The role of business incubation programmes on the performance of small and medium enterprises in South Africa

Abstract

Research has shown that Small and Medium Enterprise (SMEs) play a pivotal role in socio-economic development of countries across the globe. In recent years, business incubation programmes have gained popularity to address the perennial challenge of SME failure in South Africa. However, there have been very limited studies to empirically assess the impact of incubation in South Africa. To address this gap, this study utilised dataset, comprising 387 incubated and non-incubated firms to assess the impact of business incubation of performance. The originality of our study lies in valuable insights we established relating to the impact of incubators on SME performance. Utilising Generalised Least Squares technique in R, the study revealed that incubation has a positive impact on SME performance. Further to that the results revealed differing attributes between the incubated and non-incubated cohorts. It was recommended that the government should invest into incubation programmes to drive sustainable SME performance. Further to that, the heterogeneity between the two cohorts demands a shift from a “one size fits all” approach to supporting SMEs in South Africa