- The incubator must monitor and provide business assistance to incubatees; and
- The incubation process should regularly infuse incubatees with the necessary resources.
Monitoring and Business Assistance
Hackett and Dilts (2004b) define monitoring and business assistance (M&BAI) as “the degree to which the incubator observes and helps incubatees with the development of their ventures, including helping them to learn from low-cost failures and containing the cost of potential terminal failure.” They further depict M&BAI has having three dimensions:
- Time intensity – The amount of time dedicated to the provision of assistance as well as the average time dedicated per assistance episode.
- Comprehensiveness – The range of assistance types provided to the incubatees. This range encompasses strategic, operational, and administrative assistance types.
- Quality – The “relative value” added by the assistance to the incubatee. Assistance that effectively complements or significantly enhances the existing capabilities of incubatees are said to be of high quality.
Other than business assistance, the ability of the incubator to recognise when a firm is non-performing as well as its ability to mitigate it, whether by intensifying business assistance or terminating the contract, also play an important role in the business incubator’s performance.
Daft defines resources as “all assets, capabilities, organizational processes, attributes, information, knowledge, etc., controlled by [the organisation] that enable the [organisation] to conceive of and implement strategies that improve its efficiency and effectiveness” (1983). Hamdani (2006) states that launching a new firm requires the allocation of a generous share of resources so that the venture will be able to foresee and effectively respond to significant challenges that inevitably lie in the way. In the incubator-incubation concept, the issue of resource allocation does not only affect the incubatee but the incubator as well. As the old adage states, one cannot give what one does not have. Hackett and Dilts (2004b) confirm this philosophy by stating that “intuitively, it seems likely that an incubator high in resource munificence is more likely to be able to infuse its incubatees [with resources]…than an incubator without these resources.” They further state that resource munificence has three characteristics:
- Availability – The ease with which incubatees are able to access necessary resources.
- Quality – The “relative value” added by the resource to the incubatee.
- Utilization – The frequency of use of resources by the incubatees.
For a backgrounder on the incubator-incubation concept and for a complete set of references, see my earlier post.