Determinants of success in information and communication technology (ICT) business startup’s incubation in Kenya

Abstract

Countries and regions around the world are striving to be successful in today‘s dynamic global environment. Amid economic and political turbulence, each nation is looking for ways to improve and sustain its economy and to create more wealth for its citizens. One effective strategy is to nurture the spirit of entrepreneurship among citizens so that more local businesses can be created to enable self-sustainability and to build an innovation-based economy. The general objective of the study was to analyze the determinants of success of information and communication technology (ICT) business start-ups incubation in Kenya. This study was guided by the following specific objective. Firstly to establish whether selection criteria determine the successful incubation of ICT start-up firms in Kenya. The second objective was to find out whether financing determines the successful incubation of ICT start-up firms in Kenya. Thirdly, to evaluate whether monitoring and evaluation determines the successful incubation of ICT start-up firms in Kenya and finally to investigate whether training determines the successful incubation of ICT start-up firms in Kenya. This study adopted a correlation research design. The population of this research consisted of all the incubated and graduated ICT business startups from the six registered ICT business incubators in Kenya. There are approximately 50 ICT start up businesses that have graduated from business incubators since 2007. The target population in terms of respondents was business owners, its staff and incubation coaches of ICT start up businesses. The target population in terms of respondents was the business owners, its staff and incubation coaches. A target population of 50 active ICT businesses identified from the listing obtained from the National Business Incubation Association of Kenya (NBIAK). The population was stratified into three strata constituting 50 business owners, 230 employees and about 20 coaches. A sample of 169 respondents was selected using stratified random sampling using the Fishers et al fomula for the small sample. The unit of analysis in the study is the ICT business that is made up of the workers(business owner, employee and coaches). The responses given by workers is aggregated to give indications of the performance of the ICT startup business and further aggregation gives indication of the determinants of success or lack of entire incubation of ICT startup businesses in Kenya. This study used primary data. Data collection methods used included a set of structured questionnaires. Data was analyzed quantitatively and qualitatively and presented descriptively and illustrated by use of tables and charts. Information was sorted, coded and input into the statistical package for social sciences (SPSS) for production of graphs, tables, descriptive statistics and inferential statistics. The study findings revealed that selection criteria, financing, monitoring and evaluation and training were key determinants of successful incubation of ICT start-up firms. Results indicated that selection criteria, financing, monitoring and evaluation and training were found to be statistically significant in explaining successful incubation of ICT firms. It is therefore possible to conclude that business incubators follow a more systematic approach in their selection processes in order to recruit the most innovative ideas, and then provide them with business development services to ensure a high success rate. It can be concluded that the firms had adequate funds for product development, marketing activities, human resources, networking, research, workshops and knowledge mobilization. The study concludes that there were effective monitoring and evaluation policies in place at the firms which ensured that the incubation process was a success. It was possible to conclude that staff competence was highly emphasized in the firms. Results led to a conclusion that all employees received induction training and all the learning was incorporated on the job training.