The Effectiveness of Technology Business Incubation An Empirical Analysis in the Indian Context

Abstract

Entrepreneurship is key to drive innovation, create wealth and jobs in any economy. Entrepreneurial startups hold the promise of high growth, yet they encounter high failure rates due to uncertainties, particularly in early stages. Hence, supporting entrepreneurship is critical in transitioning economies like India. Even while India is home to several burgeoning entrepreneurial ecosystems, support for entrepreneurship is underdeveloped. This makes case for government support to develop institutions for entrepreneurship support. Technology business incubators emerged as a key vehicle for entrepreneurship support in India. However, there is a dearth of quantitative empirical studies examining effectiveness of incubation support in India. In this study we examine the effectiveness of incubators supported by Department of Science and Technology, Government of India s institutional mechanisms across six states. We conceptualize incubation support at macro-, meso- and micro- levels corresponding to the main stakeholders viz. the government, the host university and the entrepreneurial startups, respectively. At the macro-level, we look at the government s objective to develop access and availability of incubation support to startups. Government support has led to qualitative development of market infrastructure and financial access to startups. We report key differences in scale, efficiency and survival among incubated startups based on an incubator typology. We find that university-based incubators have not achieved scale as compared to private-sector incubators. We find that specialized incubators are more efficient and share long term risks with technology startups through their investments. At the meso-level, we look at the universities objective to become entrepreneurial by supporting technology startups. We evaluate the efficiency of universities in performing entrepreneurship support through incubators alongside their traditional research and teaching outcomes. We use a slack-based Data Envelopment Analysis...