Beyond Godisa: Critical Success Factors for Business ... ... critical success factors as identified

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Transcript of Beyond Godisa: Critical Success Factors for Business ... ... critical success factors as identified

  • Beyond Godisa: Critical Success

    Factors for Business Incubators in

    South Africa

    By

    Vimbainashe O Kavhumbura

    Student number: 747171

    Supervisor: Professor Boris Urban

    A research report submitted to the Faculty of Commerce,

    Law and Management, University of the Witwatersrand, in

    partial fulfilment of the requirements for the degree of

    Master of Management specialising in Entrepreneurship

    and New Venture Creation

    (Johannesburg, 2014)

  • i

    ABSTRACT

    This study examined the critical success factors of small business

    development organisations and business incubators in South Africa. Top-

    level managers and directors of these organisations were surveyed both

    on the characteristics of their organisations and on their perceptions of

    critical success factors as identified by Buys and Mbewana (2007) in a

    previous study of a similar nature.

    The researcher sought to establish whether these pre-defined antecedents

    of incubator success were still relevant to the current South African context

    and if the business model of the organisation had any bearing on

    performance outcomes. Some critical success factors, namely Access to

    Technical Expertise, Supportive Government Policy, Availability of Funding

    and Management Competencies were found to have no significant

    relationship with incubator performance, while Networking, Stakeholder

    Support, Financial Sustainability and Stringent Selection Criteria were

    positively correlated to the performance of the organisation. These

    outcomes of the quantitative survey were then explored in more detail

    through three in-depth interviews with directors of organisations with

    different priority goals and different small business development models.

  • ii

    DECLARATION

    I, Vimbainashe Olga Kavhumbura, declare that this research report is my

    own unaided work except as indicated in the references and

    acknowledgements. It is submitted in partial fulfilment of the requirements

    for the degree of Master of Management in the University of the

    Witwatersrand, Johannesburg. It has not been submitted before for any

    degree or examination in this or any other university.

    __________________________________

    Vimbainashe Olga Kavhumbura

    Signed at ……………………………………………………………………..

    On the …………………………….. day of ………………………… 2014

  • iii

    DEDICATION

    For my parents, who have given me everything.

    Ephesians 6:2-3

  • iv

    ACKNOWLEDGEMENTS

    I would like to express my deepest thanks to my supervisor, Professor

    Boris Urban, for his succinct and honest input into my research and for

    sharing his immense knowledge.

    I would also like to thank my friend and course co-ordinator, Tozi Zeka, for

    being a champion and a tremendous support.

    A special thanks to my family: Words cannot express how grateful I am to

    them for all of the prayers, words of encouragement, and sacrifices that

    they have made on my behalf. This goes double for Sam and Andrea.

    I would also like to thank all of my friends, near and far, who supported me

    in writing, and cheered me on throughout this journey.

    God bless you all.

  • v

    TABLE OF CONTENTS

    ABSTRACT ..................................................................................................................................... I

    DECLARATION ............................................................................................................................ II

    DEDICATION .............................................................................................................................. III

    ACKNOWLEDGEMENTS ......................................................................................................... IV

    TABLE OF CONTENTS ............................................................................................................... V

    LIST OF TABLES ....................................................................................................................... XI

    LIST OF FIGURES ...................................................................................................................XIV

    CHAPTER ONE.............................................................................................................................. 1

    INTRODUCTION ........................................................................................................................... 1

    1.1 INTRODUCTION .................................................................................................................. 1

    1.2 THEORETICAL BACKGROUND ........................................................................................ 1

    1.3 CONTEXT OF THE STUDY ................................................................................................. 2

    1.4 PURPOSE OF THE STUDY .................................................................................................. 4

    1.5 PROBLEM STATEMENT ..................................................................................................... 4

    1.5.1 Main problem ................................................................................................................. 4

    1.5.2 Sub-problems .................................................................................................................. 5

    1.6 SIGNIFICANCE OF THE STUDY ........................................................................................ 5

    1.7 DELIMITATIONS OF THE STUDY ..................................................................................... 6

    1.8 DEFINITIONS OF TERMS AND ABBREVIATIONS ......................................................... 6

    1.9 ASSUMPTIONS .................................................................................................................... 7

    CHAPTER TWO ............................................................................................................................ 9

    LITERATURE REVIEW ............................................................................................................... 9

    2.1 INTRODUCTION .................................................................................................................. 9

    2.2 DEFINITION OF TOPIC AND BACKGROUND ............................................................... 10

    2.2.1 Enterprise Development ............................................................................................... 10

    2.2.2 Business incubators ...................................................................................................... 14

    2.2.3 Business incubation in South Africa ............................................................................. 16

    2.2.4 Firm Performance ........................................................................................................ 18

    2.2.5 Incubator Performance ................................................................................................. 19

    2.2.6 Incubator frameworks ................................................................................................... 22

    2.3 THE GODISA CASE STUDY: CRITICAL SUCCESS FACTORS OF BUSINESS

    INCUBATION ........................................................................................................................... 26

  • vi

    Research Question 1: Are the critical success factors of the GODISA case study still

    significant? ............................................................................................................................ 26

    2.3.1 Technology expertise and facilities ............................................................................... 26

    2.3.2 Availability of funding .................................................................................................. 28

    2.3.3 The quality of entrepreneurs ......................................................................................... 28

    2.3.4 Stakeholder support ...................................................................................................... 29

    2.3.5 Supportive government policies .................................................................................... 30

    2.3.6 Competent and motivated management ........................................................................ 31

    Hypothesis 5: There is a positive relationship between management competencies and

    compensation and incubator success. .................................................................................... 32

    2.3.7 Financial sustainability ................................................................................................ 32

    2.3.8 Networking .................................................................................................................... 33

    2.3.9 Tenant selection criteria ............................................................................................... 34

    2.3.10 Incubat