(unlike in New Zealand, for example, where all taxes are collected by the central government,
which distributes money to cities). Furthermore, the culture reveres entrepreneurs and start-up
firms, and students seek out opportunities to learn about entrepreneurship.
This environment was certainly far less rich 30 years ago, but it has evolved quickly into
perhaps the single environment that is most welcoming and supportive to entrepreneurs of any on
the globe. It may seem almost counter-intuitive, but I believe the relative lack of government
interest in incubation and the fragmentation of business incubation funding programs – as well as
the strong grass-roots support of business incubation – have combined to create a rich ―stew‖ of
experimentation that, like in evolutionary biology itself, has led to the emergence of varied and
sophisticated programs that are likely strong enough to ensure the industry‘s continuation,
evolution, and success for many years to come.
The lessons here for other nations may be:

to invest whenever possible in variety and experimentation

to avoid being proscriptive and copying other countries‘ systems without sufficient
adaptation

to ensure strong ties between incubators and the local business community and
entrepreneurs

to ensure support whenever possible by local governments, universities and/or economic
development agencies

to recognize that a nation‘s business incubation industry and the environment in which it
operates will evolve over time

to understand that best practices should be learned during this evolutionary period from
practitioners, and from entrepreneurs themselves, rather than imposing them from above
Volume 3, No. 3, 2009
15
For the United States, some of these same lessons should be useful – particularly ensuring
strong ties between incubators and the local business community and entrepreneurs, and ensuring
best practices are learned from practitioners rather than imposing them from above. Other lessons
could be to avoid being swaddled by future funding that might be overly restrictive and to use the
industry‘s lengthy head start to form and manage 21 st century business incubation rather than to
have it become the subject of governmental mandates.
December 2009
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Biography
Dinah Adkins retired in August 2009 after 21 years as President and CEO of the National
Business Incubation Association; she now holds the title President Emeritus. During her tenure,
Ms. Adkins oversaw all activities of the 1,900-plus member organization of incubator managers
and developers and headed a staff of 14. NBIA currently has members representing 67 nations.
Under Adkins‟ direction, the Association increased revenues and membership many-fold and
developed an array of member services including publications, training, research, consulting
(domestic and international), and information clearinghouse activities. Ms. Adkins has been an
invited speaker throughout the world and has been widely published on the topic of business
incubation. Prior to assuming her position with NBIA, she was founding staff of the Ohio
University Innovation Center from 1982 until 1989; she also worked in journalism. She holds
Bachelor‟s and Master‟s Degrees in English from Ohio University.
Volume 3, No. 3, 2009
17
Exemplary North American Incubators
The following represents a small list of exemplary North American business incubation
programs – all focused on technology companies. This list is not intended to be exhaustive and
includes some university-based programs but also independent programs and for-profits; I have
also noted several relatively new programs and provided a brief explanation of each.
Mr. Dan MacDonald, President & CEO, InNOVAcorp Corporate
1801 Hollis St., Suite 1401 Halifax, Nova Scotia B3J 3N4, Canada
902-424-8670, 902-424-4679 (fax)
[email protected], [email protected], http://www.innovacorp.ca
Innovacorp Corporate operates two incubator facilities (biotechnology and technology) in Halifax
and also invests in new companies.
Ms. Marie Lussier, Manager, NRC Industry Partnership Facility
Building M-50, IPF/IPI 234A, 1200 Montreal Rd., Ottawa, Ontario K1A 0R6, Canada
613-998-6755, 613 998-6755, 613-993-8054 (fax)
[email protected], http://www.nrc-cnrc.gc.ca/eng/facilities/ims/ipf.html
Offering more than 60,000 square feet of laboratory and office space and specializing in linking
companies to National Research Council of Canada programs.
Dr. Juan Villalvazo Naranjo, Incubator Manager, Universidad de Guadalajara
Apdo Postal 307, Zapopan, Mexico
52--333-633-7034, 52--333-836-4502 (fax)
[email protected], http://www.dip.udg.mx
The Incubatora de Empresas is the first technology incubator in Mexico, founded at the
University of Guadalajara in 1992 and managed since its beginning by Dr. Juan V. Naranjo.
Ms. Melinda Richter, CEO/Executive Director, Prescience International/San Jose BioCenter,
5941 Optical Court, San Jose, California 95138, United States
408-960-3807, 408-960-3822 (fax)
[email protected], [email protected], http://www.sjbiocenter.com/
http://www.prescienceintl.com
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
The San Jose BioCenter is an NBIA award-winning program (2009) managed by Prescience
International that is currently in the process of doubling laboratory and office space to
approximately 80,000 square feet.
Ms. Melinda Richter, CEO/Executive Director, Prescience International Environmental Business
Cluster, 2 N 1st St., 4th Floor, San Jose, California 95113, United States
408-938-3920, 408-271-1904 (fax)
[email protected], [email protected], http://www.environmentalcluster.org
The Environmental Technology Cluster, now managed by Melinda Richter, has served more than
150 companies in its 15 years of existence.
Mr. Carl Weissmen, President & CEO, Accelerator Corp.
1616 Eastlake Ave. E., Suite 200 , Seattle, Washington 98102
206.957.7300, 206.957.7300, 206.957.7399 (fax)
[email protected], http://www.acceleratorcorp.com/home
Associated with the Institute for Systems Biology founded by Dr. Leroy Hood, Accelerator is the
most famous for-profit business incubation program focused on life sciences and has raised $150
million for its clients since 2003.
Ms. Susan W. Matlock, President & CEO, Innovation Depot
1500 1st Ave. North, Birmingham, Alabama 35203, United States
205-250-8000, 205-250-8013 (fax)
[email protected], http://www.innovationdepot.net
Innovation Depot recently moved to a 140,000 square foot facility near the University of Alabama
at Birmingham where it houses more than 50 companies and has room for another 20 to 30; This
incubator and several predecessors have been managed by Susan Matlock since 1987.
Mr. Tom O'Neal, Ph.D., Director, University of Central Florida Incubation Program
12201 Research Parkway, Ste 501, Orlando, Florida 32826, United States
407-882-1120, 407-823-3299 (fax)
[email protected], http://www.incubator.ucf.edu
An NBIA award winning program (2004), this incubator was founded with close ties to the
university in 1999 and has since spun out an additional five incubation facilities in the region.
Volume 3, No. 3, 2009
19
Dr. N. Stephen Ober, Executive Director, New Ventures, Boston University Business Incubator
53 Bay State Rd., Boston, Massachusetts 02215, United States
617-353-8996, 617-353-6164 (fax)
[email protected], http://www.bu.edu/otd/incubation
Opened in 2006, the Boston University Business Incubator has already served more than 20
companies that have created hundreds of jobs and raised more than $90 million.
Mr. Lance Weatherby, Venture Catalyst, Advanced Technology Development Center
75 5th St. Northwest, Suite 100, Atlanta, Georgia 30308, United States
404-385-7410, 404-894-4545 (fax)
[email protected], [email protected], http://www.atdc.org
One of the first U.S. technology business incubator, ATDC started in 1980 and now runs three
incubation facilities and an accelerator program that offers services over a wide region.
Ms. Bonnie Herron, Executive Director, Gwinnett Innovation Park
4355 Shackleford Rd., Norcross, Georgia 30093, United States
770-381-2900, 770-381-2808 (fax)
[email protected], [email protected],
http://www.gwinnettinnovationpark.com
Ms. Herron has managed the for-profit Gwinnett Innovation Park and its predecessors since 1987.
Gwinnett is owned by Intelligent Systems, a publicly-traded holding company that maintains a
portfolio of firm investments.
Mr. Wayne K. Barz, Manager of Entrepreneurial Services, Ben Franklin TechVentures
115 Research Dr., Bethlehem, Pennsylvania 18015, United States
610-758-5261, 610-849-5001 (fax)
[email protected], [email protected]
http://www.nep.benfranklin.org/cwo/Incubator_Network/Ben_Franklin_TechVentures/?id=69&id
2=78
Initiated in 1983 under a different name, this incubation program now resides in 62,000 square
feet in space formerly occupied by the Bethlehem Steel research laboratories and now owned by
Lehigh University.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
References
1
As business incubation has proliferated across the United States, individual senators and
members of the House of Representatives have voiced greater support, given that these
politicians can see the beneficial effects of business incubators that already exist in their states.
Support by President Obama is still nominal, in that he included funds for incubators in his
platform as a candidate and in his proposed 2010 budget; but the new president has not yet
shown he would fight for further support of business incubation.
2
NBIA Investigates…The Case of the Oldest Incubator (1990). NBIA Review, 6(3), pp. 12-13.
3
Adkins, D. (2002). A Brief History of Business Incubation in the United States, National
Business Incubation Association, p. 5.
4
Temali, M. & Campbell, C. (1984). Business Incubator Profiles: A National Survey, Hubert H.
Humphrey Institute of Public Affairs, University of Minnesota.
5
Ibid.
6
Adkins, A Brief History of Business Incubation in the United States, p. 12.
7
Birch, David. (1988). Job Creation in America, The Free Press.
8
Boyd, Kathleen. (2006). Developing a Business Incubation Program – Insights and Advice for
Communities, National Business Incubation Association.
9
Molnar, L. et al. (1997). Business Incubation Work, National Business Incubation Association.
10
11
NBIA chart based on association data.
The EDA-commissioned report of EDA-funded incubators did not examine job-creation costs
based on total investments in these projects. It only looked at cost-per-job based on EDA
funding. Normally (though this can vary), EDA requires a 100 percent financial match by local
and/or regional investors.
12
Grant-Thornton (2008). Construction Grants Program Impact Assessment Report, prepared for
the U.S. Department of Commerce Economic Development Administration, and announced in a
January 2009 EDA newsletter. Download the report here:
http://www.eda.gov/PDF/EDAConsImpactStudyVolume1FINAL.pdf.
13
Download the initial draft bill here:
http://www.nbia.org/resource_library/works/files/Brown_Legislation.pdf
14
National Business Incubation Study. EDA Project No.99-06-07535.
15
Adkins, D. Unpublished.
Volume 3, No. 3, 2009
21
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Incubation Policy on Innovation and
Entrepreneurship in Taiwan
Benjamin Yuan* and Michael B.H. Lin**
Abstract
Taiwan has the highest density of incubators in the world. There are 104 incubators located
around the island. Since the 1997 establishment of the first incubator, the government soon
supported it as an economic tool for innovation and entrepreneurship. With the change in the
global economic and social situation, Taiwan incubation policies have transformed gradually.
The Small and Medium Enterprise Administration (SMEA), Ministry of Economic Affairs (MOEA),
is responsible for incubation policy. It provides not only funding for incubators but also
management guidelines for daily incubation service. Improving incubation policy can pave the
way for superior results and professional service.
The Business Incubation Network is a collaborative nation-wide community of business
experts and resource facilities dedicated to enhancing the success of early stage entrepreneurial
companies. The Business Incubation Network does this by providing more professional
consultation and by supporting government‟s economic growth strategy in Taiwan. It makes a
huge impact for incubatees through the incubation network program. This paper outlines the
progress of Taiwan incubation policy and the critical issues. National Chiao Tung Innovation
Incubation Center (NCTUIIC) is the typical case of a university-based incubator. By providing
better services for tenants, NCTUIIC makes huge efforts in adjustment and leverage of the
resources in the local community.
Keywords : Business Incubation Network, Entrepreneurship, Incubation Policy
*
Professor, Graduate Institute of Management of Technology, National Chiao Tung University, Vice President, Asia
Association of Business Incubation (AABI), President, Chinese Business Incubation Association (CBIA) E-mail:
[email protected]
**
Senior Manager, National Chiao Tung University Innovation Incubation Center, E-mail: [email protected]
Volume 3, No. 3, 2009
23
1. The Incubation Policy in Taiwan
The incubation centers in Taiwan have been promoted since 1996 by the rule of the Key
Points of Encouraging Public & Private Institution Establishing Innovation Incubation Center
from the Committee of Small and Medium Enterprise Development Fund of the MOEA. The
Regulation of SME Development (No.4, No. 9 & No. 30) and the Regulations for the Operation of
SME Development Fund (No. 6) are the critical sources of law for incubators in establishment and
subsidy. The incubator is one of the government policy tools to improve Taiwan as the AsiaPacific Manufacturing and R&D Center by integrating technology, manpower, information and
practice for enhancing the capability of SMEs. At the initial stage of Taiwan incubation, the Small
and Medium Enterprise Administration, MOEA, provided limited subsidy and essential assistance
for setting up incubators. The city government, the R&D institution, university, public sector and
private sector are the targets encouraged to establish incubators.
1.1 The Status of Taiwan Incubators
The MOEA has subsidized incubators in excess of NTD $1.7 billion in the period from
1997 to 2009. With this subsidy, productive results have been achieved in various aspects in 3,840
incubatees, 78,068 employees, 2,428 patents, 1,118 cases of technology transfer and 49 IPO
companies. Among the total of 104 incubators, 79% are university-type incubators, 9% are
government-funded incubators, 9% are nonprofit corporation incubators, and 3% are private
incubators. At this moment, Taiwan incubators include 45 incubators in the north, 24 incubators
in the middle, 30 incubators in the south and 5 incubators in the east.
In the development period of incubation, the government plays a critical role in promoting
incubators and planning related policies. To reflect the shifting social economic environment,
Taiwan incubation policies have experienced several changes with the focus changing from
quantity to quality. This evolution truly reflects the government‘s expectation in the matter of
incubation direction and resources allocation. The government‘s report planning an SME
innovation incubation center in 1994 kicked off incubation activities and made possible analysis
of Taiwan incubation. This was studied by Dr. Benjamin Yuan, Professor at the National Chiao
Tung University. Two years later, the Key Points of Encouraging Public & Private Institution
Establishing Innovation Incubation Center was published. The additional two regulations, the
Regulation of SME Development and the Regulations for the Operation of SME Development
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Fund, became the primary source of law for promoting and funding SMEs. Therefore, the first
incubator was established by Industrial Technology Research Institute (ITRI) in 1997, and
numerous university-type incubators were created separately. These became the main body of the
Taiwan incubator. At the time, through policy encouragement, the number of incubators increased
rapidly, but some issues emerged. The capability of raising capital, gathering market information,
and consulting management for each incubator was not adequate. In 2001, the MOEA launched
―Strengthen the Function of SME Innovative Incubation Program‖ to enhance the advantages of
incubators through six measures. These measures represented different views of resources such as
building up a fine-quality incubating environment, expanding service functions of incubators,
fostering the cluster effect of regional incubators, training professional managers and specialists
of incubators, popularizing the incubation concept, and constructing an evaluation system to
examine incubating performance. It gave a single incubator the opportunity to build up its
capability of value-added services. Although most incubators had diverse capabilities, the
government enthusiastically integrated an informative platform and financial platform as the hub
of ASIA Entrepreneurship Center (AEC). The three key bodies of AEC such as the incubator,
knowledge and seed money had spun into different elements constructing the main policy from
2002-2008.
ASIA
Entrepreneurship Center
Function
Incubating Function
Information Platform
Capital Funding
Body
Incubator
Knowledge
Seed Money
Element
•Basic Service
•Development
•Professional
•Collaboration
•Evaluation
•Consultation
•Education/ Training
•Web Network
•Competition
•Investment
•Loan
•SBIR
•Credit Foundation
Source: MOEA, 2002
Figure1: The Plan of ASIA Entrepreneurship Center
Volume 3, No. 3, 2009
25
There is no doubt that high-tech startup companies always lack sufficient capital,
technology, marketing, talent, management skill and industrial relationship. They need
professional services including product and marketing information, IP analysis, patent application,
and BP planning. The two most critical issues in startups can be simply generalized as innovating
technology and the business model. It is important to arrange the best composition between these
two factors in every phase of the business life cycle. For incubators, it is not only integrating
professional services but also coordinating seasoned experts for incubatees to consult about the
best business model and strategies in the era of knowledge economy, Taiwan needs innovationoriented SMEs with unique advantage in global competition. It requires the government to
evaluate whether an incubator can match up with the change of social economy to generate
successfully innovating SMEs.
At the university level, the three parts responsible for the collaboration of academicindustry are the business incubator, academic-industry collaborative office and the technology
licensing office.
Each of them works independently without horizontal coordination and
collaboration. This wastes resources and provides no synergy. Therefore, the Industry-Academy
Collaboration & Value-added Incubation Program (IACVI Program) was conducted by the top
level of government, the Technology Consultant of the Executive Yuan, who has been integrating
cross-ministry resources since 2008. The key performance index of the IACVI Program will be
tested by the numbers of innovating startups. As for the incubation policy, the distinguishing
characteristic and differentiation will create potential new ventures based on the bright strategies
of improvement. Each incubator struggles to complete its target without getting value-added
assistance from the Business Incubation Network, the key function of IACVI Program. The
Business Incubation Network is designed to link incubators, consultants and marketing activities
together to complement the incubator.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
3. Screen/ Plan/
Guidance
1. Incubator Improvement
University RD
Commercialization
Business
Incubation
Network
Classification
Professional
Service
Tenant’s
Feedback
Screen/ Guidance
Mechanism
RD Planning
Service
4. Program
Management
Tracking
System &
Constancy
2. Environment Construction
RD Planning Data Bank
Entrepreneurial Information
Investing Mechanism
Incubating Talent
Case Study
Source: MOEA, 2007
Figure 2: IACVI Program
1.2 Key issues in Taiwan Incubation
The SMEs are the vital support of the economy providing 76% of total job opportunities in
Taiwan. These firms lack competitive differentiation, essential assistance, adequate capital, R&D
capacity and international marketing when they face severe global competition. The
comprehensive governmental program in innovation and entrepreneurship can stimulate newgeneration startups and activate traditional enterprises. The business incubator as the important
policy tool for economic growth should pay more attention in the transformation of SMEs by
providing integrated service. Now the university-type incubators, which are in the majority in
Taiwan, are influencing the entrepreneurial activities on campus. They have confronted some
issues:
1) Limited Budget
The financial source of incubators is mainly dependent on government subsidy and
university support. Less than one-third of revenue comes from tenants, and it shows that it is less
capable of generating revenue by itself especially in valuable incubating service.
Volume 3, No. 3, 2009
27
2) Ordinary Service
Without seasoned talents in marketing, financial, legal and international business affairs,
incubators provide a limited spectrum in incubating service, but otherwise the administrative
support is highly appreciated.
3) Non-focus Incubation
The incubator accepts diverse technology-based tenants to create a higher occupancy rate in
order to reduce the growing budget gap; meanwhile, it is difficult for incubatees to become a
cluster causing the mutual collaborative effect to be eliminated. The high turnover rate of
incubating managers is another factor in providing unstable incubating service. Without creating
the SOP in incubators, the collective incubating knowledge and business resources can not be
transferred to the next tenant.
1.3 Policy Adjustment and Complementary Mechanism
Start from 2008, there are four Business Incubation Networks created by four host platforms
in the IACVI Program: Information and Communication Technology Application (ICTa), BioMedical Electricity, Green Energy, and Cultural Creativity. The purpose of the Incubation
Network is to encourage mutual collaboration between incubators with complementary incubating
characteristics in order to develop full spectrum services for incubatees. The services in the
platform of Business Incubation Networks include:
1) have the capacity of internationalization and assist international marketing channels through
overseas exhibition and business matching
2) have the experience of cross-industry alliance and the capacity to assist vertical or horizontal
integrations
3) have the relationship for sharing resources and the capacity to perform well
4) have the databank of incubating experience for successful case study and sharing
5) have a comprehensive talent pool for providing consulting services
6) have the passion to coordinate partners of incubators and bring benefits throughout the
network
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Experts‘
Training
Program
Evaluation
Consultation
Academic-Industry
Collaboration
International
Marketing
Planning Office
Incubation
Experts/ Service
Providers
Create New
Venture
Public
Association
Network
Candidate Tenant
Seminar
Incubation
Network
Members
Workshop
Blue print
Case Study
Coordinating Meeting
Propagation
Source: NCTUIIC, 2009
Figure 3: Incubation Network Service Map
Since then, the incubation policy has been changed and consequently the public resources
start to move. It will progressively affect the suitable transformation in each incubator. For the
reason of building up the specialized incubating mechanism and competitive advantage,
incubators should analyze how to leverage the resources of the Business Incubation Network to
fulfill its incubating capacity. National Chiao Tung Innovation Incubation Center (NCTUIIC) is
the typical case of a university-based incubator. By providing better services for tenants,
NCTUIIC makes efforts in adjustment and leverages resources from the local community and the
Business Incubation Network.
2. NCTU Innovation Incubation Center
With excellent science and technology based research and laboratories, National Chiao
Tung University (NCTU) is the cradle of Taiwan high-tech talents, especially in the fields of
Volume 3, No. 3, 2009
29
information, communication and electrical engineering. NCTU is located in the heart of the
Taiwan technology industry, adjacent to the Hsinchu Science Park which consists of more than
400 high-tech companies. There are a lot of entrepreneurial environments around the Hsinchu
area, so the NCTU Innovation Incubation Center (NCTUIIC) took advantage and established in
1997 for the nurturing of high-tech companies.
Besides the original base on campus, NCTUIIC chose a second location inside the Hsinchu
Science Park for nurturing SoC (System on a Chip) related companies. By constructing a small
industrial value-chain within incubating premises, NCTUIIC has developed a renowned SoC
cluster at the incubation level. This cluster consists of an IC designer, IC packaging, an EDA tool
provider, an IP provider, and Test providers, all of whom have been incubated in NCTUIIC. In
terms of public resource reallocation, NCTUIIC is thinking how to be in harmony with
transformed policy through the adjustment of its organization, strategy and practice in order to
maintain the competitive advantage in the local economy.
2.1 Organization integration
In order to facilitate the commercialization of academic R&D, NCTU integrated the
Technology Licensing Office (TLO), Technology Service Center and IIC into the Focus Center of
Academia-Industry Collaboration (FCAIC) as the single window of collaboration toward industry.
FCAIC created a smooth procedure for academic commercialized R&D from technology
transfer to new venture; meanwhile, FCAIC constructed an integrating database to make demand
and supply analysis and provide matching opportunities. NCTUIIC fully utilized all information
provided by FCAIC to create value-added activities for university spin off companies. In 2008,
NCTUIIC successfully incubated 5 spin-off companies and have spun off 8 companies this year.
2.2 Operating Strategy
NCTUIIC used to be an ordinary incubator in the past, with only a good reputation on
campus and in local industry. Now, NCTUIIC should create a more active influence and
promotion in entrepreneurship. Three strategies were implemented to achieve improvements and
the result is that NCTUIIC has been promoted as an A-class incubator since 2008.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Strategy 1: Focus on Value
Less is More
The daily operation in the incubator is massive and complex. NCTUIIC set up criteria for
operation:
1) having benefits for incubates
2) having interest for NCTU
3) providing positive learning for colleagues
Based on the input-output model, NCTUIIC will pay more attention in controlling the cash
flow and in evaluating results. It will screen out the less valuable matters and focus on the heart of
the incubation. Periodic visiting, active promotion and network activities are targeted for the CEO
to bring resources, industrial linkage, and positive reputation by NCTUIIC‘s great efforts.
Core Value
Integrating all kinds of resources around the incubator became the valuable tools for
delivering value proposition. This is the core business of NCTUIIC. NCTUIIC prepares four
aspects in technology collaboration, capital raising, marketing activity and industrial network.
NCTUIIC also leverages assistance from the Business Incubation Network through the use of
senior consultants, marketing channels, and business training and incubation workshops. The key
is the status of demand and supply should be identified accurately.
Partnership
Emphasizing a partnership with tenants instead of a common landlord-tenant relationship
can change the attitude toward obtaining the mutual goals. NCTUIIC diversifies the range of
services and activities that commit to strong partnerships with tenants. The successful rate of
tenants is the only index for the incubator. So NCTUIIC tries best to turn service into business
value for tenants. It motivates tenants to participation.
Strategy 2: Create the Opportunities
SoC Cluster
NCTUIIC strove for the launching of a SoC incubator within the Hsinchu Science Park in
2005, and this has gradually grown into a SoC cluster. The great advantage of SoC tenants is the
ability to get into the Hsinchu Science Park environment even when they are fragile and unstable.
Volume 3, No. 3, 2009
31
With the upstream and downstream players around them, the SoC tenants easily build up business
relationships and develop tight interactions with others. After a three-year-incubation, most
tenants choose to get permission from the Hsinchu Science Park to enlarge their business. Five
companies have been through that shuttle successfully.
CEO Club/ Angel Club
For building the communities on the level of CEO, NCTUIIC took the initiative in forming
the CEO Club. The CEO Club is designed for knowledge sharing and interaction via periodic
meetings over the course of a year. It provides an opportunity to have dialogue with other
entrepreneurs. The Angel Club is aimed for incubatees. This club matches angels, potential
financial investors, with suitable tenants. It is the concept of virtual funding. The angels commit
to review startups then invest separately.
Incubators Alliances
It is necessary for NCTUIIC to join subordinate groups among national incubators and to
play a vital role in sharing the capability of incubating resources. NCTUIIC is the key member of
Taiwan Innovation Alliance and the Bio Medical Incubation Strategic Alliance and participates
aggressively.
Internationalization
Internationalization is the trend for incubators that have to provide international
collaboration. Inviting a foreign company or institute to garrison locally can create interaction
between incubatees and local industry. IMEC, a world-leading independent research center in
nanoelectronics and nanotechnology at Belgium, is NCTUIIC‘s tenant making further
collaboration with NCTU and the SoC industry.
To obtain international visibility, NCTUIIC aggressively discusses possible staff training and
exchange collaborations with famous universities in Japan and Singapore. At present, NCTUIIC
has entered a Memorandum of Understanding (MOU) with Tokyo University of Agriculture and
Technology (TUAT) for the plan of reciprocal staff visits and training beginning in 2010.
Strategy 3: Move Forward
Business Mindset
A clear annual target and budget can produce the best performance by input-output analysis
at NCTUIIC. Staff should receive clear and quick information through an internal system to avoid
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
failed communication. It is important to give authorization for staff; a staff member can receive
great achievement and the ability of self-examination. To meet tenants‘ satisfaction, some
incubating services are set aside as non-free services for high-quality purposes.
Leadership
The director and manager are the key members of the incubator. Not only do they set the
incubating direction and target, but they need to communicate with tenants and the university to
eliminate misunderstandings. Professor Ching Yao Huang, director of NCTUIIC, is familiar with
enterprise activities by his entrepreneurial experience and provides practical suggestions for
incubatees. He can direct incubating activities when needed, resulting in valuable assistance for
tenants. A seasoned manager is essential for the execution of incubating activities, being the
primary communicator among officers, stakeholders, incubatees, and staff. The most important
characteristic for these positions is a passion for incubation.
Reaction
Quick response is the primary principle in the service sector. It is quite the same when an
incubator deals with tenants‘ complaints. There are several, diversified companies in a small
space. These space and resource constraints can make it difficult to satisfy all tenant complaints.
The key is how tenants‘ will feel when they are not cheerful.
2.3 Participation in Government Incubation Program
Business Incubation Network
The advantage for the NCTUIIC-participating ICTa Business Incubation Network can be
described into three phrases:
1) Academic-Industry Collaboration and Consultation
Leverage consultation services from the Business Incubation Network to academic R&D
team. It will match the potential industrial clients and help to form a new venture.
2) Advisory and Diagnostic Service
Leverage professional services from the Business Incubation Network to incubatees in six
layers: Technological Advice, Intellectual Property, Business Management, Financial Planning,
International Collaboration and International Marketing. Linking with experts in the Business
Incubation Network creates an incubating advantage by providing better service.
Volume 3, No. 3, 2009
33
3) Co-host Activity and Plan
Being the core member of the Business Incubation Network, NCTUIIC co-hosts some of
the activities and workshops to expand NCTUIIC‘s influence. Through learning by doing,
NCTUIIC enhances its capability in incubation events.
Academic Start-up Program
While the global depression occurred this year, the Taiwan Ministry of Education (MOE)
launched the University Start-up Program (Ustart Program) for graduate students to develop new
ventures. NCTUIIC is responsible for nurturing 14 startups with a government subsidy of US
$65,000 by the NCTU new venture creation process. The entrepreneurial activities consist of
business courses, visiting manufactures, BP coaching, mentor advice, technology exhibition and
matching strategic partners. NCTUIIC also leverages the diagnostic mechanism of the Business
Incubation Network for assisting academic startups.
Move into
NCTUIIC
Training Course/Sharing
Enterpreneruship/Mentor/Information
Verification/Testing
Core Technology
Business Model
Feasibility
Study
Business Plan
New Venture
Creation
Source: NCTUIIC, 2009
Figure 4: NCTU New Venture Creation Process
3. Conclusion
Increasing global competition will lead enterprises to develop their own competitive
advantage in the global market, and it is especially difficult for those emerging companies without
abundant resources. For filling the gap, the incubator needs to figure out the situation and focus
on the service that could enhance competition and market value for tenants.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Table1: NCTUIIC Index
Item
2006
2007
2008
2009
Tenants
24
26
27
32
Occupation Rate
97%
98%
95%
97%
Revenue (KNTD)
14,067
20,727
19,889
20,500
Profit(KNTD)
409
537
1,828
1,500
Source: NCTUIIC 2009
NCTUIIC is devoted to value-added incubating businesses in order to achieve great
performance. Since 2008, NCTUIIC has received the Best Incubator in Taiwan award twice. With
more diversified and complex matters in incubation, NCTUIIC is improving its adaptability and
knowledge base for any future possibilities. A trend is taking shape in Taiwan incubation that
could significantly change the way incubators perform. Project-based subsidies and networking
collaboration will be main concepts of incubation. In the new era of open innovation, incubators
will be positioned as the integrating platform with certain specialties that can connect them all.
Volume 3, No. 3, 2009
35
Reference
Cheng H.A. (2004). Taiwan Incubation Status and Performances, Taiwan Research Institute
Gillespie K., Jeannet J.P., HennesseyD. (2007). Global Marketing, Houghton Mifflin
Lin B.H.(2009). The introduction of NCTUIIC, NCTUIIC
Lai R. (2004). 2003 White Paper of Taiwan Incubation, SMEA, MOEA, Taiwan
Lai R. (2006). 2005 White Paper of Taiwan Incubation, SMEA, MOEA, Taiwan
NBIA (2005). NBIA Best Practice, National Business Incubation Association
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Business Incubation in Australia:
Policies, Practices and Outcomes
Michael T. Schaper* and John Lewer**
Abstract
This paper provides a brief overview of the development of business incubation across
Australia. The first incubators appeared in the country in the early 1980s, funded by state and
territory governments. This was shortly followed by an extensive program of support from the
federal government, which led to a rapid expansion from 49 incubators in 1996 to almost one
hundred in 2005.
Australian incubation has a number of distinctive characteristics. Most have usually been
initiated and subsequently managed by a local municipality, regional economic development
organisation or business group, with support from government. Almost all incubators operate as
not-for-profit ventures. Government assistance is usually directed towards the establishment of
centres, rather than supporting their on-going operations.
The most common form are either stand-alone models, or else ones embedded with other
small business support centres; technology-based incubators represent a much smaller
proportion of the overall incubator population, and there is a relatively low level of involvement
by universities and the research sector.
Australian incubators are, in the main, focused on providing support to the general small
business community and nascent entrepreneurs, rather than on commercialising technology from
research bodies. The emphasis has therefore been on providing affordable, flexible office space
for tenants; access to shared resources; business advice and help; and links to professional and
commercial networks, rather than commercialisation through technology transfer and capital
inflows.
Key words: Australia, economic development, business incubator, Business Enterprise Centre
*
**
Ph.D., Adjunct Professor, Curtin University of Technology, Western Australia, 5a Young Street, Barton ACT 2600
Australia, Phone: +61 423 731 311, E-mail: [email protected]
Ph.D., Senior Lecturer, Faculty of Business and Law, The University of Newcastle, NSW 2308 Australia, Phone: +61 2
49 216814, E-mail: [email protected]
Volume 3, No. 3, 2009
37
Introduction
Like many other developed economies, policy makers and business development advocates
in Australia first began to take notice of the business incubator concept in the early 1980s.
Encouraged by the early successes of this new tool in enterprise development, incubation received
strong levels of support and interest from government and the business community. By 2005,
there were almost one hundred incubators operating across the country, in a variety of different
formats and business models. More recently, however, incubation has begun to focus on a number
of challenges that lie ahead of it. The number of operating incubators has declined slightly and, as
in a number of other nations, the sector has to face the challenge of making itself financially selfsustainable.
This article provides a brief overview of development in Australian business incubation
over the last quarter of a century. It begins by providing readers with some background on the
relevant economic and governmental structures operating in Australia, and gives a brief history of
the sector. The paper then analyses the current size and state of the incubator community, looks at
the level of research into the field, and concludes by identifying some of the challenges which it
faces today.
The Australian Business Context
In analysing the history and development of Australian incubation, it is important to bear in
mind a number of important country-specific features. Each has had an impact on the
development, funding and support of business programmes, including those focused on
incubation.
As is the case in most OECD nations, Australia has a large number of small-to-medium
sized enterprises (SMEs), and a high level of business entries and exits each year. Data from the
Australian Bureau of Statistics (2007) indicates that in 2007 there were just over 2 million trading
enterprises, of which 1.7 million (approximately 84%) were micro-enterprises and 300,000 (or
15%) were classified as small-to-medium sized. In that same year, some 330,000 new businesses
commenced trading, whilst another 285,000 firms exited or ceased to operate (ABS 2007).
A certain level of firm turnover or ―churn‖ is to be expected in any effective market
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
economy (Schumpeter 1934). There are often gains for the economy as more efficient surviving
firms, providing better services, displace their less effective competitors. However, analysis of
the turnover phenomenon in Australia has repeatedly indicated that the risk of business cessation
is highest amongst young firms, newly-formed enterprises, and those with very small staff
numbers (Bickerdyke, Lattimore and Madge 2000: xviii, 19; ABS 2007). Whereas the overall rate
of business exit in Australia appears to be in the vicinity of 8-10% per annum, research by the
Organisation for Economic Co-operation and Development (OECD 1999) suggests the cessation
rate for incubator tenants is significantly lower. Such figures tend to support the argument that
incubation can provide a useful service within the Australian SME context.
In addition to its business demography, an important issue to note is that the
Commonwealth of Australia is a federation consisting of six states and two territories.
Responsibility for economic development and business support has been largely the traditional
province of state or territory governments, although large-scale national infrastructure
developments, such as telecommunications and energy markets, have gradually come to fall
within the scope of the federal (Commonwealth) government. Nevertheless, most funding for
business development and small firm assistance programs has usually been provided by the state
and territory governments and their agencies. As federal-state relations have changed, the federal
government has become increasingly involved in funding economic programmes and developing
policies for the small business sector. In recent years, for instance, various federal governments
have funded initiatives such as a ―Building Entrepreneurship in Small Business‖ program through
incubators; Small Business Field Officers to facilitate mentoring, skills development and advisory
services to small businesses; a Small Business telephone helpline; and a Small Business Online
Program (Yeun 2007; AusIndustry n.d. 1; AusIndustry n.d. 2).
Another distinctive characteristic of the business development sector has been the
emergence of free (as opposed to fee-paying) government-sponsored business advisory services
across Australia. Beginning in 1987, most state and territory governments began to fund support
organisations, most commonly known as Business Enterprise Centres (BECs), with a mission of
providing assistance to new and existing small firms. The Centres were responsible for providing
free or subsidised help to entrepreneurs seeking to start new businesses, assisting firms seeking to
grow or improve their operations, and to work alongside small enterprises in distress. Such help
took a variety of forms, including direct one-to-one advice, help with business planning,
management skills development, training, coaching, mentoring and access to financiers.
Volume 3, No. 3, 2009
39
A final notable feature is that forms of assistance to entrepreneurs and the small business
sector has traditionally varied from one time period to the next: fashions and trends in how to
support new and growing firms have often changed. Governments and policymakers have often
experimented with one or another policy tool to foster the sector, and then, after a few years,
moved on to focus instead on another tool. In the early 1990s, for example, benchmarking was
often seen as a critical ingredient to helping firms grow; however, by the mid-1990s this had been
replaced by an emphasis on other techniques, such as the adoption of quality assurance standards.
Australian governments have generally been unwilling to indefinitely fund programs on an ongoing basis, especially if they cannot demonstrate their effectiveness.
The Evolution of Australian Incubation
Business incubators began to first emerge in Australia in the early 1980s, when a number of
state governments began to initially sponsor such developments within their own jurisdictions.
Early programmes emerged in the states of Western Australia, New South Wales and Queensland,
as well as in the Australian Capital Territory. By 1989 incubators were operational in almost all
the states (Bhabra-Remedios and Cornelius 2003). Increasing interest in the concept, and the
development of some successful incubators during this time, led to federal government
involvement beginning in 1991 (ANZABI 2004).
The development of Australian incubators was typically fostered by local groups in a
distinct geographical region or community, working with the support and encouragement of
federal government. Most projects were usually initiated by a local municipality, regional
economic development organisation (such as a Chamber of Commerce or industry association), a
community group, or – more typically – a coalition of these bodies. Once established, oversight
and responsibility of the incubator was often vested in a broad-based management committee with
representatives from most, if not all, of these groups. An important part of feasibility analysis
therefore typically included the identification of not only potential client incubator tenants, but
also stakeholder groups which could help manage the incubator (BIIA 2009).
The variety of incubators that subsequently emerged adopted a number of different forms.
Many incubators were stand-alone generic enterprises, open to any interested firm and managed
by an independent voluntary body. However, a substantial number adopted an ‗embedded
incubator‘ model, in which they were co-located with local small business advisory centres, such
as BECs.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Given that BECs are themselves structured as not-for-profit entities, and that their raison
d‟etre has been to provide advice and support to new firms, there has always been a high degree
of synergy between the two forms of business support. Between them, stand-alone and embedded
incubators represent the largest proportion of Australian incubators.
A smaller, but still significant, group of incubators were the technology-focused centres.
Technology incubators first began to develop a significant role in 1999, when the federal
government announced the establishment of some ten centres under a specialised ‗Building on
Information Technology Strengths‘ (BITS) program (Allen Consulting Group 2003; BIIA 2009).
As a result of these initiatives, the number of incubators across the country grew
substantially throughout the 1990s and 2000s. In 1996, for example, there were some 49
incubators in Australia; by 2004 there were almost one hundred (ANZABI 2004: 6, 10).
The growing number of incubators also led to a need for better internal co-ordination of the
network of incubator managers. In the late 1980s centre managers and boards created the
Australia and New Zealand Association of Business Incubators (ANZABI). Membership of the
organisation was drawn from across the incubator sector, and focused on sharing and
disseminating information, upgrading the skills of incubator staff, liaising and advocating to
government, raising the profile of the incubator sector, and promoting ‗best practice‘ industry
performance. Despite the name, most of ANZABI‘s membership was drawn from Australia, and
in 2004 it was renamed Business Innovation and Incubation Australia (BIIA). By mid-2009, BIIA
counted in its membership over half (some 45) of all incubators in the country.
Overall, incubators appear to have made a significant contribution to the development of
many small firms. According to one study, in March 2005 there were an estimated 1,200 tenant
businesses in incubators across the country; another 1,300 firms had already departed from
incubators between 2000-2005 (BIIA 2009). Citing unpublished AusIndustry data, the BIIA
estimated that ‗assuming a conservative annual turnover of $250,000 per graduate,‘ the incubator
industry had ‗directly facilitated more than $875 million in SME sales‘ (BIIA 2008: 5).
Key Characteristics of the Australian Incubation Sector
In some respects, the Australian business incubation sector may have peaked by about 2005.
Volume 3, No. 3, 2009
41
Since that time, the number of operative incubators appears to have declined – an early 2009
survey of the sector, for example, indicated that there were now approximately eighty incubators
in operation. Nevertheless, the first quarter-century of the Australian business incubator
community has seen the evolution of a business development model that has some distinctive
characteristics.
Most noticeably, almost all incubators developed to date have been built on a not-for-profit
basis. Few profit-based centres exist, and most others have simply sought to break even. Whether
it is a stand-alone, embedded or technology incubator, funding for the establishment of each
center has typically come from a state or federal government grant to purchase a building –
usually an existing premises which is then renovated and made fit for purpose (such as an old
primary school), although in some limited cases funds have been given to construct a completely
new building. Some funds have, on occasion, also been given to meet the original fitout and
commencement of the incubator. However, once an incubator has been established and
commenced trading, incubator managers have generally worked on an ―operating cost recovery‖
basis when setting fees for their tenants. Few, if any, incubators have attempted to fully recoup
their extensive capital costs through the fees they charge incubatees. Management of most centres
has typically been vested in an incorporated not-for-profit legal entity, further reinforcing the
charitable nature of the venture.
Another distinguishing feature of the Australian sector is the relatively low level of
involvement by universities and the formal research sector. Whilst there are a number of
incubators with formal links to tertiary institutions (such as the University of the Sunshine Coast‘s
innovation centre), these are the exception, not the rule. Whereas some nations such as South
Korea have developed national incubator systems that are strongly (if not principally) focused on
technology transfer, Australian incubation has more frequently been focused on assisting the
general small business community and nascent entrepreneurs, rather than on commercialising
technology from research bodies. The emphasis has therefore been on providing affordable,
flexible office space for tenants; access to shared resources; business advice and help; and links to
professional and commercial networks, rather than commercialisation through technology transfer
and capital inflows.
A final significant characteristic is that funding support from government for incubators has
usually been limited in nature and duration (ANZABI 2004). Whilst there still remains a level of
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
financial support for some incubators from one government or another, overall, as BIIA (2009)
themselves acknowledge on their website:
…neither the federal nor state/territory governments have a program to
support business incubators once established. It is anticipated that funding
provided in response to the feasibility will enable the incubator to be selfsustaining…
In many respects, this is not surprising. As Lane (2009) has noted, other national
governments, such as that of New Zealand, have also adopted an approach of catalysing the initial
formation of incubators, rather than sustaining them in the long run. Nevertheless, the move to
self-sufficiency may create challenges for many incubators. Overall, federal government funding
to date has been substantial – in April 2005, for example, there were some 75 business incubators
being funded by the Australian government, and another four under construction (AusIndustry
2005).
An interesting aside is that Australia has also funded a number of incubator development
projects in other nations as part of its foreign aid and development program. In late 2008, for
example, Australia sponsored Fiji‘s first ‗National Business Incubator Workshop‘, designed to
provide local citizens with more knowledge about how to launch and successfully manage a local
incubator (Australian High Commission 2008).
Research Into Australian Incubation
One noticeable gap in the development of Australian incubation has been the relatively low
level of formal evaluation and research into the sector.
Although a number of studies into Australian incubation already exist (see, for example,
Gardner and Keynon 1994; Dowling 1997; Allen Consulting Group 2003; ANZABI 2004;
AusIndustry 2005), a search of the academic and general literature indicates that little further
detailed empirical research has been published since 2005. One of the most recent studies, that by
Abduh, D'Souza, Quazi & Burley (2007), used a mail survey to determine tenants‘ satisfaction
levels with the facilities provided by 38 incubators. The authors acknowledged considerable
limitations with their research, particularly in regards to the generalisability of their findings and
Volume 3, No. 3, 2009
43
the exploratory nature of the results (ibid.: 88). In contrast, Burnett‘s (2009) doctoral thesis used a
Qualitative approach to examine the management competencies required to successfully obtain
funding and sponsorship within four not-for-profit incubators in Australia. An earlier conference
paper by Burnett & McMurray (2008) qualitatively examined the motivations of family-based
businesses that chose to relocate into an incubator.
This knowledge gap is not unique to Australia. The OECD (1999: 9) had already noted a
decade ago that, although business incubators had emerged as a popular public policy strategy, the
systematic evaluation of their performance had generally been lacking. They also argued that
‗notwithstanding the paucity of rigorous impact‘, their own evidence showed notable variations in
incubator performance between different countries (ibid.). Other researchers have also drawn the
same conclusions. For example, a more recent review of the international literature by BhabraRemedios and Cornelius (2003: 13-14) also found that ‗… there is still uncertainty about whether
incubators are achieving their goals and exactly what their impact is on their tenants. There is a
gap in our knowledge about how an organisation develops in the protected environment of an
incubator.‘
As the above discussion indicates, there is clearly still capacity for more research to be
undertaken into a wide number of issues within the Australian incubator system.
Conclusion
Business incubation tends to take different forms in different jurisdictions and, as has often
been noted, reflects the needs and goals of each of the nations in which it operates. The Australian
model that has emerged after a quarter of a century – that of a broad-based sector focused largely
on start-ups, which is essentially expected to fund its own future – is different to that practiced in
some other countries. Like any other national incubation system, it faces its own set of challenges
for the future. Nevertheless, incubators have also carved out a role for themselves in the broad
suite of business development programs that exist today, and will doubtless continue to play a role
well into the foreseeable future.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
References
Abduh, M.; D'Souza, C.; Quazi, A. & Burley, H. T. (2007). ―Investigating and Classifying
Clients' Satisfaction With Business Incubator Services‖ Managing Service Quality, Vol.17
No.1, pp.74-91.
Allen Consulting Group (2003) Evaluation Of The BITS Incubator Program And The Intelligent
Island Incubator: Report to the Australian Government Department of Communications,
Information Technology and the Arts Melbourne: Allen Consulting Group.
AusIndustry (n.d. 1) Small Business [online]
http://www.ausindustry.gov.au/SmallBusiness/Pages/home.aspx (accessed 18 November
2009).
AusIndustry (n.d. 2) BESB Home [online]
http://www.ausindustry.gov.au/SmallBusiness/BuildingEntrepreneurshipinSmallBusinessB
ESB/Pages/BESBHome.aspx (accessed 18 November 2009).
AusIndustry (2005) Australian Government Funded Small Business Incubators Currently
Operating 2005, April [online]
http://www.businessincubation.com.au/Text/10563515002704820/uploadedFiles/11223604
58333-5030.pdf (accessed 30 October 2009).
Australian Bureau of Statistics (2007). Counts of Australian Businesses, Including Entries And
Exits, Cat.no.8165.0, Canberra: Australian Bureau of Statistics.
Australian High Commission, Fiji (2008). Australia Supports Small Businesses in Fiji, Media
release, 10 September [online] http://www.fiji.embassy.gov.au/suva/mrlease11sep.html
(accessed 22 October 2009).
Australia and New Zealand Association of Business Incubators (2004). Incubation Works: Case
Studies of Australian Small Business Incubators and Their Impact, Canberra: ANZABI.
Bhabra-Remedios, R. K. & Cornelius, B. (2003). ―Cracks in the Egg: Improving Performance
Measures in Business Incubator Research” Paper presented to the 16th annual conference of
the Small Enterprise Association of Australia and New Zealand, 28 September-1 October,
Ballarat.
Bickerdyke, I.; Lattimore, R. & Madge, A. (2000). Business Failure and Change: an Australian
Perspective, Canberra: Productivity Commission Staff Research Paper.
Burnett, H.H.M. (2009). Exploring The Parameters For The Optimum Funding Of Australian
Incubators From An Incubator Manager Perspective Doctor of Philosophy (Ph.D.) thesis,
Swinburne University of Technology, Melbourne, Australia.
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Burnett, H.H.M. & McMurray, J. (2008). ―Exploring Business Incubation From A Family
Perspective: How Start-up Family Firms Experience the Incubation Process in Two
Australian Incubators‖ Paper presented to the 19th annual conference of the Small
Enterprise Association of Australia and New Zealand, 14-17 September, Sydney.
Business Innovation and Incubation Australia (2008). Leveraging the Stock of Business
Incubators in Australia: Developing a New Approach. Submission to the Review of
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Dowling, P. (1997). Business Incubation in Australia: Best Practice Standards and an Industry
Profile, Wollongong: Australia and New Zealand Association of Business Incubators.
Gardner, J. & Keynon, A. (1994). ―Business Incubators in Australia: An Evaluation‖ Paper
presented to the annual conference of the Australia and New Zealand Association of
Business Incubators (ANZABI), Fremantle.
Lane, C. (2009). ―Incubating Incubators: The New Zealand Policy of Cutting the Cord‖ AsiaPacific Journal of Innovation and Entrepreneurship, Vol.3 No.2, pp.29-46.
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Yeun, W. (2007). ‗Budget 2007-08 - Small Business Summary‘, Economics@ANZ, 9 May.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Business Incubation Policy in Japan
Satoshi Hoshino*
Abstract
Out of the thousands of years of Japanese history, the modern and industrialized economic
era spans only the last 140 years. During this short history, there have been two peaks of
industrial prosperity. The first peak was in the heavy industry period, which was attained through
government policy and formed the modern foundation of the nation. The second peak was in the
high tech industry period. Led by private companies under the management of excellent
entrepreneurs, industries such as chemical and electronics applied manufacturing prospered.
However, these prosperous days named “the bubble economy” came to a sudden end in 1990.
After this event, the „business incubation‟ concept was vigorously studied and applied by the
Japanese government, which lead to the formation of the Japan Association of New Business
Incubation Organization (JANBO) in 1999. JANBO was established as a control tower for
nationwide business incubation activities. Since its inception, more than 600 incubation managers
were trained by its training institute and were stationed at 200 business incubation facilities and
programs. JANBO‟s activities came to an end when the Japanese regulation that supported the
business incubation growth in the country expired in 2009. The Japan Business Incubation
Association (JBIA), a private organization, was then established in 2008 by hundreds of
incubation managers to replace JANBO since the activities that JANBO provided were
indispensable for the fundamental infrastructure of the nation‟s economy. Recently, due to the
drastic worldwide depression, JBIA, in addition to its existing tasks, has also developed new
policies to facilitate the creation of self-employed businesses.
Key Words : Business Incubation, Incubation Manager, Self-employment, JBIA.
*
President, Japan Business Incubation Association (JBIA), C/O Japan Industrial Location Center 8th Floor Tokyo,
YWCA Building, 101-0062 1-11-8 Kanda Surugadai Chiyoda-ku Tokyo, Japan, E-mail: [email protected]
Volume 3, No. 3, 2009
47
The Brief Industrial History and the Business Incubation in Japan
It was only 140 years ago when the modern nation of Japan was born with its first national
constitution after thousands of years of ancient customs. However, compared to industrialized
nations, the first half of the Japanese modern industrial era was still at a level similar to those of
developing nations. After World War II, approximately 60 years ago, industries with advanced
technology started to prosper including electronics applied manufacturing and chemical industry
based on technologies and know-how from the conventional heavy industry. The Japanese
economy boomed tremendously during this period supported by numerous export oriented
manufacturing companies. Japan then attained the second peak of its national industrial prosperity
so called ―the bubble economy,‖ behind which were diligent, hardworking workers and cheap
labor cost. However, the bubble economy came to the sudden end in 1990. Although Japan is still
keeping the second largest GDP in the world, the burst of the bubble economy has caused more
than two decades of a serious economic hardship in the country.
Rapidly increasing unemployment rate after the bubble economy burst triggered the
Japanese government to establish a new temporary regulation to start business incubation
activities following the success of business incubation activities in the U.S. This marked the
beginning of the business incubation history in Japan, and it was the very first attempt of Japanese
Government to stimulate economies by creating industries through cultivating entrepreneurs. The
temporary regulation served to unite industry-supporting organizations scattered throughout the
country and created ―a one stop service office‖ in each prefecture. This one stop service system is
called an ―industrial platform,‖ which became an important infrastructure for creating new
industries. The Japan Association of New Business Incubation Organization (JANBO) was
established at that time as the central agency of these platforms in 1999.
One of JANBO‘s missions was to utilize the past experiences of similar business incubation
attempts and train incubation managers. JANBO established a training institute for incubation
managers. It also organized numerous symposiums to educate the public about business
incubation, published educational journals related to business incubation, and gave recognition to
individuals and organizations with superior achievement in the business incubation field from
1999 to 2009.
As a result of these activities, JANBO achieved to create a strong network of 50 industrial
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
platforms and 200 business incubators, who were trained by 600 industry creation professionals
called ―incubation managers.‖ In addition to these domestic activities, JANBO also played an
important role in organizing and networking in Asian countries through the Asian Association of
Business Incubation (AABI). However, due to the expiration of the temporary business incubation
legislation, JANBO ceased its activities at the end of March 2009.
The Japan Business Incubation Association (JBIA)
Whoever once involved in the business incubation industry understands the strong necessity
of having a business incubation association. The success of the National Business Incubation
Association (NBIA) in the U.S. and similar organizations in other countries have taught us the
critical role that business incubation associations play as a national strategic body as well as an
information control agency. In response to the demand for establishing a new association to take
over the role played by JANBO, 200 active incubation managers trained by JANBO joined forces
and formed a new association called the Japan Business Incubation Association (JBIA) in June
2008. It was established prior to JANBO‘s termination in order to provide undisrupted business
incubation services in Japan. JBIA officially succeeded all the roles that JANBO played in the
business incubation field, despite the fact that JBIA was an organization independent from any
government sectors. Currently JBIA is the only business incubation association in Japan, and it
became an official member of AABI of Japan in May 2009.
JBIA was formed by the ―bottom up‖ method by a large number of individuals who know
business incubation thoroughly and have strong connections with each other. On the contrary,
JANBO was formed by the ‖top down‖ method by the Japanese government, and its initial
members were business incubation related public parties, not individuals, who had no knowledge
of business incubation at that time. In addition, JBIA is an organization specialized in business
incubation as opposed to JANBO, which was an organizing party of the industrial platforms and
business incubation was one part of its numerous activities. Establishment of JBIA finally allowed
Japan to possess a real business incubation capability with necessary supporting organizations,
professionals and infrastructures.
The Features of the Business Incubation Environment in JAPAN
Careful consideration must be given when designing and promoting specific business
Volume 3, No. 3, 2009
49
incubation in a different country because often situations vary greatly from one region to another
and from time to time. The well-known Batavia Industrial Center in Batavia, New York, USA
was the origin of business incubation and served as a model for the current business incubation
activities. However, employing the exact same approach would not be effective to conduct
business incubation activities in Japan or any other countries. The aspects of Japan‘s economic
features that need to be considered when promoting business incubation in Japan include:
・Japan is definitely not an industrially developing country, but it has not been a so-called
‗mature country‘ in the past few decades, either.
・Japan has the second largest number of big firms listed in Fortune Top 500.
・Japan has a superior, useful industrial infrastructure called ―industrial platforms,‖ which offer
services and support to SME and entrepreneurs such as financing, consultation, and facilities.
・The unemployment rate in Japan is 5.5% in average as of September 2009.
・ The Japanese government has an adequate budget for technology development and for
bankruptcy prevention of SMEs.
・Japan has an extremely low entrepreneur rate among 40 surveyed countries by the Babson
college, U.S.A. (Japan has never been a country where entrepreneurs are widely respected and
sought out.)
By considering the above features and comparing with other countries, Japan is definitely
not facing economic poverty at this moment, which probably resulted in the rather sluggish
business incubation activities in Japan and the termination of JAMBO in a very short period of
time. However, the country also has a huge national debt and a serious top-heavy population
problem, which will cause a gradual decline in the quality of life in Japan.
The JBIA Business Incubation Policy
Japan‘s manufacturing industries, which lead the prosperous days in past decades, is losing
its competitive edge due to high labor costs. Many of the manufacturing companies have already
shifted their mass producing factories to Asian countries, which offer much cheaper labor. This
has caused bankruptcy of many domestic small subcontracting manufacturers. However, the big,
mighty firms will likely survive with their highly competitive technologies and large capital,
while a gradual reduction in the number of employees is expected.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
In September 2009, a new political party won the national election and caused a dramatic
change in Japanese government. This historical event is worth being called the first political
revolution in the 140 years of the modern Japanese history. The new government is expected to
cut a large portion of its budget for unnecessary construction of roads and facilities, which used to
be artificially created by politicians to support the income of people in rural areas.
The change of industries, the change in the population structure and the political power shift
described above all point toward the fact that Japan is already entering into the ‗mature country‘
time. Facing these serious issues, JBIA has created a new policy, which incorporates the
following aspects:
1. More emphasis should be placed on business incubation of small self-employed businesses in
rural areas, rather than technology oriented business incubation in urban areas, which requires
bigger budget and a longer time frame. The rural areas will inevitably require more assistance
because their unemployment rate is expected to rise as Japan becomes more of a ‗mature
country.‘ Moreover, the large to mid-sized existing firms are competitive enough to survive
and will likely continue to develop technology oriented business without a help of the public
sector.
2. Business incubation activities for the service industry which does not require large facilities
and space should expand into the private sector. The private sector is much more flexible than
the public sector in terms of offering various services competitively.
3. A more strategic approach should be employed to educate individuals involved in business
incubation:
1) Incubation managers need to be taught the latest marketing knowledge and skill sets so
that they can offer more effective advice to entrepreneurial candidates. The advice
should focus on how to create a lasting business that will succeed and survive in the
coming decades, rather than simply teaching general knowledge of business operation
and growth.
2) Local government officials need to be educated so that they will be capable to design and
create strategic business development plans to stimulate local economies. Traditionally,
local government officials were merely trained just to carry out the projects assigned by
the national government. The new skills and knowledge of establishing feasible, practical
business development plans are strongly needed.
3) Latest knowledge and importance of business incubation need to be further spread and
Volume 3, No. 3, 2009
51
taught continuously to individuals related to the industry including government officials and
entrepreneurs. Most Japanese people are still not familiar with the concept and the term of
―business incubation.‖ The application and function of business incubation in Japan has
improved significantly over the last 20 years through continuous efforts of modifying and
reforming the original American business incubation concept. We will need to continuously
educate and spread the latest business incubation knowledge and its importance because in
order to survive and overcome the current recession and economic changes that will be
brought by becoming a ―mature country,‖ business incubation and incubation mangers are
indispensable to Japan‘s economy.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Biography
Satoshi Hoshino was involved in the ship-building industry in Japan as an automatic control
engineer.
During the recession of the heavy industry, he challenged himself to start up a new business
as an entrepreneur, which changed his life to become involved in business incubation.
In 1987, he became an incubation manager at the Kanagawa Science Park (KSP), Japan‘s
first attempt of business incubation activities, and visited numerous business incubators abroad.
After 12 years of serving as an incubation manager, he retired from the KSP and joined the
Japan New Business Incubation Organization (JANBO). He has established Japan Business
Incubation Association (JBIA) in 2008 since JANBO terminated its activity. He is now promoting
―business incubation‖ all over Japan along with training incubation managers and developing best
practices for business incubation in the nation. His involvement in the business incubation
industry totals for 22 years, and he is the longest serving member of Japanese business incubation
field.
Volume 3, No. 3, 2009
53
54
Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Business Incubators in China
Wang Rong*
Abstract
The business incubators have developed for more than 20 years in China. In fact, the
growth of Chinese business incubator has attracted the world counterparts not only in quantity
but quality as well. The article gives the whole view of the business incubators in China and tries
to find out the driven factors behind the quick growth. What‟s more, it also introduces the future
trend of Chinese business incubators.
Key-words: China, Business Incubator
*
President emeritus of AABI, Honorary President of Shanghai Technology Business Incubation Association (STBIA),
E-mail: [email protected]
Volume 3, No. 3, 2009
55
Introduction of Chinese Business Incubators
1.1
The Beginning of Business Incubator in China
In 1986, Dr. SONG Jian, the former minister of China Science and Technology
Commission, proposed to establish the China Technology Innovation Center. It is regarded as the
first official opinion on business incubator in China. One year later, under the guidance from Unit
Nation expert group, China Science and Technology Commission launched the study of business
incubator. In 1987, Wuhan Donghu New Technology Innovation Center was set up, which was
the first business incubator in China. It opened up a new epoch of China business incubator
industry.
In 1987, the State Council of PRC officially approved the implementation of the Torch
Program, which aims to commercialize, industrialize, and internationalize the hi-tech products in
China. It is a milestone in China business incubator industry because business incubators play an
important role in the Torch Program.
1.2
The Present State of Chinese Business Incubator
After 20-years‘ development, Chinese business incubators have contributed a lot to China
economy growth as well as to hi-tech SME expanding. Not only have more and more innovation
centers emerged, but also more and more hi-tech enterprises have graduated from the innovation
center and become leaders in the hi-tech industry. Therefore, the Chinese business incubators
have great effect on the hi-tech industry development in China.
i.
Quick Growth of Chinese Business Incubators
According to the survey by China Torch Program, up to 2008, there are 674 technology
business incubators in China. From the figure 1 below, it is obviously that the business incubators
have accelerated the growth rate since 2000. The compound annual growth rate from 2000 to
2001 arrives 25%, 3 times of the corresponding rate from 1991 to 1999.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Figure 1
800
674
614
600
534
431
548
464
378
400
280
200
43
61
61
73
73
80
100
77
131
110
0
Source: Torch High Industry Development Center, MOST
What‘s more important, the business incubates grow in quality as well as in quantity. The
tenant in business incubator reaches 44832, which provide over 940,000 job positions. Among all
the 32370 graduation tenants, 80% companies survived in the intense competition, about 600
companies annual revenue exceeds 100 million, and over 50 companies successfully executed
IPO.
Figure 2
Year
Incubation Area
/10,000M2
Tenant Qty
Employees in Tenant
/1000 Person
Accu. Qty. of
Graduation Tenant
2001
2002
2003
2004
2005
2006
2007
2008
509
633
1359
1515
1970
2008
2270
2351
12821
20993
27285
33213
40639
41341
44750
44832
260
360
480
550
720
790
930
940
3994
6207
8981
11718
15931
19896
23394
32370
Source: Torch High Industry Development Center, MOST
Volume 3, No. 3, 2009
57
ii.
Types of Business Incubator in China
Innovation Center
It is the most popular type of business incubator in China, and it also has the longest
developing history. Most innovation centers are sponsored by local government initially. In
addition, recently more and more private capitals pay much attention to develop the innovation
center than before.
University Science Park
Universities play an important role in the field of innovation. They always inspire the
students and faculties to create new ideas, launch new research projects, and get new
achievements. Thus, the university science parks are also the important type of business
incubators in China.
Oversea Student Enterprise Park
The aim of oversea student enterprise park is to attract the top Chinese students and experts
in foreign countries to contribute their knowledge and capacity to motherland. Until 2008, there
are 68 oversea student enterprise parks, in which 3857 companies (12 listed), 6041 oversea
students(3969 PhD), and more than 100,000 employees.
International Business Incubator (IBI)
Since 1994, the Ministry of Science and Technology has approved 9 international business
incubators in 9 cities, including Beijing, Shanghai, Tianjin, Chongqing, Guangzhou and other 4
cities. IBI has become an important window of international cooperation and communication.
They promote the local SMEs to explore the oversea market and help the foreign SMEs to
develop in China.
China Oversea Science Park
Chinese government has set up several oversea science parks in Manchester UK,
Cambridge UK, Maryland USA, Moscow Russia, Vienna Austria, Singapore as well as Australia.
1.3

Achievements of Chinese Business Incubators
It forms the national sustainable development system of technology innovation. There are
about 50,000 tenants annually in the business incubators.

58
It helps to cultivate many companies with high growth rate. Those companies are becoming
Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
the key source to innovation, entrepreneurship and tax of the local economy and society.

The business incubators also help to solve employment problem. The innovation companies
create a lot of job opportunities especially to fresh graduates.

The survival rate of tenants in business incubators exceeds 70%, which is much higher than
those in society. It is the success result of incubator service, including project selection,
enterprise guidance, financing and so on.

Compared to its huge economy and social outcome, the business incubators cost the smallest
social resources. Until 2008, the total investment to incubator construction from official
funds is 20 billion RMB, which occupies only small part of the annual revenue of tenants.

The business incubators speed up the construction of network incubation service. Nowadays,
there are 5 big regional incubator networks, over 30 provincial incubator association. Many
alliances of innovation centers, oversea student science parks and university science parks
are emerging. There exist a stage of cooperation and communication.
2.
Factors to Drive Success of Chinese Incubators
Government Support
China government pays much attention to the development of business incubators. In
addition, the business incubators are regarded as the key part of national innovation system. The
central government as well as the local government considers the growth of business incubators
into the developing strategy. What‘s more, the state capital plays an important role of constructing
business incubator in China.
Tax Reduction and Financial Funds
In 2007, the Ministry of Finance and State Administration of Taxation announced that the
national business incubators are exempt from four kinds of tax, including housing tax, land tax,
business tax and refund of income tax.
Network
The national competent authority of business incubator has set up the measures for business
incubator certification. The appraisal measure for the national business incubator has been
established. The standard of national business incubators helps the business incubator to improve
their incubation service.
In addition, under the guidance of Ministry of Science and Technology, six key regional
Volume 3, No. 3, 2009
59
associations of business incubator have emerged. Those associations play an important role of
coordinating regional business incubator development as well as promoting the incubation service.
Policy-oriented
Under the policy of the government, the business incubators have attracted the private funds
to invest in. The multiple investments change not only the share holders of business incubator, but
also operation ways of business incubator.
The internationalization is another important feature of China business incubators. Through
the international exchange, China business incubators learn a lot experience from the developed
countries.
3.
3.1
New Trends of Chinese Business Incubators
Extend the Incubation Chain
 Nursery
The nursery provides the pre-incubation service to those projects which only in the period
of ideas. It extends the incubation service chain forwardly. In addition, it pool the startup capital,
R&D facilities and corporate development strategy together into a comprehensive scheme.
 Accelerator
In recent years, with China's rapid economic development, it has promoted a large number
of enterprises to enter the fast-growing period. However, the traditional business incubator can‘t
meet the further demands of those enterprises. The accelerator aims to help the graduate
companies to grow further. On the other hand, those companies contribute to the development of
incubators as well as the local economy.
3.2
Establish Incubation Tutorial System
The incubation tutorial system make up for the lack of industrial professionals in incubation
service. The mentor team is composed of successful entrepreneur, top managers in big companies,
professions in research institutes, senior managers of business incubators and experts in
consulting firms.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
The main task of incubation mentors is to help the tenants integrated its inner and external
resource. The incubators are the bridge between tenants and mentors. Both of them are able to
find out the opportunity to cooperation.
3.3
Explore the Model of Incubator Holding Stocks
―Shareholding incubation‖, the model of venture investment, is a small risk investment
funded by the incubation organizations and the individuals of their management team.
Its advantages are as follows: first, the incubator management team possesses full
knowledge of startup enterprises, entrepreneurs, venture projects and their technical skills, market
prospects, and management capacity. Second, low operation costs, low investment risks, and high
enthusiasm provide adequate guarantee for the startup enterprises to rapid achieve capital, control
risks, and obtain investment return.
3.4
Spur the Professional Incubator Development
The shortcoming of the comprehensive incubator: It has caused a serious waste of
incubation resources; It has resulted in the severe homogenization competition of the incubators;
It has resulted in excess mortality of incubating companies, reputation damage, decline in status,
and team instability.
The professional incubators overcome those shortages. It allows the incubator focus on
several industries, provide tail-made professional service and explore the ―growth chain" of
"research, production and marketing‖ for the incubating companies
3.5
Promote the Network Incubation
Realize the organizational form‘s development from the ―incubator network‖ to the
―network incubation‖ with deep services. First, it is to establish talent exchange mechanism of
incubators. The next is to establish comprehensive service system of incubators. Last but not lease,
it is to establish product procurement chain of the incubating companies.
4.
Conclusion
After 20 years quick development, China business incubator has been the first one in
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61
quantity in the world. What‘s more important, China has explored a unique way to develop
business incubator. Borrowing the foreign advanced managerial skills and combining with the
real situation in China, government plays an important role in the initial stage of the business
incubators growth and constructs a suitable developing environment for the business incubators.
In the mean time, the business incubator take advantage of the government policy to attracting the
private funds to investing in, this leads to the effective and efficient operation.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Entrepreneurial Leadership and Academic
Entrepreneurship in
Malaysian Public Research Universities
Mohar Yusof*
Abstract
Entrepreneurial leadership, capable of overcoming various hierarchical and internal
constraints, as well as conflicts, has assumed great significance in the wake of institutions of
higher learning trying to promote academic entrepreneurship. There is still a paucity of empirical
research on academic entrepreneurship especially in the context of a developing economy like
Malaysia and its higher education system. This paper analyzes and presents academic
entrepreneurship as a leadership process of creating economic value through acts of
organizational creation, renewal or innovation within or outside the university that results in
research and technology commercialization. It contributes to the literature by examining the
theoretical connection and relationship between leadership behavior and the level of academic
entrepreneurship in Malaysian public research universities. Findings and results from this study
will enable public research universities to evaluate the level of entrepreneurial leadership, their
leadership strategies and capabilities in developing an entrepreneurial mindset which pervades
the entire university organization, the status of their entrepreneurial systems within and outside
the universities, identify enablers and barriers for academic entrepreneurship within their
academic organizations, and, enhance decision making especially in fostering academic
entrepreneurship.
Key words: Entrepreneurial Leadership, Leadership Strategies, Academic Entrepreneurship,
Entrepreneurial Mindset.
*
Senior Lecturer, Bank Rakyat School of Business and Entrepreneurship, Tun Abdul Razak University, 3rd Floor, Block
C&D, Capital Square Jalan Munshi Abdullah 50100 Kuala Lumpur, MALAYSIA, 603-76277125 (Telephone), 60376277130 (Fax), E-mail: [email protected]
Volume 3, No. 3, 2009
63
1. Introduction
At the heart of this research lies the phenomenon of academic entrepreneurship. It has
become a very interesting, complex and important phenomenon because it is situated at the core
of changes in the landscape and context of higher education transformation in Malaysia. In
essence, it is changing how universities are being viewed. No longer are universities viewed only
as the liberator and protector of all knowledge and science, of fact and principle, of inquiry and
discovery, of experiment and speculation. No longer does it only play the role of producer of
human capital and industry-ready workers. In this century, universities pursue academic
entrepreneurship to strategically place and position themselves as important engines of
sustainable technological development and economic growth.
Academic entrepreneurship is the leadership process of creating economic value through
acts of organizational creation, renewal, or innovation that occurs within or outside the university
that results in research commercialization and technology transfer. It may occur at the level of
individuals or groups of individuals, acting independently or as part of a university system, who
create new organizations, or instigate renewal or innovation within the university or outside the
university in science and technology parks, university-owned corporate firms, spin-offs or
research centers. It is also the cumulative results and integration of these individuals‘ scientific
activity, academic activity and commercialization activity in discovering, exploring, pursuing and
capitalizing on the creation, innovation and renewal opportunities in the intrapreneurial process.
These individuals are referred to as academic entrepreneurs or intrapreneurs.
This study addresses academic entrepreneurship in four public universities which have been
designated as research universities by the Malaysian government in 2006 under the Ninth
Malaysian Plan 2006 – 2010 (EPU, 2006). More specifically, this study examines the relationship
between entrepreneurial leadership behavior and the level of academic entrepreneurship in
Malaysian public research universities. Findings and results from this study are expected to enable
public research universities to evaluate the level of entrepreneurial leadership, their leadership
strategies and capabilities in developing an entrepreneurial mindset which pervades the entire
university organization, the status of their entrepreneurial systems within and outside the
universities, identify enablers and barriers for academic entrepreneurship within their academic
organizations, and, enhance decision making especially in fostering academic entrepreneurship.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
2. Literature Review
The academic entrepreneurship literature is fragmented due to the different approaches
utilized by scholars in researching the phenomenon. Past empirical studies have approached the
inquiry from various angles including entrepreneurial behavior of scientists (Louis et. al., 1989;
Klofsten and Jones-Evan, 2000; Louis et. al., 2001; Laukkanen, 2003), commercialization of
knowledge (Lowe, 1993; Argyres and Liebeskind, 1998; Agrawal and Henderson, 2002), patentrelated issues (Mowery et. al., 2001; Saragossi and van Pottelsberghe de la Potterie, 2003),
licensing of technology and inventions (Conceicao et. al., 1998; Thursby and Thursby, 2004),
entrepreneurship education (Gibb and Hannon, 2006), entrepreneurship in university settings
(Chrisman et. al., 1995; Steffensen et. al., 2000; Klofsten and Jones-Evan, 2000; Nicolaou and
Birley, 2003; Zhao, 2004; Brennan et. al., 2005; Brennan and McGowan, 2006; O‘Shea et. al.,
2004; O‘Shea et. al., 2005; Powers and McDougall, 2005), academia-industry collaboration
(Keast, 1995; Etzkowitz, 1998; Mansfield, 1998), university transformation and renewal (Clark,
1998; Jacob et. al., 2003; Bernasconi, 2005), proposition surrounding the triple-helix model
(Etzkowitz et. al., 2000; Etzkowitz, 2003) and issues related to national policies and socioeconomic development (Etzkowitz and Klofsten, 2005; Gibb and Hannon, 2006).
Based on content analysis and review of 173 published papers, Rothaermel et. al. (2007)
identified that there are four major research streams emerging in this area of study. These research
streams are: (1) entrepreneurial research university, (2) productivity of technology transfer offices,
(3) new firm creation, and (4) environmental context including networks of innovation. In
investigating the phenomenon in the UK, Brennan et. al. (2005) conceptualized the field of
academic entrepreneurship as a confluence of three overlapped streams of research on
technology-based firms, the commercialization of academic discipline knowledge and the role of
universities in society.
The review of extant literature reveals that there seems to be three differing views on
academic entrepreneurship: first, the view that academic entrepreneurship is in conflict with the
traditional view of the university, thus, it normally and conveniently occurs outside the university
and beyond the traditional role of the academia due to the conflict and tension created thereby
(Louis et. al., 1989; Klofsten and Jones-Evans, 2000; Laukkanen, 2003); secondly, the view that
academic entrepreneurship is merely the creation of new business ventures by any of the
university agent, which therefore positions academic entrepreneurship as a mechanism of
Volume 3, No. 3, 2009
65
technology transfer (Chrisman et. al., 1995; O‘Shea et. al., 2004; O‘Shea et. al., 2005; Powers
and McDougall, 2005; Kirby, 2006); and thirdly, an integrative view based on corporate
entrepreneurship perspective where academic entrepreneurship encompasses organizational
creation, innovation and renewal inside and outside the university (Brennan et. al., 2005; Brennan
and McGowan, 2006).
In explaining academic entrepreneurship, this study adopts and uses the corporate
entrepreneurship perspective as the background theory since the view has received the most
attention as a concept in explaining entrepreneurship within an existing organization (Zahra,
1996; Zahra et. al., 1999; Sharma and Chrisman, 1999; Christensen, 2004; Antoncic and Hisrich,
2004; Schildt et. al., 2006, Morris et. al., 2008), as is evident from special issues of journals, for
example, Strategic Management Journal in 1990 (Corporate Entrepreneurship), Strategic
Management Journal in 2001 (Entrepreneurial Strategies for Wealth Creation), and
Entrepreneurship, Theory & Practice in 1999 (Corporate Entrepreneurship in a Global
Economy).
2.1 Entrepreneurial Leadership in a University Setting
Entrepreneurial leadership is more like transformational leadership rather than transactional
leadership, yet it differs in some fundamental ways. The fundamental difference between
entrepreneurial leadership and transformational leadership is focus. Entrepreneurial leadership is
inherently opportunity-focused. Hence, entrepreneurial leaders spend much less time to change
people‘s minds to move into a new direction not like transformational leaders. Instead,
entrepreneurial leaders seek out and recruit like-minded individuals who share their understanding
and passion for the opportunity and are interested in taking quick, decisive action. Entrepreneurial
leadership can be described as visionary leadership with inherent focus on opportunities,
building/creating, creative destruction/rearrangement, dynamic stake, staged investment, medium
term and has an exit strategy (Bryant, 2003; Judge and Piccolo, 2004; Clawson, 2006; Fernald et.
al., 2005; Thornberry, 2006).
The entrepreneurial leader has an entrepreneurial mindset involving qualities such as
internal locus of control, tolerance for ambiguity, willingness to hire people smarter than oneself,
a consistent drive to create, build or change things, passion for an opportunity, a sense of urgency,
perseverance, resilience, optimism and sense of humor about oneself. Entrepreneurial leaders can
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play either an active role as lead entrepreneurs themselves or act as the catalysts that stimulate the
entrepreneurial actions and energies of others (Thornberry, 2006). Entrepreneurial leaders
embody three characteristics of leadership which are vision, dedication and drive, and
commitment to excellence (Dess et. al., 2008).
Yusof and Jain (2007) in reviewing six conceptual models or overviews associated with
entrepreneurial universities (Clark, 1998; Etzkowitz et. al., 2000; Sporn, 2001; Etzkowitz, 2004;
Kirby, 2006; Rothaermel et. al., 2007) found that leadership directly or indirectly is a key element
in influencing university-level entrepreneurship. Despite the subject of leadership being a major
and critical issue, the focus of leadership in these studies and models is on institutional leadership
rather than leadership at various organizational levels in the university. Hence, the review of the
empirical research literature on academic entrepreneurship has revealed a gap in the
understanding of entrepreneurial leadership in the context of research universities and its
relationship with academic entrepreneurship.
To fill the gap, this study focuses on entrepreneurial leadership as an organizational factor
and process that can occur at various levels in the university organization including at the
individual level and capacity. This study argues that academic leaders at various levels in the
university need to behave entrepreneurially in order to stimulate academic entrepreneurship
because they play a fundamental role in facilitating, nurturing and supporting entrepreneurial
activities within the university. In line with this, the following hypothesis is formulated:
H1:
The entrepreneurial behavior of leaders in the university significantly influences
the level of academic entrepreneurship in the university.
A study on 112 entrepreneurial teams in Taiwan‘s high-tech ventures found that lead
entrepreneurs who are risk-takers, proactive and innovative can stimulate the creativity of their
team members (Chen, 2007). In addition, another study which used thematic analysis examined
articles published in the Creativity and Innovation Management Journal from 1991 to 2000 to
identify the association of leadership as a process contributing to creativity and innovation. The
study revealed nine overlapping themes within each of which leadership plays a part in the
production of creative insights or innovative productivity. Interestingly, it also revealed that many
authors placed leadership as an implicit factor within their models of change (Rickards and Moger,
2006).
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67
H1a:
The entrepreneurial behavior of leaders in the university significantly influences
organizational innovation in the university.
One of the critical elements found by Clark (1998) in successful entrepreneurial academic
institutions strong top-down leadership and policies that support and encourage the process of
academic entrepreneurship and which merge entrepreneurial orientation objectives with the
traditional academic values of the university (O‘Shea et. al., 2004). Further, Bercovitz and
Feldman (2004) found a significant leadership effect whereby individual faculty members are
more likely to engage in technology transfer activities when the department head is also actively
involved in these activities.
H1b:
The entrepreneurial behavior of leaders in the university significantly influences
organizational creation in the university.
Guth and Ginsberg (1990) postulated that entrepreneurial behavior in organizations is
critically dependent on the characteristics, values/beliefs, and visions of their strategic leaders. For
example, in a study on a large utility organization, it was found that managers who consistently
practiced entrepreneurial leadership behaviors had significantly higher results in terms of
employee satisfaction, customer satisfaction and financial district margin contributions than their
peers who did not practice these behaviors. This study is important because it demonstrated the
impact of the managers‘ entrepreneurial leadership training in enabling and facilitating a more
creative climate for their subordinates (Pearce et. al., 1997; Thornberry, 2006).
H1c:
The entrepreneurial behavior of leaders in the university significantly influences
organizational renewal in the university.
3. The Research Study
To test these hypotheses, a cross-sectional survey based methodology was used in this
research to obtain data from the respondents namely academicians from four public research
universities in Malaysia. The targeted population frame for this research comprised of academic
staff categorized as professors, associate professors and lecturers in the selected four public
research universities. The Directory of Academic Profiles established by the Ministry of Higher
Education was used as the source for the sampling frame. The sample size was derived through
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proportionate stratified random sampling method.
Data collection for this study began in July 2008. The data for this study was collected
through a self-administered questionnaire by the researchers. The questionnaire was divided into
two sections, section A and B. Section A comprised questions eliciting demographic
characteristics. Section B comprised of 9 questions designed to gather the information from the
respondents on their perception about the entrepreneurial leadership behavior exhibited by
academic leaders at various levels of the university and 18 questions (6 questions for each
dimension) about the overall level of academic entrepreneurship exhibited in their universities. A
five point Likert scale was used in this section and the respondents were required to state the
extent to which they agreed or disagreed with the statements in the questionnaire. Up to the end
of August 2008, 77 questionnaires were successfully collected and were found to be complete and
usable for data analysis.
There are various leadership theories and instruments that measure leadership behavior.
Since the focus of this study is to investigate the level of entrepreneurial behavior in academic
leaders and its association to academic entrepreneurship, Thornberry‘s (2006) instrument on
General Entrepreneurial Leadership behavior is adopted and the categorization of academic
entrepreneurship was based on the adoption and modification of Zahra‘s (1996) measure for
corporate entrepreneurship. A Cronbach coefficient alpha test was conducted on the 27 items in
Section B to determine internal consistency of the scales used. The values of Cronbach Alpha
coefficient are depicted below in Table 1. All the variables and sub-components of the scale
demonstrated sufficient alphas (0.7 or above).
Table 1: Reliability Statistics
VARIABLES
CRONBACH
ALPHA
ENTREPRENEURIAL LEADERSHIP BEHAVIOR
0.869
ORGANIZATIONAL INNOVATION
0.935
ORGANIZATIONAL CREATION
0.925
ORGANIZATIONAL RENEWAL
0.905
ACADEMIC ENTREPRENEURSHIP
0.963
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69
4. Data Analysis and Results
4.1 Demographic Characteristics of the Sample
Based on the demographic characteristics provided in Table 2 below, we found that the
majority of the respondents were male (53.2%) and were 40 and above years of age (74%). In
terms of race, majority were Malay (79.2%) which is a common scenario in local public
universities. 81.8% of the respondents were permanent employees of the universities while the
remaining worked on contract (13%) or temporary (5.2%) term. With regards to academic
qualification, 63.6% of the respondents had PhDs, 29.9% had Masters and 6.5% had professional
qualifications. 13% of the respondents were professors, 37.6% were associate professors, 35.1%
were senior lecturers and the rest were lecturers (14.3%).
Table 2: Frequency Distributions of Sample (n = 77)
Demographic
Frequency
Percentage
Gender
Male
Female
41
36
53.2
46.8
Age
44 or below
41
53.2
45 or above
36
46.8
Race
Malay
61
79.2
Chinese
Indian
7
2
9.1
2.6
Other
7
9.1
Working Status
Permanent
63
81.8
Contract
Other
10
4
13
5.2
Highest Academic Qualification
PhD
49
63.6
Master
Other
23
5
29.9
6.5
39
38
50.6
49.4
Academic Designation
Professor & Associate Professor
Senior Lecturer & Lecturer
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4.2 T-test for Gender, Age and Academic Designation
T-test was conducted to determine if there exist any significant differences between male
and female academicians with regards to their perception towards entrepreneurial behavior of
leaders in the selected universities. Levene‘s tests showed p-value of greater than 0.05 and hence
homogeneity of variances exists (one of the assumptions for independent group t-test). The tvalue and corresponding p-value were found to be not significant at the 5% level of significance.
Thus, we conclude that there exist no significant difference between the means of male and
female with regards to their perception towards leadership behavior. The results are depicted in
Table 3.
T-Test was conducted to determine if there exist any significant differences between age
groups (44 or below, and, 45 or above) and their perception towards entrepreneurial leadership.
Levene‘s tests showed p-value of greater than 0.05 and hence homogeneity of variances exists
(one of the assumptions for independent group t-test). The t-value and corresponding p-value
were found to be significant at the 10% level of significance. Thus, we conclude that there exists
significant difference between the respondents‘ age and their perception towards leadership
behavior. The results are depicted in Table 3.
T-Test was also conducted to determine if there exist any significant differences between
the professorial group and non-professorial group with regards to their perception towards
leadership behavior. Levene‘s tests showed p-value of greater than 0.05 and hence homogeneity
of variances exists (one of the assumptions for independent group t-test). The t-value and
corresponding p-value were found to be not significant at the 5% level of significance. Thus, we
conclude that there exists no significant difference between those in the professorial group and
those in non-professorial group with regards to their perception towards leadership behavior. The
results are depicted in Table 3.
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71
Table 3: T-test for gender, age and academic designation
Variable
Levene’s test for equality of
variance
t-test for equality of means
F
Sig
t
df
Sig (2 tail)
Gender
2.714
0.104
-0.339
75
0.736
Age
0.341
0.561
1.749
75
0.084*
Academic
Designation
1.005
0.319
-1.605
75
0.113
*Significant at 10% Sig. level
4.3 Correlation Analysis
Using a series of correlation analyses, support was produced for each research hypothesis
(see Table 4).
H1:
The entrepreneurial behavior of leaders in the university significantly influences
the level of academic entrepreneurship in the university.
The Pearson correlation analysis results in an R-value of 0.548 with a p-value of 0.0001.
Based on these results, H1 is supported. Therefore, entrepreneurial behavior of leaders in these
universities has a significant influence with the level of academic entrepreneurship. Nevertheless,
the strength of this relationship is 0.3 as measured by R-squared, hence indicating that
entrepreneurial leadership exerts a moderate influence on the level of academic entrepreneurship.
H1a:
The entrepreneurial behavior of leaders in the university significantly influences
organizational innovation in the university.
The Pearson correlation analysis results in an R-value of 0.524 with a p-value of 0.0001.
Based on these results, H1a is supported. Therefore, entrepreneurial behavior of leaders in these
universities has a significant influence with the level of organizational innovation. Nevertheless,
the strength of this relationship is 0.275 as measured by R-squared, hence indicating that
entrepreneurial leadership exerts a moderate influence on organizational innovation.
H1b:
The entrepreneurial behavior of leaders in the university significantly influences
organizational creation in the university.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
The Pearson correlation analysis results in an R-value of 0.521 with a p-value of 0.0001.
Based on these results, H1b is supported. Therefore, entrepreneurial behavior of leaders in these
universities has a significant influence with the level of organizational creation. Nevertheless, the
strength of this relationship is 0.272 as measured by R-squared, hence indicating that
entrepreneurial leadership exerts a moderate influence on organizational creation.
H1c:
The entrepreneurial behavior of leaders in the university significantly influences
organizational renewal in the university.
The Pearson correlation analysis results in an R-value of 0.465 with a p-value of 0.0001.
Based on these results, H1c is supported. Therefore, entrepreneurial behavior of leaders in these
universities has a significant and positive influence with the level of organizational renewal.
Nevertheless, the strength of this relationship is 0.216 as measured by R-squared, hence indicating
that entrepreneurial leadership exerts a moderate influence on organizational renewal.
Table 4: Means, Standard Deviations and Correlation Coefficients
1
2
3
4
5
Variables
Mean
SD
1
2
3
4
Leadership
Behavior
Academic
Entrepreneurship
Organizational
Innovation
Organizational
Creation
Organizational
Renewal
25.94
6.41
1
59.93
14.55
0.548**
1
20.2
5.69
0.524**
0.947**
1
19.22
5.33
0.521**
0.932**
0.851**
1
20.52
4.76
0.465**
0.881**
0.749**
0.713**
5
1
** Correlation is significant at the 0.01 sig. level (one tailed)
4.4 Multivariate Analysis of Variance (MANOVA)
To examine the relationship of leadership behavior with multiple dependent variables,
MANOVA test was conducted. Results of the test are shown in Table 5. The findings demonstrate
that entrepreneurial behavior of leaders significantly influences all three dependent variables of
organizational innovation, organizational creation and organizational renewal. However, the most
significant relationship is between leadership behavior and organizational innovation and the
strength of the relationship is 0.411 as measured by the adjusted r -squared, indicating that
entrepreneurial leadership exerts a moderate to strong influence on organizational innovation as
Volume 3, No. 3, 2009
73
compared to the other dependent variables.
Table 5: MANOVA for Leadership Behavior, Organizational Innovation, Organizational
Creation and Organizational Renewal
Source
Corrected
Model
Intercept
Leadership
Behavior
Error
Total
Corrected
Total
Dependent
Type III Sum
Variable
of Squares
df
Mean Square
1487.648(a)
25
59.506
3.125
.000
Creation
1260.828(b)
25
50.433
2.871
.001
Renewal
844.683(c)
25
33.787
1.962
.021
Innovation
19922.806
1
19922.806
1046.279
.000
Creation
18370.869
1
18370.869
1045.844
.000
Renewal
21620.773
1
21620.773
1255.386
.000
1487.648
25
59.506
3.125
.000
Creation
1260.828
25
50.433
2.871
.001
Renewal
844.683
25
33.787
1.962
.021
Innovation
971.121
51
19.042
Creation
895.845
51
17.566
Renewal
878.343
51
17.222
Innovation
33868.695
77
Creation
30592.948
77
Renewal
34137.682
77
2458.769
76
Creation
2156.673
76
Renewal
1723.026
76
Innovation
Innovation
Innovation
F
Sig.
a R Squared = .605 (Adjusted R Squared = .411)
b R Squared = .585 (Adjusted R Squared = .381)
c R Squared = .490 (Adjusted R Squared = .240)
4.5 Descriptive Analysis of the Responses to the Construct on Leadership
Behavior
Table 6 depicts a tabulation of the means and standard deviation of responses to the 9 items
that measure respondents‘ general perception of entrepreneurial leadership behavior exhibited by
academic leaders at various levels of the universities.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Table 6: Mean & Standard Deviation of Responses to Leadership Behavior variable (n = 77)
Items
Mean
SD
1.
Moves ahead with new approach
3.12
1.08
2.
Listen to suggestions from others
3.09
1.03
3.
3.08
1.05
4.
Use different approaches to overcome
obstacles
Promote risk-taking environment
2.99
1.01
5.
Demonstrate entrepreneurial orientation
2.91
0.99
6.
Encouraging bending of rules
2.86
0.97
7.
2.83
1.08
8.
Get things done even by going around
system
Encourage others to outwit bureaucracy
2.57
1.03
9.
Actively fight bureaucracy
2.51
0.93
The items have been arranged according to a descending order of the mean scores. The
highest mean score (Mean=3.12; SD=1.08) is obtained for the item on ‗In general, academic
leaders at various levels of the university willingly move ahead with a promising new approach
when others might hold back‘. On the other hand, the lowest mean score (Mean=2.51; SD=0.93)
is obtained for the item on ‗In general, academic leaders at various levels of the university
actively fight the encroachment of bureaucracy in the university‘. The results demonstrate that the
respondents/academicians perceive that people in leadership role in these universities exhibit
weak leadership behavior for the latter and strong leadership behavior for the former. However,
the highest score being around 3 signifies that there is not a very strong entrepreneurial leadership
behavior for any of these items which could further explain the reason for the level of leadership
behavior to be low (Mean=25.94; SD=6.41) and the level of academic entrepreneurship to be
moderate (Mean=59.93; SD=14.55) in these universities as shown by their mean scores in Table 4.
Rules, systems and bureaucracy seem to be major obstacles in fostering entrepreneurial
behavior among academic leaders as demonstrated by the means scores of item 6, 7, 8 and 9.
These factors are hindering academic leaders in these universities to act entrepreneurially or to
undertake entrepreneurial activities and opportunities. In fact, there is moderate level of
entrepreneurial orientation among the leaders. Further, the promotion and encouragement for risktaking is also moderate. Nevertheless, items 3, 6 and 9 which are closely related, demonstrate that
academic leaders may have a slightly high sense of perseverance in moving ahead and in utilizing
Volume 3, No. 3, 2009
75
different approaches in overcoming obstacles. This is supported by a positive attitude and openmindedness in listening to suggestions from others.
5. Discussion
Entrepreneurial behavior among academic leaders can represent a significant enabler to
academic entrepreneurship in the local public research universities, especially when academic
leaders are able to unleash their entrepreneurial mindset, thinking, approach and potential. The
results of this study confirm that a higher level of entrepreneurial behavior among academic
leaders will commensurate in a higher level of academic entrepreneurship in these universities.
Support was generated for all the hypotheses. Results of this study have also confirmed the
findings of previous studies which found positive relationship between leadership behavior and
academic entrepreneurship in a university setting (Clark, 1998; O‘Shea et. al., 2004; Bercovitz
and Feldman, 2004).
While the results show, in general, a slightly high level of academic entrepreneurship in
these four public research universities, the current state of entrepreneurial leadership behavior in
these universities is still very moderate. The challenge for these universities is to redefine the
organization‘s concept of leadership. Inevitably, academic leadership role will be in conflict with
entrepreneurial leadership role. Academicians‘ first priority and responsibility will be towards
teaching and research. Nevertheless, the entrepreneurial mindset and approach can be adopted and
inculcated through innovative teaching and consulting activities, and by identifying opportunities
and understanding market demand before a research is undertaken in order for the research output
or technology to have a higher potential of being commercialized and transferable to the industry.
The direction towards this mindset and approach needs to be supported and encouraged through
strong entrepreneurial leadership behavior capable of overcoming various hierarchical and
internal constraints.
The study has provided some insights to the enquiry on the theoretical connection and
relationship between leadership behavior and the level of academic entrepreneurship in Malaysian
public research universities. Needless to say that the study is exploratory in nature and suffers
from limitations. One of the limitations of the study is that the questionnaire relied upon selfreports and perceptual data of academicians towards their universities. Moreover, the sample size
is small thus generalizability of the results is problematic.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
6. Future Research
Given the limitations mentioned above, the study can explore if statistically significant
correlations are consistent with non-parametric measures such as Spearman or Kendall correlation.
In addition, a more appropriate sample size can be collected to support generalization of the
findings. Further, other than doing a quantitative study, a qualitative strategy can be used to carry
out an in-depth analysis of the culture and complexities of the processes and systems involved in
the universities‘ entrepreneurial activities and the underlying dimensions of entrepreneurial
leadership behavior. This paper has focused more on leadership behavior rather than the
dimensions of academic entrepreneurship. Future studies should investigate further and validate
the dimensions of academic entrepreneurship i.e. organizational innovation, organizational
creation and organizational renewal, used in the context of public research universities.
Given that Malay academicians constitute 79.2% of the study‘s sample, the possible
influence and impact of Malay culture on the behavior of academic leaders and on the level of
academic entrepreneurship may need to be further examined. Selvarajah and Meyer (2008)
studied 512 managers in an urban area in Malaysia to determine the influence of different cultural
backgrounds i.e. the Malays, Chinese and Indians, on management practices in Malaysia. The
study described that Malay personal qualities emphasized on morality, religion, inter-personal
relationships and communication. Values projected by the Malays were non-confrontational,
adaptive and submissive attitude which are translated into respect for authority and the elders,
social sensitivity, loyalty to group and high regard for the pursuit of knowledge and scientific
inquiry. In addition, some studies had been made on attitudes of Malay academicians towards pay
and promotion (Morris, Yaacob and Wood, 2004) and success factors of Malay women
academicians (Ismail, Rasdi and Wahat, 2005). However, studies on Malay culture in universities
and its impact on academic entrepreneurial activities are still very much limited, especially since
academic entrepreneurship is a new phenomenon in Malaysia.
7. Conclusion
To nurture something new like academic entrepreneurship, strong entrepreneurial leadership
is required at various levels of the public research universities since they are governed by rules,
regulations, procedures and systems set by the government. Government intervention is going to
be difficult to overcome especially when funding and budget are provided for by the government.
Volume 3, No. 3, 2009
77
Pursuing entrepreneurial and commercialization activities may not be important unless there is a
very strong desire and vision founded on the understanding of the benefits that these activities
bring to wealth creation and nation building. Entrepreneurial leadership characteristics can also
help to strengthen the universities‘ commitment to excellence. Thus, continuous motivation,
training and leadership support are needed to build the culture of academic entrepreneurship,
innovation and commercialization.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Technical Entrepreneurship and Technological
Innovations: SMEs in the Electronics Industry in
Bangalore, India*
M H Bala Subrahmanya**, K N Krishnaswamy*** and M Mathirajan****
Abstract
This paper probes the nature of innovative SMEs of technical graduates and post-graduates
as compared to those of technical diploma holders and non-technical entrepreneurs in the
electronics and telecommunication industry of Bangalore. Further, it ascertains innovation
performance of the three groups in terms of shares of innovated products in total sales.
Subsequently, it examines economic performance of technical entrepreneurs (graduates/postgraduates) relative to those of non-technical entrepreneurs and technical diploma holders. The
former had higher shares of technically qualified employees, more experienced employees and
more exclusive design offices, higher shares of innovated products in total sales and at the
aggregate, had higher partial factor productivities and returns to scale. However, differences in
partial factor productivities are not statistically significant and the difference in returns to scale
could not be exclusively attributed to innovations since innovations are of incremental in nature
in both the groups. The absence of qualitatively superior innovations despite higher “innovative
capability” of the technical entrepreneurs is largely attributed to the lack of competition in the
product market.
Key words: SMEs, Product innovations, Technical entrepreneurship, Bangalore, India,
Electronics & telecommunication industry, Education
*
This paper forms part of the Research Project titled, The Influence of Technological Innovations on the Growth of
Manufacturing SMEs, sponsored by the Department of Science and Technology (DST), Government of India, New
Delhi. The authors are grateful to DST, New Delhi for this project sponsorship without which, this Project work could
not have been undertaken by the authors. The authors are grateful to the comments and suggestions of two anonymous
reviewers, which have considerably contributed to the finalization of this paper. However, the usual disclaimers apply.
**
Corresponding Author, Professor in Economics Department of Management Studies Indian Institute of Science
BANGALORE, E-mail: [email protected]
***
Retired Professor and Consultant Department of Management Studies Indian Institute of Science BANGALORE,
E-mail: [email protected]
****
Head Department of Management Studies Anna University – Tiruchirapalli TIRUCHIRAPALLI, E-mail:
[email protected]
Volume 3, No. 3, 2009
85
1. Introduction
Innovation is increasingly seen as a contributory factor to higher performance in a growing
number of industries and in particular, strengthening the firm‘s competitive advantage (O‘Regan,
et. al., 2006). The importance of innovation as a driver of sustainable competitive advantage is
well documented (Shoham and Feiganbaum, 2002). But a substantial proportion of innovation
literature is focused on Small and Medium Enterprises (hereafter SMEs) dealing with the causal
factors, objectives, sources, dimensions and achievements, among others (Hoffman, et. al., 1998;
Becheikh, et. al., 2006). The primary reason for this importance could be due to their considerable
size as well as their innovation contributions, apart from their role in economic growth and job
creation. About 50% of all innovations and 94% of all radical innovations since WWII in the
USA have come from small firms (Longnecker, et. al., 2000); about 1/3 of the total innovations in
Japan in 2003 have emerged from SMEs (METI, 2004). Thus, it is due to innovation contributions
as well as innovation potential that SMEs have been promoted as the seedbed of innovations.
However, despite a considerable focus on SME innovations across industrialized as well as
industrializing economies, the role of entrepreneurship in the promotion of SME innovations has
not been explored adequately. Particularly, it is essential to examine whether technical
entrepreneurship in a technology intensive industrial sector can play a more decisive role in
carrying out technological innovations compared to non-technical entrepreneurs. This paper is an
attempt to fill this research gap. The paper explores three research questions in the area of SME
innovations: Are the features of technical entrepreneur-owned product innovative SMEs different
from those of non-technical entrepreneurs? Do product innovations of the former differ from that
of the latter? Does economic performance of technical entrepreneurship based SMEs differ from
that of non-technical entrepreneurs? To answer these questions, we have chosen 39 product
innovative SMEs in the electronics and telecommunication industry in Bangalore city, India, a
global hub of technological innovation in South Asia.
This paper has the following structure. The literature review and research framework of the
study are presented in section 2 and research objectives and methodology are described in section
3. The characteristics and achievements of product innovative SMEs of technical and nontechnical entrepreneurs are examined in section 4, firm level performance of technical
entrepreneurship based SMEs vis-à-vis that of non-technical entrepreneurs is comparatively
analyzed in section 5 and the summary and conclusions are presented in section 6.
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2. Literature Review and Research Framework
Product innovation has become an increasingly important competitive factor for both large
and small firms since the early 1980s (Chapman and O‘Mara, 2001). Innovative products present
great opportunities for firms in terms of growth and expansion into new areas. Significant product
innovations allow firms to establish competitively dominant positions, and afford new comer
firms an opportunity to gain a foothold in the market (Danneels and Kleinschmidt, 2001). Among
firms of different sizes, SMEs are generally more flexible, adapt themselves better, and are better
placed to develop and implement new ideas. The flexibility of SMEs, their simple organizational
structure, their low risk and receptivity are in fact essential features facilitating them to be
innovative (Harrison and Watson, 1998).
SMEs are renowned for their creativity and new product development. This applies in
particular to SMEs that have the ability to innovate effectively and develop new products (Vossen,
1998; Storey, 1994). Further, the ability of SMEs to meet growing consumer expectations is
largely based on their capability to innovate and deliver new products at competitive prices
(O‘Regan, et. al., 2006). Clearly, the capability to innovate quickly is a key factor in the
sustainable competitive advantage of any firm. This leads to the question - what determines SME
capability to innovate? Most obviously, it is the quality of entrepreneurship, apart from a firm‘s
financial and human resources and its external environment.
Other things remaining the same, the quality of entrepreneurship is likely to be better-off if
the entrepreneur concerned is a technically qualified scientist/engineer, particularly in a
technology-intensive industry. Such entrepreneurs will be able to understand their customer
requirements as well as recognize new market opportunities appropriately and adequately.
Therefore, they will be able to initiate and implement product innovations more successfully than
entrepreneurs who are not technically qualified or who are only technically skilled. The
innovative capability would be strengthened further, if a firm has a high proportion of technical
employees rather than skilled and unskilled employees. Similarly, more experienced employees
would be an asset to a firm relative to inexperienced or green-horn employees. This is because
innovations would require significant investments in skills and competencies that involve cojoining of individuals within the organization (Edwards, et. al., 2001).
But not many empirical studies have examined the roles of technical entrepreneurship and
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87
technical employees in the innovations of SMEs. According to Rothwell, suitably qualified inhouse engineers and scientists form one of the organizational factors shaping innovative SMEs
(Edwards, et. al., 2001). Some others have contended that manager‘s qualification and cumulative
experience is an important determinant of innovation though their roles have not been empirically
tested (Becheikh, et. al., 2006). But Hoffman, et al (1998) in their literature survey based paper,
indicated that a higher proportion of Qualified Scientists and Engineers (QSEs) and technically
accomplished owner managers have been found to be central to the R&D and innovation efforts –
either as direct sources of knowledge, ideas and inspiration, as the actual doers of R&D or as
managers of the SME‘s relations with external sources of R&D. However, a high incidence of
QSEs (and the knowledge base they represent) among employees and a strong leadership
provided by a highly educated founder/entrepreneur are not among the factors to be the most
important determinants of innovative activity and economic success of SMEs (Hoffman, et. al.,
1998).
Salavou and Lioukas (2003) focusing on the Greek SMEs in the food and beverages
industry, brought out that it is mainly entrepreneurial orientation that favours the choice of radical
product innovations as against incremental product innovations. This suggests that in SMEs the
notion of entrepreneurial-push outweighs both market-pull and technology-push arguments.
However the study neither distinguished technical from non-technical entrepreneurs nor did it
examine the impact of product innovations on firm performance.
Avlontis and Salavou (2007) focused on identifying entrepreneurial profiles of SMEs to
suggest variations in product innovativeness dimensions of different performance potential. Based
on a sample of 149 manufacturing enterprises, the study identified two opposite groups with the
help of a cluster analysis, namely, active entrepreneurs and passive entrepreneurs. The study
demonstrated that these two groups of entrepreneurs consisted of product innovators who take
equal care of reducing customers‘ burden in adopting new products. However, the entrepreneurial
attitude instilled in active entrepreneurs as compared with passive entrepreneurs is primarily
mirrored in new products, which embody in their characteristics higher uniqueness, an ingredient
found to act as an important contributor to product performance. However education background
of entrepreneurs was not one of the factors, which determined the nature of entrepreneurs.
Bala Subrahmanya (2005a) compared the patterns of technological innovations in smallscale engineering enterprises of Northeast England with that of Bangalore of India. He studied 34
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Small firms each in both the regions and brought out that entrepreneurial background in the form
of technical education and work experience had a crucial role to play in the emergence of new
product innovations. A greater proportion of innovative enterprises in Northeast England (seven
out of 33) than in Bangalore (two out of 26) have achieved radical product innovations by
developing new products and obtaining product patents. The entrepreneurs who have developed
new products had relevant academic backgrounds in engineering or work experience in an
engineering industry or both and such entrepreneurs attributed their innovation achievements to
their self-motivation and growth objective. He further indicated that such product innovators grew
in size overtime. The remaining innovative SMEs carried out only incremental innovations in the
form of improvement of existing products/processes in both the regions. However, he did not
throw any light on firm performance based on quantitative data.
Bala Subrahmanya (2005b) studied the factors responsible for small firms to undertake
technological innovations in the engineering industry of Karnataka in India, among others. He
observed that small scale engineering firms had a high proportion of entrepreneurs with technical
graduate/post-graduate/doctorate qualifications (in almost 54% of the 166 small firms). Ho further
ascertained that there is a statistically significant positive relationship between technical education
background of entrepreneurs and their self-motivation to undertake technological innovations. Of
course, he did not examine whether innovations and economic performance of these technical
entrepreneurs differed from that of non-technical entrepreneurs or not.
In another study, Bala Subrahmanya (2007) probed how two small foundries in Belgaum,
Karnataka state, India have achieved technological innovations successfully based on their
technological capability and customer needs. The entrepreneurs of both the foundries obtained
their engineering degrees from the prestigious Indian Institute of Technology (IIT), Bombay and
they attributed their technological innovations mainly to self-motivation and self-efforts.
Changing product designs, as desired or directed by their customers, cost reduction, quality
improvement and import substitution through reverse engineering are the features of these
incremental innovations, which enabled them to enhance competitiveness, grow in the domestic
market and penetrate the international market. This case study-based analysis indicated that
technical entrepreneurship of a higher quality did play a distinctive role in the innovations of the
two SMEs. As a result, the annual turnover of both increased by almost 100 times over a period of
more than two decades.
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89
Bala Subrahmanya (2009) compared the nature and strategy of product innovations of an
engineering SME in Ota, Tokyo of Japan with another engineering SME in Mysore, Karnataka of
India. Japanese SME realized and planned for product innovation due to an external threat
perceived by its technically qualified entrepreneurs whereas Indian SME owed its origin to the
lack of encouragement for the innovative ideas of two technically qualified employees of a large
enterprise employer. In both cases, technical education background, work experience in a large
enterprise and self-motivation of entrepreneurs played a decisive role in undertaking product
innovations. Thus the study brought out that internal capability is decisive for product innovations
to emerge from SMEs because technical education and work experience give an edge to
entrepreneurship for undertaking innovations. However, the two case studies revealed that SMEs
do require external support to carry out technological innovations. Due to their successful product
innovations, over a period of time, both have grown in size considerably.
It is with this brief backdrop of empirical research understanding that a conceptual model is
proposed linking technical entrepreneurship with product innovations and firm performance
(Figure 1). To begin with we would suggest that entrepreneurs with engineering degrees and with
or without work experience, who initiate their own start-ups and who could succeed in obtaining
technically qualified employees and retain experienced employees in the long run, would have
superior internal technological capability.
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Figure 1: Technical Entrepreneurship, Product Innovations and Firm Performance A Conceptual Model
- Technical Entrepreneur
- Higher proportions of technical
employees and more
experienced employees
- Meet Customer requirements
and/or
- Exploit Market Opportunities
Internal Technological
capability
Market Demand
Develop / Improve new /
existing products
Product Innovations
Sell innovated products
as part of total sales
Innovation Sales
Achieve better economic
performance
Firm Performance
Such entrepreneurs would be able to respond better to the requirements and demands of
their customers and recognize the market opportunities sooner than non-technical entrepreneurs,
and to undertake product innovations. Product innovations may emerge in the form of new
product developments or improvement of existing products. Since these product innovations
emerge in response to market signals, such SMEs will be able to sell innovated products as part of
their total sales, which in turn would lead to an improvement in their economic performance and
growth of sales. It is with this conceptual model that the objectives of this paper are stated.
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3. Research Objectives and Methodology
The study has the following specific objectives:
(i)
To study the entrepreneurial background and features of product innovative SMEs
for technically qualified and non-technical entrepreneurs
(ii)
To examine the achievements of product innovations of technical entrepreneurs visà-vis non-technical entrepreneurs
(iii)
To ascertain and comparatively analyze the economic performance of product
innovative SMEs of technically qualified entrepreneurs with those of non-technical
entrepreneurs
These objectives are studied with respect to SMEs in the electronics and telecommunication
industry in Bangalore city, India. Bangalore, capital city of Karnataka state of India, is the only
‗global hub of technological innovation‘ in south Asia and the highest ranked global hub in the
entire Asia (UNDP, 2001). Karnataka leads the rest of India in electronics and
telecommunications with over 300 of the world‘s leading companies located there. The list of
companies includes global giants like Siemens, Motorola, AT&T, Alactel, Sony, Sanyo, Samsung,
British Telecom, GE and British Aerospace as well as domestic large companies like Bharat
Electronics Limited, Indian Telephone Industries Limited, BPL Limited and a host of others. In
addition, there is a wide variety of SMEs located in various industrial estates across the city,
notably in and around an exclusive ‗electronic city‘ in the eastern part of the city (Government of
Karnataka, 2001).
Bangalore urban district had the highest proportion of Small Scale Industries (SSIs)
engaged in R&D and innovations as revealed by an earlier Census based study (Bala
Subrahmanya, et. al., 2001). Similarly, machinery equipments & parts industry, which comprises
electronics & telecommunication industry, among others, was one of the industries where a very
high proportion of SSIs was engaged in R&D and innovations (Bala Subrahmanya, et. al., 2001).
Therefore, electronics & telecommunication sector in Bangalore would be ideal to study the role
of technical entrepreneurship in product innovations and firm performance of SMEs.
For the present study, SMEs are defined to include all manufacturing enterprises having
investment in plant & machinery up to Rs.100 million (approximately equivalent to US$2 million),
as per the definition of government of India given in the Micro, Small and Medium Enterprises
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Act, 2006 (Ministry of SSI, 2007). Technological innovation in general is viewed as the
transformation of an idea into a new or improved saleable product or operational process in
industry or commerce, etc (Yeh and Chang, 2003). However, the focus of the present paper is
confined to product innovations only. We define product innovations to comprise development
and introduction of new products and/or improvement of existing products by manufacturing
SMEs. Products may be new to the firm or to the industry, locally or globally.
Next, entrepreneurship is defined as the practice of starting new ventures or revitalizing
already existing ventures, particularly new businesses generally in response to identified
opportunities. But entrepreneurship might emerge from individuals with formal educational
qualifications or without having any formal education. Those who have formal educational
qualifications might have science & technology (S&T) based education or non-technical
education. Further, those who have S&T education might be either just technical diploma holders
or technical graduates/post-graduates. Other things remaining the same, those who have higher
technical education might be able to contribute more in terms of technological innovations. This
is because technological innovation is an expression of human potential and higher levels of
education make powerful contributions to technology creation and diffusion (UNDP, 2001). This
will be more crucial in a technology-intensive industry such as electronics & telecommunication.
Therefore, we broadly segregate SMEs into two groups: (i) SMEs owned by entrepreneurs
who are technical graduates or post-graduates, and (ii) SMEs owned by entrepreneurs who do not
have formal education or are school educated, or intermediates or graduates/post-graduates in arts,
science and commerce, and who are technical diploma holders. We have clubbed technical
diploma holders under non-technical entrepreneurs because technical diploma education is ‗skillbased‘ and not ‗knowledge based‘. Therefore, their entrepreneurial quality will not be comparable
to that of technical graduates/post-graduates and thus they are not clubbed under the former. For
the purpose of this research, we call the former as ―technical entrepreneurs‖ and the latter as ―nontechnical entrepreneurs‖.
The primary data were gathered with the help of a structured questionnaire comprising
about 60 questions/items covering characteristics of SMEs, educational background of
entrepreneurs, dimensions, objectives, dimensions, achievements and outcomes of technological
innovation, recognitions won, proportion of innovated products in total sales and data on
economic variables such as employment, investment, sales turnover, etc. The validity and
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93
reliability of the questionnaire was ensured based on the knowledge and experience of the authors,
discussions held with experts from SME related government agencies and financial institutions,
and representatives of SME associations. Further, based on a pilot study, we did an item analysis
for the questions excluding those which are (i) opinions on policies, (ii) dichotomous questions,
and (iii) descriptive questions, which yielded a Cronbach‘s  (alpha) of 0.653.
In the absence of a detailed official data base of SMEs in Bangalore, we had to rely on the
data base of Consortium of Electronic Industries of Karnataka (CLICK) and Electronic City
Industries Association (ELCIA), among others. Accordingly, with the validated questionnaire, we
approached 162 electronic SMEs across the city of Bangalore and gathered primary data from 67
electronic SMEs. Only those SMEs which have come up prior to 2001/02 were covered by the
study. The quantitative data were gathered for a period of five years from 2001/02 to 2005/06.
Data collection was done during January – December 2007. Out of the 67 electronic SMEs, we
have chosen all the 39 SMEs which have carried out product innovations (with or without process
innovations) during 2001/02-2005/06, for the present study. The first two objectives were
analyzed descriptively by making use of frequency tables and in terms of percentages for both
technical and non-technical entrepreneurs. The third objective was analyzed for SMEs of
technical and non-technical entrepreneurs using correlation analysis, ANOVA and regression
analysis.
4. Characteristics of Product Innovative SMEs
The features of product innovative SMEs and their innovation achievements can be
described in terms of their origin, composition of employees, their work experience, nature of
entrepreneurship, nature of the product market in which they operate, and finally, share of
innovated products in total sales. All the 39 electronic SMEs were start-up firms and thus
represent first generation entrepreneurship in the electronics industry. Of the 39 SMEs, 23 had
come up prior to 1991 whereas 16 have come up in the period of economic liberalization since
1991. The pertinent issue is what prompted the entrepreneurs to initiate their own start-ups? The
entrepreneurs of 26 SMEs attributed the origin of their start-up to their own innovative ideas
whereas entrepreneurs of the remaining 13 SMEs set-up their enterprises to exploit the market
opportunities perceived by them.
Given this it is appropriate to understand the background of these entrepreneurs in terms of
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
their educational qualifications. The electronics & telecommunications industry being a high-tech
industry, the level of qualification of entrepreneurs is likely to be high, mostly technical. The
composition of educational qualification of electronic SME entrepreneurs is presented in Table 1.
Technical entrepreneurs with engineering graduation/post-graduation qualifications accounted for
almost 54% of the total SMEs, technical entrepreneurs with technical diploma qualification
accounted for about 18% of the SMEs whereas non-technical entrepreneurs accounted for the
remaining 28% of the total.
Table 1: Educational background of entrepreneurs
Nature of qualification
Number of SMEs
% of Total
A. Intermediates/Graduates/Post-Graduates
in Arts & Commerce
B. Diploma in Engineering
11
28.20
7
17.95
C. Graduate/Post-Graduate in Engineering
21
53.85
39
100.00
Total
Thus SMEs of technical entrepreneurs formed the majority in the electronics and
telecommunication industry.
This is understandable given the nature of the industry where
technical knowledge of the entrepreneurs would play an important role in carrying out product
innovations. But the fact that non-technical SME entrepreneurs accounted for more than a quarter
of the total product innovative SMEs implies that even non-technical entrepreneurs can initiate
product innovations. This is quite interesting because if non-technical entrepreneurs have
implemented product innovations in a high-tech industry, they must have hired technical
employees. This necessitates us to look at the composition of employees of these SMEs.
The composition of employees for product innovative SMEs with non-technical
entrepreneurs (Group A), diploma qualified entrepreneurs (Group B) and technical graduate/postgraduate qualified entrepreneurs (Group C) is given in Table 2. All the SMEs with non-technical
employees had at least, one technical qualified executive or supervisor, which would explain why
they would be able to implement product innovations. However the proportion of technically
qualified employees in total employees increases with an improvement in the technical
qualification of entrepreneurs: SMEs with technical diploma qualified entrepreneurs accounted
for a higher proportion of technical employees than SMEs with non-technical entrepreneurs and
SMEs with technical graduate/post-graduate entrepreneurs accounted for a higher proportion of
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95
technical employees compared to SMEs with technical diploma qualified entrepreneurs.
Table 2: Composition of employees
Group
Group A (11)
Technical
employees
42 (13%)
Non-Technical
employees
35 (10%)
Skilled
workers
141 (42%)
Un-skilled
workers
116 (35%)
Total
334 (100%)
Group B (7)
18 (19%)
6 (6%)
57 (60%)
14 (15%)
95 (100%)
Group C (21)
357 (35%)
85 (8%)
249 (24%)
340 (33%)
1031 (100%)
Total (39)
417 (28%)
126 (9%)
447 (31%)
470 (32%)
1460 (100%)
Note: A Group = Non-Technical entrepreneurs, B Group = Diploma entrepreneurs,
C Group = BE or ME entrepreneurs.
*Figures in brackets of the first column represent the number of innovative SMEs
On average, workers accounted for nearly two-thirds of the total employees in all the
innovative SMEs, the highest proportion being in the non-technical entrepreneurship based SMEs
followed by technical diploma entrepreneurship based SMEs and technical graduate/post-graduate
entrepreneurship based SMEs, respectively (Table 2). The next pertinent issue is how many of the
employees are experienced and how many are relatively fresh. This is important because if
innovative SMEs could retain their employees in the long run, they would be able to realize
productivity gains much more than if they quit after gaining some years of work experience. The
composition of employees in terms of work experience would throw some light on this, which is
presented in Table 3. On average, almost half of the total employees were relatively fresh as they
had hardly a couple of years‘ work experience. Among these innovative SMEs, more experienced
employees accounted for a higher share in SMEs of technical graduates/post-graduates followed
by SMEs of diploma entrepreneurs and then by SMEs of non-technical entrepreneurs. In the
SMEs of both non-technical and diploma entrepreneurs fresh employees accounted for more than
half of the total whereas their relative share in the SMEs of technical graduates & post-graduates
accounted for 45% of the total.
Table 3: Work experience of employees
Range of Work Experience
Group
>10 years
3 to 10 years
<3 years
Total
Group A (11)*
52 (15%)
103 (31%)
179 (54%)
334 (100%)
Group B (7)*
15 (16%)
24 (25%)
56 (59%)
95 (100%)
Group C (21)*
305 (30%)
258 (25%)
468 (45%)
1031 (100%)
Total (39)*
372 (25.5%)
385 (26.40%)
703 (48.10%)
1460 (100%)
* Number of innovative SMEs
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
In general it is observed that it is relatively difficult for SMEs to hire technical employees
and retain even non-technical workers in the long-run. But technical graduate/post-graduate
entrepreneurship based SMEs in the electronics & telecommunications industry appear to be
better-off with respect to both as reflected in the higher shares of technical employees and more
experienced employees in total employees.
The presence or absence of design centre represents another dimension of product
innovative SMEs. SMEs in the electronics & telecommunications sector play a major role in
customer satisfaction, product improvement, cost reduction and competition. The presence of
exclusive design offices within the enterprise premises might be an indication of the importance
that the entrepreneur has attached to product designing as part of product innovations. Table 4
presents the composition of SMEs under different kinds of entrepreneurship described earlier, in
terms of the presence and absence of design offices. Again, a larger proportion of SMEs with
technical graduates/post-graduates as entrepreneurs have exclusive design offices compared to
SMEs of non-technical entrepreneurs and technical diploma entrepreneurs. All these indicate that
technical entrepreneurship of the higher order in the form of graduate and post-graduate degrees
do make a difference to the ‗organizational environment‘ of innovative SMEs.
Table 4: Presence of design offices in SMEs
Group
Design Office Exists
No Design Office
Total
Group A
4 (36%)
7 (64%)
11 (100%)
Group B
1 (17%)
6 (83%)
7 (100%)
Group C
9 (43%)
12 (57%)
21 (100%)
Total
14 (36%)
25 (64%)
39 (100%)
If that is the case, it would be appropriate to look at their innovation achievements in terms
of proportion of innovated products in total sales, which is given in Table 5. A higher number and
higher proportion of SMEs with technical graduate/post-graduate entrepreneurs accounted for
innovation sales more than 20% in their respective total sales. More than half of the SMEs in the
group accounted for innovation sales more than 5% in the total sales. Even SMEs of technical
diploma entrepreneurs accounted for a similar share whereas in almost two-thirds of the SMEs of
non-technical entrepreneurs, innovation sales did not exceed 5% of the total sales. This indicates
that technical entrepreneurship makes a difference to the innovation performance of SMEs.
Volume 3, No. 3, 2009
97
Table 5: Innovation sales in SMEs
Range of Sales%
Group A
Group B
Group C
Total
Nil
1 (9%)
1 (14%)
2 (10%)
4 (10%)
Up to 5%
6 (55%)
2 (29%)
7 (33%)
15 (38%)
>5% up to 20%
3 (27%)
3 (43%)
8 (38%)
14 (36%)
>20% up to 50%
1 (9%)
1 (14%)
4 (19%)
6 (16%)
11 (100%)
7 (100%)
21 (100%)
39 (100%)
Total
*Figures in brackets are percentages to the total given in the last row.
To further examine the difference in innovation performance, we calculated the average
share of innovated products in total sales for the three groups and conducted one way ANOVA.
The results of both are given in Tables 6 and 7. The average share of innovated products in total
sales was the highest for SMEs of technical graduate/post-graduate entrepreneurs followed by
SMEs of non-technical entrepreneurs and technical diploma entrepreneurs, respectively (Table 6).
But the difference between the average innovation sales of the three groups is not statistically
significant as indicated by the F value (Table 7). This could be because of the negligible
difference between Group A and Group B.
Table 6: Innovation sales in groups of SMEs
Number of SMEs
Innovation Sales (%)
Group A
11
10.09
Group B
7
9
Group C
21
14.91
Total Innovative SMEs
39
12.45
Groups
Table 7: ANOVA results for innovation sales of SME groups
Sources of
variation
Between groups
98
Sum of squares
Degrees of freedom
Mean squares
F ratio
271.03
2
135.5125
1.202
Within groups
4058.72
36
112.7422
Total
4329.75
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
But the difference between the innovation sales of Groups A and B and Group C is
considerable and so are the other characteristics discussed earlier. Therefore, we examined the
firm level performance of innovative SMEs for two broad groups: Group 1 comprising SMEs of
non-technical entrepreneurs and technical diploma entrepreneurs (hereafter referred to as Group
1), and Group 2 consisting of SMEs of technical graduate/post-graduate entrepreneurs (hereafter
mentioned as Group 2).
5. Firm Level Performance of Innovative SMEs:
To begin with, we looked at the partial factor productivities of the two groups for two
different years as well as their growth between the two years. Since Group 2 SMEs accounted for
a higher share of innovated products in their total sales relative to Group 1 SMEs, we would
expect Group 2 SMEs to have higher factor productivities and higher growth of factor
productivities relative to Group 1 SMEs, if innovation is beneficial to firm performance. However,
factor productivities, particularly labour productivity could be influenced favorably by higher
capital intensity, other things remaining the same. Therefore, it would be appropriate to ascertain
the level of capital intensity between the two groups as well as between the two years.
Accordingly, we estimated labour productivity, capital productivity and capital intensity for
Group1 and Group 2 for 2001/02 and 2005/06 (Table 8). Group 2 SMEs accounted for higher
labour and capital productivities as well as higher capital intensity. Labour productivity grew at a
marginally higher rate in Group 2 SMEs compared to Group 1 SMEs whereas capital productivity
grew at a marginally higher rate in Group 1 SMEs relative to Group 2 SMEs.
Table 8: Factor productivities and capital intensity in innovative SMEs
Labour productivity
Capital
productivity
Group 1 Group 2
Year
Group 1
Group 2
2001/02
4.936
10.735
0.67
2005/06
10.068
22.283
CARG:
2001/02-2005/06
19.49
20.01
Capital intensity
Group 1
Group 2
0.73
0.184
0.212
2.79
3.00
0.305
0.304
42.85
42.38
13.47
9.43
What is more significant is that capital intensity grew at a higher rate in Group 1 SMEs and
as a result they were as capital intensive as Group 2 SMEs in 2005/06. This implies that despite
Volume 3, No. 3, 2009
99
having a higher growth of capital intensity, Group 1 SMEs could not achieve a higher growth of
labour productivity but could achieve a marginally higher growth of capital productivity. This
necessitates probing of whether the differences in the labour and capital productivities and capital
intensity between the two groups are statistically significant. We did one way ANOVA for these
variables for the two groups for 2001/02 as well as for 2005/06. We found that the difference is
not statistically significant for any of the three variables for either 2001/02 or 2005/06. What is
more surprising is that one way ANOVA brought out that even the improvements in labour
productivities, capital productivities and capital intensities of SMEs between 2001/02 and
2005/06 are not statistically significant.
Given these results, we estimated the returns to scale for the two groups for 2001/02 as well
as for 2005/06, with the help of a regression model as follows:
Log Y = Log K + Log L + Dummy
Where Log Y = log of gross value added of 39 product innovative SMEs, Log K = Log of
capital investment (current replacement value of capital) of the 39 SMEs and log L = Log of
Number of employees of the 39 SMEs, and dummy took the value of 0 for Group 1 SMEs and 1
for Group 2 SMEs. Log values of the variables are used to minimize the variance and bring
linearity. The estimated returns to scale for 2001/02 and 2005/06 are presented in Table 9. Both
the regression models are statistically significant as indicated by the respective F values. The
explanatory powers of the regression models are quite significant as the adjusted R square is more
than 70% in both the cases.
Table 9: Returns to scale in innovative SMEs: 2001/02 & 2005/06
Explanatory Variables
Dependent variable is Log GVA
2001/02
2005/06
Log L
0.38 (1.91)**
0.47 (2.72)*
Log K
0.56 (4.86)*
0.44 (4.44)*
Dummy
0.18 (1.52)***
0.24 (2.34)*
Constant
0.20 (1.09)
0.37 (2.08)*
Adj R
0.704
0.726
F value
31.14
34.49
39
39
2
Number of observations
*Significant at 0.05 level **Significant at 0.10 level
***Significant at 0.15 level. All F values are significant at 0.05 level
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
The contributions of both labour and capital are statistically significant in both the models.
What is important to note is that dummy variable is statistically significant at 0.15 level for
2001/02. But its coefficient improved for 2005/06 and so is its statistical significance. The
statistical significance of dummy variable in both the models indicates that the returns to scale of
Group 2 SMEs were significantly higher than that of Group 1 SMEs in 2001/02 as well as in
2005/06. The results indicate that Group1 experiences almost constant returns to scale whereas
Group 2 experiences increasing returns to scale.
These results could be attributed to a variety of factors. As we have seen earlier, Group 2
SMEs not only had technical entrepreneurship but also accounted for greater shares of technical
employees and more experienced employees, more of these SMEs had exclusive design offices
and accounted for a higher share of innovated products in their total sales. All these would have
cumulatively reflected in the statistical significance of the dummy variable. What is noteworthy is
the improvement in the coefficient of dummy variable as well as its statistical significance in
2005/06 relative to 2001/02. The same holds good for labour input whereas the coefficient of
capital has decreased during 2001/02-2005/06. Overall, it appears that returns to scale of Group 1
SMEs have declined marginally whereas that of Group 2 SMEs has improved marginally during
2001/02-2005/06.
To examine whether the differences in the coefficients of the variables are statistically
significant, we conducted Chow (F) test as follows:
F = [(RSSr – RSSus)/(k)]/[(RSSur)/(N1 + N2 – 2k)]
Where RSSr = residual sum of squares for the model. This refers to the full (2001/02 and
2005/06 combined together) sample regression in which slope coefficients are viewed as equal
across groups. RSSur = sum of residual sum of squares from each of the sub sample regression
results (2001/02 and 2005/06 separately). N1 and N2 are number of observations in each sub
sample and k is the number of restrictions to be tested, that is, number of estimated parameters in
the sub sample regressions (Ramanathan, 2002). The Chow test result yielded a value of 0.59. But
the calculated F value is less than the tabulated F value of 1.69 at 0.05 level. This brings out that
the differences in the coefficients of the explanatory variables are not statistically significant.
However the difference in the returns to scale of Group 1 and Group 2 SMEs in 2005/06 holds
good as much as in 2001/02.
Volume 3, No. 3, 2009
101
Of course, we are cautious not to attribute the higher returns to scale exclusively to
innovations. This is because there is not much of a difference in the innovation performance of
these SMEs except the differential shares of innovated products in total sales. Almost all of the
SMEs have predominantly carried out incremental product innovations in the form of
improvements in product designs, product shapes and product dimensions as desired by their
customers to suit customer requirements. As a result, six of them ( two of Group 1 and four of
Group 2) have won awards and four of them (two each belonging to two Groups) have got
citations from their customers, SME Associations, financial institutions, etc. Two of the SMEs (of
Group 2) have claimed that they have obtained product patents but we have not verified its
authenticity. Thus, by and large, innovation achievements of SMEs in the two groups do not differ
significantly to argue that technical entrepreneurship makes a difference to SME innovations.
However the ―internal technical strength ― of Group 2 SMEs in the form of higher shares of
technical employees and more experienced employees with more exclusive design centres is
distinctively different from that of Group 1 SMEs. This is in addition to their ‗higher quality of
technical entrepreneurship‘ due to technical graduate/post-graduate qualifications of their owners.
The one way ANOVA results for the two groups for (i) percentage shares of technical employees
in total employees, and (ii) percentage shares of employees having more than 10 years of
experience in total employees are presented in Tables 10 and 11. The results clearly show that
Group 2 SMEs have a statistically significant higher share of technical employees as well as more
experienced employees than Group 1 SMEs. This being the case, Group 2 SMEs would have
higher ―innovation potential‖ compared to Group 1 SMEs. Given this, they are in a better position
to upgrade their ―quality of innovations‖ to achieve better results.
Table 10: ANOVA results for % of technical employees
Groups
No of SMEs
Average
Variance
Group 1
18
14.44
149.43
Group 2
21
28.68
623.26
ANOVA Results
Sources of
variation
Between Groups
1964.825
Degrees of
freedom
1
Within Groups
13005.7
37
Total
14970.53
38
Sum of squares
Mean squares
F ratio
1964.825
5.59*
351.5055
*Significant at 0.05 level
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Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
Table 11: ANOVA results for % of experienced employees
Groups
No of SMEs
Average
Variance
Group 1
18
14.70
441.43
Group 2
21
30.95
757.65
ANOVA Results
Sources of
variation
Between Groups
2557.849
Degrees of
freedom
1
Within Groups
22657.33
37
Total
25215.18
38
Sum of squares
Mean squares
F ratio
2557.849
4.18*
612.3603
*Significant at 0.05 level
But the incremental nature of innovations carried out by most of the Group 2 SMEs could
be due to their perception of less competitive environment in which they operate or alternatively,
they would have consciously chosen less competitive product market within the electronic and
telecommunication industry. This holds good absolutely as well as relative to Group 1 SMEs
(Table 12). Almost 78% of the SME entrepreneurs in Group 1 felt that they have more than 10
competitors whereas the comparable figure for Group 2 entrepreneurs is just 38%, which is less
than half of that of Group 1. Almost 60% of the Group 2 entrepreneurs felt that the number of
their competitors did not exceed five whereas just about 17% of the Group 1 entrepreneurs felt so.
Thus the contrast is clear: Group 1 entrepreneurs operate in a much more competitive
environment whereas Group 2 entrepreneurs operate in a more monopolistic market. This could
be the reason why Group 2 entrepreneurs might not have undertaken radical innovations but
confined themselves to incremental innovations.
Table 12: Degree of competition in the product markets of SMEs
Groups
Number of Competitors as perceived by the Entrepreneur
1 to 2
3 to 5
6 to 7
8 to 10
> 10
Total No of SMEs
Group 1
1
2
1
0
14
18
Group 2
6
6
1
0
8
21
Total No of SMEs
7
8
2
0
22
39
This brings out that it is unlikely that SMEs would undertake or upgrade their ―quality of
innovations‖ just because they have internal technological capability. What is equally important is
Volume 3, No. 3, 2009
103
external market pressure in the form of intense competition.
6. Summary and Conclusions:
The importance of technological innovation as a means of enhancing firm competitiveness
is widely recognized today by researchers and policy makers alike. A growing number of
researchers have been probing diverse issues concerning SME innovations in different parts of the
world economy. However what has not been probed satisfactorily is the role of technical
entrepreneurship in the promotion of innovations in SMEs. Particularly, it would be appropriate to
examine whether technical entrepreneurship has any decisive role to play in carrying out product
innovations and achieve higher economic performance in a technology intensive industrial sector.
We have probed the characteristics of 39 product innovative SMEs in the electronics and
telecommunication sector of Bangalore in India to understand how do SMEs of technical
entrepreneurs differ from those of non-technical entrepreneurs. Further we have analyzed their
product innovations and firm level economic performance. SMEs of technically qualified
entrepreneurs accounted for majority of the product innovative SMEs and had higher shares of
technical employees and more experienced employees. A greater proportion of technical
entrepreneurship based SMEs had exclusive design centres. All these indicated their ―higher
innovation potential‖ relative to SMEs of non-technical entrepreneurs and entrepreneurs with
technical diploma qualifications. What is significant to note is that a relatively higher percentage
of SMEs in the former accounted for a higher proportion of innovation sales relative to the latter.
Obviously, on average, the former had a higher share of innovated products in total sales
compared to the latter. But did it help them to achieve a better economic performance?
Technical entrepreneurs‘ SMEs had higher factor productivities in 2001/02 as well as in
2005/06. They had higher capital intensity as well in 2001/02 but capital intensity of SMEs of
non-technical entrepreneurs and technical diploma entrepreneurs grew faster during 2001/022005/06 and therefore capital intensity was similar between the two groups in 2005/06. However,
ANOVA results revealed that the differences in the factor productivities and factor intensity
between the two groups are not statistically significant.
The multiple regression analysis performed to ascertain the returns to scale brought out that
the former was better-off as it experienced increasing returns to scale whereas the latter
104
Asia Pacific Journal of INNOVATION AND ENTREPRENEURSHIP
experienced decreasing returns to scale in both the years. Of course, the returns to scale of both
the groups did not alter significantly between 2001/02 and 2005/06. However we could not
establish clearly the role of innovations in the better performance of product innovative SMEs of
technical entrepreneurs because the nature of product innovations carried out by these SMEs did
not differ significantly from the rest. The product innovations of all the SMEs were largely
confined to improvement of product designs, product shapes and dimensions as desired by their
customers to suit customer requirements.
This brings out that despite their superior ―internal technological capability‖ owing to
technical entrepreneurship, higher proportion of technical and experienced employees, and
exclusive design centres, their innovations are not distinctly different from the rest. This is
primarily attributed to the nature of market in which they operated. Unlike the SMEs of nontechnical entrepreneurs which operated in a more competitive market, SMEs of technical
entrepreneurs functioned in a more monopolistic market which would have resulted in less market
pressure to generate more intensive product innovations. This implied that mere possession of
internal technological capability will not ensure ―superior innovations‖ particularly if those SMEs
are operating in a less competitive market and if they have to upgrade their quality of innovations,
adequate market pressure in the form of intensive competition might have to emerge.
Volume 3, No. 3, 2009
105
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Volume 3, No. 3, 2009
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108
Call for Papers
Introduction about APJIE
Asia Pacific Journal of Innovation and Entrepreneurship is a refereed and highly
professional journal covering entrepreneurship, innovation, incubation and related topics. It aims
to establish channels of communication and to disseminate knowledge among policymakers,
experts and professionals working in universities, government departments, research institutions,
as well as industry and related business.
The Journal publishes original papers, theory-based empirical papers, review papers, case
studies, conference reports, relevant reports and news, book reviews and briefs.
Commentaries on papers and reports published in the Journal are encouraged. Authors will
have the opportunity to respond to the commentary on their work before the entire treatment is
published.
Subject Coverage for Vol.4, No.1
This journal focuses on the strategy and management methods of business innovation and
Entrepreneurship. Subjects include, but are not limited to:
• Case Study in Following Fields Respectively &
• Innovation Management
• Incubation Management
• Economic Development
• Entrepreneurship
• Strategy and System Development
• Entrepreneurial Marketing
• Entrepreneurial Business Environment
• Business Ethics
Submission Ways of Paper
1) APJIE (Asia Pacific Journal of Innovation and Entrepreneurship) officially announce a <Call
for Papers for the Volume 4, No.1 will be published in April, 2010. The deadline for manuscripts
is February 28, 2010, which must be received here on the desk of APJIE through electronic
mailing system: [email protected]
109
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AABI Presidential Board Member :
AABI President
Annuar Mohd Saffar (Malaysia, [email protected])
Executive Director of Kulim Technology Park Corporation
AABI Vice President
Benjamin Yuan (Chinese Taipei, [email protected])
Professor of Institute of Management of Technology National Chiao Tung
University Hsinchu
AABI Honorary President
Wang Rong (China, [email protected])
Honorary President of Shanghai Technology Business Incubator Association
(STBIA) / Vice Director of Shanghai Technology Innovation Center (STIC)
AABI Advisor
Rustam Lalkaka (USA, [email protected])
President of Business & Technology Development Strategies LLC
AABI Advisor
Hong Kim (Korea, [email protected] )
Dean of Graduate School of Global Entrepreneurship, Hoseo University
AABI Association Members:
Australia
Phillip Kemp, President
Business Innovation & Incubation Australia
http://www.businessincubation.com.au
China
Wang Rong, President
Shanghai Technology Business Incubation Association
http://www.incubator.sh.cn
Duan Junhu, Deputy Director General
Torch High-Tech Industry Development Center, Ministry of Science and
Technology
http://www.chinatorch.gov.cn
Chinese Taipei
Benjamin Yuan, President
Chinese Business Incubation Association
http://www.cbia.org.tw
Hong Kong, China
Allen T.B. Yeung, Representative
Hong Kong Science and Technology Parks Corporation
http://www.hkstp.org
India
R.M.P. Jawahar, President
Indian STEP and Business Incubators Association
http://www.isba.in
Japan
Satoshi Hoshino, President
Japan Business Incubation Association
http://www.jbia.jp
Kazakhstan
Yerik Dukenbayev, President
The Kazakhstan‘s Association of Business Incubators and Innovation Centers
http://www.kabic.kz
Korea
Yeung-Shik Kim, Chairman
Institute of Korea Entrepreneurship Development
http://kobia.or.kr, http://ikedi.or.kr
Kyrgyz Republic
Zamira Akbagysheva, Representative
Union of Business Incubators and Innovation Centers of the Kyrgyz Republic
http://www.cango.net.kg
Malaysia
Andrew Wong, President
Multimedia Development corporation Sdn. Bhd(MSC central Incubator/
Accelerator, National Incubator Network Association)
http://www.mdc.com.my
New Zealand
Jonathan Kirkpatrick, Representative
Incubator New Zealand
http://www.aut.ac.nz/techpark
Richard White, Representative
New Zealand Trade and Enterprise
http://www.nzte.govt.nz
Pakistan
Muhammad Raza A. Khan, Representative
Technology Incubation Centre, National University of Science and Technology
http://www.tic.org.pk
Philippines
Mercedes M. Barcelon, Representative
Ayala Technology Business Incubator Network, Ayala Foundation, Inc.
http://www.ayalatbi.org‘
Singapore
Cham Tao Soon, Representative
Nanyang Technological University
http://www.ntu.edu.sg
Thailand
Janekrishna Kanathrana, Representative
Thai Business Incubators and Science Parks Association
Uzbekistan
Valijon Amanlikov, Representative
Association of Business Incubators and Technoparks of the Republic of
Uzbekistan
http://www.abit.uz
Vietnam
Vu Kim Chi, Representative
Vietnam Business Incubation Club
ISSN 2071 – 1395
AABI Secretariat Office:
Asian Association of Business Incubation (AABI)
100 Qin Zhou Road, Shanghai, 200235
Tel: 86-1304-4118-085
Web site: www.aabi.info
Email: [email protected]
Editorial Office:
Institute of Korea Entrepreneurship Development (IKED)
KAIST Alumni Venture Hall 2F 2115, 373-1
Guseong-Dong Yuseong-Gu, Daejeon, Korea (
Tel: +82-70-7568-6371
Tel & Fax: +82-53-580-6371
Web site: www.ikedi.or.kr
Email: [email protected]
Asia Pacific Journal of
Innovation and Entrepreneurship
Vol. 3, No. 3, 2009