DOI: https://doi.org/10.14710/agrisocionomics.v8i1.21956

BUSINESS INCUBATORS AS ENABLERS TO INNOVATION CAPABILITIES OF MSMEs: AN EMPIRICAL EVIDENCE FROM INDONESIA

*Faisol Faisol orcid scopus publons  -  Faculty of Economic and Business, Universitas Nusantara PGRI Kediri, Kediri, East Java, Indonesia, Indonesia
Diah Nurdiwaty  -  Faculty of Economic and Business, Universitas Nusantara PGRI Kediri, Kediri, East Java, Indonesia, Indonesia
Hestin Sri Widiawati  -  Faculty of Economic and Business, Universitas Nusantara PGRI Kediri, Kediri, East Java, Indonesia, Indonesia
Sigit Puji Winarko  -  Faculty of Economic and Business, Universitas Nusantara PGRI Kediri, Kediri, East Java, Indonesia, Indonesia
Open Access Copyright 2024 Agrisocionomics: Jurnal Sosial Ekonomi Pertanian under http://creativecommons.org/licenses/by-sa/4.0.

Citation Format:
Abstract

Business incubators are seen as crucial enablers of innovation, offering mentoring and other support to the budding entrepreneurs and enterprises. Numerous investments have been made by the Governments and other agencies to support the growth of business incubators, including those in the infrastructure, finance, human resources and communication technologies. Using cross-section data from 156 representatives of MSMES in the City of Kediri (East Java Province of Indonesia), this study examines how business incubator capability is perceived to affect the innovation performance of regional MSMEs. Data has been analyzed using Structural Equation Modeling - Partial Least Squares techniques. Service Capacity, Financial Strength and Incubation Capacity has been identified as three important characteristics of the business incubators to support the innovation capability of MSMEs. Additionally, this study found that communication infrastructure in business incubators plays a significant moderating role to influence the innovation performance of MSMEs being incubated. In order to assist the growth of domestic technology entrepreneurs and innovation performance, this study supports the idea that developing economies should prioritize free knowledge transfer platforms through the over business incubators.

Fulltext View|Download
Keywords: business incubator, financial strength, infrastructure, MSMEs, service capacity

Article Metrics:

Article Info
Section: Articles
Language : EN
Recent articles
A BIBLIOMETRIC ANALYSIS: RESEARCH OF URBAN FARMING IN INDONESIA PERIOD 1991-2023 ANALYSIS OF JOB SATISFACTION AND MOTIVATION OF AGRICULTURAL EXTENSION WORKERS ON PERFORMANCE IN EAST JAVA PROVINCE POVERTY LEVEL OF TOBACCO PRODUCER HOUSEHOLDS IN EASTERN JAVA PROVINCE (CASE STUDY OF TOBACCO FARMERS IN SITUBONDO REGENCY) More recent articles
  1. Ali Qalati, S., Li, W., Iqbal, S., Yassir Hussain, R., Wen Yuan, L., & Ali, S. (2019). Impact of Price on Customer Satisfaction; mediating role of Consumer Buying Behavior in Telecoms Sector mediating role of Consumer Buying Behaviour in Telecom Sector View project International Journal of Research Impact of Price on Customer Satisfaction; International Journal of Research Impact of Price on Customer Satisfaction, 06(04), 150–165. https://journals.pen2print.org/index.php/ijr/
  2. Asheim, B.T., Gertler, M. S. (2005). The geography of innovation: regional innovation systems. Oxford University Press, 291–317
  3. Azam, M. S. (2015). Diffusion of ICT and SME performance. In Advances in Business Marketing and Purchasing (Vol. 23A). https://doi.org/10.1108/S1069-096420150000023005
  4. Azari, M. J., Aspelund, A., & Eide, A. E. (2020). Knowledge integration in international SMEs–The effects on firm innovation and performance. Cogent Business and Management, 7(1). https://doi.org/10.1080/23311975.2020.1849890
  5. Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science, 16(1), 74–94. https://doi.org/10.1007/BF02723327
  6. Binnui, A. (2021). Technology Incubation as Intervention for Sustaining New Technology-Based Firms’ Growth in the Greater Mekong Subregion (GMS). GMSARN International Journal, 15(3), 185–194
  7. De Oliveira Paula, F., & Da Silva, J. F. (2020). Combining Knowledge to Improve Product and Process Innovation and Performance of SMES in Developing Economies. International Journal of Innovation and Technology Management, 17(2). https://doi.org/10.1142/S0219877020500133
  8. Du, L. (2021). How knowledge affects incremental innovation in SMEs: Knowledge base and knowledge heterogeneity. Journal of General Management, 46(2), 91–102. https://doi.org/10.1177/0306307020930196
  9. Faisol, N. A., Kumar, V., & Aliami, S. (2023). Mediating Role of Inter-Firm Linkages and Innovation Capability towards the sustainability of SMEs in Indonesia. International Journal of Technology, Policy and Management, 23(4), 387–409. https://doi.org/10.1504/IJTPM.2023.133918
  10. Faisol, Sri Aliami, M. A. (2022). Pathway of Building SMEs Performance in Cluster through Innovation Capability. Economics Development Analysis Journal, 11(2), 140–152. https://doi.org/10.15294/edaj.v11i2.46442
  11. Faisol, F., Astuti, P., & Winarko, S. P. (2021). The Role of Technology Usage in Mediating Intellectual Capital on SMEs Performance During the Covid-19 Era. ETIKONOMI, 20(2), 413–428. https://doi.org/10.15408/etk.v20i2.20172
  12. Fardnia, P., Kaspereit, T., Walker, T., & Xu, S. (2021). Financial performance and safety in the aviation industry. International Journal of Managerial Finance, 17(1), 138–165. https://doi.org/10.1108/IJMF-03-2019-0095
  13. Gao, Q., Cui, L., Lew, Y. K., Li, Z., & Khan, Z. (2021). Business incubators as international knowledge intermediaries: Exploring their role in the internationalization of start-ups from an emerging market. Journal of International Management, 27(4), 100861. https://doi.org/10.1016/j.intman.2021.100861
  14. Gozali, L., Masrom, M., Zagloel, T. Y. M., Haron, H. N., Dahlan, D., Daywin, F. J., Saryatmo, M. A., Saraswati, D., Syamas, A. F., & Susanto, E. H. (2018). Critical success and moderating factors effect in Indonesian Public Universities’ business incubators. International Journal of Technology, 9(5), 1049–1060. https://doi.org/10.14716/ijtech.v9i5.1363
  15. Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing Theory and Practice, 19(2), 139–152. https://doi.org/10.2753/MTP1069-6679190202
  16. Hair, J. F., Ringle, C. M., & Sarstedt, M. (2012). Partial Least Squares: The Better Approach to Structural Equation Modeling? Long Range Planning, 45(5–6), 312–319. https://doi.org/10.1016/j.lrp.2012.09.011
  17. Hair, J. F., Ringle, C. M., & Sarstedt, M. (2013). Partial Least Squares Structural Equation Modeling: Rigorous Applications, Better Results and Higher Acceptance. Long Range Planning, 46(1–2), 1–12. https://doi.org/10.1016/j.lrp.2013.01.001
  18. Hair, J. F., Sarstedt, M., Pieper, T. M., & Ringle, C. M. (2012). The Use of Partial Least Squares Structural Equation Modeling in Strategic Management Research: A Review of Past Practices and Recommendations for Future Applications. Long Range Planning, 45(5–6), 320–340. https://doi.org/10.1016/j.lrp.2012.09.008
  19. Hair, J. F., Sarstedt, M., Ringle, C. M., & Gudergan, S. P. (2017). Advanced Issues in Partial Least Squares Structural Equation Modeling. 272 Page; SAGE Publications, Inc
  20. Hair, J. F., Sarstedt, M., Ringle, C. M., & Mena, J. A. (2012). An assessment of the use of partial least squares structural equation modeling in marketing research. Journal of the Academy of Marketing Science, 40(3), 414–433. https://doi.org/10.1007/s11747-011-0261-6
  21. Hall, B. H., Lotti, F., & Mairesse, J. (2013). Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms. Economics of Innovation and New Technology, 22(3), 300–328. https://doi.org/10.1080/10438599.2012.708134
  22. Hamdollah, R., & Baghaei, P. (2016). Partial least squares structural equation modeling with R. In Practical Assessment, Research and Evaluation (Vol. 21, Issue 1)
  23. Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares path modeling in international marketing. Advances in International Marketing, 20(2009), 277–319. https://doi.org/10.1108/S1474-7979(2009)0000020014
  24. Hinton, P. R. (2014). Statistics Explainded. In Routledge: Londo, UK,
  25. Iammarino, S. (2005). An evolutionary integrated view of regional systems of innovation: Concepts, measures and historical perspectives. European Planning Studies, 13(4), 497–519. https://doi.org/10.1080/09654310500107084
  26. Jasimuddin, S. M., & Naqshbandi, M. M. (2019). Knowledge infrastructure capability, absorptive capacity and inbound open innovation: evidence from SMEs in France. Production Planning and Control, 30(10–12), 893–906. https://doi.org/10.1080/09537287.2019.1582097
  27. Jiang, Q., Wang, D., Wang, Y., & Wu, B. (2022). Innovation Elements, Incubation Capacity, and Incubation Performance in Biomedical Incubation Platforms: Moderating Role of Customized Services. Frontiers in Public Health, 10(May), 1–9. https://doi.org/10.3389/fpubh.2022.873875
  28. Joseph F. Hair Jr., G. Tomas, M. Hult, Christian M. Ringle, and M. S. (2014). A primer on partial least squares structural equation modeling (PLS-SEM). In International Journal of Research & Method in Education. https://doi.org/10.1080/1743727x.2015.1005806
  29. Kiani Mavi, R., Gheibdoust, H., Khanfar, A. A., & Kiani Mavi, N. (2019). Ranking factors influencing strategic management of university business incubators with ANP. Management Decision, 57(12), 3492–3510. https://doi.org/10.1108/MD-06-2018-0688
  30. Kovid, R. K., & Kumar, V. (Eds.). (2022). Cases on emerging markets responses to the COVID-19 pandemic. IGI Global Publications
  31. Kumar, V., & Ayodeji, O. G. (2020). Web analytics for knowledge creation: A systematic review of tools, techniques and practices. International Journal of Cyber Behavior, Psychology and Learning (IJCBPL), 10(1), 1–14
  32. Kumar, V., & Ayodeji, O. G. (2021). E-retail factors for customer activation and retention: An empirical study from Indian e-commerce customers. Journal of Retailing and Consumer Services, 59, 102399. https://doi.org/10.1016/j.jretconser.2020.102399
  33. Kumar, V., & Gupta, G. (Eds.). (2021). Strategic management during a pandemic. Routledge and Francis Group
  34. Kumar, V., & Nanda, P. (2022). Approaching the Porter’s five forces through social Media Analytics. International Journal of Services Operations and Informatics, 12(2), 184–200. https://doi.org/10.1504/IJSOI.2022.126329
  35. Kumar, V., & Vidhyalakshmi, P. (2012). Cloud computing for business sustainability. Asia-Pacific Journal of Management Research and Innovation, 8(4), 461–474. https://doi.org/10.1177/2319510X13481905
  36. Kusumawati, R. D., Oswari, T., Yusnitasari, T., Mittal, S., & Kumar, V. (2021). Impact of marketing-mix, culture and experience as moderator to purchase intention and purchase decision for online music product in Indonesia. International Journal of Business Innovation and Research, 25(4), 475–495. https://doi.org/10.1504/IJBIR.2021.117089
  37. Lai, W. H., & Lin, C. C. (2015). Constructing business incubation service capabilities for tenants at post-entrepreneurial phase. Journal of Business Research, 68(11), 2285–2289. https://doi.org/10.1016/j.jbusres.2015.06.012
  38. Leitão, J., Pereira, D., & Gonçalves, Â. (2022). Business Incubators, Accelerators, and Performance of Technology-Based Ventures: A Systematic Literature Review. Journal of Open Innovation: Technology, Market, and Complexity, 8(1). https://doi.org/10.3390/joitmc8010046
  39. Li, C., Ahmed, N., Qalati, S. A., Khan, A., & Naz, S. (2020). Role of Business Incubators as a Tool for Entrepreneurship Development: The Mediating and Moderating Role of Business Start-Up and Government Regulations. Sustainability, 12(5), 1822. https://doi.org/10.3390/su12051822
  40. Lobo, S., & Samaranayake, P. (2020). An innovation management assessment framework. Benchmarking, 27(5), 1633–1656. https://doi.org/10.1108/BIJ-02-2019-0085
  41. Lukeš, M., Longo, M. C., & Zouhar, J. (2019). Do business incubators really enhance entrepreneurial growth? Evidence from a large sample of innovative Italian start-ups. Technovation, 82–83(July), 25–34. https://doi.org/10.1016/j.technovation.2018.07.008
  42. Luthans, F., Youssef, C.M., & Avolio, B. (2006). Psychological Capital: Developing the Human Competitive Edge
  43. Machado, P. R. S., Treptow, I. C., de Oliveira Roveder, M., Bichueti, R. S., & Zampieri, N. (2019). The role of a business incubator in supporting the needs of innovative business. In Lecture Notes in Electrical Engineering (Vol. 505). Springer International Publishing. https://doi.org/10.1007/978-3-319-91334-6_142
  44. McDonald, R. P. (1996). Path analysis with composite variables. Multivariate Behavioral Research, 31(2), 239–270. https://doi.org/10.1207/s15327906mbr3102_5
  45. Millette, S., Eiríkur Hull, C., & Williams, E. (2020). Business incubators as effective tools for driving circular economy. Journal of Cleaner Production, 266, 121999. https://doi.org/10.1016/j.jclepro.2020.121999
  46. Mittal, S., & Kumar, V. (2019). Study of knowledge management models and their relevance in organisations. International Journal of Knowledge Management Studies, 10(3), 322–335. https://doi.org/10.1504/IJKMS.2019.101491
  47. Mohammadian, H. D., Mohammadian, F. D., & Assante, D. (2020). IoT-education policies on national and international level regarding best practices in German SMEs. IEEE Global Engineering Education Conference, EDUCON, 2020-April, 1848–1857. https://doi.org/10.1109/EDUCON45650.2020.9125148
  48. Molodchik, M., Jardon, C., & Yachmeneva, E. (2021). Multilevel analysis of knowledge sources for product innovation in Russian SMEs. Eurasian Business Review, 11(2), 247–266. https://doi.org/10.1007/s40821-020-00166-6
  49. Mungila Hillemane, B. S. (2020). Technology business incubators in India: what determines their R&D contributions to the national economy? International Journal of Innovation Science, 12(4), 385–408. https://doi.org/10.1108/IJIS-03-2020-0020
  50. Nanda, P., & Kumar, V. (2022). Information processing and data analytics for decision making: A journey from traditional to modern approaches. Information Resources Management Journal, 35(2), 1–14. https://doi.org/10.4018/IRMJ.291693
  51. Nanda, P., & Kumar, V. (2023a). Development of MSMEs in India: Challenges vs Govt policies. International Journal of Technology, Policy and Management, 23(3), 245–267. https://doi.org/10.1504/IJTPM.2023.132621
  52. Nanda, P., & Kumar, V. (2023b). Decision analytics for competitive advantage: Cases on using social Media Analytics. International Journal of Technology, Policy and Management, 23(4), 372–386. https://doi.org/10.1504/IJTPM.2023.133920
  53. Ndubisi, N. O., Dayan, M., Yeniaras, V., & Al-hawari, M. (2020). The effects of complementarity of knowledge and capabilities on joint innovation capabilities and service innovation: The role of competitive intensity and demand uncertainty. Industrial Marketing Management, 89(May), 196–208. https://doi.org/10.1016/j.indmarman.2019.05.011
  54. Ngah, R., & Wong, K. Y. (2020). Linking knowledge management to competitive strategies of knowledge-based SMEs. Bottom Line, 33(1), 42–59. https://doi.org/10.1108/BL-08-2019-0105
  55. Ngwabebhoh, F. A., Saha, N., Nguyen, H. T., Brodnjak, U. V., Saha, T., Lengalova, A., & Saha, P. (2020). Preparation and characterization of nonwoven fibrous biocomposites for footwear components. In Polymers (Vol. 12, Issue 12, pp. 1–18). https://doi.org/10.3390/polym12123016
  56. Okundaye, K., Fan, S. K., & Dwyer, R. J. (2019). Impact of information and communication technology in Nigerian small-to medium-sized enterprises. Journal of Economics, Finance and Administrative Science, 24(47), 29–46. https://doi.org/10.1108/JEFAS-08-2018-0086
  57. Omrani, N., Rejeb, N., Maalaoui, A., Dabic, M., & Kraus, S. (2022). Drivers of Digital Transformation in SMEs. IEEE Transactions on Engineering Management, 1–14. https://doi.org/10.1109/TEM.2022.3215727
  58. Peterson S., & Luthans F. (2007). Psychological Capital: Developing the Human Competitive Edge Related papers
  59. Cooke, P., Uranga, M. G., & Etxebarria, G. (1997). Regional innovation systems: Institutional and organisational dimensions. Research policy, 26(4-5), 475-491. https://doi.org/10.5260/chara.23.1.9
  60. Podsakoff, P. M., & Organ, D. W. (1986). Self-Reports in Organizational Research: Problems and Prospects. Journal of Management, 12(4), 531–544. https://doi.org/10.1177/014920638601200408
  61. Pustovrh, A., Rangus, K., & Drnovšek, M. (2020). The role of open innovation in developing an entrepreneurial support ecosystem. Technological Forecasting and Social Change, 152(October 2018). https://doi.org/10.1016/j.techfore.2019.119892
  62. Roman, A., & Rusu, V. D. (2022). Digital Technologies and the Performance of Small and Medium Enterprises. Studies in Business and Economics, 17(3), 190–203. https://doi.org/10.2478/sbe-2022-0055
  63. Sarstedt, M., Hair, J. F., Cheah, J. H., Becker, J. M., & Ringle, C. M. (2019). How to specify, estimate, and validate higher-order constructs in PLS-SEM. Australasian Marketing Journal, 27(3), 197–211. https://doi.org/10.1016/j.ausmj.2019.05.003
  64. Sarstedt, M., Ringle, C. M., Smith, D., Reams, R., & Hair, J. F. (2014). Partial least squares structural equation modeling (PLS-SEM): A useful tool for family business researchers. Journal of Family Business Strategy, 5(1), 105–115. https://doi.org/10.1016/j.jfbs.2014.01.002
  65. Saurabh, & Kumar, V. (2017). Technology integration for the success of B2C M-commerce in India: Opportunities and challenges. IUP Journal of Information Technology, 13(1), 24–35
  66. Sedita, S. R., Apa, R., Bassetti, T., & Grandinetti, R. (2019). Incubation matters: Measuring the effect of business incubators on the innovation performance of start-ups. R and D Management, 49(4), 439–454. https://doi.org/10.1111/radm.12321
  67. Tansey, O. (2007). Process tracing and elite interviewing: A case for non-probability sampling. PS - Political Science and Politics, 40(4), 765–772. https://doi.org/10.1017/S1049096507071211
  68. Tian, M. W., Wang, L., Yan, S. R., Tian, X. X., Liu, Z. Q., & Rodrigues, J. J. P. C. (2019). Research on Financial Technology Innovation and Application Based on 5G Network. IEEE Access, 7, 138614–138623. https://doi.org/10.1109/ACCESS.2019.2936860
  69. Tuffour, J. K., Amoako, A. A., & Amartey, E. O. (2022). Assessing the Effect of Financial Literacy Among Managers on the Performance of Small-Scale Enterprises. Global Business Review, 23(5), 1200–1217. https://doi.org/10.1177/0972150919899753
  70. Usman, I., Maupa, H., Idrus, M., Haerani, S., & Nurjanna, N. (2020). Moderation effect of competence of knowledge and innovation: case of Bali. Business Process Management Journal, 26(6), 1307–1327. https://doi.org/10.1108/BPMJ-06-2019-0236
  71. Wang, Y., Zhao, N., Lei, X., & Long, R. (2021). Green finance innovation and regional green development. Sustainability (Switzerland), 13(15), 1–19. https://doi.org/10.3390/su13158230
  72. Xiao, L., & North, D. (2018). The role of Technological Business Incubators in supporting business innovation in China: a case of regional adaptability? Entrepreneurship and Regional Development, 30(1–2), 29–57. https://doi.org/10.1080/08985626.2017.1364789
  73. Yao, J., Crupi, A., Di Minin, A., & Zhang, X. (2020). Knowledge sharing and technological innovation capabilities of Chinese software SMEs. Journal of Knowledge Management, 24(3), 607–634. https://doi.org/10.1108/JKM-08-2019-0445
  74. Zhao, L., Zhang, H., & Wu, W. (2017). Knowledge service decision making in business incubators based on the supernetwork model. Physica A: Statistical Mechanics and Its Applications, 479, 249–264. https://doi.org/10.1016/j.physa.2017.03.013

Last update:

No citation recorded.

Last update:

No citation recorded.