Evaluating the role of business incubators in South Africa.

Abstract

The aim of this study was to evaluate the role of business incubators and business incubation programmes in South Africa. Worldwide, business incubation programmes are aimed at promoting economic development by supporting emerging entrepreneurs or start-up companies by cushioning them in their nascent phase of business development. South Africa only adopted business incubation as a strategy for promoting entrepreneurship and supporting SMMEs about two decades ago. This route was taken in order to build an inclusive economy whilst addressing a number of the country’s multifaceted challenges; therefore business incubation as a strategy had to yield rapid results. The study’s conceptual framework centred around how business incubators, through organisation and providing certain contingencies, cushioned SMMEs; and on how, through agglomeration, SMMEs were able to exploit the economies of scale and networking effects, as well as how they benefited from the positive externalities. The research methodologies adopted in this study comprise a multi-pronged approach made up of both secondary and primary research methods. The primary research methods include surveys, questionnaires and interviews with business incubation programmes based in KwaZulu-Natal. The study used small- micro- and medium-sized enterprises (SMMEs) or entrepreneurs as the unit of analysis, six were randomly selected from each of the fifteen business incubators in the province to take part in the survey questionnaire. The main findings of the study were firstly that South African entrepreneurs were faced with quite a number of challenges and these challenges were acting as a deterrence for a lot of people that wanted to consider entrepreneurship as a career path. Secondly, business incubators in South Africa were failing to fill in the gaps by mitigating against the challenges entrepreneurs faced. At best a number of these business incubators served duplicate roles as office parks with little value-added services. This study discovered that South Africa still needs to do a lot of groundwork if wanted to promote entrepreneurship and stimulate economic growth, but in the main, it was seemingly in the right direction policy-wise.