The influence of incubation hub services on the post-graduation business performance of digital technology SMEs in South Africa

Abstract

Digital technologies are disruptive technologies implemented across various sectors to improve business models, customer experiences, and value propositions. South African digital technology-focused SMEs arising through incubation programmes therefore have a meaningful role to play during this revolutionary period. Incubation programmes play a key role in providing services to SMEs with the objective of supporting the SME to become a financially sustainable entity after graduating from the incubation programme. The performance of an incubation programme is usually considered from the perspective of the incubation hub and not the SME, creating a lack of clarity in relation to the services that result in the business performance of the SME post-graduation. Thus, an investigation into the influence of the services provided by incubation programmes, with a specific focus on training and network development, on the post-incubation performance of the graduate digital technology SME is imperative, and was conducted through this study. The study was conducted from the perspective of the post-incubation graduate digital technology SME. This quantitative study utilised cross-sectional data collected from 130 digital technology SMEs, who participated and graduated from their respective incubation programmes. After performing hierarchical multiple linear regression, together with moderation analysis, the data was analysed. When performing the regression analysis with the predictor variables of network development and training and the dependent variable of financial capital raised, the value of R-square was 0.014, implying that the model was a poor fit. When the model was run with the same predictor variables of network development and training and the dependent variable of turnover growth, a R-square value of 0.43 was achieved implying that the model was good. Following the examination and interpretation of the data, it was found that the service of training provided by the incubation programme had a significant positive influence on the post-graduate digital technology SME’s turnover growth, but did not influence the financial capital raised by the digital technology SME post-incubation graduation. It was also found that the service of network development had a significant positive influence on the post-incubation graduate digital technology SME’s turnover growth, but did not influence the financial capital raised by the digital technology SME post-incubation graduation. It is therefore recommended that incubation hubs offer services that better equip digital technology SMEs with raising of financial capital post-graduation. This may be a contributing factor that assists with SME survival post-incubation