The role of business incubators in creating sustainable small and medium enterprises

Abstract

Background: Despite the prevalence of business incubators as platforms through which new ventures can be technically and financially supported, there is controversy on the extent to which a one-size-fits-all approach to business incubator support can be applied to all emerging or existing small and medium enterprises (SMEs).

Aim: To explore the value addition and role of business incubators to assist entrepreneurs to grow their businesses to enable them to become entrepreneurial leaders.

Setting: State of SMEs; Business incubators; the development of entrepreneurs in South Africa.

Method: A literature survey regarding the nature of business incubators was conducted, making use of a convenience sample comprising a pre-published list of 58 business incubators.

Results: Business incubators see themselves in a position of strength and are not in a true partnership with the incubatee. Most business incubators only support Broad Based Black Economic Empowerment candidates, ignoring the needs and value-add of a diverse SME population. Findings highlighted the conflicting information about the state of SMEs in South Africa, thereby calling for policies to clearly and uniformly report reliable statistics on the status of SMEs to enable more focussed support for SMEs.

Conclusions: Business incubators must clearly conceptualise their own business operating model and articulate their value-add to prospective emerging entrepreneurs. Post COVID-19 it is essential to fast tract the sustainability of SMEs and role clarification and differentiating are two important factors that need to be taken into consideration by both business incubators and entrepreneurs to ensure focussed support and allocation of public and private funding.