International Conference of Product Development and Management Association, Firms in Shenzhen

Transcription

1 The Appraisal of Incubator Services: A View from Hi-tech Incubated Firms in Shenzhen Wang Hongwei, Yin Hong, Cheng Haiqing, Lin Dechang, Lu Qiang Abstract: In one of our previous studies on hi-tech incubator (Wang et al., 2008), we summarized and classified incubator services into four types - infrastructure related services, educating related services, business related services and networking related services. This paper is an empirical research to appraise these services in terms of degree of importance from the view of incubated firms. We chose a typical hi-tech incubator in Shenzhen and surveyed 120 firms inside. At the same time, we also ask the participants to examine the need for some suggested new services as options. Preliminary analysis shows that tangible, infrastructure-related services, finance related services, networking to government and advice to receive preferred policies are among the most welcome services Key words: Technology Business Incubator (TBI), Incubator Services, Survey, Service Appraisal The first business incubator of the world 1 Introduction appeared in the US In After that various In the past 20 years, Technology Business countries started to set up business incubators Incubators (TBIs) have been undergoing a very one after another (Chen, 2006). The first fast development in China in terms of number incubator in China was established in East Lake, and characteristic and are housing large number Wuhan in 1987 and got support of Torch Plan of incubatees (Wang, 2007). It is agreed among (Qiu, 2004). By the end of year 2006, there are policy makers and scholars that technology 548 incubators in China with accommodation business incubator is an effective way to area of more than 20 million square meters and accelerate hi-tech incubatees development and the number of incubatees amounts to more than enhance their innovation capacity and technology 40, 000 with more than 20,000 spin-offs. China is development (Sun et al., 2007). Especially in ranked No. 1 in the Scale of incubation in all China, incubators have become a kind of policy measures (Wang, 2007). tool for the local authority to impel the technical A main objective of TBIs is to accelerate new innovation (Chen, 2006). Improving existing technology ventures through offering targeted services and introducing proper new services is a services including strategic advice, access to necessary yet challenging task to the financing, marketing, and public relation (PR) management of TBIs for sustaining the growth of support, benefits programs, mentoring, and incubators and incubated firms. This requires infrastructure support (Sung et al., 2003). Studies good understanding of the effectiveness of the show that there are various types of classification services provided by TBIs. Yet there is little for the services provided by an incubator such as empirical research on the evaluation of a full tangible (e.g. physical facilities and office range of TBI services. This study intends to fill equipment) and intangible services (e.g. this gap by measuring the degree of importance emotional support) (Bøllingtoft & Ulhøi; Abduh, of these services and then preliminarily analyses et al., 2007; Rice, 2002); infrastructure support, the causes and effects behind the collected views management support, and technology support from incubated firms. (Lalkaka & Abetti, 1999); infrastructure service, The rest of the paper is organized as follows: business support and Mediation service (Bergek Section 2 reviews background information of & Norrman, 2008). In our study, we basically incubators, types of services, services provided follow the idea of Bergek & Norrman and Abduh, by TBIs; Section 3 explains the methodology et al., but use a new set of terms: infrastructure employed - conducting a questionnaire survey; related services, educating related services, getting views from hi-tech incubatees in business assistance related services and Shenzhen; Section 4 demonstrates the empirical networking related services. results about the perception of incubated firms on Infrastructure services provide office space, existing services and potential new services, furniture, sports facilities, conference rooms; followed by analyses and discussions. At last network access, 24-hour security and other Section 5 concludes with suggestions for future amenities to do with physical infrastructure and research. real estate (Carayannis & Zedtwitz, 2005; Ou, 2001). Chinese TBIs have provided services 2 Literature review covering the other three fields such as property management, agency, accreditation,

2 recommendation, financing, information counseling, management and skill training, marketing, human resource, and international cooperation and communication (Zhang, et al., 2005). Comprehensive networking services including cooperation with community and local government agencies, organizations; interactions between clients and outside individuals such as customers, suppliers and other professional service providers (O Neal, 2005; Schwartz & Hornych, 2008; Lee & Osteryoung, 2004; Greene & Butler, 1996). Research questions (also see Figure 1): (1) What existing services are perceived important by incubated firms and thus deserve reinforcement and improvement; (2) What new services are perceived important by incubated firms and thus deserve introduction. Literature Review 3 Methodology incubatees. The age of selected incubatees is controlled lower than 6 years and these incubatees are categorized into electronic information, software, new material and new energy, light mechanical and electrical integration, biotechnology and pharmaceutical industry (see Table 1). Of the 120 questionnaires sent out, we received 105 valid ones. We first made appointments with the founders of these incubatees and then personally called on them and let them fill the questionnaire and answered the questions face to face. The field investigation approach ensured a higher response rate at 88% (105 out of 120). Another reason for this quite good response rate is careful homework and professional relationship with these enterprises. However, it must be noted that the researchers had in no way influenced or biased the results. Table 1 Industry Sectors of Respondents ABC TBI in Shenzhen Number of Percent Evaluation about Firms Responding Electronic degree Information of importance Selected existing on every service: A Analysis 25 of 24 services and survey among material empirical data and New Services incubatees and new energy brief Mechanical and Electrical discussion Figure 1 Research Flow Integration The ABC TBI in Shenzhen is one of largest incubators in China accommodated with more than 400 hi-tech incubatees in its 6 sub-incubators. We use a survey method to collect information about its incubatees views on existing services and potential new services. The questionnaire was designed as follows: First, we selected 14 exiting services based on the information provided by ABC TBI and literature review above. We adopted a 5-level scale (1=very unimportant, 2=unimportant, 3=has no idea, 4= important, 5=very important) to explore incubatees s perceptions on these services. Secondly, based on services provided by Chinese and foreign incubators and discussions with the manager of ABC TBI about their future plans, we chose 15 potential new services. We Biotechnology and pharmaceutical Results and discussion 4.1 Incubatees views on existing services We calculate percentage of firms marking each existing service arranging from importance level 1 (very unimportant) to level 5 (very important) and obtained incubatees perception on separated dimension of existing services (Table 2). The last column (4+5) is a sum of the numbers of level 4 (important) and level 5 (very important). We then arrange the order of existing services in the table according to the number of the last column (important + very important). Table 2 Percentage of Response in Rating Existing Services (%) Existing services items of office space credibility of incubator also adopted the same 5-level scale. The geographical position Appendix 1 shows all the selected existing and channels and information new services in four types of classification. exhibition and technical exchanges (Trade Fair) We conducted a pilot study to assess the 14 information (science and technology policy) exiting services and 15 new services with the publishing platform of product of firm inputs from 20 general managers of incubated and commerce, taxation and other matters companies. Then some modification was done information on platform for supply and demand of enterprise the expression of the questionnaire. Following management, it, technical training platform between enterprise and research institute survey forms were distributed almost one by of professional service institution one by the authors to the managers of hi-tech

3 Activities to help improve visibility ( venture star competition) 1 7 Informal communication exchange platform among enterprises 2 8 Table 2 shows that almost all the services provided by the incubator are considered as effective services. The spectrum between the highest (87%) and the lowest (48%) differentiates the services in terms of the degree of importance perceived by the customers. The followings are some preliminary discussions to explain such differences. Among infrastructure related services, most of them - S1, S2 and S3 - are regarded as important with 87%, 86%, and 84% ratings respectively in the last column (4+5) especially lower rental fee of office space receiving 53% participating enterprises response at level 5 (very important). This means infrastructure related services are critical to most hi-tech incubated firms since they are very cost-sensitive in their early phase of business cycle. Business related services including S4, S5, S7, S8, and S9 are considered to be also important rating 81%, 74%, 69%, 65%, 61% at level 4+5. This means services concerning capital, product, marketing are important for most hi-tech incubatees. Funding, marketing and increasing sales revenues are among the greatest challenges to the entrepreneur of new ventures, and they hope incubator can assist more in addressing such problems (McAdam & McAdam, 2008). Among education related services, S6 is rated 72% and policy is a common concern for nearly all the participating incubatees. Government policy is very influential in China, especially in Shenzhen where government has launched many kinds of funds to support Hi-tech firms. Therefore, these hi-tech incubatees are interested in seminars or advice about policies. However, S10 (general training programs) is rated by only 60% participant enterprises. Normally only customized coaching program is a critical factor for tenants determining whether they can succeed or fail (Peters, et al., 2004). General training may not be specific enough for each incubatee. Networking related services including S11, S12 and S13 receive 59%, 57% and 56% participants marking. Services concerning university affiliation, professional services and visibility improvement are considered as relatively less important. This may be because their effects are more indirect, intangible or long term. The least important service is S14 informal communication exchange platform among enterprises (48%). Maybe it is not frequent for hi-tech firms to share information since they concern much on the potential of their core technologies which are actually their core competence for survival. 4.2 Incubatees views on new services We calculate percentages of incubatees rating on each item of 15 new services arranging from level 1(very unimportant) to level 5(very important) (see Table 3). Likewise, the last column is the sum of the numbers of level 4 (important) and level 5 (very important) to represent important + very important. The new services are arranged in the order of the last column. Table 3 Percentage of Response in Rating New Services (%) New services items S1 Construction of enterprises accelerator S2 Mutual-conversation of managers and government departments S3 Core competence training project (such as patents application) S4 Establishment of industry alliance S5 Assist in industry analysis and market potential analysis S6 Technical achievements exhibition and trading center S7 High level service (Financing Scheme Design) S8 Top-level talents recruitment and information publication S9 Mutual-conversation forum of managers and research institutions S10 Public laboratories and Public technology service platform S11 Shenzhen-Hong Kong innovation Circle cooperation platform S12 Entrepreneur management talent training S13 Innovation cities bridge, channel and

4 platform S14 Entrepreneurial mentor S15 Internal and international academic exchanges S1, an infrastructure related service, is considered as the most important one (rated 84%) and selected by 50% of participating enterprises at level 5 (very important), which reflects the badly needed space by many hi-tech incubatees in their developing phase. However, S10 (public lab and platform) is rated much lower (62%) and considered as very important by 26% of participating enterprises. From the discussions with the interviewees, we know that the hardware and software required by hi-tech incubatees are sophisticated and special, and some patent-sensitive, so building a common technology platform is not very feasible and not in the urgently needed list. Among networking related services, S2 (linking to government) receives 75% in rating and regarded as very important by 36% of participants. Interviews show that most hi-tech incubatees expect the incubator to function as a bridge to associate enterprises with governmental departments to enjoy preferred policies. S4, S9, S11, S13 and S15 represent networking to external environment such as industrial partners, research institutions, regional economic organizations and the results show that these networking services are generally important although less than networking to government. Business related services such as S3, S5, and S8 rated 73%, 68% and 63% respectively. Discussions with the participants show that patent related issues (such as protection and acquisition) are very important to most hi-tech incubatees. Also, recruiting human resources is a common problem faced by these incubatees. We lack high-level talents, but we do not have the capacity to organize recruitment events, so we rely on the incubator to address this problem. S7, an education related service, receives 64% of participants preference because advanced advice about financial design is a big concern for most hi-tech incubatees, associated with issues like cash flow and capital structure. S12 and S14, rated 58% and 49% are education services related to entrepreneur management talent training and entrepreneurial mentor have no direct and quick impact on the operation. Especially, most entrepreneurs believe that such knowledge is very tacit and can only be gained through practicing. They prefer to share it among themselves informally and naturally rather than in a formal training program. From the preliminary discussions above, we find that infrastructure related services are still the biggest concern for most incubatees in their initial and developing stages of the business-cycle. In-depth or professional and specific services are required to design for each incubatee regarding to education related and business related services. Networking service is an effective way for new ventures to get investment because it ensures that enterprises get information resources, financial channels, government loan and VC capital (McAdam & McAdam, 2008). And these incubatees we investigate consider network to government as the best way to obtain preferential policies and capital. 5 Conclusion This paper is an empirical research to appraise TBI services in terms of degree of importance from the view of incubated firms. We chose a typical hi-tech incubator in Shenzhen and surveyed 120 firms inside. At the same time, we also ask the participants to examine the need for some suggested new services as options. Preliminary analysis shows that tangible, infrastructure-related services, finance related services, networking to government and advice to receive preferred policies are among the most welcome services. There is also room to reinforce incubation accelerator. For business related services, existing services concerning capital, marketing, and policies are important. Human resources and talent recruitment is given a high attention. Education related services should be more specific, more professional, leading to visible and direct outcome. Among networking services, further improvement can be made to foster communications with government, which is an advantage of most Chinese TBIs. Future research can be done though a more detailed and thorough analysis by using some tools like SPSS, and more interviews can be arranged to verify the results from the survey study in order to understand some in-depth causes. The objective is to evaluate the effectiveness of provided services and link them to the solid performance of incubated firms. References [1] Abduh, M., D Souza, C., Quazi, A., Burley, H. T. Investigating and classifying clients satisfaction with business incubator services. Management Service Quality,

5 2007,17(1):74-91 [2] Bergek, A., Norrman, C. Incubator best practice: A framework. Technovation, 2008,(28):20-28 [3] Bøllingtoft, A., Ulhøi, J.P. The networked business incubator-leveraging entrepreneurial agency. Journal of Business Venturing, 2005,(20): [4] Carayannis, E. G., Zedtwitz M. V. Architecting glocal, real-virtual incubator networks as catalysts and accelerators of entrepreneurship in transitioning and developing economies: lessons learned and best practices from current development and business incubation practices. Technovation, 2005, (25): [5] Chen Su. Business Incubators and Technology Innovations. PhD, dissertation, Xiamen University, 2006(in Chinese) [6] Greene, P. G., Butler, J. S. The Minority Community as a Natural Business Incubator. Journal of Business Research, 1996,(36):51-58 [7] Lalkaka, R., Abetti, P. A. Business incubation and enterprise support systems in restructuring countries. Creativity and innovation management, 1999,8(3): [8] Lee, S. S., Osteryoung, J.S. A comparison of critical success Factors for effective operations of university business incubators in the United States and Korea. Journal of small business management, 2004,(42): [9] McAdam, M., McAdam, R. High tech start-ups in University Science Park incubators: The relationship between the start-up s lifecycle progression and use of the incubator s resources. Technovation, 2008,(28): [10] O Neal, T. Evolving a Successful University-Based Incubator: Lessons Learned From the UCF Technology Incubator. Engineering Management Journal, 2005,17(3):11-25 [11] Ou Tinggao. Study on operation of Business Incubators. PhD, dissertation, the Renmin University of China, 2001(in Chinese) [12] Peters, L. Rice, M., Sundararajam, M. The Role of Incubators in the Entrepreneurial Process. Journal of Technology Transfer, 2004,29(1):83-91 [13] Qiu Xuan. Study on development of American and European Business Incubators. Jilin university master degree thesis, 2004( in Chinese) [14] Rice, M. P. Co-production of business assistance in business incubators: An exploratory study. Journal of Business Venturing, 2002,(17): [15] Schwartz, M., Hornych, C. Specialization as strategy for business incubators: An assessment of the Central German Multimedia Center. Technovation, 2008 [16] Sun, H., Ni, W., Leung, J. Critical Success Factors for Technological Incubation: Case Study of Hong Kong Science and Technology parks. International Journal of Management, 2007,24(2): [17] Sung, T. K., Gibson, D. V., Kang, B. Characteristics of technology transfer in business venture: the case of Daejeon, Korea. Technological Forecasting & Social Change, 2003,(70): [18] Wang Hongwei, Lin Dechang, Yin Hong, Lu Qiang, Cheng Haiqing. Linking Incubator Services to the Performance of Incubated Firms: A Review. Accepted by the 4 th International Conference on Management of Innovation and Technology, 2008 [19] Wang Shuhai. Cradle of technology SME growth Development of Science and Technology Business Incubator in 2006: A Overview. Chinese Hi-tech zone, 2007,(8):16-22 [20] Zhang Dongdi, Fan Weijun,Wu Shouren, Zhang Wei, Chen Yu, Xing Xiao, Wu Xiaoyan. A Report on Problems of Business Incubator in China. Technology venturing, 2005,(2):44-56

6 Appendix 1 Services provided by ABC TBI in Shenzhen Forms Exiting services New services Infrastructure related services Lower rental fee of office space; Convenient geographical position; Reputation and credibility of incubator to help improve image Public laboratories and public technology service platform; Construction of enterprises accelerator Educating related services Business, management, technical training; Relevant policy information (science and technology policy auditorium); Entrepreneurial mentor; Entrepreneur management talent training ( MBA/EMBA courses); High level service (Financing Scheme Design) Business related services Information publishing platform of the product of firms (exhibition halls display); Public information platform of supply and demand information of enterprise; Various financing channels and information (loans, capital venture); Assist in industry and commerce, taxation and other related matters; Product exhibition and technical exchanges (Trade Fair) Top-level talents recruitment and information (Technical manager, CEO); Assist in industry analysis and market potential analysis; Core competence training project (patents, standards); Technical achievements exhibition and trading center; Networking related services Recommendation of professional service institution; Informal communication platform among enterprises (venture Sharon); Cooperation platform between enterprise and research institute; Help improve visibility ( venture star competition) Establishment of industry alliance (industrial chain collaboration); Shenzhen-Hong Kong innovation Circle cooperation platform; Innovation cities bridge, channel and platform; Internal and international academic exchanges; Mutual-conversation forum of managers and research institutions; Mutual-conversation forum of managers and government