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T

his chapter describes the research methodology employed in the study to


achieve the focused objectives defined in the previous chapter. The choice of the

methodology is complicated because of the availability of a large variety of methods,


techniques, procedures and the numerous combinations spawned by the abundance of
tools. A review of the extant literature reveals that the earlier studies on business
incubation are mainly either exploratory attempts or are descriptive. Questionnaire
based research (Allen and Rahman 1985, Lumpkin and Ireland 1988, Allen and
McCluskey 1990, Hansen et al 2000) and case studies (Kumar and Kumar 1997,
Autio and Klofsten, 1998) have dominated the research into incubation. While the
quantitative studies have compared incubators on various parameters, the qualitative
studies have tried to identify best practices and capture intangibles which are not
easily quantifiable. Regardless of the methodology, the manager of the incubator has
been an important source of information due to the fact that most incubators have very
few staff members and the manager generally has the best overview of the companies
within the incubator. We will begin our discussions with an overview of global and
Indian business incubation landscape and then discuss the research methodology in
detail.

An Overview of Global and Indian Business Incubation


Centres
Business incubators are designed to nurture the development of newly formed
entrepreneurial companies by providing them with an array of targeted business
support services and resources, which include: management guidance, technical
advice, consulting, appropriate rental space, shared basic business services and
equipment, networking support, marketing assistance, and financing necessary for
company growth. The most common goals of incubation programs are to improve the
survival and growth of new start up firms substantially, create jobs and wealth,
enhance entrepreneurial climate, create and retain businesses, commercialize new
technologies, build or accelerate growth in a local industry, and diversify economies.
The earliest incubation programs focused on a variety of technology companies or on
a combination of light industrial, technology and service firms. However, in more
recent years, they are targeting industries such as food processing, medical
technologies, space and ceramics technologies, arts and crafts, telecommunications
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and software development. Incubator sponsors have also focused on microenterprise


creation, the needs of women and minorities, and environmental endeavors. Although
the business incubation centres have come of age, the unavailability of adequate and
reliable information about them is a major concern which needs to be addressed.
The definitions of business incubation vary markedly from country to country and
information flows are sporadic. Therefore, the numbers of incubators worldwide are
estimates and are provisional. As of October 2006, there were nearly 7000 incubators
of various types in the world.1 Out of these, approximately 1400 were in North
America (1115 in United States, 191 in Mexico and 120 in Canada), 1000 in Europe
(including 370 in Germany), 400 in China, 355 in Korea, 265 in Japan, and 220 in
UK. The remaining are in other parts of the world. India has around 120 incubators
including 40 Science and Technology Entrepreneurs Parks (STEP).2

Business incubators originated in the United States of America and the first incubator
came into being in an abandoned Massey Ferguson manufacturing plant in Batavia in
1959. A number of initiatives were undertaken between 1985 and 1995 to strengthen
the incubation movement and as a result, it evolved into an ecosystem with a plethora
of models ranging from public to private incubators.

Business incubation took a growing role in Canadas economic development. During


the year 2005, there were more than 83 operating business incubators generating
funds in excess of $45 million. Within them, 900 client businesses raised revenues
over $93 million and created full and part-time employment for more than 13,000
people.3

China also has a well-developed incubation market space, with the government
playing a predominant role to accord with its mandate of high technology led
economic growth. Although the creation of small businesses through the incubation
model started only in late 1980s, it has been able to develop about 400 variants in a
short span. These incubators have helped bridge the gap between research and the
marketplace, fostered entrepreneurial attitudes, and facilitated the re-entry of scholars
abroad. Between 2002 and 2006, the number of client firms increased from 20993 to

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41434, and their real value added increased from 41 billion to 133 billion Yuan (at the
2000 price).4

National Business Incubation Association (NBIA) estimated that in 2005 alone, North
American incubators assisted more than 27,000 start-up companies that provided fulltime employment to over 100,000 workers and generated annual revenue of $17
billion. Another study in the mid 1990s found that 87 per cent of all firms that had
graduated from NBIA member incubation programs were still in business and about
84 per cent of them remained in the incubators community.5 A 2008 study conducted
by consulting firm Grant Thornton for the US Department of Commerce Economic
Development Administration found that business incubators produced new jobs at low
cost to the government.6
Over the last 12 years, United Kingdom Business Incubation (UKBI)7 has measured
the impact of incubators on local economy and workforce. The research proved that
an incubator's client firms provided an average of 167 jobs (full time equivalents) per
incubator and were home to roughly 30 entrepreneurial companies at any one time.
About 60 per cent of them also operated "outreach" services and were able to support
150 additional ventures. Most importantly, businesses had an average success rate of
98 per cent when they were located in the incubator as compared to a national average
of less than 30 per cent and around 87 per cent of them survived beyond five years.
Thus, business incubation centres have not only grown in numbers and geographic
spread, but also in terms of its impact on promoting entrepreneurship, job creation and
economic development across the world.

So far as the Indian scenario is concerned, the National Science and Technology
Entrepreneurship Development Board (NSTEDB) launched the Science and
Technology Entrepreneurs Parks (STEP) in the early 1980s, and the Technology
Business Incubators (TBI) in the beginning of 2000.8 Our country has nearly 120
incubators and science parks which have nurtured over 1150 entrepreneurs up to
2008.9 NSTEDB has so far created 53 TBIs in collaboration with premier academic
and research institutes with an investment of Rs. 100 crores and the cumulative
revenue generated by these incubated enterprises now stands at Rs. 595 crores.10
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Although no comprehensive study has been carried out to measure the impact of these
mechanisms put together, the estimates are that all these incubators help to graduate
about 500 enterprises every year and out of these, 60 per cent are technology based
startups.11 The report of the Working Group on science and technology for small and
medium scale enterprises for the Eleventh Five Year Plan (2007-2012)12 recommends
that a total of 170 Technology Business Incubators and 50 Technology Innovation
Centres should be set up with a total outlay of Rs. 1100 Crore.

Though the origin of Incubation Centres in India is recent, they have played a
significant role in promoting entrepreneurship which could be reviewed from the
unique contribution of few Business Incubation Centres.

Founded in 2000, SIDBI Innovation & Incubation Centre (SIIC), set up by Indian
Institute of Technology, Kanpur has incubated 15 startups, of which 5 have already
graduated.

SIIC

incubates

ventures

in

technology,

engineering

and

all

interdisciplinary areas. The incubatee firms have created employment for 94


individuals and generated revenues exceeding Rs 67 million.

Centre for Innovation, Incubation and Entrepreneurship (CIIE), Ahmedabad which


came into being in 2001 facilitates the conversion of hi-tech and mass-impact
innovations into enterprises. From amongst the 16 companies that have been
incubated, 2 have already moved out successfully. CIIEs incubatees currently employ
over 150 individuals across western India.

Technology Business Incubator, National Institute of Technology, Calicut, (TBINITC) was established in 2003 and has completed incubation of 4 out of the 17
ventures that have been admitted so far.

Vellore

Institute

of Technology-Technology Business Incubator (VIT-TBI)

commenced its operations in 2003 and focuses on Auto Components, Biotechnology


and Consumer Durables. It has enrolled 18 enterprises out of which 5 companies have
already achieved their agreed upon milestones. The firms have created more than 65
jobs and contributed Rupees 16 million to the economy.

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Technology Business Incubator, Kongu Engineering College (TBI KEC) has


incubated 22 companies since its inception in 2003 and 12 of them have left with
sustainable businesses. Located in a region known for its entrepreneurial culture TBI
KEC incubatees have collectively generated more than 200 jobs till date.
TBI Composites was instituted in 2003 with the aim of incubating ventures in
materials, technology, product and process development. It has graduated 53 of the 56
firms it has incubated. The firms have generated 1500 jobs and added Rupees one
billion in revenues.

With a focus on serving poor farmers of the semi-arid tropics through business
incubation approach, Agri Business Incubator-ICRISAT has incubated 17 companies
out of which 5 have left after fulfilling the purpose of incubation. These firms have
created employment for 543 individuals till date.

Launched in 2004, Society for Innovation and Entrepreneurship, SINE, a broadspectrum technology business incubator, focuses on promotion of entrepreneurship at
IIT Mumbai. Of the 32 Companies admitted so far, 10 have generated employment
for more than 200 people.

Working towards the creation of a new class of entrepreneurs, the Designpreneurs,


National Design Business Incubator, NDBI was founded in 2004. The process of
incubation has already been completed for 14 firms who have created 30 new jobs and
generated revenues of Rupees 60 million.

With a strong thrust on Agriculture Biotechnology and Pharma sectors, MITCON


Biotechnology Centre (MPBC) was initiated in 2004 and graduated 15 companies out
of the 35 which were incubated. Its incubatees have created jobs for more than 150
people and revenue to the tune of Rupees 40 million.

The Life Science Incubator - ICICI Knowledge Park, Hyderabad which came into
existence in 2005 is structured as an independent centre within ICICI Knowledge Park
(IKP). The incubator was the joint recipient of the Best TBI award from DST for the

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year 2007. It has incubated 9 firms of which 3 have exited successfully after attaining
the desired level of growth.

Trivandrum based Technopark Technology Business Incubator has incubated 72 firms


so far, of which 40 have already become viable. The incubator focuses on technology
development and product-based companies.

With a single-minded focus on promoting ventures in the herbal medicine space,


Periyar Technology Business Incubator has incubated 7 companies since its founding
in 2006.

Amity Innovation Incubator (AII) was founded in March 2006. AII has chosen to
focus on nurturing enterprises in the domains of ICT & Bio-Informatics. Of the 25
ventures that have been incubated by AII, 3 have graduated after becoming
freestanding businesses.

IITMs Rural Technology and Business Incubator was set up in 2006 and focuses on
nurturing enterprises, building rural inclusive business ventures through designing
products and services for rural needs which have a technology component. RTBI has
incubated 12 companies of which 2 have accomplished the purpose of incubation.
An upcoming incubator, Krishna Path Incubation Society (TBIKIET) was established
in 2007 with a focus on ventures in the ICT, electronics and mechanical engineering
domains. It has incubated 11 companies.

Established five years ago with a thrust on VLSI design and an embedded system,
TBI-BITS has incubated 9 ventures of which 2 have made an exit after reaching their
milestones. All the current incubatees have developed their products through virtual
incubation and created 127 jobs and generated revenues of about Rupees 10 million.

A newly established incubator, Amrita Technology Business Incubator was started a


year ago and is currently incubating 4 companies. It focuses on incubating ventures in
the Information Technology (IT), Electronics & Instrumentation domains.

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Thus, on the basis of above description, we may summarize that the business
incubation centres in India are growing in numbers steadily over the years and have
started contributing to job and business creation. Although most of them have focused
on information technology, emerging industries like ceramics, space, biotechnology,
telecommunications, and bioinformatics are also being targeted.

Research Design
The present research is exploratory cum descriptive in its nature. It is exploratory in
the sense that very little research work has been done on the role of business
incubation centres in promoting entrepreneurship in India and abroad. It is descriptive
because the practices followed by business incubation centres to promote
entrepreneurship, which have already been identified and studied by earlier scholars
were also analyzed in the present research endeavour. Moreover, the observations
made by the scholars have provided base for the formulation of this research project.

Universe of the study


The universe of the study is confined to 37 business incubation centres and their
incubatees existing in India during the year 2009-2010.

Survey population
We employed a simple validation process to determine whether each individual
business incubation centre qualified for inclusion in the survey population, and
included only those incubation centres which have a physical facility and housed
incubatees. Thus, based on the criterion, the survey population is confined to only 34
business incubation centres and their incubatees.

Survey Sample
The survey sample consists of 10 business incubation centres and 42 incubatees.
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A state wise list of Business Incubation Centres existing in the country during 2009
was obtained from the National Science and Technology Entrepreneurship
Development Board, Department of Science and Technology, Government of India. A
total of 37 Business Incubation Centres were indicated in the list (Please refer: Table
2.1) which served as a sampling frame for the survey.

TABLE 2.1: State Wise List of Business Incubation Centres in India During 2009
S.No

State

Number of Business Incubation Centres

Andhra Pradesh

Delhi

Gujarat

Haryana

Karnataka

Kerala

Maharashtra

Orissa

Rajasthan

10

Tamil Nadu

11

Uttar Pradesh

12

West Bengal

Total

37

The study followed a two step sampling procedure to gather data from Incubators and
the Incubatees. The first step involved the selection of Business Incubation Centres.
Since their exact numbers were not known, the researchers searched various websites
and directories and sought references from experts in the field. However on
establishing contacts based on these references, in most of the cases, they were
informed that either the business incubation centres did not exist or were not
operational. It was, therefore, decided to follow the list provided by the DST. Given
our interest in the subject, the small number of respondents and anticipated low
response rate, we decided to include all the Business Incubation Centres in our study.
However, given that four of them were established only in late 2008 or early 2009 i.e.
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just when the data collection for this study was about to begin, it was decided to
exclude them and the sampling method in that respect can be considered to be
judgment sampling.

The second step involved a selection of incubatees. According to NSTEDB-DST, the


average number of incubatees per incubator was 10-15. Thus, based on this feedback,
we decided on a convenient sampling procedure and targeted five incubatees per
Business Incubation Centre. To improve an expected low response rate, it was
decided to over sample and send the survey material to ten incubatees per Business
Incubation Centre. Incubator managers were the target contact respondents for the
survey of Business Incubation Centre and to help facilitate the survey of in house
incubatees.

Profile of Sampled Business Incubation Centres


Most of the respondent business incubation centres were established within five years
before the survey (Please refer: Table 2.2). In case of the respondent incubatees, most
of them were admitted during the last three years of the survey. The year of admission
and nature of business of these incubatee companies is presented in table 2.3 and table
2.4.
TABLE 2.2: Year of Establishment of Sampled Business Incubation Centres

Year of Establishment

Number of Business Incubation Centres

2000

2001

2004

2007

Total

10

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TABLE 2.3: Year of Admission of Sampled Incubatee Companies to the Incubator


Year of admission to business
incubation centre
2003

Number of incubatees

2004

2005

2006

2007

2008

15

2009

12

2010

Total

42

TABLE 2.4: Nature of Business of the Sampled Incubatee Companies

Nature of business

Number of incubatee companies

Healthcare

Information Technology

21

Electronics

Manufacturing/Mechanical/Engineering

R&D

BPO

IPR

NGO

Fashion

Telecom

Design Solutions

Robotics

Motion Picture Processing

Total

42

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Technopark Technology Business Incubator, Trivandrum


Technopark Technology Business Incubator (T-TBI), a joint initiative of Technopark,
Trivandrum and the Department of Science and Technology (DST), Government of
India, is avidly helping the technology business start-ups with all the necessary
resources and support they need to evolve and grow as a ripened business. It provides
the incubatees with necessary infrastructure support, technology/ prototype
development support, research assistance, help in getting funding, business consulting
assistance and do whatever is necessary to make the start-up a success. The primary
focus is on developing the ICT opportunities for building global enterprises. The
incubator aims to spot and attract potential entrepreneurs through intensive training
programmes undertaken on a regular basis.

Venture Center, Pune


Venture Center strives to nucleate and nurture technology and knowledge-based
enterprises by leveraging the scientific and engineering competencies of the
institutions in the "Pune region" in India. It is a business incubator specializing in
technology startups offering products and services exploiting scientific expertise in
the areas of materials, chemicals, biological sciences and engineering. The Venture
Center is the trademark of Entrepreneurship Development Center, a not-for-profit
company hosted by the National Chemical Laboratory, Pune, India.

Centre for Innovation, Incubation and Entrepreneurship, IIM, Ahmedabad


CIIE aims at fostering innovation-driven entrepreneurship through incubation,
research and dissemination of knowledge. It was setup by IIM, Ahmedabad in
2001 in collaboration with Government of Gujarat and the Department of Science and
Technology, Government of India. Since its inception, a host of organizations,
professionals, academicians and networking partners within India and across the
globe have been closely associated with the initiatives of CIIE. Expertise at IIMA in
areas of technology network, management, grassroots level innovations and
entrepreneurship development, provided the necessary impetus and the intellectual
basis for this initiative.
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JSSATE, NOIDA
The JSS Mahavidyapeetha has established the Science and Technology Entrepreneurs
Park in the campus of the JSS Academy of Technical Education, Noida. It is a
registered society under the Society Registration Act 1860. This initiative is one of the
first instances of such a Park being established in the initial years of an Engineering
Institution to provide value added programmes and services for the students,
unemployed youth, working professionals and aspiring entrepreneurs in the National
Capital Region. The Science Park has been established drawing from the rich
experience of the host institution in successful implementation of similar programmes
in its other institutions at Bangalore and Mysore. SJCE-STEP, located at the Sri
Jayachamarajendra College of Engineering, Mysore is one of the 14 STEP's
established by the Department of Science and technology (DST), Govt. of India.

JSSATE-STEP focuses on two principal sectors of Information Technology (IT) and


Manufacturing Technology (M.T). Under the IT umbrella, an Information Technology
Business Incubator (ITBI) has been established with a vision to nurture and facilitate
IT based startup companies to develop and grow into successful free standing
business in a viable timeframe. Under the MT initiative a unique project Product
Lifecycle Management Competency Center (PLMCC) with the association of the
Ministry of Youth Education and Research, Govt. of France and Dassualt System,
France aims to be a center of excellence in education training and research in the
PLM segment.

Birla Institute of Technology and Science (BITS) Incubator, Pilani


The Birla Institute of Technology and Science (BITS), Pilani in association with the
Department of Science and Technology (DST), Government of India has established a
Technology Business Incubator (TBI) in the area of Embedded Systems and VLSI
Design. BITS has set up a Center for Entrepreneurial Leadership (CEL) to give a
specific boost and emphasis to entrepreneurship development. TBI jointly with CEL
shall

promote

entrepreneurial

leadership

across

all

disciplines,

facilitate

entrepreneurial activity amongst students, and invite entrepreneurs to use TBI services
so as to develop end products for commercialization.
80

National Design Business Incubator, NID, Ahmedabad


NDBI is an initiative of the National Institute of Design (NID), Ahmedabad set up
with the support of Department of Science and Technology, Govt. of India, New
Delhi. It is incorporated as a non profitable Section 25 Company and is internationally
recognized as one of the foremost multidisciplinary institutions in the field of design
education, research, training and service. NID has been a catalyst in disseminating
design awareness amongst Indian industry, as its graduates are active in every sphere
of economic activity in the country. The mandate of NDBI is to nurture a culture of
entrepreneurship in the creative minds of young designers, so that their ideas
metamorphose into newer and niftier products or services capable of being marketed
and sold. The outcome is creation of a new class of entrepreneurs, the
Designpreneurs.

The National Institute of Technology TBI, Calicut


The National Institute of Technology Calicut has set up a Technology Business
Incubator with the support of National Science and Technology Entrepreneurship
Development Board (NSTEDB), Department of Science and Technology, Govt. of
India, to incubate start up industries in the IT and electronics domains with the
following objectives:

To provide Regional Development through nurturing the growth of technology


based small enterprises and generation of highly skilled employment. It helps
in incubating knowledge based startups into sustainable business by providing
specialized guidance, critical support, innovative financing and networking
support within an affordable and well equipped workspace.

To assists the units to identify and evaluate the technology and know-how.

To help the entrepreneurs in conducting their feasibility study, project


appraisal, market research and economic study.

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To support the units in training their employees for improvement of technical


and management skills.

Amity Innovation Incubator, Amity University


Amity Innovation Incubator (AII) is a registered not for profit society supported by
an advisory body consisting of industrialists, venture capitalists, technical specialists
and managers to help entrepreneurs realize their dreams through a range of
infrastructure, business advisory, mentoring and financial services. Its mission is to
foster entrepreneurial spirit amongst students, faculty and society at large and to
promote technology-based start-up companies in the region. The objectives of the
incubator are:

To identify potential entrepreneurs with a viable business plan.

To provide managed workspace with low cost office facilities.

To cover some of the risks involved in the early stages of incubation of


emerging technologies and provide various forms of business and professional
services.

NSIC Training-cum- Incubation Centre, OKHLA


National Small Industries Corporation (NSIC) is working to fulfill its mission of
promoting, aiding and fostering the growth of Micro, Small & Medium Enterprises
(MSMEs) in the country. One of the programmes implemented by NSIC is to create
self-employment opportunities by imparting training in entrepreneurship building to
the unemployed people who want to set up new small business enterprises in any of
the manufacturing / services sectors.
NSIC Training-cum-Incubation Centre provides an opportunity to first generation
entrepreneurs to acquire skills for enterprise building and incubate them to become
successful small business owners. At these centres, exposure in all areas of business
operations such as business skills development, identification of appropriate
technology, hands on experience on working projects, product selection, and
opportunity guidance including commercial aspects of business is provided. In

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addition, low cost project technologies required for setting up new small business
enterprises are displayed in working condition.
Krishna Path Incubation Society TBIKIET
TBI-KIET was established in 2007 jointly by National Science & Technology
Entrepreneurship development board (NSTEDB), Ministry of Science & Technology,
Government of India and Krishna Institute of Engineering & Technology. It provides
support for commercialization of any innovative idea by way of startup firms through
development strategies, linkages and consultancy in the relevant field. TBI-KIET has
a dedicated five storied state-of-art and energy efficient building to accommodate 35
incubatees. 8 incubatee companies have received SEED fund support of Rs. 50 Lacs.

Data Collection
Secondary Data
To identify the sources of relevant data, we conducted an electronic search using key
terms

associated

with

business

incubation.

After

retrieving

all

relevant

articles/research papers/reports etc, we read their bibliographies to access other


sources of data and repeated the process till we were reasonably confident that all
extant data on incubation had been identified and retrieved. In addition to this, we
sifted through hard copies of various books, journals, reports, brochures, newspapers
and magazines that were accessible to us on the subject.

Primary Data
Initial contacts were established with the incubator managers even before the research
was started. They were informed of the research and most of them showed a high
level of enthusiasm and expressed their willingness to participate in the survey. Their
response to the pre notification was very positive and they stated that the study was
timely and needed.
The researchers initially planned to visit the incubators where observations could also
be made. However, this proved to be difficult because of long-distances between the

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incubators and the time it could take to execute all the visits. The research was,
therefore, conducted using a survey approach and most preferred strategy for
collecting the information proved to be through the self administered questionnaires
supplemented by interviews. The researchers, however, managed to visit four
incubators. Our data analysis plan included factor wise and item wise analysis of the
role of business incubation centres in promoting entrepreneurship and, therefore, an
arbitrary five point likert type response scale was found to be most suitable.

Construction of Data Collection Instrument


For developing the questionnaires, we began by reviewing several existing survey
instruments related to business incubation and built on them by refining the relevant
questions and adding additional ones as necessary to meet the objectives of this
research. We started listing down the various business incubation services identified
through a review of literature and once the list was ready, it was reviewed and pruned
to reflect only those services which were relevant to the purpose of the study. They
were then translated in the form of structured statements and incorporated in the
questionnaire. Most of the research work on business incubation has been done
outside India, and therefore, it was imperative to check the relevance and coverage of
the selected incubation services incorporated in the questionnaire to the Indian
context. For this purpose, consultations were held with business incubation centre
heads, incubatees and experts in entrepreneurship development. In addition to this,
the questionnaire was discussed with the head of the overall incubation programme in
India at Department of Science and Technology, Government of India. The feedback
received from these discussions was used to make suitable changes to the
questionnaire.
Different studies have used different terminology and ways in describing or
classifying the services provided by business incubation centres. However, in general,
no marked dissimilarities were found in their concept and practices between
incubators in India and other countries. Prior to launch of the survey, the researchers
conducted a pilot test to assess the instruments clarity, content and user-friendliness.
The questionnaire was finalized after incorporating suggestions that emerged as a
result of pretesting and pilot testing.
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Reliability and Validity


To examine the reliability, various coefficients such as Cronbach alpha, Spearman
Brown split half coefficient, and Guttmans split half coefficient were calculated
using SPSS. (Please refer: Table 2.5)
TABLE 2.5: Reliability Analysis
R E L I A B I L I T Y A N A L Y S I S - S C A L E (S P L I T)
Reliability Coefficients
N of Cases =

10.0

N of Items = 82

Correlation between forms =.9267

Equal-length Spearman-Brown = .9620

Guttman Split-half = .9609

Unequal-length Spearman-Brown = .9620

41 Items in part 1

41 Items in part 2

Alpha for part 1 = .9253

Alpha for part 2 = .9039

R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A)
Reliability Coefficients
N of Cases =

10.0

N of Items = 82

Alpha = .9586

A Cronbach alpha value of above .70 is considered acceptable. In the present case, the
high reliability coefficients: Cronbach alpha (r = .95), Spearman Brown (r = .96) and
Guttman split half (r = .96) reveal that the test halves are highly correlated and the
questionnaire has high reliability.

In order to assess content validity, the final

questionnaire was reviewed with incubation experts and they revealed that the
questionnaire was exhaustive and possessed validity.
Data was gathered using two separate self administered questionnaires, one for
incubator managers and another for incubatees. At the time of the survey being
conducted in 2009, information about the precise number of operating incubators in
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India was not available. Therefore, the list of business incubation centres provided by
Department of Science and Technology, Government of India was considered as a
sampling frame. There were a total of 37 business incubation centres in the list, out of
which 4 were excluded as they were established only in late 2008 or early 2009 i.e
just when the data collection for this study was about to begin. Given our interest in
the subject, the small number of respondents and anticipated low response rate, we
decided to include all of them in our study. Therefore, the questionnaire was mailed to
33 business incubation centres and 330 incubatees. After follow up, a total of 12
questionnaires from business incubation centres and 45 questionnaires from
incubatees were returned. Out of these, 10 and 42 responses respectively were
considered valid for analysis.

The self administered questionnaire for the incubator managers is divided into
following parts. The first part is devoted to collect the demographic information of the
respondents. The second part consists of 25 statements pertaining to the role of
business incubation centres in promoting entrepreneurship. 57 statements related to
the practices followed by business incubation centres to promote entrepreneurship
constitutes the third part of the questionnaire. The last part comprises of open ended
statements providing the respondents an opportunity to express their view point and
give suggestions since all the other parts included structured statements where this
opportunity was denied. The respondents were requested to indicate their level of
agreement with each statement on an arbitrary five point likert type response scale.

A separate questionnaire was administered to the incubatees to make an assessment of


their perception regarding various services provided by the business incubation
centres. In addition to the demographic information, there were 25 structured
statements and two open ended statements in this questionnaire. The respondents were
requested to rank the relative importance of each service and indicate their level of
agreement with each statement on an arbitrary five point Likert type response scale.
They were also requested to indicate whether they asked the incubator to provide the
particular service to them. The questionnaires were put to pilot test and revised before
sending them to the respondents.

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In the present study, 25 incubator services were classified into four main groups:
Physical infrastructure, Business Assistance, Management guidance and consulting,
and Enabling environment services. In addition to this, 57 incubation good practices
followed by the business incubation centres to promote entrepreneurship were
classified into 7 categories namely: Management practices, Promotional practices,
Networking practices, Tenant Management practices, Human Resource practices,
Assessment practices and Host Institution Involvement practices. How these roles and
practices are linked to the Questionnaire A (For Incubators) and Questionnaire B
(For Incubatees) is indicated below:

Roles of Business Incubation Centres:


Physical Infrastructure Services
1. Providing below market rate rental space - Questionnaire A, question 4 /
Questionnaire B, question 4
2. Providing communication facilities like phone, fax, internet - Questionnaire A,
question 5 / Questionnaire B, question 5
3. Providing library facilities - Questionnaire A, question 7/ Questionnaire B,
question 7
4. Providing laboratory facilities - Questionnaire A, question 15 / Questionnaire
B, question 15

Business Assistance Services


1. Providing secretarial services - Questionnaire A, question 6 / Questionnaire B,
question 6
2. Providing technical assistance - Questionnaire A, question 8 / Questionnaire
B, question 8
3. Providing marketing assistance - Questionnaire A, question 9 / Questionnaire
B, question 9
4. Providing legal services - Questionnaire A, question 10 / Questionnaire B,
question 10
87

5. Providing networking support - Questionnaire A, question 11/ Questionnaire


B, question 11
6. Providing human resource management services - Questionnaire A, question
12 / Questionnaire B, question 12
7. Providing assistance in obtaining statutory approvals - Questionnaire A,
question 13 / Questionnaire B, question 13
8. Providing assistance in product development activities - Questionnaire A,
question 14 / Questionnaire B, question 14
9. Providing assistance in securing capital - Questionnaire A, question 16 /
Questionnaire B, question 16

Management Guidance and Consulting Services


1. Providing Information on business ideas - Questionnaire A, question1 /
Questionnaire B, question 1
2. Providing assistance in conducting feasibility studies - Questionnaire A,
question 2 / Questionnaire B, question 2
3. Providing assistance in developing business plans - Questionnaire A, question
3 / Questionnaire B, question 3
4. Providing business counseling - Questionnaire A, question 17 / Questionnaire
B, question 17

Enabling Environment Services


1. Creating environment where entrepreneurs learn from each other Questionnaire A, question 18 / Questionnaire B, question 18
2. Reduced

time

required

to

develop

marketable

products/services

Questionnaire A, question 19 / Questionnaire B, question 19


3. Reduced early stage operational costs - Questionnaire A, question 20/
Questionnaire B, question 20
4. Accelerated development of new firms - Questionnaire A, question 21/
Questionnaire B, question 21
5. Reduced chances of failure of new firms - Questionnaire A, question 22/
Questionnaire B, question 22
88

6. Helped companies establish credibility - Questionnaire A, question 23/


Questionnaire B, question 23
7. Take periodic feedback about services Questionnaire A, question
46/Questionnaire B, question 24
8. Formal procedure for handling grievances - Questionnaire A, question
54/Questionnaire B, question 25

Practices followed by the business incubation centres to promote


entrepreneurship:
Management Practices
1. Feasibility study before establishing incubation centres Questionnaire A,
question 33
2. Formal Business Plan- Questionnaire A, question 34
3. Advisory Board - Questionnaire A, question 35
4. Suitable MIS - Questionnaire A, question 39
5. Availability of funds- Questionnaire A, question 67
6. Decision making process- Questionnaire A, question 69
7. Autonomy- Questionnaire A, question 77
Promotional Practices
1. Entrepreneurship promotion programmes- Questionnaire A, question 25
2. Well maintained website- Questionnaire A, question 36
3. Advertising/promotion plan- Questionnaire A, question 37
4. Awareness about incubation centre- Questionnaire A, question 66
Networking Practices
1. Assistance to existing SMEs - Questionnaire A, question 28
2. Sharing information with other incubation centres- Questionnaire A, question
38
3. Support from local industry- Questionnaire A, question 40
4. Understanding of industrial needs- Questionnaire A, question 68
89

Tenant Management Practices


1. Assistance after leaving incubation centre- Questionnaire A, question 24
2. Formal admission policy- Questionnaire A, question 41
3. Tenant selection through selection committee- Questionnaire A, question 42
4. Formal exit policy- Questionnaire A, question 43
5. Periodic collection of information on tenant companies- Questionnaire A,
question 45
6. Periodic assessment of tenant companies progress- Questionnaire A, question
47
7. Periodic assessment of tenant companies needs- Questionnaire A, question 48
8. Difference in expectation between tenant companies and incubation centresQuestionnaire A, question 49
9. Difference in priorities of tenant companies and incubation centresQuestionnaire A, question 50
10. Difficulty in finding appropriate tenant companies- Questionnaire A, question
51
11. Difficulty in organizing funds for tenant companies- Questionnaire A,
question 52
12. Availability of suitable space to tenant companies on leaving incubation
centre- Questionnaire A, question 53

Human Resource Practices


1. Providing business related skills training to students- Questionnaire A,
question 29
2. Improvement in number and quality of students placements- Questionnaire A,
question 30
3. Hiring of consultants- Questionnaire A, question 44
4. Well laid down criteria for selection of staff- Questionnaire A, question 55
5. Incubation centre heads experience of working with start up companiesQuestionnaire A, question 56
6. Trained staff- Questionnaire A, question 57
7. Periodic assessment of training needs of staff- Questionnaire A, question 58
90

8. Periodic appraisal of staff performance- Questionnaire A, question 59


9. Equity stake in incubated companies for incubation centre staff- Questionnaire
A, question 60
10. Sufficient salary for incubation centre head- Questionnaire A, question 61
11. Willingness of staff to change- Questionnaire A, question 62
12. Risk taking behavior of staff- Questionnaire A, question 63
13. Attracting and retaining incubation centre staff- Questionnaire A, question 64
14. Shortage of incubation centre staff- Questionnaire A, question 65

Assessment Practices
1. Exploiting business opportunities- Questionnaire A, question 26
2. Transforming innovation into products/services- Questionnaire A, question 27
3. Creation of job opportunities- Questionnaire A, question 31
4. Regenerate public confidence in entrepreneurship- Questionnaire A, question
32
5. Periodic assessment of entrepreneurial market- Questionnaire A, question 78
6. Adapts quickly to change- Questionnaire A, question 79
7. Periodic assessment of performance- Questionnaire A, question 80
8. Well defined criteria for measuring success- Questionnaire A, question 81
9. Self sustainability of incubation centre- Questionnaire A, question 82

Host Institution Involvement Practices


1. Integration of objectives- Questionnaire A, question 70
2. Provision of land and building- Questionnaire A, question 71
3. Sharing of facilities/expertise- Questionnaire A, question 72
4. Promotion of entrepreneurial culture- Questionnaire A, question 73
5. Review of incubation centre activities- Questionnaire A, question 74
6. Leveraging of resources - Questionnaire A, question 75
7. Clearly defined roles- Questionnaire A, question 76
To elicit information from individual incubation centres and its incubatees,
questionnaires along with self addressed stamped return envelope were sent to all the
91

incubator managers, who in turn, and where possible, distributed the questionnaire for
incubatees/ entrepreneurs. Where it was not possible to collect information on
incubatees through incubator managers, the incubatees were contacted personally for
information through e-mail, meetings and over the telephone. The respondents were
requested for an early response without setting a deadline for the return of the filled in
questionnaires. One day after sending the questionnaires, a confirmation e-mail was
sent to all the respondents. Follow up e-mails were then sent as a reminder to those
who had not responded. Telephone calls were also used to follow-up until a
satisfactory number of responses were received.

Even though some of the questions could be regarded as sensitive, the incubator
managers did not have any difficulty answering them mostly because the initial trust
had already been established. In most cases, respondents just completed and returned
the self administered questionnaires in the provided self addressed stamped envelope.
At four of the incubators where the researcher made personal visits, the responses
were collected by hand. After receiving all the responses, telephone calls were made
to a couple of respondents in order to verify the correctness of the responses both
from incubators and incubatees.

Analysis Pattern
Identified Variables:
Independent variables
1. Physical Infrastructure services
2. Business Assistance Services
3. Management Guidance and Consulting services
4. Enabling Environment services
Dependent Variable
Promotion of Entrepreneurship

92

Content Analysis of Role of Business Incubation Centres in


Promoting Entrepreneurship
TABLE 2.6: Content Analysis of Role of Business Incubation Centres
Response Categories and Weight
Assigned to Each Category of
Response
SA
A
I
D
SD
S.No

Item
No

Description of Items

(5)

Physical Infrastructure Services


Provides work space to tenant
1
4
companies at below market rate rent
2

Provides communication facilities


Provides library facilities to tenant
companies.

15

Provides laboratory facilities

Business Assistance Services


1

Provides secretarial services

Provides technical assistance

Provides marketing assistance

10

Provides legal services

11

12

13

14

16

Provides networking support


Provides human resource
management services
Assists tenant companies in
obtaining statutory approvals
Assists the tenant companies in
product development activities
Helps tenant companies in securing
capital

Management Guidance and Consulting Services


Disseminates information on
1
1
business ideas
Helps the tenant companies in
2
2
conducting feasibility studies
93

(4)

(3)

(2)

(1)

17

Helps the tenant companies in


developing business plans
Provides business counseling to
tenant companies

Enabling Environment Services


Creates an environment where
tenant companies learn from one
1
18
another
Reduces the time required to
develop marketable
2
19
products/services
Reduces early stage operational
3
20
costs
Accelerates the development of new
4
21
firms
Minimizes the chances of failure of
5
22
start up firms
Helps the tenant companies to
6
23
establish credibility
Makes periodic assessment of tenant
companies satisfaction with
7
46
incubator services.
Has formal procedure for handling
8
54
tenant companies grievances
To examine the role of business incubation centres in promoting entrepreneurship, we
have identified four categories of services namely: Physical Infrastructure services,
Business Assistance services, Management Guidance and Consulting services, and
Enabling Environment services. Within each category, we have isolated various
services and these services are further translated in statements and for each statement
we have assigned five response categories which are SA for Strong Agreement, A for
Simple Agreement, I for Indifferent/Dont Know, D for Simple Disagreement and SD
for Strong Disagreement. If the nature of the statement is positive, then the maximum
weight assigned to Strong Agreement is 5, Simple Agreement is 4, Indifferent is 3,
Simple Disagreement is 2 and Strong Disagreement is 1.

To investigate the role of Physical Infrastructure services and their impact on


promoting entrepreneurship, four statements have been incorporated in the
questionnaire. In the above content analysis, the nature of all the statements is positive

94

and, therefore, the maximum score obtained by one respondent on account of physical
infrastructure services is 20, whereas the minimum score is 4 and neutral score is 12.

For scrutinizing the impact of Business Assistance services, we included nine


statements in the questionnaire. Since the nature of all the statements is positive, the
maximum score obtained by one respondent on account of business assistance
services is 45, whereas the minimum score is 9 and neutral score is 27.

The role of Management Guidance and Consulting services is perused by assimilating


four statements in the questionnaire. All of the statements are positive and, therefore,
the maximum score obtained by one respondent on account of management guidance
and consulting services is 20, whereas the minimum score is 4 and neutral score is 12.

In order to evaluate the contribution of Enabling Environment services and their


impact on promoting entrepreneurship, eight statements have been retained in the
questionnaire. The nature of all the statements is positive and, therefore, the
maximum score obtained by one respondent on account of enabling environment
services is 40, whereas the minimum score is 8 and neutral score is 24.

For example, in case of one respondent, for physical infrastructure services, he


indicates neutral (I) for 1st item, Disagreement (D) for 2nd item, Strong Agreement
(SA) for 3rd item and Simple Agreement (A) for 4th item, his total obtained score on
account of physical infrastructure services rendered by business incubator centre
comes to 14 as indicated below:
Item

Response

Weight

Neutral (I)

Disagreement (D)

Strong Agreement (SA)

Agreement (A)

Total obtained score

14

95

This respondent has a total score of 14 out of 20 maximum possible score on account
of physical services which indicates that incubators services are highly significant for
the entrepreneur.

Content Analysis of Practices Followed by Business


Incubation Centres to Promote Entrepreneurship
TABLE 2.7: Content Analysis of Practices Followed by Business Incubation
Centres to Promote Entrepreneurship

Response Categories
S.No

Item
No

SA
Description of Items

Management Practices
Feasibility study was conducted
before establishment of
1
33
Incubation Centre.
Incubation Centre has a formal
2
34
business plan.
Incubation Centre is managed by
3
35
an Advisory Board.
Incubation Centre has
implemented a suitable
Management Information System
4
39
(MIS).
Lack of funding is a major
impediment to the success of
5
67
Incubation Centre.
Decision making process of
Incubation Centre is long with
6
69
multiple decision points.
7

77

Incubation Centre has autonomy.

Promotional Practices
Incubation Centre conducts
entrepreneurship programmes
1
25
such as workshops/trade fairs etc
Incubation Centre has a well
2
36
maintained website.
Incubation Centre carries out a
well designed advertising
/promotion plan for promoting the
3
37
Incubator
96

SD

66

There is lack of awareness about


Incubation Centre and its
services.

Networking Practices
Incubation centre provides
business assistance to existing
1
28
Small & Medium Enterprises (SME)
Incubation Centre shares
information with other incubators
2
38
on a regular basis.
Incubation Centre has support
from the local industry for its
3
40
activities.
Incubation Centre has a poor
4
68
understanding of industrial needs
Tenant Management Practices
Incubation Centre continues to
provides assistance to tenant
companies even after graduation
1
24
(i.e. exit from the incubator)
Incubation Centre has a formal
policy for admitting tenant
companies to the Incubator.
2
41
Tenant selection is determined by
a Selection Committee for your
3
42
Incubation Centre.
Incubation Centre has a formal
policy for graduating tenant
4
43
companies from the incubator.
Incubation Centre periodically
collects information on key
business parameters like
employment, revenue etc from
5
45
the tenant companies.
Incubation Centre makes a
periodic assessment of tenant
companies progress in the
6
47
Incubator.
Incubation Centre makes a
periodic assessment of tenant
7
48
companies needs in the Incubator
Differences between Incubation
Centre and tenant companies in
8
49
terms of expectations.
Differences between your
Incubation Centre and tenant
9
50
companies priorities.
97

10

51

11

52

12

53

Incubation Centre has difficulty


in finding appropriate tenant
companies.
Incubation Centre has difficulty
in organizing sufficient funds for
tenant companies
Suitable space is available to
tenant companies outside
Incubation Centre upon
graduation.

Human Resource Practices


Your Incubation Centre provides
business related skills training to
1
29
students.
Your Incubation Centre has
improved the number and quality
2
30
of students placements.
Incubation Centre hires
consultants with expertise to
provide assistance to tenant
3
44
companies.
Incubation Centre has a well laid
down criteria for selection of its
4
55
staff.
Incubation Centre head has a
successful track record of
working closely with start-up
5
56
companies.
Incubation Centre staff is trained
in business skills like finance,
budgeting, organizational analysis
6
57
etc.
Incubation Centre makes periodic
assessment of training needs of its
7
58
staff.
Incubation Centre makes periodic
appraisal of its staff's
8
59
performance.
Incubation Centre staff is
permitted to have an equity stake
in the companies created in the
9
60
Incubator.
Incubation Centre heads salary is
sufficient to attract an
experienced incubator
10
61
professional
Incubation Centre staff is usually
11
62
reluctant to change.
98

12

63

13

64

14

65

Incubation Centre staff has risk


taking behaviour.
Incubation Centre has problems
with attracting & retaining skilled
staff.
Incubation Centre has a shortage
of skilled staff.

Assessment Practices
Incubation Centre has created
successful businesses by
1
26
exploiting opportunities.
Incubation Centre has
transformed innovations into
2
27
marketable products/services.
Incubation Centre has created
3
31
direct job opportunities
Incubation Centre has helped
regenerate public confidence in
4
32
entrepreneurship.
Incubation Centre makes periodic
assessment of the entrepreneurial
5
78
market.
Incubation Centre adapts quickly
6
79
to the changing conditions.
Incubation Centre makes periodic
7
80
assessment of its performance.
Incubation Centre has well
defined criteria for measuring its
8
81
success
Incubation Centre is self
9
82
sustainable.
Host Institution Involvement Practices
Host Institution (Institution
establishing the Incubator) has
integrated the objectives of
Incubation Centre into its
1
70
strategic planning.
Host Institution has provided
adequate land & building for
2
71
Incubation Centre.
Host Institution shares its
facilities/ expertise with
3
72
Incubation Centre.
Host Institution promotes an
4
73
entrepreneurial culture.
Host Institution periodically
reviews the activities of your
5
74
Incubation Centre.
99

75

76

Incubation Centre is leveraging


all available resources from the
Host Institution.
The role of Incubation Centre and
the Host Institution is clearly
defined.

The practices followed by business incubation centres to promote entrepreneurship


have been investigated with respect to seven categories namely: Management
Practices, Promotional Practices, Networking Practices, Tenant Management
Practices, Human Resource Practices, Assessment Practices, and Host Institution
Involvement Practices.

Within each category, we have isolated various practices and these practices are
further translated in statements and for each statement we have assigned five response
categories which are SA for Strong Agreement, A for Simple Agreement, I for
Indifferent/Dont Know, D for Simple Disagreement and SD for Strong
Disagreement. If the nature of the statement is positive, then the maximum weight
assigned to Strong Agreement is 5, Simple Agreement is 4, Indifferent is 3, Simple
Disagreement is 2 and Strong Disagreement is 1. However, in case of negative
statements, the weights are reversed and the maximum weight assigned to Strong
Agreement is 1, Simple Agreement is 2, Indifferent is 3, Simple Disagreement is 4
and Strong Disagreement is 5.

In order to evaluate Management Practices, seven statements have been retained in


the questionnaire.
The Promotional Practices have been explored with the help of four statements that
formed a part of the questionnaire.

For perusing the Networking Practices, four statements have been isolated and
incorporated.

The Tenant Management Practices were assessed through twelve statements that have
been assimilated in the questionnaire.

100

To examine the Human Resource Practices, fourteen statements were included.

The Assessment Practices were explored using nine statements.

In order to analyze Host Institution Involvement Practices, seven statements have


been incorporated in the questionnaire.

For example, in case of one respondent, for Management Practices, he indicates


neutral (I) for 1st item, Disagreement (D) for 2nd item, Strong Agreement (SA) for 3rd
item, Simple Agreement (A) for 4th item, Strong Agreement (SA) for the 5th item,
Disagreement (D) for 6th item and Strong Disagreement (SD) for 7th item, his total
obtained score on account of Management Practices is as under:

Item

Response

Weight

Neutral (I)

Disagreement (D)

Strong Agreement (SA)

Simple Agreement (A)

Strong Agreement (SA)

Disagreement (D)

Strong Disagreement (SD)

------------------------------------------------Total obtained score =

22

-------------------------------------------------This respondent has a total score of 22 out of 35 maximum possible score on account
of Management Practices which indicates that these Practices are perceived to be
effectively implemented by the business incubation centre.

Statistical tools applied for analysis of data


For the analysis of the collected primary data, we have used both descriptive as well
as standard statistical tools such as central tendency, standard deviation and ANOVA.
Measures of central tendency as means and standard deviation were computed in
101

relation to various categories of services provided by the Business Incubation Centres.


A comparison of mean scores was done and an independent sample test t test for
equality of means was employed at a significance level of 5 per cent. Further an
ANOVA table was created for item wise analysis. The practices followed by Business
Incubation Centres to promote entrepreneurship were investigated using descriptive
mean scores.

We may summarize that the present study is exploratory cum descriptive in its nature.
The choice of the research design is justified because very little research work has
been done on the role of business incubation centres in India and abroad, and the
practices followed by them which have already been identified by earlier scholars
have provided base for the research project. The data was gathered during 2009
2010 using self administered questionnaire which contained 82 questions. While the
survey population consisted of 34 business incubation centres, the sample comprised
of 10 business incubation centres and 42 incubatees. The research team employed
both descriptive as well as standard statistical tools for data analysis.

---------------X---------------

References
1. http://www.nbia.org/resource_center/bus_inc_facts/index.php
2. Government of India, Conceptual Document on Technology Business
Incubators-Developing Eco System for Knowledge to Wealth Creation,
Department of Science & Technology, National Science and Technology
Entrepreneurship Development Board, , Chapter 1, p. 10
3. http://www.cabi.ca/CABI_Report_07_Final.pdf
4. Haiyang Zhang and Tetsushi Sonobe, Business Incubators in China: An
Inquiry into the Variables Associated with Incubatee Success, Economics ejournal, 5, 2011 accessed from www.economics-ejournal.org
5. http://www.nbia.org/resource_library/works/index.php/ Construction Grants
Program Impact Assessment Report
102

6. http://www.nbia.org/resource_library/works/files/EDA_study_PR_FINAL.pdf
7. http://www.ukbi.co.uk/about-ukbi/business-incubation.aspx
8. Government of India, Status Report on Technology Business Incubators
Department of Science & Technology, National Science and Technology
Entrepreneurship Development Board, Chapter 1, p. 3
9. Government of India, Conceptual Document on Technology Business
Incubators-Developing Eco System for Knowledge to Wealth Creation,
Department of Science & Technology, National Science and Technology
Entrepreneurship Development Board, p. 39
10. Ibid., p. 6
11. Ibid., pp. 10-11
12. http://www.dst.gov.in/about_us/11th-plan/rep-subsme.pdf

103