New Venture Survival Challenges in Kenya: Does Business Incubation Help?

Small enterprises face a myriad of challenges that include; lack of access to finance, especially long-term finance, cannot benefit from scale economies, constraints in process and product innovation, difficulties in accessing tangible and intangible resources and limited access to scientific knowledge all of which very much pronounced in new ventures. Therefore, this study sought to explore new venture survival challenges in incubated technology-based new ventures in Kenya. The literature review reveals knowledge gaps in the new venture survival research findings and the empirical evidence on the effect of business incubation on new venture Survival. The study was informed by the Logic Business incubator Model by Hackett and Dilts (2004). Given the research objective, a descriptive research design was appropriate for this study. A total of 9 incubators and 364 incubatees from Nairobi Metropolitan were involved in the study. From the business incubators, stratified random sampling was applied to obtain a sample size of 182 incubatees. A semi-structured questionnaire was used to collect both qualitative and quantitative data from the incubatees while an interview schedule collected qualitative data from the incubation managers. The quantitative was analyzed using the SPSS tool; version 25 which generated both descriptive and inferential statistics. Pearson’s correlation coefficient indicated the magnitude of the relationship between business incubation and new venture survival, with a positive correlation; r=0.487, p<0.05. Bivariate regression analysis indicated that business incubation had a statistically significant effect on new venture survival, with the beta coefficients; β = 0.607, p<0.05). The qualitative data was analyzed using a qualitative analysis process. The analysis indicated that the majority of the incubator managers averred that high product acceptability and market consolidation had a great influence on new venture survival. Business incubators that support entrepreneurial and small business development were found to produce higher tenant survival rates. Therefore, this study recommends that the business incubator's value proposition should strengthened to address the new venture survival challenges in Kenya. The business incubators need to model business support services that encompass the four elements of business support; business coaching, training, business plan support and provision of subsidies.