Entrepreneurial factors affecting incubatee performance

: a Hong Kong-based study

Abstract

Academia, business world and governments over the world have been increasingly paying attentions on promoting entrepreneurs to increase the creation of new business ventures. Unfortunately, high failure rate does happen and therefore, nurturing entrepreneurs and new business ventures has been the twisted global issue. In particular, business incubation has become a major tool in fostering high-technology entrepreneurial ventures. That is the reason why science parks and incubators exist. It is an economic tool for ensuring that someday, after being hatched from the incubator, the incubatee becomes independent and commercially successful. Survival is a particularly problematical measure. There is therefore a need to take into account the association between sustained factors of the incubated firms and the influence on firm performance. This thesis seeks to identify the significant entrepreneurial factors affecting incubatee performance with respect to three dimensions: entrepreneurial personality, mission traits, and customer relationship. Empirical data are collected with respect to a number of incubatee respondents at an early stage of their business development so as to investigate the significant factors and compare firm growth on the basis of control experiments in a range of industries of importance to HKSAR. The control groups include 36 respondents from IT industry and 31 respondents from electronics industries. Regression results indicate need to achieve and knowledge acquisition as strong predictors of sales growth. Unfortunately, the results obtained are only from a single year within the entire incubation process. It cannot be used to represent the results in general. Further, when regressed over employment growth, customer orientation is found to be a strong predictor. It explains 16.5% of the variance but only in the third year. An important empirical finding from both control groups is that external locus control is a critical VI failure factor for startup in terms of firm performance. In particular, external locus control is strongly negative regressed (p< .005) over sales growth for control electronics firms (a model explains 48.9% of the variance) during the first start-up year. Furthermore, entrepreneurial technology-based new ventures constitute a dominant proportion of incubated firms. Often, such firms are established by engineering graduates. This thesis also investigates a methodology for assessing the potential for success of new ventures set up by engineering students via an evaluation of the entrepreneurial personalities and intents of engineering students. A survey of 215 engineering students indicates particular traits have a strong predictive impact on the proclivity towards the different ‘idea factors on innovation’ suggested by Goldenberg et al. (1999). In particular, combined with ‘need to achieve’, ‘risk-taking propensity’ and ‘personal desirability of starting business’ are strongly regressed on the highest success-to-failure ratio idea factor called random event whereas combined with ‘external locus of control’ and ‘attitude towards entrepreneurship’ influences the selection of ‘failure-intended’ idea factors. The findings have important implications for researchers, business incubators and policy makers inside and outside universities.

Date of Award	15 Feb 2006
Original language	English
Awarding Institution	City University of Hong Kong
Supervisor	Hongyi SUN (Supervisor) & Chiu On Edmund CHEUNG (Supervisor)