Incubators in Developing Countries and Their Benefit From Regional Resources

Roman Liedtke
Incubators in
Developing Countries
and their Benefit from
Regional Resources
A Case Study in Namibia
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Roman Liedtke
Incubators in
Developing Countries
and their Benefit from
Regional Resources
A Case Study in Namibia
Roman Liedtke
Bremerhaven, Germany
ISSN 2625-3577 ISSN 2625-3615 (electronic)

BestMasters
ISBN 978-3-658-28721-4 ISBN 978-3-658-28722-1 (eBook)
https://doi.org/10.1007/978-3-658-28722-1
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Table of Contents
1 Introduction................................................................................................. 1
1.1 Practical and Theoretical Relevance ..................................................... 1
1.2 Research Aims and Research Questions ............................................... 2
1.3 Research Setting – Governmental Incubators in Namibia .................... 3
1.4 Thesis Structure .................................................................................... 3
2 Conceptual Backgrounds ........................................................................... 7

2.1 Business Incubators .............................................................................. 7
2.1.1 Delimitation of Incubators .......................................................... 7
2.1.2 Organizational Structure of Incubators ....................................... 8
2.1.3 Resource Dependency in Organizations ................................... 10
2.1.4 Relevant Resources of Incubators ............................................. 12
2.2 Institutional Theory ............................................................................. 14
2.2.1 Definition of Institutional Theory ............................................. 14
2.2.2 ‚Three Pillars of Institutions‘ .................................................... 15
2.2.3 Institutions and Developing Countries ...................................... 16
2.3 Absorptive Capacity & Organizational Learning ................................ 17
3 Formation of Preliminary Assumptions.................................................. 23

3.1 Linking the Theoretical Concepts ....................................................... 23
3.2 Development of Preliminary Assumptions ......................................... 25
4 Methodology .............................................................................................. 27
4.1 Research Design.................................................................................. 27
4.2 Data Collection ................................................................................... 28
4.3 Data Analysis ...................................................................................... 31
4.3.1 MAXQDA ................................................................................ 31
4.3.2 Pre-Determined First-Degree Categories .................................. 31
4.3.3 Inductive Coding with Paraphrasing ......................................... 33
4.3.4 Validity ..................................................................................... 33
VI Table of Contents
5 Findings ..................................................................................................... 35
5.1 Introduction to Bokamoso Entrepreneurial Center (BEC) .................. 35
5.2 Relevant Resources ............................................................................. 36
5.2.1 Organizational Resources ......................................................... 36
5.2.2 Technological/Physical Resources ............................................ 38
5.2.3 Financial Resources .................................................................. 41
5.2.4 Human Resources ..................................................................... 43
5.3 Absorptive Capacity............................................................................ 44
5.3.1 Prior Knowledge ....................................................................... 44
5.3.2 Solution Knowledge ................................................................. 45
5.3.3 Need Knowledge....................................................................... 47
5.3.4 Impact of Institutional Surrounding .......................................... 50
5.4 How BEC Fails to Benefit from Regional Resources ......................... 59
6 Discussion & Conclusion .......................................................................... 65

6.1 Theoretical Contributions ................................................................... 65
6.2 Practical Implications.......................................................................... 66
6.3 Limitations .......................................................................................... 67
6.4 Research Outlook ................................................................................ 67
Bibliography ...................................................................................................... 69
List of Abbreviations
BEC Bokamoso Entrepreneurial Center
CII Company Internal Incubator
ICI Independent Commercial Incubator
ICT Information and Communications Technology
LEMEX Lehrstuhl für Mittelstand, Existenzgründung und Entrepreneurship
NGO Non-governmental organization
NI Networked Incubator
NUST Namibia University of Science and Technology
OLT Organizational Learning Theory
RBI Regional Business Incubator
RBV Resource-based view
RDT Resource Dependency Theory
RQ Research Question
RV Relational View
SME Small and medium-sized enterprise
UI University Incubator
VI Virtual Incubator
List of Figures
Figure 1: Absorptive Capacity on Incubators in Developing Countries ............. 25
List of Tables
Table 1: Dimensions of Absorptive Capacity ..................................................... 21

Table 2: Overview Interviewees ......................................................................... 29
1 Introduction
1.1 Practical and Theoretical Relevance
In the last few decades, business incubators have attracted interest from practition-
ers and scholars worldwide as an integral support institution for entrepreneurs
(Harper-Anderson, Lewis, & Molnar, 2011; Lose & Tengeh, 2015; Ratinho &
Henriques, 2010; Scaramuzzi, 2002). Entrepreneurship is often considered to be a
major source for economic power, yet it involves a high degree of risk by nature,
especially in financial terms (Bracke, Hilber, & Silva, 2018; Hamilton, 2000).
Also, entrepreneurs continuously face lack of resources, skills, and experience
(Baker & Nelson, 2005; Cardon, Stevens, & Potter, 2011; Vasconcelos Gomes,
Salerno, Phaal, & Probert, 2017). Incubators play a significant role in supporting
entrepreneurs by overcoming such resource constraints to start and implement
business successfully.
These benefits are important particularly in developing economies for several

reasons: First, there is often a lack of established entrepreneurship education at
higher academic institutions in such countries, which leads a general deficiency of
entrepreneurial skills of the population (Jafaar, Aziz, & Rashid, 2008). Neverthe-
less, education programmes in entrepreneurship are seen as an important tool to
prepare entrepreneurs for the future, which can sometimes be marked by uncer-
tainty (Henry, Hill, & Leitch, 2005). Second, the overall economic situation in
developing countries does not allow the existing industry to offer a sufficient num-
ber of jobs for the population. Therefore, a larger number of people decide to be-
come self-employed as a realistic career path rather than being unemployed (El
Harbi & Grolleau, 2012). Such necessity entrepreneurs often suffer from the lack
of resources and need external support. However, incubators in developing coun-
tries often face special barriers due to their weak institutions. In weak institutions,
entrepreneurs face diverse challenges. For instance, the missing provision of en-
trepreneurial education, the lack of available entrepreneurial funding and the lack
of extensive and effective networks have a negative impact on new business ac-
tivities (Aidis & Estrin, 2006). In general, it can be stated that a weak institutional
environment has a negative effect on company formation (Acs & Virgill, 2010).
Furthermore, incubators in developing countries often suffer from a lack of
resources which further strengthen the challenges (Hackett & Dilts, 2004).

R. Liedtke, Incubators in Developing Countries and their Benefit from Regional
Resources, BestMasters, https://doi.org/10.1007/978-3-658-28722-1_1
2 1 Introduction
Incubators are generally considered well researched. They have already been in-
tensively researched for more than 30 years and there are now a large number of
different publications (Albort-Morant & Ribeiro-Soriano, 2016). One reason for
this is the persistent expansion of incubators. The first incubators were founded in
the 1960s and were almost exclusively located in developed countries. (Aerts,
Matthyssens, & Vandenbempt, 2007). Starting in the 1990s, the concept was in-
creasingly implemented in developing countries such as China, Brazil, India, Ma-
laysia, and Turkey. (Akçomak, 2009). It is noticeable that after the turn of the
millennium a trend reversal could be noticed. While the number of newly installed
incubators in developed countries declined rapidly, growth rates in developing
countries increased even faster. (Akçomak, 2009). According to Akçomak (2009),
the number of new incubators established each year in developing countries is now
significantly higher than in developed countries.
A possible reason for the decline in developed countries could be the maturity of
the market or the realization of existing potential. Exactly this potential is now
emerging in developing countries and makes this topic an interesting field of re-
search. Despite the large volume of publications in the past, there is little literature
on incubation in developing countries. Research on this topic is still considered
immature in literature. (Mrkajic, 2017). Mrkajic (2017) further states that although
incubators in developing countries have often been the subject of applied studies,
no convincing theoretical framework has been proposed yet. There is obviously a
research gap in this area.
1.2 Research Aims and Research Questions
The aim of this master thesis is to explore the mechanism how and from whom
incubators in developing countries address external resources and what enablers
and constraints exist on the organizational and institutional levels. Underlying as-
sumptions are that incubators, as well as entrepreneurs in developing countries,
suffer from resource constraints and therefore absorptive capacity is crucial for
incubators to mobilize external resource, and that this capacity is determined by
organizational and institutional factors. In doing so, this thesis will explore how
incubators in developing countries can use external, regional resources to over-
come the lack of their own resource. In addition to the opportunities, the risks that
1.4 Thesis Structure 3
go along with it in this context should also be highlighted. Against the back-
grounds, this thesis addresses the following research questions:
RQ1: Which resources are valuable for incubators in developing countries?
RQ2: How can (not) incubators absorb and transform the external resource into
their organizational competencies?
It is expected that this thesis will give recommendations for decision-makers in

incubators to solve challenges incubators are currently facing to address external
resources. The focus here is on implementable solutions in view of the special
conditions that prevail in developing countries.
1.3 Research Setting – Governmental Incubators in Namibia
The research design will be based on a qualitative research approach with a single
case study with the Bokamoso Entrepreneurial Centre in Namibia. Based on the
previous literature, this thesis will develop preliminary assumptions. Preliminary
data including interviews with entrepreneurs and incubator managers, as well as
regional actors were collected during a three-week student project in March 2018.
The interviews address the needs of the Bokamoso’s tenants and the specific chal-
lenges the Bokamoso Entrepreneurial Centre faces. During the program, student
groups developed solutions and prototypes for identified needs and challenges of
the incubator which should be implemented in a next few months. These solutions
and prototypes are considered as an external resource for the incubator and this
thesis explores what enablers and constrains the incubator faces in the situation
where meaningful external resources are available.
1.4 Thesis Structure
This thesis is structured as follows:
Chapter two relies on mainly three research fields: (1) business incubator; and (2)
institutional theory; and (3) absorptive capacity. In order to understand the
4 1 Introduction
characteristics of incubators in developing countries, an application of the litera-

ture on institutional theory will be considered to outline how incubators are em-
bedded in their institutions. For instance, a theoretical framework developed by
Scott concerning the ‘Three Pillars of Institutions’ will be used on that issue (Scott,
2008). This framework provides this thesis with explanations that barriers that in-
cubators are facing in developing countries by dividing the barriers into regulative,
normative and cognitive dimensions. Third, this thesis applies the concept of “Ab-
sorptive Capacity” (Cohen & Levinthal, 1990; Todorova & Durisin, 2007; Zahra
& George, 2002). In literature, the term is used in the context of technology trans-
fer. Cohen and Levinthal define absorptive capacity as the ability of a company to
recognize, assimilate and apply the value of new external information for com-
mercial purposes. In this context, the incubator is structurally considered as a busi-
ness and its action potential within networks is equated with it. Linking this con-
cept with incubators proves that incubators have a significant overlap with com-
panies in terms of structure and in information transfer issues.
Chapter three combines the theoretical concepts discussed and modifies the model
of Absorptive Capacity. The modifications will be implemented in order to apply
Absorptive Capacity to incubators in developing countries. This step can be con-
sidered as a formulation of Preliminary Assumptions, as the modified concept sug-
gests what will be researched in this work to answer the research questions.
Chapter four describes the scientific approach. This includes, among other things,
the introduction of the research design. The methods used are explained and dis-
cussed. The case study on which this paper is based is also presented and all pro-
cesses from data collection to data analysis are discussed.
Chapter five presents the findings of the case study. For this purpose, an overview
of the findings of the case study will be provided with regard to the research ques-
tions. The foundation for this will be the data analysis described in chapter four.
The aim of this chapter is to clarify what the relevant resources are for incubators
in developing countries and how they can be absorbed by incubators. The line of
argumentation is based on the concept visualized in chapter three. Furthermore,
the findings are compared with the existing literature and conceptual background
and it is shown to what extent the current state of research is progressed and how
previous research can be supplemented by the case study. The creation of new
1.4 Thesis Structure 5
knowledge is expected through the combination of various theoretical concepts

and the comprehensive data material derived from practice.
Chapter six provides a brief overview of the research gap that this thesis is in-
tended to fill and shows the theoretical and practical contribution this research
makes to the research area addressed. Finally, the limitations are discussed and an
outlook for future research is given.
2 Conceptual Backgrounds
2.1 Business Incubators
2.1.1 Delimitation of Incubators

In the 1980s, many regions experienced a stagnating economy and, as a result,
high unemployment rates. At the same time, the number of newly founded small
and medium-sized enterprises (SMEs) increased, which is why entrepreneurship
received a higher attention in research (Wennekers & Thurik, 1999).
Startups are particularly important in entrepreneurship because they bring innova-
tions to the markets and contribute to economic growth by stimulating competition
(Wennekers & Thurik, 1999). The start-up community has been growing continu-
ously for decades and thus the relevance of appropriate support models in order to
establish SMEs on the market sustainably (Guy, 1996).
In the practice, the terms coworking space and business incubator are often used
simultaneously (Mack, Marie-Pierre, & Redican, 2017). In research, however,
these terms have to be clearly distinguished from each other, as the two concepts
differ significantly with regard to the scope of services provided (Littlewood &
Kiyumbu, 2018).
The classical coworking space offers the entrepreneur primarily a low-priced al-
ternative to expensive office space (Littlewood & Kiyumbu, 2018). The demand
for these services exists because entrepreneurs have only limited financial re-
sources in the initial phase and are therefore looking for low-cost workplaces (Irina
& Alina, 2015). The pricing models can vary significantly and can be customized
to the entrepreneur and his needs (Littlewood & Kiyumbu, 2018). The second ad-
vantage of a coworking space is the possibility to meet like-minded people and
thus build up networks (Kyrö & Artto, 2015). Synergy effects can be achieved
through the exchange of competences and skills. (Spinuzzi, 2012). Coworking
spaces often offer networking events for members and external partners on a reg-
ular basis in order to facilitate the exchange of experiences and to meet relevant
people from the start-up community in a relaxed atmosphere (Kyrö & Artto, 2015).
The overall focus lies on connecting entrepreneurs with different backgrounds; the
coworking space therefore acts as a platform for entrepreneurs that fosters net-
working (Capdevila, 2015).

8 2 Conceptual Backgrounds
Incubators are often defined as coworking spaces that offer additional services to
entrepreneurs. (Aernoudt, 2004). In literature, they are classified as
„a facility that provides affordable space, shared office ser-

vices, and business development assistance in an environ-
ment conducive to new venture creation, survival, and early-
stage growth.“ (Allen & Mccluskey, 1990: 61)
Incubators offer both economic and social programs, which mean intensive sup-
port for start-ups. These programs begin with the simple coaching of the entrepre-
neur and medium-term support to enable long-term success (Al-mubaraki &
Busler, 2013). Incubators are considered to be mediators for sustainable SME de-
velopment, as they provide services that support start-ups in their establishment
and growth (Bruneel, Ratinho, Clarysse, & Groen, 2012; Schwartz & Goethner,
2009). The services of incubators are divided into three dimensions in the litera-
ture: Infrastructure, networks, and coaching (Abduh, D’Souza, Quazi, & Burley,
2007).
This means that incubators offer significantly more services than classical cowork-
ing spaces. While coworking spaces only offer the dimensions of infrastructure
and networks, incubators provide access to knowledge and its transfer. (Salem,
2014). Incubators are therefore to be regarded as a core component of a start-up
ecosystem (Good, Knockaert, Soppe, & Wright, 2018). Incubators are thus in a
position to offer their clients added value in the shortest possible time
(Wonglimpiyarat, 2016). The value-added services results on the one hand from
the provision of low-cost workplaces (Aernoudt, 2004; Bergek & Norrman, 2008),
the creation of networking opportunities in the form of specific events (Bøllingtoft,
2012) as well as the transfer of important know-how concerning the establishment
and development of the business concept (Peters, Rice, & Sundararajan, 2004).
The combination of all components facilitates a start-up to grow faster since a
separation of all mentioned activities would be associated with higher costs and a
significantly higher expenditure of time.
2.1.2 Organizational Structure of Incubators

There exists a variety of types of incubators and therefore different characteristics.
Due to the existing heterogeneity of incubators, researchers recommend that pub-
lic policy should be linked to incubator types in order to achieve better decisions.
2.1 Business Incubators 9
(Allen & Mccluskey, 1990). Aernoudt (2004) points out that the number of incu-
bators has increased rapidly since the 1980s and that there are significant quality
differences between incubators. Furthermore, he concludes that certain differences
have to be considered during the comparison and that this should prevent "apples
with pears" from being compared with each other.
Therefore, researchers have derived and distinguished different archetypes of in-

cubators from each other. Based on the four elements of the Competitive Scope
from Porter (1986), namely vertical scope, segment scope, geographical focus,
and industry focus, von Zedtwitz & Grimaldi (2006) derived five different arche-
types of incubators. The resulting types were regional business incubator (RBI),
university incubator (UI), virtual incubator (VI), independent commercial incuba-
tor (ICI) and company internal incubator (CII).
In the next step, they classified the types with regard to profit orientation. Accord-
ingly, RBI and UI are not profit-oriented, whereas VI, ICI, and CII are profit-
oriented (von Zedtwitz & Grimaldi, 2006). Additionally, the mission of the corre-
sponding incubator types was formulated. The RBI focuses according to von
Zedtwitz & Grimaldi (2006) on the regional economy and its development, the UI
aims to promote academic entrepreneurship, ICI creates profit by developing suc-
cessful start-ups, the CII increases profit by using internal ideas and the VI ad-
dresses entrepreneurs with ICT-supported solutions and generates revenue by of-
fering resources via the Internet with a focus on the formation of a strategic alli-
ance (Nowak & Grantham, 2000).
In the literature, there exist further archetypes of incubators, which are partially a
combination of other types, partially also completely new archetypes in incubator
research. Bøllingtoft & Ulhøi (2005) argue for a networked incubator (NI) for in-
stance. This model uses a bottom-up approach where startups develop and manage
the incubator. Incubator ventures engage in business networks based on comple-
mentary capabilities, driving technology transfer among each other that increases
the dynamics inside and outside the incubator (Bøllingtoft & Ulhøi, 2005).
Networks are considered relevant for all types of incubators as they collaborate
with partners and build networks to provide SMEs with the resources and services
they need. In the literature, potential partners are NGOs, government, universities
and/or industrial companies (Etzkowitz, Carvalho de Mello, & Almeida, 2005).
Partnerships are important because they are considered to be one of the key factors
in enhancing SME sustainability (Azevedo de Fonseca & Chiappetta Jabbour,
2012). Networks function as an interface for the transfer of information, advice,
and resources that are owned by others and therefore play a crucial role for long-
term survival for both the SMEs and the incubator as an institution (Hoang &
Antoncic, 2003).
In particular, resource dependence is of major importance with regard to the exist-

ence of incubators, which is why a more detailed outline is given in the following
section. Thereby, it refers to theories that investigate the resource dependence of
organizations. That can also be applied to incubators.
2.1.3 Resource Dependency in Organizations

There are many approaches and theories in the literature that indicate that re-
sources play a central role in the decision-making process of organizations. The
Resource-based view (RBV) is one of the best-known phenomena in this context.
It outlines how firms can generate a competitive advantage through core resources
and core capabilities (Barney, 1991; Peteraf, 1993; Wernerfelt, 1984). Large cor-
porations possess extensive resources, which are important for the survival of the
enterprise and thus a central component. They must meet four criteria: The re-
source is (1) valuable for the own company, (2) rare, (3) difficult to imitate and
(4) non-substitutable (Barney, 1991). Resources fulfilling these criteria are entitled
in the literature with the acronym VRIN. Each letter of which represents one of
the above criteria (Kraaijenbrink, Spender, & Groen, 2010).
It can thus be stated that all organizations are dependent on resources. However,
the RBV is based on the resources of a single organization. The external view is
thus almost entirely disregarded. Resources are often not located in a single
organization but can be available in a multitude of different organizations or actors
(Dyer & Singh, 1998). For this reason, Dyer & Singh (1998) extended the RBV
by the Relational View (RV), which should close the mentioned gap.
The complementary approach to the RBV implies that competitive advantages are
gained through both internal and external resources. In this way, the previously
strictly internal view is increasingly directed to the external organizational envi-

ronment and thus expands the theoretical scope by an important perspective (Dyer
& Singh, 1998). This perspective illustrates that as organizations increase their
resource base, they should also consider regional resources in order to generate
competitive advantages.
As soon as organizational behavior is detected, dependence on external resources

is linked to this organization, as postulated by the Resource Dependency Theory
(RDT) supplementing the RBV (Pfeffer & Salancik, 2003). From this theory's per-
spective, organizations are only considered to be self-contained as they possess
the necessary resources for the value creation process.
Organizations, due to their dependency, need to ensure that they can absorb the
necessary resources sufficiently to establish interdependencies and thus increase
their own survival rate (Pfeffer & Salancik, 2003). These interdependencies are
achieved in the literature through strategic partnerships that can contribute to the
sustainable development of SMEs (Bitzer, Francken, & Glasbergen, 2008).
In case of lack of access to resources, which can be caused by lack of strategic

collaborations, organizations such as incubators risk that they no longer be able to
provide their services appropriately and thus fail in the long-term (Peters et al.,
2004). In order to avoid this situation, organizations need to take possession of all
relevant resources.
As strategic partnerships are considered essential for organizations and thus also
for incubators, it is recommended to establish collaborations with regional part-
ners. Organizations need to define what resources are relevant to them in order to
survive in the long term. That means that they need to be able to assess the value
of resources and recognize to what extent they can benefit from certain resources
or information. Incubators, for instance, act as intermediaries within the RDT be-
tween the incubated companies and the business environment and are responsible
for the transfer of resources (Amezcua, Bradley, Grimes, & Wiklund, 2013).
The above-mentioned VRIN approach can, therefore, be extended by the letter

"O", since, in addition to the core resources, there must be an organization that can
absorb and applies the resources (Barney, 2002). This is associated with a precon-
dition to understand what the resources are and who the owners of these regional
resources are and thus potential partners for strategic collaborations (RQ1). It is
also necessary to have access to the resources/information that has been defined
as being relevant and to transform the resources gained into the organizational
competencies of the incubator in order to benefit from them as efficiently as pos-
sible (RQ2).
2.1.4 Relevant Resources of Incubators

The literature includes a multitude of resource taxonomies concerning the success
or failure of organizations. The taxonomies describe the important resource cate-
gories for organizations/incubators and form basic frameworks for all organiza-
tions. These frameworks have been developed and modified by scholars over time.
A recent taxonomy that can be found in the literature distinguishes four types of
resources: (1) organizational resources, (2) technological resources, (3) financial
resources, and (4) human resources (Somsuk & Laosirihongthong, 2014).
Older taxonomies used the term of physical resources instead of technological re-
sources (Barney & Hesterley, 1999), or formed only three categories where finan-
cial resources were not intended to be a main category (Barney, 1991; Penrose,
2009). However, the definitions in both concepts are similar and therefore substi-
tution of both categories is possible (Somsuk & Laosirihongthong, 2014).
Organizational resources include:
„a firm’s formal reporting structure, its formal and informal

planning, controlling, and coordinating systems, as well as
informal relations among groups within a firm and between
a firm and those in its environment.“ (Barney, 1991: 101)
In this respect, the selection process of an incubator can be seen as an essential

resource. A badly organized selection process can result in too strong or too weak
tenants being included in the incubation program and this can lead to incubator
failure in the long-term (Aerts et al., 2007). An incubator must only promote SMEs
that are “weak-but-promising” (Hackett & Dilts, 2004: 62). This wording aims to
ensure that SMEs that can be considered weak due to lack of resources should be
selected primarily as soon as they have a promising business idea. All in all, the
criteria have to be chosen in such a manner that the selection process matches the
incubator's mission and success is probably for both the SME and the incubator
(Wiggins & Gibson, 2003). The resource "selection process" can be expanded by
the formulation of exit criteria, i.e. milestones of the incubation program must be
set for all tenants and the time for an exit must be determined (Smilor, 1987).
Technological respectively physical resources include:
„the physical technology used in a firm, a firm’s plant and

equipment, its geographic location, and its access to raw ma-
terials.“ (Barney, 1991: 101)
This begins with the physical infrastructure of the incubator, such as the working
space to be rented, equipment or facilities (Lee & Osteryoung, 2004; Peters et al.,
2004). In a broader context, technological resources are understood as ideas and
know-how regarding other physical resources (Hisrich & Smilor, 1988). The trans-
fer of ideas and know-how can be facilitated by incubators by connecting with
industry or universities (Gower & Harris, 1994). Thus, incubators are regarded as
catalysts for technology transfer (Wonglimpiyarat, 2014).
Financial resources „refer to all financial and in-kind support that firms can use
“ (Somsuk & Laosirihongthong, 2014: 199).
These include access to financial resources such as loans, grants or venture capital
(Hackett & Dilts, 2004). In addition to the financial resources of an incubator, the
ability to support SMEs with financial consultancy is included. This ability should
lead SMEs to draw the right conclusions about financial decisions (Lee &
Osteryoung, 2004).
The fourth group in the taxonomy of resources considered is human resources.

These resources
„refer to attributes of the founding team, a business incuba-

tor's management team and staff by which their unique tal-
ents and skills are vital to the success of the business incu-
bator.“ (Somsuk & Laosirihongthong, 2014: 199)
Among other things, human resources include skilled managers who have experi-
ence in managing a business incubator and thus make a positive contribution to
the development of the incubation program (Hisrich & Smilor, 1988; Lee &
Osteryoung, 2004). Furthermore, the coaching of the tenants is regarded as a hu-
man resource. Through coaching, the incubator offers (free or fee-based) training
opportunities, frequently as workshops or seminars (Peters et al., 2004).
The resource taxonomy is used to respond to RQ1. It illustrates which resources

are valuable for incubators in developing countries. Simultaneously, the categories
are the reference for the Preliminary Assumptions to be developed in chapter three,
since the existing literature on relevant resources for organizations suggests that
organizational, technological/physical, financial and human resources are suffi-
ciently needed to achieve long-term survival. Thus, this premise also applies to
incubators, which represent the object of investigation in this paper.
2.2 Institutional Theory
2.2.1 Definition of Institutional Theory

In order to better understand the structure of incubators, a look will be taken into
the institutional theory. The precondition here is that incubators are seen as part of
its institutional surroundings and that the institutional theory can thus be applied.
In a broader meaning, it can be said that there is an institutional surrounding in
which incubators are embedded and thus they are necessarily part of this institu-
tional surrounding or region (Hung, 2005). In this case, institutional theory affects
the phenomenon of the incubator.
Institutional Theory relies on the perspective of an open system that influences

organizations in its environment and that this environment is part of a strongly
sedimented social construction (Clegg, 1981). According to Luhman & Cunliffe
(2013: 85)
„the issue of [social] legitimacy — how organizations adapt

to their environment and manage their credibility — is the
concern of institutional theory.“
Thus, Institutional Theory argues with the decades-old notion that organizations
need to convince their environment that they are legitimate entities that deserve
support (Meyer & Rowan, 1991). The theory, therefore, attempts to investigate
2.2 Institutional Theory 15
and understand the behavior of an organization in a cross-border context and thus

outside the company's internal perspective (Szyliowicz & Galvin, 2010). This con-
sideration is important for the understanding of institutional structures, as they
change due to both endogenous and exogenous factors (Scott, 2008a).
2.2.2 ‚Three Pillars of Institutions‘

There are numerous approaches in the literature to explain the structure of institu-
tions or institutional environments. Scott (2014: 56) describes institutions as units
that
„[include] regulative, normative and cultural-cognitive ele-

ments that together with associated activities and resources,
provide stability and meaning to social life.“
These elements represent the so-called 'three pillars of institutions' and thus form
the core components of institutions (Scott, 1995). Basically, the model suggests
that all forms of institutions that control human interactions through regulatory,
normative and cultural-cognitive processes influence the decision-making of the
whole organization (Scott, 1995). While these three dimensions can be distin-
guished from each other in the analytical context, in empirical terms these pillars
are regarded as closely linked elements of institutionalization (Scott, 2008b): (1)
regulative pillar, (2) normative pillar and (3) cultural-cognitive pillar:
The first dimension is (1) the regulative pillar. The regulative pillar includes the
ability to establish rules, monitor compliance and, where appropriate, impose
sanctions to influence future behavior (Scott, 2001). Furthermore, the regulative
components include laws and formal rules that must be followed by all actors
(Scott, 2008b).
The second dimension is (2) the normative pillar. The normative pillar emphasizes
normative rules that are mandatory for social life. Normative systems, therefore,
contain values and standards that must be complied with. Values specify desirable
behavior with respect to established standards, while norms express how things
should be done without violating the values (Scott, 2001).
The third dimension is (3) the cultural-cognitive pillar. The cultural-cognitive pil-
lar explains the existence of interactions between different actors. Different sym-
bols from the dimensions words, signs and gestures are used. These symbols are
assigned to situations or activities, allowing for communication between actors
without any problems. The cognitive abilities of an actor are based on the respec-
tive individual interpretation. The interpretation is controlled by the individual so-
cial background. This leads to actors with different social backgrounds having dif-
ferent subjective interpretations of the same issue (Scott, 2001).
This model of the three pillars is therefore suitable for examining the structure of
organizations and in the broader meaning of incubators as well. When applying
this theory to the research issue of this thesis, there is therefore not only a depend-
ence on resources, but also a dependence of institutionalization on both the own
organization and the environment in which it is embedded. From this perspective,
the immediate institutional surrounding can be regarded as a regional resource and
is of particular importance for incubators. In the following section, it will be ex-
plained why this issue is important especially in developing countries.
2.2.3 Institutions and Developing Countries

This section aims to explain the specific challenges faced by organizations in de-
veloping countries. Since this work is concerned with incubators in developing
countries, it is essential to consider the institutional environments in which incu-
bators operate. First, it should be mentioned that there exists little literature about
this phenomenon. In recent years, researchers have started to explore the institu-
tional environment in developing countries, as the importance of institutions for
the internationalization of small businesses has increasingly been recognized in
recent years (Cheng & Yu, 2008). For decades, the research field of incubators in
developing countries has been disregarded and the focus has been on incubators
in developed countries (Mrkajic, 2017). Although there has been an increase in the
research activity of incubators in developing countries, the survival rate of this
new type of incubator is still low (Mrkajic, 2017).
The literature suggests possible reasons for an existing dependence on entrepre-

neurs and incubators on the respective institutional environment (George &
Prabhu, 2000). In particular, smaller organizations tend to rely on external parties
2.3 Absorptive Capacity & Organizational Learning 17
to benefit from external information and resources in a wide variety of situations

(Harris, Rae, & Misner, 2012). In addition, in contrast to established enterprises,
SMEs are exposed to a significantly greater asymmetry of power vis-à-vis institu-
tions and are therefore more dependent on the support of intermediaries as their
privileges are limited to institutional access (Child & Rodrigues, 2011). Institu-
tionally weak environments pose a great challenge to incubators, among others, as
they create barriers for the tenants that undermine growth and thus can have a
long-term negative impact on the survival of incubators (Acs & Virgill, 2010).
The literature mentions numerous possible barriers that can often be identified at
the institutional level in developing countries. These include developments affect-
ing the financial sector, governance issues and the adequacy of education and tech-
nical skills (Acs & Virgill, 2010). Furthermore, developing countries mostly lack
entrepreneurial skills, targeted financial support for entrepreneurs and extensive
business networks, which is counterproductive for the growth of SMEs (Aidis &
Estrin, 2006). Especially in developing countries, these barriers are often associ-
ated with institutionally weak environments (Hoskisson, Eden, Lau, Wright, &
Hoskisson, 2000).
2.3 Absorptive Capacity & Organizational Learning
As previously described, numerous resources for incubators in developing coun-

tries are externalized, which means that they are either outside the organization or
can only be acquired through collaborations with external partners. The depend-
ence of the organizations on their institutional environment was also emphasized.
Incubators in developing countries, therefore, tend to rely on their external part-
ners.
The combination of available external resources and difficult institutional frame-

works poses the question of how incubators can overcome this dilemma and re-
duce existing barriers. Obviously, incubators as an organization have to internalize
external resources, but this undertaking is hindered by the (regional) institutional
environment.
One way of addressing these challenges is the Absorptive Capacity described in

the literature - a concept that examines an organization's ability to internalize ex-
ternal knowledge through "absorption". (Bergh & Lim, 2008; Zahra & George,
2002). Absorptive capacity was first established by Cohen and Levinthal in 1990
as
„the ability of a firm to recognize the value of new, external

information, assimilate it, and apply it to commercial ends“
(Cohen & Levinthal, 1990: 128).
According to the theory of Organizational Learning, it is crucial for a company to

identify, assimilate and apply resources - often in the form of knowledge - to create
value (Todorova & Durisin, 2007). Therefore, Absorptive Capacity is a mecha-
nism to make external resources available and applicable to the organization
through (prior) knowledge. The absorption of external knowledge can, therefore,
be understood as learning. In this way, learnings that take place on an individual
level can be converted by the organization and transformed into an organizational
learning (Kim, 1993). This transformation can only be successfully implemented
as soon as mechanisms or guidelines exist within the organization that enables
individual members to carry out learning processes independently and releases
them for collective transformation (Slater & Narver, 1995).
Organizational Learning Theory (OLT) is thus a suitable supplement to the ap-

proaches to resource dependency presented so far. While the RBV and the RDT
describe what the important resources within an organization are, the OLT states
that resources should be continuously absorbed to accelerate the development of
the organization. OLT can, therefore, be applied to all situations in which an
organization faces the challenge of adapting to dynamic environments in order to
generate a competitive advantage or a survival opportunity (Barney, 1991). Over-
all, organizational learning improves strategic, financial and operational decisions
(Mayer, Stadler, & Hautz, 2014). This means that better performance can be ex-
pected for the entire organization (Hitt, Dacin, Levitas, Arregle, & Borza, 2000).
The existence of absorption capacities is the reason why an organization needs to

be able to learn from strategic decisions. These absorption capacities develop, inter
alia, when an organization gains experience while operating in its institutional en-
vironment (Bergh & Lim, 2008). The experience gained over time can enable the
organization to codify the information for improving routines that are the basis for
future actions (Mayer et al., 2014). It is stated in the literature that learning success
is highest in Absorptive Capacity when the organization refers to prior knowledge
(Bergh & Lim, 2008). This implies that a larger (internal) resource base is more
successful for the absorption of new knowledge. This fact is once again an indica-
tor that dependence on resources is moving to the center of strategic decisions. In
particular, a lack of (external) resources reveals an absorption potential that should
be exploited with the help of Absorptive Capacity.
The original concept of the Absorptive Capacity from Cohen & Levinthal (1990)
should represent a mechanism that refers to many different types of knowledge.
However, scholars criticized this formulation for being too unspecific. Due to the
various characteristics of the different knowledge types, a more careful differenti-
ation of the existing types was suggested (Volberda, Foss, & Lyles, 2010). On the
other hand, it is considered problematic to limit absorption capacity to a specific
type of knowledge, as it undermines the answer to the question of absorption ca-
pacity for other types of knowledge (Lane, Salk, & Lyles, 2001). It is proposed
that when applying Absorptive Capacity, the respective differences of the relevant
knowledge types with regard to their properties and suitability must be taken into
account, since different transfer mechanisms may apply under different precondi-
tions (Lane, Koka, & Pathak, 2006).
Scholars are currently taking up some examples of the differentiation of

knowledge types. Schweisfurth & Raasch (2018) found out that two special types
of knowledge are necessary for the promotion of innovation within an
organization: Solution Knowledge and Need Knowledge. They noticed that Cohen
& Levinthal (1990) have suggested the absorption of different types of knowledge,
but have focused only on technological knowledge that can be subordinated to
solution knowledge (Schweisfurth & Raasch, 2018). Need Knowledge is a term
that originates primarily from marketing and is understood in the relevant litera-
ture as knowledge about customer needs (Homburg, Wieseke, & Bornemann,
2009), that innovative organizations are confronted with in current and future mar-
kets (Alexy, George, & Salter, 2013). In a firm, this knowledge is normally pos-
sessed by the employees or, in the case of external knowledge, by the customers
(von Hippel, 1994), which, in the case of an incubator, can be represented by the
SMEs together with their customer base.
Schweisfurth & Raasch (2018) further argued that Need Knowledge is one of the
key components of innovation alongside Solution Knowledge (Danneels, 2002).
Thus, when absorbing new knowledge, an organization should ensure that both
types of knowledge are included in the Prior Knowledge.
Basically, four dimensions of Absorptive Capacity can be distinguished: Acquisi-

tion, Assimilation, Transformation, and Exploitation (Zahra & George, 2002).
While the dimensions Acquisition and Assimilation can be added to the Potential
Absorptive Capacity, the dimensions Transformation and Exploitation represent
the Realized Absorptive Capacity (Zahra & George, 2002). Potential Absorptive
Capacity describes the ability to recognize and acquire the value of external re-
sources, while Realized Absorptive Capacity focuses on the ability to adequately
transform the absorbed knowledge and make it applicable (Zahra & George,
2002). The chronology of the individual dimensions can be regarded as a process
in which each phase builds on the preceding stage.
The following table illustrates the compressed definitions of the individual phases.
Table 1: Dimensions of Absorptive Capacity
Dimension Definition Reference(s)

Acquisition Acquisition capability refers Todorova & Durisin
to the ability of a company to (2007),
identify and acquire external Zahra & George
Potential Absorptive Capacity
knowledge that is important (2002),

to its business. Cohen & Levinthal
(1990)
Assimilation Assimilation capacity refers Todorova & Durisin
to the ability of a company to (2007),
absorb external knowledge. Zahra & George
This ability also refers to rou- (2002),
tines and processes with Cohen & Levinthal
which the company analyses, (1990)
processes, interprets and un-
derstands the acquired infor-
mation.
Transformation Transformation refers to the Zahra & George
ability of a company to com- (2002),
Realized Absorptive Capacity
bine routines and existing Slater & Narver

knowledge with newly ac- (1995),
quired expertise. Kim (1993)
Exploitation Exploitation refers to the abil- Todorova & Durisin
ity of a company to use exist- (2007),
ing and trans-formed Zahra & George
knowledge for its operations. (2002),
The focus of exploitation is Cohen & Levinthal
on the transformation of (1990)
knowledge into new products.
3 Formation of Preliminary Assumptions
3.1 Linking the Theoretical Concepts
The concept of Absorptive Capacity comprises a number of key aspects that are
important for the application to incubators in developing countries and in particu-
lar to the two research questions.
Hutabarat & Pandin (2014) identified two relevant aspects in this context, which
indicate that Absorptive Capacity is a suitable model: On the one hand, this con-
struct has a multidimensional character. The different dimensions represent differ-
ent abilities within the incubator, which in their sequence are of importance for the
entire organization. First, an incubator must (1) recognize the value of the new
knowledge (external resource), (2) assimilate this knowledge, (3) transform it, and
finally (4) exploit it for its (commercial) purposes.
On the other hand, Hutabarat & Pandin (2014) point out that there is a close rela-
tionship between the absorptive capacity of the incubator and its related, Prior
Knowledge (internal resource base). The concept, therefore, has a cumulative
character, i.e. the Prior Knowledge is also decisive for the future resource basis.
Absorptive capacity thus implies that the development of the incubator is both
path- and history-dependent (Hutabarat & Pandin, 2014).
The link with the resource taxonomy discussed in this paper is appropriate because
Absorptive Capacity can not only explain how incubators in developing countries
can absorb external (regional) resources but also which resources are explicitly
addressed so that incubators as an organization can experience a better learning
process. Absorptive capacity is per se an intangible phenomenon, which also pro-
duces an intangible output in the form of organizational learning; however, the
(intangible) knowledge can also include how tangible resources can be gained and
used more efficiently.
The fact that Organizational Learning also depends on the learning outcome of the
individual members is also of relevance for the present case. Since in an incubator
numerous individualists (tenants) are confronted with learning processes on a daily

24 3 Formation of Preliminary Assumptions
basis, the superordinate organization has the opportunity to transform the individ-
ual learnings into its own competencies. This enables a two-dimensional view of
the object under investigation, namely the incubator in the developing country.
In this context, the distinction between Solution Knowledge and Need Knowledge
is particularly interesting for the application, as the incubator has to acquire Solu-
tion Knowledge in order to be financially independent and to provide functionality
in the technological sense, but also Need Knowledge in order to satisfy human
needs and optimize organizational processes (Alexy et al., 2013). The resource
taxonomy used in this work can also be subdivided into the following segments:
While Solution Knowledge is required for technological and financial resources,
Need Knowledge is used for the acquisition of organizational and human re-
sources. The extended taxonomy therefore also covers the dimensions of tangible
resources (Solution Knowledge) and intangible resources (Need Knowledge).
By interlinking the concepts considered, more meaningful results can be achieved,

which can be of importance for incubators in developing countries. On the one
hand, the required resource types were defined and associated with the required
knowledge. The construct of Absorptive Capacity is linked for the first time to this
comprehensive resource taxonomy in order to gain a better understanding of what
knowledge and resources are necessary for incubators in developing countries.
The output generated in this paper is intended to show how incubators in develop-
ing countries can recognize the value of regional resources, how they can trans-
form absorbed knowledge into their own organizational competencies, what role
SMEs play in the learning process of the organization and to what extent the
organizational environment with its regional resources influences the incubator.
Fig. 1 visualizes the updated concept of Absorptive Capacity, which can be applied
to incubators in developing countries under consideration of all relevant theoreti-
cal concepts. When looking at the previous versions of Absorptive Capacity, the
differences to Fig. 1 are clearly evident (Appendix 1 – 3).
3.2 Development of Preliminary Assumptions 25
Figure 1: Absorptive Capacity on Incubators in Developing Countries
Source: own developed illustration, based on Todorova & Durisin (2007)
3.2 Development of Preliminary Assumptions
In order to be able to apply the conceptual background discussed in chapter two

for the development of suitable Preliminary Assumptions, sufficient modifications
of the concept of Absorptive Capacity were necessary. So far, researchers have
used Absorptive Capacity as a general model to increase the knowledge base
within an organization (Cohen & Levinthal, 1990; Todorova & Durisin, 2007;
Zahra & George, 2002). Despite the fact that the model has continuously evolved
over the years, no explicit application has been made to incubators in developing
countries.
Until now, there was no explicit definition of knowledge types and the associated
resources that are required to improve general performance. Furthermore, the in-
stitutional environment of an organization was ignored or presented unspecifically
for the investigation of incubators in developing countries. For this reason, the
26 3 Formation of Preliminary Assumptions
Institutional Theory was integrated in order to clarify the significance of the im-
mediate environment of incubators and to highlight the specific challenge of in-
teraction.
The model of Absorptive Capacity shown in Fig. 1 is based on the version of

Todorova & Durisin (2007), frequently referred to in literature. The above-men-
tioned modifications enable the concept of Absorptive Capacity to be applied to
incubators in developing countries since relevant dimensions have been added to
the research on the phenomenon. The model provides indications as to which re-
sources an incubator must acquire in order to ensure its long-term survival and
thus serves to respond to RQ1.
As both tangible and intangible resources are required (Barney & Hesterley, 1999;
Somsuk & Laosirihongthong, 2014), it is necessary to have the appropriate
knowledge for each acquisition available within the organization. In this case, the
term Prior Knowledge is used. This is necessary to absorb further, specific
knowledge (Cohen & Levinthal, 1990). The literature suggests that both Solution
Knowledge and Need Knowledge are involved; both types of knowledge are there-
fore necessary for an organization to develop innovative attributes (Danneels,
2002; Schweisfurth & Raasch, 2018).
In the modified model the institutional theory also fits in, which in this case are
represented by the 'Three pillars of institutions’. The institutional surrounding
plays a major role in developing countries, as there are often characterized by weak
attributes and can, therefore, have a negative impact on the development of SMEs
(Acs & Virgill, 2010). With these modifications, the concept of Absorptive Ca-
pacity can be applied to the phenomenon of incubators in developing countries.
The aim of this step is to use findings to answer RQ2 and filter out the key obsta-
cles that are responsible for incubators in developing countries failing to absorb
valuable external resources and transform them into their organizational compe-
tencies.
4 Methodology
4.1 Research Design
In order to answer the research questions, a case study was chosen as a qualitative
research method. Generally, it can be stated that case studies are suitable for an-
swering questions that begin with either a "how" or a "why" (Yin, 2009). Since
one of the two research questions in this paper meets this criterion, a case study
was selected as a suitable research method for answering the second research ques-
tion. According to Piekkari, Welch, & Paavilainen (2009), a case study is
„a research strategy that examines, through the use of a va-

riety of data sources, a phenomenon in its naturalistic con-
text, with the purpose of ‘‘confronting’’ theory with the em-
pirical world.“ (Piekkari et al., 2009: 569).
This confrontation can be either to identify constructs for later theoretic testing or
to seek a holistic explanation of how processes and causes fit together in each
individual case (Ragin, 1992). This process explores, destabilizes and reconstructs
the relationship between theory and the empirical world (Dubois & Gadde, 2002).
According to Yin (2009), the case study is used for explanatory purposes, in which
a deductive logic can be applied that tests assumptions as well as existing theory.
Case studies must have a clear design with research questions, concrete analysis
units as well as a procedure for interpreting the collected data (Yin, 2009). As
already mentioned, within the framework of this work, a so-called “how” research
question comes into consideration, namely
RQ2: How can (not) incubators absorb and transform the external resource into
their organizational competencies?
With regard to the research underlying this paper on how incubators in developing
countries can benefit from regional resources, the case study method is a good
choice for assessing the processes involved. The fact that incubators in developing
countries are a complex social phenomenon also argues in favor of choosing a case
study to answer research questions.

28 4 Methodology
A single case study design was chosen for this research (Yin, 2009), where, within
a single case (Bokamoso Entrepreneurial Center), attention also is given to the
subunits (entrepreneurs). These sub-units were developed according to the princi-
ple of "theoretical sampling" from Eisenhardt (1989); the SMEs are selected for
theoretical rather than statistical reasons with a view to extending existing theory.
Even if the incubator is regarded as the primary analytical unit, the sub-analysis
units are needed to gain a better understanding of the selected single case.
According to a rationale for the use of single case studies, "a representative or
typical case" must be available (Yin, 2009: 48). The Business Incubator "Bo-
kamoso Entrepreneurial Center" can be regarded as a typical incubator in devel-
oping countries. The results of the single case study can, therefore, be projected
with a certain degree of probability onto other incubators in developing countries.
The selection of the typical or representative case is also a goal of theoretical sam-
pling (Eisenhardt, 1989).
For a single case study, it is according to (Yin, 2009) useful, to cover the theory
in advance and develop clear assumptions based on it. In addition, the assumptions
provide clear guidance on where to seek evidence for the case study (Yin, 2009).
It is, therefore, a deductive single case study. The corresponding theory is dis-
cussed in chapter two and there are assumptions based on the existing literature in
chapter three, which serve as a basis for the case study and its analysis.
4.2 Data Collection
The empirical data were collected through in-depth interviews. Qualitative inter-
views were selected to conduct a representative study on the resource relationships
of incubators in developing countries, in which the interviewees could report in
detail on their experiences with the incubator. A total of 19 in-depth interviews
were conducted throughout the three-week period, including four interviews with
employees of the incubator, 13 interviews with local entrepreneurs and one inter-
view each with employees of the Namibia University of Science and Technology
(NUST) and a craft center in Windhoek. Tab. 2 provides an overview of all inter-
viewees.
4.2 Data Collection 29
Table 2: Overview Interviewees
Interviewee Company/Cluster Age

Employee A BEC (Operative Staff) 30 – 39
Employee B BEC (Incubator Manager) 30 – 39
Entrepreneur A Food Processing & Packaging 30 – 39
Entrepreneur B Textile / Fashion Design 40 – 49
Entrepreneur C ICT 30 – 39
Entrepreneur D Textile / Fashion Design 50 – 59
Entrepreneur E Textile / Fashion Design 30 – 39
Entrepreneur F Food Processing & Packaging 40 – 49
Entrepreneur G Tourism 30 – 39
Entrepreneur H Textile / Fashion Design 40 – 49
Entrepreneur I Textile / Fashion Design 20 – 29
Entrepreneur J Arts & Craft 20 – 29
Entrepreneur K Food Processing & Packaging 30 – 39
Entrepreneur L Textile / Fashion Design 30 – 39
External A Craft Center Windhoek unknown
External B NUST (Department of ICT) unknown
As already mentioned, theoretical sampling is applied to the selection of inter-

viewees, i.e. (typical) interviewees have been selected from various areas because
they are particularly suited to illuminate the relationships between different con-
structs and to expand or redefine theory based on them (Eisenhardt & Graebner,
2007). In this case, the analysis unit is the incubator in the developing country,
while the sub-analysis units are all actors who can help to better understand and
analyze the overall construct. The aim was thus to cover many different, and above
all relevant, areas through the selection of interview partners and thus to cover a
broad spectrum of perspectives.
First of all, there are the incubator employees, as they are in daily touch with the
available resources of the incubator and can, therefore, provide a lot of relevant
information. The employee structure of the incubator is of minor complexity; two
employees are responsible for the operative business, while the (official) manage-
ment assumes an additional employee and was the primary contact person during
30 4 Methodology
the entire project. The project participants conducted two interviews with the in-
cubator management and another two interviews with an operative employee. The
first interview covered basic questions. In both cases, follow-up interviews were
necessary as the interview manual changed during the progress of the project and
new questions were added.
The main group of interviewees was the entrepreneurs of the BEC. This was partly
due to the fact that, at the time of the project, the BEC had over 40 tenants and
therefore many potential interviewees were available. The aim was to talk to as
many different entrepreneurs as possible in order to ensure that the analysis was
as representative as possible and did not allow for a one-sided view.
In addition, SMEs should come from different sectors in order to enable a multi-
dimensional view to be taken. According to the consensus of the project partici-
pants, a one-sided selection of interview partners exclusively from the textile pro-
cessing industry would not be meaningful, as the challenges may differ from in-
dustry to industry.
Overall, the selection process of the interview partners was an open and dynamic
process, with the result that it occasionally happened as well that some entrepre-
neurs actively contacted the project team and asked for an interview. As a result,
the entrepreneurs did not perceive the project team as disturbing and were willing
to give an insight into their daily work and their relationship to the incubator.
As already mentioned, interviews were also conducted with external persons in

order to open up another dimension on the one hand and to identify possible col-
laboration partners for the BEC on the other hand. They were an employee of
NUST and an employee of the Craft Center in Windhoek.
The interviews were semi-structured and merely followed a flexible guideline that
was individually generated by the three groups at the beginning of the project.
Each group focused on a specific unit of analysis, resulting in three different in-
terview guidelines that followed three different strategies that supplemented each
other. One group concentrated on the needs of the incubator, while the other
groups focused on the needs of the entrepreneurs.
The lingua franca was English, as it was understood by all project participants as
well as by the locals. It was desired that the proportion of open questions was very
4.3 Data Analysis 31
high so that a fluent conversation could develop, and the interviewees were given
the opportunity to answer extensively. Open interviews are a suitable method for
explorative questions (Moran-Ellis et al., 2006; Yin, 2009). In addition, backup
questions were created for each question so that the desired depth could be
achieved in the interviews. This principle has been implemented by all groups,
without exception, in their guidelines. The result of this approach was that in a
relatively short time it was possible to cover the broadest possible spectrum of
potential issues. Each interview was attended by at least one representative from
each group so that the empirical data from all interviews could be collected com-
prehensively. All interviews were recorded with at least one technical device (dic-
tation device, smartphones) and the recordings were stored directly in the cloud to
avoid possible data loss. The audio files were transcribed word for word so that
the interviews could be used for further analysis. (Patton, 2002).
4.3 Data Analysis
4.3.1 MAXQDA
In order to analyze the obtained data, the software "MAXQDA" was used, which
allows analysing qualitative data based on codes. The coding scheme is based on
the theoretical principles explained in chapter two and is based, in particular, on
the resource categories defined in section 2.1.4, which can be regarded as relevant
for an incubator. Furthermore, categories were formed from the dimensions Ab-
sorptive Capacity and institutional surrounding. The results are presented in a con-
densed way across all interviews so that consistent opinions are represented by the
opinion of a group. If a consensus is reached between several interviewees, the
results are referred to as 'some entrepreneurs' or 'the incubator staff', for example,
in order to include a representative statement in the discussion.
4.3.2 Pre-Determined First-Degree Categories

Based on the conceptual background (chapter two) and the preliminary assump-
tions (chapter three), a first categorical scheme for data analysis was developed.
The collected empirical data were subsequently para-phrased with MAXQDA.
32 4 Methodology
It has turned out that the analysis will cover three different main areas: First, the
analysis will focus on (1) what resources are important for incubators in develop-
ing countries, (2) how organizational learning in the present case is implemented
through absorptive capacity, and (3) what the institutional barriers and enablers
are.
The analysis of the empirical data begins with (1) a resource-based approach. The
(preliminary) resource taxonomy is based on the taxonomy defined in chapter
2.1.4. First of all, a differentiation is made between (1.1) organizational resources,
(1.2) technological resources, (1.3) financial resources and (1.4) human resources.
However, the application of this taxonomy in the case study comes up against its
limitations, since the meaningfulness is only restricted to the relevance of the re-
sources and no conclusive statements can be made about the situation of the in-
vestigated organization.
Therefore, the existing conceptual background was extended by a superordinate

main category: Internal and External Resources. At this level, it is possible to ex-
amine what resources are already available in the organization (internal resources)
and what kind of resources are needed and therefore outside the organization (ex-
ternal resources). This step reveals and classifies the needs of the incubator con-
sidered in the case study. A key objective of this work is to investigate the absorp-
tion capacity of incubators. Thus, the external resources are of great importance in
this field of research.
The second unit of data analysis is (2) Organizational Learning - in this case
through incubators in developing countries. This category focuses on the capabil-
ities of the incubator. It will be investigated how an incubator can recognize the
value of a resource and how the incubator can gain access to these resources. In
this context, the modified concept of Absorptive Capacity proposed in chapter
three is relevant.
The third unit of analysis is (3) the investigation of institutional barriers and ena-
blers. The concept of 'Three pillars of institutions' forms the theoretical framework
for this section (Scott, 2008). The analysis examines the extent to which the insti-
tutional surrounding of the organization (incubator) can be described in structural
terms. The 'three pillars' in this context are the (1) regulative dimension, (2) nor-
mative dimension and (3) cultural-cognitive dimension. The concept facilitates an
4.3 Data Analysis 33
insight into how an organization and its institutional environment interact with
each other and how the organization is influenced by the institution.
4.3.3 Inductive Coding with Paraphrasing

The preliminary category scheme, which was introduced in Chapter 4.3.2, is set
up in the MAXQDA software as a classification level. First, a separate coding
structure was created for each interview. This always followed the same structure:
There were three main categories: (1) Resources, (2) Absorptive Capacity and (3)
Institutional Influence. A total of 14 subcategories were subordinated to these
main categories. MAXQDA, therefore, offers a total of 14 allocation options for
codes (Appendix 7).
All transcripts of each interview are paraphrased sentence by sentence. Each sen-
tence is reviewed for possible classification in the above categories and allocated
in the event of a positive evaluation. Finally, the paraphrases represent the codes
that can be regarded as summarized thought units of the interviewees. The totality
of all codes ultimately forms the foundation on which the results of the qualitative
analysis are based. At the end of the coding process, 777 codes were produced
using this procedure. All 777 codes were checked and allocated successively to
one subcategory.
4.3.4 Validity
In order to achieve a higher validity of the research results and to reduce systemic
errors, triangulation was implemented as a research strategy in this paper (Blaikie,
1991). Triangulation is considered to be an effective method to enhance the quality
of empirical results (Patton, 2002). Two main forms of triangulation were used:
investigator triangulation and data triangulation.
In investigator triangulation, the quality assurance of research is achieved through

the collection and analysis of data by different researchers (Denzin & Lincoln,
2005). The aim is to counteract the cognitive bias that can arise in the collection
and analysis of data by an individual researcher (Miles & Huberman, 1984). As
already mentioned, three different research teams were formed. It was ensured that
each team consisted of members from different social backgrounds (Brannen,
34 4 Methodology
1992). For this purpose, the group allocation was aimed at German researchers
collaborating with Namibian/South African researchers. Each team had a different
focus when creating the interview guidelines, enabling them to generate as much
output as possible within the available time. In each interview, at least one partic-
ipant from each group took part so that each dimension was covered. The results
were first discussed in the individual groups and then presented to the entire re-
search team. Through the exchange of cognitive input by several researchers, the
quality of the results was increased.
Data triangulation was also used. This compensates for biases by collecting data
of different dimensions (Brown, 2001). This was achieved by interviewing not
only employees of the investigated incubator but also persons from a different
level of relation to the incubator. As already mentioned, these were the entrepre-
neurs on the one hand and external partners on the other hand. The object of in-
vestigation (BEC) was thus analyzed from different perspectives since each level
(employee, entrepreneur, external) has a different view on the issue and thus a
multidimensional view can be enabled (Brown, 2001).
5 Findings
5.1 Introduction to Bokamoso Entrepreneurial Center (BEC)
The case study on which this paper is based was a study project carried out by the
Chair in Small Business and Entrepreneurship (LEMEX) at the University of Bre-
men. The project was called „Developing Solutions for a City Incubator in Na-
mibia“.
As part of the three-week research project, six master’s students from the Faculty
of Economics, together with students from the Free State University (Bloemfon-
tein, South Africa) and the NUST (Windhoek, Namibia) supported SMEs in the
Bokamoso Entrepreneurial Center (BEC). BEC is an organization that was
founded by the City of Windhoek in 2003 as Coworking Space and has evolved
into an incubator over the years. The incubator aims to play a leading role in sus-
tainable SME development in Namibia. In order to achieve this goal, BEC has set
itself the following mission:
„To provide resources and services to build capacity and de-

velop entrepreneurial skills of SMEs to enable them to com-
pete in the open market and exploit business opportunities
upon exit from the Bokamoso Entrepreneurial Centre, by
forging strategic alliances and smart partnerships with rel-
evant stakeholders in the government, business and SME
community.“ (Appendix 4)
However, the incubator is confronted with barriers that represent an obstacle to

the fulfillment of the mission. The study project was intended to examine the chal-
lenges the incubator faces and the approaches that can be taken to counteract these
problems. The research team conducted interviews with various actors in Wind-
hoek and developed prototypes within the framework of the project, which were
presented in a public presentation at the NUST at the end of the project. These
prototypes can be regarded as external, regional resources and the question arose
how these resources could be absorbed and implemented by the incubator.

36 5 Findings
For this reason, this paper deals with this issue. The selected research questions
within the framework of this thesis thus link up to the study project and contribute
a part to the representation of the outcomes.
The project is relevant because incubators in developing countries have been little
researched and there are few representative studies in this context (Akçomak,
2009; Hausberg & Korreck, 2018).
In the following, the results of the case study are presented and RQ2 answered.
5.2 Relevant Resources
5.2.1 Organizational Resources

In order to understand the organizational background of the BEC, it must be re-
membered that the Centre was established in 2003 but no suitable staff with expe-
rience in incubation could be found. For this reason, it was initially decided to set
up a coworking space with a focus on renting space for small businesses. Entre-
preneur L is at least one SME resident in the BEC, which „joined the incubation
center in 2003.“ In 2009, according to Employee B „things started changing, [...]
bring in more staff, changing job descriptions, developing this incubation con-
cept.“ The transformation from a classic coworking space to a business incubator
thus started.
The interviews with the employees of the BEC provided many insights into the
daily work routine and thus into the organizational processes of the incubator. This
includes above all the selection process, with which potential entrepreneurs are
selected (Aerts et al., 2007; Hackett & Dilts, 2004; Smilor, 1987; Wiggins &
Gibson, 2003). BEC has recognized that such a process needs to be organized in
order to filter out suitable SMEs among applicants. However, its overall situation
shows some weaknesses (further explanations in Chapter 5.3.3). From an
organizational point of view, however, it is problematic that the individual cases
are apparently examined, but there is no overall concept for the choice of entre-
preneurs. As a result, the current 40 SMEs can be divided into 14 different clusters.
„We've got a lot of clusters. Right now, with the intakes that
we have, we've got 14 different clusters, but then we use to
5.2 Relevant Resources 37
prioritize on textile, innovation [and] arts & craft.“ (Em-

ployee A)
A higher number of clusters requires a higher degree of employee flexibility in

order to be able to adequately advise SMEs from each cluster. This automatically
leads to a more extensive need for Prior Knowledge, which represents a major
challenge for the current staff constellation of the BEC (see chapter 5.3.1). Ac-
cording to Employee A, in addition to the focus on textiles and arts & craft, priority
is also given to innovative SMEs. However, according to the official cluster clas-
sification of the BEC, there is currently only one SME that can be classified as an
innovative business in accordance with their standards (Appendix 5).
The real focus lies thus on textile/fashion design (nine SMEs) and arts & craft
(three SMEs). In these branches - and especially in textile production - it is partic-
ularly challenging to be innovative and thus to differentiate oneself from ordinary
manufacturers who offer their products for sale on the street. „[The dresses are]
something common. You can find it anywhere in Windhoek“ (Entrepreneur B).
There is also intense competition within the incubator in the textile sector. Entre-
preneur B describes the situation as follows: „If you look at this place, everybody
is doing the same thing.“ This increases the risk that even at the moment when an
entrepreneur specializing in textiles makes innovative progress, the distinguishing
feature is copied, and the Competetive Advantage is only of short duration. Entre-
preneur B personally has no problem with the fact that concepts are quickly cop-
ied, since she also makes use of copying as soon as she receives new impulses
through inspiration from others: „That's why I do even if others cover it, I also do
covers.“
In principle, the tenants are expected to be able to leave the incubator again within
three years and become self-sufficient (Appendix 6). BEC, therefore, sets a clear
limit and thus corresponds to the definition of an incubator in which it limits the
period of assistance (Rice, 2002).
„And once you are here, the period is divided in three years
because our lease agreement [...] is divided in three years.“
(Employee A)
38 5 Findings
The training included in the programme is conducted by external persons, as the

BEC staff do not have the necessary know-how or are already completely occupied
in their working capacities.
According to the BEC, this program is structured to meet the needs of entrepre-
neurs and the contents are structured correspondingly. Therefore, in the first year
of the programme, basic training will take place, including accounting, taxation,
and marketing. Building on that, the second year is followed by targeted training
to cover the needs of the individual SME and in the third year, the preparation for
the exit takes place. Employee A considers an exit as the moment at which SMEs
are able „to buy themselves land from the City of Windhoek and then actually build
[...] a business.“ Employee A explains that it is the BEC's vision that an SME after
three years should be able to „get out and then [...] give space for those that are
coming.“
However, this vision is not being fulfilled at the moment, as many tenants are not
yet ready for becoming self-sufficient after the three-year period. There are many
reasons for this - on the one hand, they are of a financial nature (see also Chapter
5.2.3). On the other hand, there is a serious problem regarding the acquisition of
land outside the incubator. Among other things, it is due to the high - but market-
driven - prices, which represent a major barrier for SMEs. But there also seems to
be a lack of suitable land in sufficient quantity, which is why SMEs often remain
in the BEC after three years. In this respect, the institutional environment of the
incubator plays an important role (see chapter 5.3.4).
Weaknesses in organizational resources also include the fact that important deci-
sions are taken outside the incubator. This is mainly due to the fact that the BEC
is a subsidiary organization of the City of Windhoek and in this case, the head of
the organization (Employee B) is significantly restricted in her decision-making
(see chapter 5.3.4).
5.2.2 Technological/Physical Resources

First, it should be noted that the incubator is located on the outskirts, near the
township of Katutura. The location of the BEC is considered unattractive by all
interviewees. For this reason, only a few customers visit the incubator because
they often do not know that the incubator exists or where it is locatedEmployee A
describes the situation as follows: „The place here is isolated anywhere. [...] It’s
not easy. It’s in Katutura.“ The BEC is considered to be difficult to access, espe-
cially as there is no connection to the public transport networks. In addition, the
SMEs feel isolated because of the fenced area:
„It’s like they are fencing off, they [put] interlocks. They
close the road for the taxis, so [...] there is no drop off zone
for taxis. [...] Those type of things.“ (Entrepreneur F)
The number of places available in the BEC is currently limited to 43. These places
are called "stalls" and have the external appearance of a slightly more spacious
garage. For the residential tenants, this is the central location from which they
operate. The company headquarters, production plant and storage areas are located
in a confined space in one stall. This leads to capacity problems for entrepreneurs,
which is a hindrance to business growth.
„The challenge is [...] the capacity at the moment from the

incubation point of view. [...] We're at the moment just in five
shops because [...] that capacity is a bit too small for us ...
because this is not we want to be.“ (Entrepreneur A)
In extreme cases, SMEs are forced to store a large part of their inventory at home,
as the available space is already occupied. Entrepreneur G explains: „The store
that I’m having it’s just an office space, but a lot of things that I have I keep them
at my house.“ (Entrepreneur G)
As an interim solution, the incubator attempts to allow entrepreneurs to move to a

larger stall as soon as it is available. In rare cases, SMEs receive the second stall
in addition to the rented place. Entrepreneur F was offered this as an intermediate
solution as her business had stagnated due to capacity problems: „I started with
the small one. [...] But now I add one stall because of the machinery.“ (Entrepre-
neur F)
The technological equipment of the location essentially does not cover all basic
needs of the SMEs. For instance, the electricity supply is not included in the rent
of the tenants, which is why there are often problems with the electricity. Some
entrepreneurs even have to manage completely without electricity because they
40 5 Findings
cannot afford it. Entrepreneur F perceives the expenses for electricity to be paid
by himself as a negative factor: „The electricity is a big challenge. [...] It’s expen-
sive, very, very much.“
In addition, internet access on the BEC grounds is restricted or temporarily una-

vailable. For this reason, there is a so-called resource room in which Internet-ca-
pable computers are available for the tenants. These can be used, for instance, for
online marketing, which is considered important by many entrepreneurs. How-
ever, in the resource room, there are only two computers for almost 40 tenants and
the opening hours are linked to the working hours of the BEC staff, which makes
flexible use more difficult. The incubator recognizes this not as a problem, as the
resource room is needed only slightly.
„Some of them started [...] capacitating themselves by pur-

chasing computers. [...] The resource center doesn't get fre-
quented by them so much as we would hope to. But it's still
fine because the range of the WIFI is still adequate.“ (Em-
ployee B)
However, SMEs feel that the WIFI range is inadequate and would like to see a
better connection for their online marketing opportunities, since, for instance,
communication via social media is seen as an important tool for start-ups. Entre-
preneur E regards the current situation as an obstacle to the promotion of his busi-
ness.
„The WIFI doesn't reach here and the network here is really
poor. [...] If the WIFI was broader [...] in terms of the mar-
keting [...] the incubator could [...] collect funds to have in-
ternet here“ (Entrepreneur E)
Due to the high demand for the stalls, the incubator plans to increase the number
in order to create more space for entrepreneurs from the region.
„The plan to extend is there. [...] Our team already has a

plan on what we want to do with the available space that we
identified next to the center.“ (Employee A)
Therefore, investments in the incubator's size are planned, although the

current premises have a deficient infrastructure.
5.2.3 Financial Resources

In principle, the BEC is considered as a financially dependent organization as it is
a branch of the City of Windhoek. In order to obtain planning certainty, the ap-
proval of the city administration is always necessary. The budget available to the
BEC on a regular basis is limited.
„I don't get more than N$ 150,000 per year for projects

which are after two or three workshops ... the money is finish.
So, if I can also be empowered to go and get the funds for
projects that would also be good.“ (Employee B)
The annual budget of N$ 150,000 provided by the City of Windhoek is therefore

slightly less than € 9,000. The incubator manager is dissatisfied with this financial
situation as the room for maneuver is reduced to a minimum.
The rents of the SMEs are regarded as the main source of revenue for the incubator
alongside the government-approved budget but are not cost-covering at all, which
is why there are permanent financial shortages in the organization's budget.
„The training [...] costs are not covered by the rent [...]. I
mean, the little funds that we get from the rent, we use it to
maintain the center ... only that.“ (Employee A)
The situation in Windhoek with regard to the available space for SMEs shows a
particular constellation. BEC offers almost without competition the cheapest
places for a stall and is thus for entrepreneurs who have few financial resources an
attractive place to physically locate the SME.
„People out there want to lease space from the City of Wind-
hoek, specifically from this place because it's cheap. It's
cheaper than anything else you find in Windhoek.“ (Em-
ployee A)
42 5 Findings
For many entrepreneurs, this is the main reason why they applied for a place at the
BEC, including Entrepreneur G: „This was the cheapest place where you can rent,
and as a small entrepreneur [...] to start a business.“ The low rents in the incuba-
tor are also a reason why entrepreneurs do not want to leave the incubator even
after the end of the planned three years, which the incubation program is supposed
to cover regularly. Outside the BEC, rents would be charged five times higher than
in the BEC.
„But then you find out that people are not ready to go and
pay market-related fees - these are subsidized rates in the
center. Subsidized from the City of Windhoek.“ (Employee
A)
In view of this fact, the incubator tries to gradually adjust the rent for SMEs that
have already exceeded the usual rental period of three years closer to the market
rent.
„What encourages them to move is just going closer to

market-related prices. For example, your rent will come
from N$ 750 [...] to maybe N$ 1200. Just to tell you "we see
you are ready". Most of them don't want to be ready even
though they are ready. So, charging them just a little bit
higher for rent it will encourage them sometimes.“ (Em-
ployee A)
From this step, BEC hopes to be able to pass workspace on to future generations
by encouraging older generations to leave the incubator and be self-sufficient
through sanctions.
However, the financial problems are not only lamented on the incubator side; the
SMEs also frequently state that the lack of financial resources is crucial for
strongly hindering company growth. In particular, there is a lack of money to carry
out appropriate marketing activities, as the interviews showed:
„When it comes to marketing as I said is the accessibility,

because we only use one platform of marketing, which is [...]
social networks. [But] you can't reach the people you want
to reach with that type of. [That’s] why [we want to] use an-
other type of platforms and marketing [...] funding. Money
that we need for marketing.“ (Entrepreneur C)
Money is generally regarded as a central resource that the entrepreneurs lack. En-
trepreneur D generally says: „The business [...] was growing, [...] but [...] the
problem is only if you have no money then the business cannot grow further.“
Additional financial resources are needed above all to scale the start-up and create
additional jobs.
„[We need] working capital to employ more staff to be able

to run the business at a quicker pace and to produce more.
And [be] more efficient because at the end of the months my
wage would be much bigger. So, we need that kind of money
that injection.“ (Entrepreneur E)
The SMEs, however, consider external financial resources to be extremely diffi-

cult to obtain, especially by traditional channels such as banks. One way for the
BEC to acquire financial resources is through regular pitching events in which
innovative ideas are financially supported by funding organizations (see chapter
5.3.2).
5.2.4 Human Resources

The employee structure of the incubator is initially simple in the hierarchy. There
are two employees who are responsible for the operational business and they are
subordinate to a manager. Officially, all employees are the salaried staff of the
City of Windhoek, which means that the BEC is considered a dependent entity.
There is no clear allocation of tasks between the two subordinate employees,
which means that both employees must be familiar with all operational activities
of the daily work routine. BEC employees suffer from the situation that they are
already fully occupied with the work assigned to them. For this reason, there is a
demand for another worker to help relieve the situation.
„We are short-staffed. [...] Right now, we are missing one

additional staff [...] Maybe [...] one or two [...] guys that are
doing the same job as I'm doing.“ (Employee A)
44 5 Findings
In principle, the SMEs are satisfied that the employees are always available when
problems arise. However, they note that these seem rather overloaded and that the
prospect of a quick solution tends to be minimal. Entrepreneur H describes her
experiences as follows: „You just have to be patient. Even if they say it will take
one month or whatsoever, you have to be patient.“ (Entrepreneur H)
Human resources exist in the BEC at different levels. In addition to the employees
who make up the largest part of the Prior Knowledge, the SMEs can also be re-
garded as a human resource. This is to be justified by the fact that all knowledge,
which is carried by involved individual persons within the organization, can con-
tribute to the learning success of the entire organization (Kim, 1993). For this rea-
son, a well-designed selection process is required for the incubator (Aerts et al.,
2007; Hackett & Dilts, 2004).
BEC apparently faces the comfortable situation that there is a large number of
interested candidates for the limited number of available stalls. According to the
responsible persons, potential tenants arrive daily and ask for free places. This is
advantageous for the incubator insofar that it can be carefully selected from the
numerous applications. As mentioned before, the incubator does not succeed in
optimally exploiting this potential.
5.3 Absorptive Capacity
5.3.1 Prior Knowledge

There are several reasons why BEC does not have a large knowledge base. The
range of tasks carried out by the employees extends from SME consulting to co-
ordinating tasks with external partners and administrative activities, including the
maintenance of the center and the external representation of BEC. From this point
of view, it is to be expected that the positions will be filled by business experts
who already have a lot of experience in managing an incubator and in providing
adequate advice for SMEs (Hisrich & Smilor, 1988; Lee & Osteryoung, 2004).
However, the employees of the BEC do not have a significant business back-
ground. On behalf of the BEC, it is already sufficient for employees to have a
bachelor’s degree in economics, but without special proof of relevant professional
experience.
5.3 Absorptive Capacity 45
„This position already is requiring a degree to get it. I al-

ready got a bachelor’s degree in Economics. That's why I
could apply and get the position.“ (Employee A)
As a result, SMEs are supervised by people who themselves have little or no ex-
perience in managing start-ups. Furthermore, one of the two operative employees
of the BEC is in the process of completing his master’s degree simultaneously with
his work at the BEC. Prior to this, he completed an honours programme, which is
necessary in Namibia in order to be admitted to the master’s programme, and
which can be classified in chronology between bachelor's and master's degrees.
However, not only one of the operative employees works part-time for the BEC,
but also the leading employer in the incubator is studying alongside and was at the
time of the project in the honours study of Business Administration.
„I'm now in the process of completing my honours degree in

Business Administration. I've waited a little bit too long be-
tween my degree and my masters ... so, I'm doing my honours
now, but I'm planning to do my masters in Entrepreneurship
and Innovation ... hopefully, next year if I'm able to get ad-
mitted.“ (Employee B)
5.3.2 Solution Knowledge

The BEC suffers from financial problems as the costs for the carried-out activities
cannot be covered to some extent and additional funds are required from the City
of Windhoek or from external partners. The organisational policy is therefore
strongly directed towards attracting financial resources, both for the center itself
and for the SMEs, as financial problems are seen as a predominant issue by all
actors (see Chapter 5.2.3).
As already described, the entire incubator is financially dependent due to a limited

budget and is constantly looking for funds to close these budget gaps. Regular
pitching events are a suitable way to acquire external financial resources (Hackett
& Dilts, 2004). Innovative ideas are financially supported in such events. Most of
the money originates from funds set up by international NGOs. The incubator tries
46 5 Findings
to pitch regularly at these events, hoping to receive funds from this program for
the realization of projects.
„There was a scoping mission team from GIZ, and then I had
to go and pitch an idea for an incubator start-up, or a start-
up hub. We were about 14 organizations that pitched ideas
and there is like N$ 16 million available. So, everybody is
fighting to get some of the money. So, three of the ideas that
I pitched they brought into ideas, but we don't know how
much money we will get, and we don't know ... the entire idea
that we pitched will be funded.“ (Employee B)
But financial support for SMEs is also seen as a central task for the BEC. For this
reason, the BEC tries to take on the role of mediator with regard to potential pro-
moters. They focus on financial support for the SMEs and consider the financial
situation of the incubator to be secondary.
„No, that [financial support for the incubator] would depend

on business to business. We just create a link between what
we think is a valuable financial institution that is there for
small businesses. And then we invite those financial institu-
tions to come and give like an information session on what
they can offer.“ (Employee A)
The BEC hopes that this will lead to more financial support from external partners
and indirect relief for the incubator budget.
Some of the entrepreneurs themselves do not have sufficient knowledge to acquire

financial resources and to use larger funds as effectively as possible. Entrepreneur
J already experienced the situation in receiving a larger amount of money, but had
no adequate use for it:
„When we entered the competition, we won N$ 20,000 [€

1,200] investment for the business. [...] But then we blindly
[...] without knowing what we really wanted, [...] ended up
spending the money on things that were actually not [...]
what we really needed [...] for us to really grow the busi-
ness.“
5.3.3 Need Knowledge

In order to attract human resources in the form of new entrepreneurs, BEC places
ads in the regional newspaper. This is confirmed by many entrepreneurs, who said
that they learned about the vacancy of the stall mainly through this type of com-
munication. Entrepreneur G also became aware of the available space: „I applied
through a newspaper advert and according to the interviews they give me a stall
here.” However, the incubator is also active and carefully follows the media such
as newspaper reports. Entrepreneur J was contacted by the BEC:
„We were featuring a newspaper article, and then one of the

head people from here [Employee B], she read up on the ar-
ticle, because we mentioned something about needing busi-
ness space somewhere to operate from, so she gave us a text
and said maybe we should apply for this and then we ap-
plied“ (Entrepreneur J).
As already described, BEC faces the situation that there is a large number of ap-
plications for the limited places, which is why a waiting list has been created on
which, according to the BEC, between 80 and 100 applicants are currently listed.
This offers the chance that the incubator with a proper selection process can extract
the optimum from the application constellation. According to the BEC, such a
process exists, which includes a short interview.
„Through the process of selection and admission […] you

will be invited for an […] small interview to tell us about
yourself, your business, why would you think it would benefit
for you being here.“ (Employee A)
During the interview, the basic requirements of the BEC on the entrepreneur will
also be examined. This includes, above all, registration with the Ministry of Trade
for at least one year, which is regarded as the most important prerequisite.
„You need to have been registered for one year so that we

know that you are serious about your business. And then we
will see "ah okay, you have registered with the Ministry of
Trade". That is the major one at least.“ (Employee A)
48 5 Findings
However, there is no verification as to whether economic activities were actually

carried out in the year of registration. It is generally assumed that the entrepreneur
was active in his business for at least one year, even if the probability is high that
he had to operate from home due to lack of opportunities.
„Most of them start a business and operate from home and

hope that they generate a kind of income to pay market-
related fees and stuff. We see it as a benchmark if you been
in operation for a year and then we can give you some help.“
(Employee A)
Entrepreneur H confirms that in her case there was no other option. „I already
registered my business [and] I was just working at my sister’s house [...]. I just
put my machine there then I work from home.“ (Entrepreneur H)
In addition, the applicants must submit a business plan, but the BEC does not make
any concrete statement about the extent to which this is decisive for inclusion in
the incubator, especially as many entrepreneurs do not have the know-how to draw
up a meaningful business plan. Entrepreneur F explains, for example, that she has
no knowledge of this issue:
When you go to the financial institution for help, [...] you

must bring [...] your business plan, we have just started and,
you know, it was very difficult. Because [...] I didn’t prepare
myself for all that.“ (Entrepreneur F)
This shows that she was admitted to the incubator without proving a business plan,
as she could not demonstrate her knowledge at a later stage. It seems that the va-
cant places are primarily carried out according to the personal opinion of the exe-
cuting employee and that there are no predefined entry criteria. Since the incubator
had provided only a little information on the entry criteria, the tenants were asked
about this topic. The reasons for inclusion in the programme were different. En-
trepreneur F described the situation back then: „I have an interview why I want to
come here and [...] I told them that I already bought the machines and [...] they
give me [...] the place.“ In some cases, the personal attitude seems to be the deci-
sive criterion, as Entrepreneur I explains: „I [...] present [...] my business idea to
them, they were like [I] fit in the incubation center because [I] have a long-term
projection.“
For the BEC, the tenants are fundamental to Need Knowledge, as they often come
to the employees' office and give feedback. Sometimes these are disclosures of
problems, but also indications of possible suggestions for improvement. While the
incubator claims to respond well to the feedback, the SMEs feel exactly the oppo-
site and believe that the BEC is always open to feedback, but many things are not
implemented, and no reaction is noticed. For example, SMEs often point out that
they do not know how (online) marketing works and how to apply it to their busi-
ness. Entrepreneurs expect more assistance from the incubator in this matter and
they are sure that active marketing support could contribute to success. Entrepre-
neur A stated that he „came here in this programme forget training in marketing.“
Many SMEs share this opinion and see the challenges mainly in this area.
For instance, some SMEs have to struggle with the circumstance that the expenses
for their individual marketing or advertising activities are too high and that they
can therefore only use any actions sparingly. The SMEs, therefore, urge, on the
one hand, that the BEC market itself more strongly as an organization and, on the
other hand, that the advertising efforts of all tenants should be bundled in order to
increase its reach and advertising effectiveness both at the organizational and in-
dividual level. The proposal of a central website, on which all tenants are repre-
sented, meets with the approval of all entrepreneurs since advantages could be
exploited for both internal and external purposes.
„I think it will be a brilliant idea for Bokamoso itself to have

a homepage. Whereby different people with different stalls
can log in or [internal and external] people have ideas on
[what] people are doing [here]. So, it would be fine [...] and
maybe also put billboards on [...] website [...] because for
every person like me to put up advert sign will be very ex-
pensive.“ (Entrepreneur G)
In addition, SMEs need the knowledge to drive their individual marketing forward.
Entrepreneur E, for instance, describes promotion through social media as essen-
tial and profitable for his company: „And then I put [a post on social media] up.
And people see that. In the next few days, the phone is ringing endlessly.“ Some
50 5 Findings
entrepreneurs, on the other hand, do not see the potential of this marketing strategy
and rely on conventional methods. Entrepreneur F considered „word of mouth“ as
the most successful marketing strategy, although there are more effective market-
ing methods. Entrepreneur J also focuses mainly on word of mouth but knows
„that [this] is something you don’t have control over.“ On the one hand, some
entrepreneurs lack the financial resources to implement better strategies, on the
other hand, they lack the knowledge that the incubator should provide to them.
Others rely on the BEC, as already indicated, and hope that the incubator will take
over the marketing.
Due to complex decision-making processes (see chapter 5.3.4), the BEC only has
the opportunity to market the center and the tenants in a conventional way by
printing brochures in which the vision and mission of the incubator are conveyed
and the companies of the tenants are presented. However, the use of this print
medium poses challenges because, on the one hand, the costs for this activity are
too high and, on the other hand, the reach is low compared to Internet-based media.
„I'm sure, you saw those brochures and booklets. It's too
costly to print ... for me it's much more affordable to em-
power a staff member and say, run the Facebook, or manage
the website and do regular updates.“ (Employee B)
A further problem with the use of brochures is that, with constantly changing ten-
ants, there is a need for frequent adaptation and therefore printing of updated edi-
tions, which will lead in the long term to an inefficient method of marketing the
BEC.
Print media such as flyers do not represent a suitable long-term marketing oppor-
tunity for SMEs either, as the cost-benefit ratio is considered ineffective. Many
SMEs, including Entrepreneur J, confirm this: „We don’t really do flyers, because
printing is really expensive for us, we’re a startup.“
5.3.4 Impact of Institutional Surrounding

In principle, it can be stated that BEC is dependent on external partners from the
institutional environment. This is generally considered typical for incubators in
developing countries (Harris et al., 2012).
This statement is illustrated by the fact that the incubator has defined a concrete
three-year programme for its tenants, in which specific training contents and
courses have been determined. However, so far there have only been informal col-
laborations (e.g. with the NUST) which do not guarantee that the corresponding
training will actually take place. Both the incubator managers and the SMEs share
this opinion, as training only takes place on an irregular basis and is more sponta-
neous in nature.
„We have got a training calendar. [...] Depending on the de-

mand from all the interest, [...] we organize the training. But
we are actually supposed to have it on a monthly basis. [...]
There is a couple of things that have not been in place that
we are present now. [...] On a monthly basis we have got
about one, two, three, four [...] training. [...] But this is not
just strictly for the Bokamoso clients here.“ (Employee B)
The irregularity of the training programmes is due to the fact that the implemen-
tation depends on many factors, including the occupancy rate. Since the training
is conducted by external partners, the incubator has no influence on the time sched-
ule of the program. Opinions about the training program vary widely. However,
negative aspects predominate overall. The general tendency is that the
organization of the training is unstructured. Moreover, some SMEs consider the
training to be too theoretical and therefore not useful to apply, or they believe that
the training is too general and therefore they see no reason to attend the training.
„I’ve taken a couple [training], but then I still feel like we

have different companies, different views and what they do
is like, [...] they just teach the basics, but then [Entrepreneur
E’s] marketing won’t be the same as mine, [...] cause I can’t
advertise on social media, because I’m targeting corporate
companies, so [Entrepreneur E] is targeting individuals.“
(Entrepreneur I)
Some tenants, however, claim that they have never taken part in any training, even
if the BEC says it should be mandatory. Entrepreneur K is therefore actively
searching for knowledge without the help of the incubator, as it is not helpful in
her opinion.
52 5 Findings
„I [learn] also from the training from Femtec, also from

Dragons‘ Den and also from my book. [...] If I need some-
thing, I’m like ok, where can I get this, maybe I should go
and google it and stuff like that.“ (Entrepreneur K)
A major challenge of the BEC is that the objective of promoting more innovative
SMEs cannot be achieved. Among the applicants, for vacant stalls, there seems to
be only a small number of entrepreneurs who can be classified as innovative. The
cause of this problem could be Namibia's education system. A strong educational
foundation is needed for the targeted promotion of innovative entrepreneurship
(Acs & Virgill, 2010). To create innovative ideas the appropriate human capital is
needed (Romer, 1992). This seems to be insufficiently available in Windhoek and
also nationally, which makes an acquisition more difficult. The institutional envi-
ronment in which BEC is embedded impairs the achievement of the innovation
objectives because there are no concepts to promote the (innovative) entrepreneur-
ial mindset at an early stage. According to the "Three Pillars of Institutions", the
lack of a stable cultural-cognitive pillar will endanger the exchange of resources
within the institutional region (Scott, 2008b) and significantly hinder the absorp-
tion of knowledge by the incubator.
This cultural-cognitive pillar also includes the mindset that is shaped by education
or the behavior patterns embodied in culture, especially towards others. This state-
ment is illustrated when BEC officials explain that the incubator operates more
like a family community than an independent economic entity.
„If we are running the center as a business, [excluding ten-

ants from the program] would be easy. But since we are run-
ning it as a community initiative where you also listening to
what the person is saying besides the scope to what the per-
son is supposed to be doing.“ (Employee A)
The interpersonal level thus covers a larger range than is usual for incubators,
which operate as self-sufficient businesses and prioritize the intention to make a
profit. Employee A describes that it is almost impossible to exclude an SME from
the programme who, in a personal conversation, reports that he suffers from family
problems, for instance:
„You have to sympathize. [...] It’s not easy to push them out.
Most of the time you are only pushed out [...] if you are
breaking the rules. You are not paying, you are drinking al-
cohol on the premises, you are fighting, you are not attend-
ing any training that we are inviting you or any meetings be-
cause those are compulsory.“ (Employee A)
Further statements confirm that the incubator cares about the personal interests of
the entrepreneurs, even if it is counterproductive for the development and mainte-
nance of the incubator in the long run. This empathic attitude is also reflected in
the incubator when looking at the duration of the previous tenants' membership.
As described in Chapter 5.2.1, prior to 2009 there was a period in which the BEC
did not classify itself as an incubator and the focus was on the rental of stalls.
Employee B describes that there are still some tenants in the BEC today who have
experienced the center as a coworking space and recognize the incubator even nine
years after the transition of the organizational paradigm as such:
„So, those ones they have started since the inceptions

[2003], they just go with the flow. They are just here every
day. If they can make one dress and sell it and get money just
to eat something tonight, they are fine with it.“ (Employee
B)
With these entrepreneurs, the BEC has failed to draw a clear line between profes-
sional and private; the incubator employees feel responsible for the private situa-
tion of these people, which once again illustrates the cultural trait.
„In the African context, there is this whole issue of ... that
you take on the responsibility of the extended family. And
that [...] mindset [...] we also need to change. We need to
change our people's mindset in terms of how we run busi-
nesses because some of them also have the perception that
things need to be given and it needs to be free, but that is not
what we are supposed to be.“ (Employee B)
The mindset of many entrepreneurs addressed by Employee B is therefore pre-

sented as one of the biggest barriers. This mindset contains, among other things,
54 5 Findings
the expectations that the tenants display. On the one hand, the incubator is facing
various challenges and cannot offer some services on a high level, on the other
hand, the entrepreneurs are disappointed faster because they expect too much from
the BEC.
But it is not only the BEC that has to deal with this problem. Other organizations,
such as the Craft Center in Windhoek, also complain about the special mindset
that the tenants demonstrate. As in the incubator, some entrepreneurs take ad-
vantage of the organization, for example by not paying rent, which is a nuisance
for the craft center:
„It’s [...] very difficult to work with small companies. [...]

When I came here the [amount] was quite high of people not
paying rent. [And they say that they] had to buy stock and
it’s been a bad month and this and that. So, [...] you need to
pay your rent. It doesn’t matter if you have [expensive] car
or furniture [...].“ (External A)
The cultural-cognitive pillar of the institutional environment of organizations thus

hinders the incubator from consistently achieving its objectives.
In addition to the cultural-cognitive pillar, the institutional surrounding also

includes politics, whose regulative and normative decisions have a crucial influ-
ence on the performance of the incubator. Some of these decisions cannot be un-
derstood by the BEC's officials. For instance, doubtful decisions contribute to the
fact that the known land problem cannot be solved. Employee A reports that, for
instance, abandoned industrial areas are not used due to political decisions, alt-
hough this would be an excellent location for the outgrowing tenants:
„I wish, we had more land [and] people can go [...] to some

other place like maybe Ramatex, you guys won't know about
Ramatex, but it's a huge industrial area with bigger ware-
houses where they can be operating at a full scale. And then,
still with interventions, if they need them from us because the
center is about small businesses and we want new people
coming in and older people that are gone through the system
going out.“ (Employee A)
Subsequent research on Ramatex has shown that this is a large area which has been
closed in 2008 and could accommodate a multiple of the almost 40 SMEs currently
available at the BEC. The industrial area is relatively close to the center and would
be the ideal place for SMEs, for whom the available space in the BEC has become
too small and could therefore urgently use larger premises for scaling the business.
Due to political decisions, which cannot be understood transparently, this area is
considered unused since the closure, although the area and the technical equipment
there has a lot of potentials. Opening the government to this issue and cooperating
with the BEC would be a great opportunity to provide SMEs with the opportunity
to scale and grow. As the Ramatex site is a former mass textile production area,
Employee A considers it particularly suitable for successful SMEs, especially as
the incubator hosts a large number of textile entrepreneurs (The Namibian, 2008).
The situation over land is classified by many entrepreneurs as burdening. It is re-

ported that promises have been made by the City of Windhoek to ensure access to
land for SMEs after the incubation programme. However, these expectations are
in conflict with reality, which is why disappointment has spread to those respon-
sible among the tenants. Entrepreneur D expresses displeasure that promises re-
garding land have not been fulfilled:
„I was also disappointed in City of Windhoek because [...]

they would promise us that land [when we enter the center].
[...] From 2008 up to 2018, how many years is it?“ (Entre-
preneur D)
This opinion is not the only one, because in some cases the lack of availability of
land is the reason why some SMEs cannot leave the incubator. This also hinders
them from being able to supply retailers because they cannot meet demand with
the low scale possible in the incubator. The efforts of the SMEs to scale, however,
are great. Entrepreneur F, for instance, already applied for land in 2011, but since
then no land has been obtained.
„I just want to be in my own place and then build my ware-

house. So, I’m still waiting now from the municipality to give
me a land.“ (Entrepreneur F)
56 5 Findings
The SMEs believe that one possible reason is that it is common in Namibia to sell
available land in auctions. Entrepreneurs would have had a decisive disadvantage
here, as Entrepreneur F explained: „You have to go on an auction [...] with the
developers and millionaires and [...] I won’t come out.“ Public auctions make it
impossible for small entrepreneurs to obtain land since prices rise as a result of
bids from the wealthy and are therefore unattainable for SMEs. Thus, there is no
government-controlled process to supply land to entrepreneurs in order to create
sustainable jobs in the region. Furthermore, the waiting SMEs occupy space in the
incubator and thus limit the possibility for future generations to be supported. En-
trepreneur E confirms this: „It's not really for you to be grounded here for life
because it limits opportunities for others.“
Another hindrance, due to institutional circumstances, is the decision-making pro-

cess. As already indicated in Chapter 5.2.1, important decisions are taken decen-
trally. Structurally, the BEC can be classified as a subsidiary organization of the
City of Windhoek and thus the supposed head of the incubator (Employee B) is
dependent on the decisions of a higher authority not directly located in the incu-
bator.
„Generally, the first person who makes the decision is the

manager of economic development. [...] He also sits as a sec-
ond representative at the City of Windhoek on the Board of
Trustees and then when they make the decisions together
then all the decisions made come down to where we are.“
(Employee A)
This decentralized decision-making hampers the absorption of relevant knowledge

or resources since Employee B as a manager must always convince the Board of
Trustees of an idea. An example of this problem is the fact that the BEC does not
have a website or Facebook profile, although there is a need for a way to present
itself to the public. The reason why the center has not yet used such a medium is
that no decision has been made on responsibility and employees are not authorized
to create a website or Facebook profile. The Board of Trustees consists of people
from different industries who have no direct connection to the incubator, as they
have no significant physical or structural contact with the BEC. This is one reason
why the time span for decision-making is longer than in a centralized decision-
making process.
„I don’t think it will be a problem for somebody to bring up

[...] a website through that kind of collaboration that we al-
ready have. But then coming up with a new [idea] takes for-
ever.“ (Employee A)
According to Employee A, bureaucracy plays a major role in the decentralized

decision-making process. Every organization has a complex decision-making
structure on its own. If collaboration then occurs between two organizations, it is
almost impossible, in the employee's opinion, to achieve results with regard to a
quick decision. Employee A explains this problem clearly using the example of
the planned website, which could possibly be created in collaboration with NUST
students:
„NUST itself is huge and [...] in my experience, memoran-

dum of [...] collaboration [...] they want to fit from you as
much as you want to fit from them. [...] What we want is [...]
to bridge the gap between the market and the small entrepre-
neurs. But that only exists with CED [Centre of Development
– Department of NUST] to some extent. Not with the NUST
as an institution. [...] I don’t want to be misquoted saying
that it cannot happen. It’s just in my experience [...] it’s a
long process. You can wait a year or two as we are waiting
for these guys [...] to develop the website.“ (Employee A)
This fact describes clearly that even at the moment when external resources are
available and ready for absorption, their acquisition can only take place under dif-
ficult conditions or it may not even come to absorption because of the barriers
described, since a possible temporary availability of external resources could be
missed due to institutional weaknesses on the part of the incubator. The complex-
ity of bureaucratic issues is also confirmed by a NUST employee with regard to a
possible collaboration with BEC.
„It would involve a lot of bureaucratic steps because [...]

NUST is also a training institution. [...] When it comes to
organizations like this, [...] they appear to be moving slowly,
but that's because there's a lot of considerations.“ (External
B)
58 5 Findings
It is described by both sides that the prevailing bureaucracy is a barrier to the ab-
sorption of knowledge/resources, as many partners are involved in the decision-
making process. Employee B describes the bureaucratic situation as "frustrating”.
It is considered realistic that waiting times of up to two years are unavoidable for
allegedly simple issues such as the creation of a website in order to successfully
complete all bureaucratic steps. These waiting times also occur in supposedly sim-
ple situations such as the expansion of the WIFI range:
„I know that [...] we currently have a challenge, but it's a

more infrastructural challenge because [...] the optic fiber
cable that we rent from Telecom is giving problems. So, we
have reported that [...] but ... I don't know ... that is some-
thing that the IT department needs to resolve, but they are
aware of it.“ (Employee B)
The barrier described above is caused by the so-called ICT policy of the City of
Windhoek. This hinders various (mainly technology-based) projects and prohibits
organizations such as the BEC from creating websites.
„[To create a Facebook page for the center] that's a chal-

lenge that I've been having because of our ICT policy. Even
[for] us when you go now on Gmail, there are restrictions
because of the ICT policy. So, our ICT policy needs to
change in order for us to have a website for the center and
in order for us to link the Facebook pages of the individual
tenants.“ (Employee B)
Thus, a lack of resources can be attributed to the regulative and normative pillars
of the incubator's institutional environment, since only official approval is lacking,
or the rules significantly restrict the incubator's ability to act. However, the value
of the resource (website/social media) was recognized by the BEC, which indi-
cates that there is a willingness to acquire resources and thus to absorb them.
„Even if I really want to, I can't just of my own create a Fa-

cebook page, I must get permission to do that. And if I [...]
get the permission then I will do it. The reason why I don't
have permission to do it, we are still in the process because
5.4 How BEC Fails to Benefit from Regional Resources 59
our board members have changed. [...] Now the board of

members that I have are young people ... it's the older kind
of people that I have.“ (Employee B)
Employee B, therefore, has the prospect that a change is currently taking place in
decision-makers. This includes a generation change from older to younger mem-
bers on the Board of Trustees and a more open mindset to innovative solutions.
The manager of the incubator hopes that this will open up the decision-making
instance and thus speed up decisions in future situations and facilitate the absorp-
tion of relevant knowledge and regional resources.
„I have a graphic designer on my Board of Trustees [now]

and she's also a young businesswoman of the year 2015. So,
at least with her, she understands my vision for the center in
terms of marketing.“ (Employee B)
Despite the planned improvement of the Board of Trustees, the incubator manage-
ment would like to see more independence and a centralization of decisions in
order to be able to realize more innovative ideas.
5.4 How BEC Fails to Benefit from Regional Resources
During the three-week research project, the output of different dimensions was
generated by the three study groups, which could serve as an example of available
external resources. On the one hand, it was a central website which could be used
to market both the BEC itself and the SMEs. Another example was a prototype of
an e-learning platform aimed at solving the problems of the current training pro-
gramme. The availability of these external resources in the form of prototypes can
be guaranteed due to their possibility of implementation. However, the above-
mentioned barriers lead to the fact that external resources cannot be transformed
into the incubator's organizational competencies.
These barriers can be classified into five core hindrances: (1) lack of resources, (2)
lack of prior knowledge, (3) focus on solution knowledge, (4) influence of institu-
tional environment and (5) lack of absorption of resources/knowledge.
60 5 Findings
The first hindrance is the (1) lack of resources. In principle, there is a lack of re-
quired resources in all areas of the mentioned taxonomy, namely (1.1) organiza-
tional resources, (1.2) technological/physical resources, (1.3) financial resources
and (1.4) human resources. In the following, the most important resources for in-
cubators in developing countries are discussed (RQ1).
At the level of (1.1) organizational resources, a concrete selection process is lack-

ing at first. There is no clear framework for evaluating and selecting applicants
(Hackett & Dilts, 2004; Wiggins & Gibson, 2003). On the other hand, exit criteria
have been formulated, but they are not strictly kept (Smilor, 1987). Another im-
portant organizational resource is the formulation of milestones for the incubation
program (Hackett & Dilts, 2004; Wiggins & Gibson, 2003). Although the BEC
has defined these within the framework of their so-called "Capacity Building Pro-
gramme" (Appendix 6), due to the lack of keeping exit criteria this planning cannot
be implemented. During the defined programme, the incubator's task is to ensure
technology/knowledge transfer between SMEs and external partners (Lee &
Osteryoung, 2004). As described, knowledge transfer in the BEC only takes place
in an unstructured manner and is largely described by the tenants as not useful.
The availability of the (1.2) technological/physical resources is, in the tenants'

view, only at the minimum level. This includes the leased stall, equipment and
facilities and thus the physical infrastructure (Lee & Osteryoung, 2004; Peters et
al., 2004). The supply of technological infrastructure, i.e. electricity and WIFI, is
not sufficient to provide SMEs with the technological framework needed to fully
exploit their entrepreneurial potential. The know-how and ideas which often be-
long to the technological resources in the literature (Hisrich & Smilor, 1988), were
considered separately in the context of this paper and classified as Prior
Knowledge, Solution Knowledge and Need Knowledge.
With regard to the (1.3) financial resources, the BEC generally receives govern-
ment support (Hackett & Dilts, 2004; Smilor, 1987), however, the budget provided
by the City of Windhoek is considered insufficient, which is why the incubator is
continuously seeking additional financial resources (Hackett & Dilts, 2004;
Smilor, 1987; Wiggins & Gibson, 2003). Nevertheless, the incubator suffers from
the fact that access to financial resources is a major challenge and the possibilities
are largely limited to a few options. In addition, it is seen as a task for incubators
to ensure financial support and appropriate advice for SMEs (Lee & Osteryoung,
2004). However, the incubator does not manage to provide financial support on its
own due to its inherent financial challenges. The advice regarding the financial
resources of the tenants takes place only in the form of coaching, which for reasons
already discussed takes place only irregularly.
The situation regarding (1.4) human resources is unsatisfactory for the investi-
gated incubator. The employees feel overburdened and would like further support
from an additional employee. Incubators are also characterized by the fact that the
management is taken over by executives who have the appropriate skills and the
required knowledge (Hisrich & Smilor, 1988). Therefore, a prerequisite for a
properly functioning management is relevant experience in this area (Hackett &
Dilts, 2004; Lee & Osteryoung, 2004; Wiggins & Gibson, 2003). These attributes
are missing from the current staff of the BEC, which is why the knowledge base
of the incubator is negatively affected. On human resources, the literature also
looks at available coaches/mentors who impart relevant and applicable knowledge
to SMEs (Peters et al., 2004). This type of human resource is completely external-
ized using the example of the BEC, which is why the incubator is dependent on
external partners for this aspect.
The described situation around the human resources influences the (2) Prior
Knowledge of the incubator considerably. The human resources adequate for an
incubator are absent or insufficient with regard to the attributes described. This
leads to employees taking over the tasks of the incubator, even though they do not
(yet) have sufficient know-how and are studying simultaneously to counteract this.
According to the concept of Absorptive Capacity, this Prior Knowledge is neces-
sary to be able to absorb external resources anyway (Cohen & Levinthal, 1990;
Todorova & Durisin, 2007; Zahra & George, 2002).
Due to the weak Prior Knowledge of the incubator, (3) the focus on Solution
Knowledge is too strong. This aspect is strengthened above all by the fact that the
incubator has a severe lack of resources and is therefore initially looking for tan-
gible resources. Financial and technological resources are therefore at the core of
management, as they are considered essential to survive in the short to medium
term (Schweisfurth & Raasch, 2018). The incubator therefore needs more financial
independence and a significantly improved technological/physical resource base
in order to focus increasingly on Need Knowledge. In the literature Need
Knowledge as well as Solution Knowledge is regarded as essential to achieve
62 5 Findings
long-term survival through innovation (Alexy et al., 2013; Danneels, 2002;

Schweisfurth & Raasch, 2018). As already mentioned, Need Knowledge enables
the acquisition of intangible resources and thus organizational and human re-
sources and can, therefore, contribute to an improved Absorptive Capacity of the
incubator.
However, knowledge of the necessity of resource absorption alone is no guarantee

that incubators in developing countries will be able to acquire valuable resources
and transform and apply them after acquisition and assimilation. It must also be
considered that the (4) influence of the institutional environment can significantly
prevent the incubator from increasing the resource base. The ‘Three Pillars of In-
stitutions’ (Scott, 1995), namely the regulative, normative and cultural-cognitive
dimensions were linked to the concept of absorptive capacity and the influence of
the institutional environment on the BEC was investigated.
The result is that a strong influence of the institutional environment is noticeable.

It has been observed that many solutions/ideas cannot be implemented because
institutional circumstances prevent this. This leads to a dependence of the incuba-
tor (George & Prabhu, 2000). The statement is confirmed that both the rights of
the SMEs and those of the incubator are limited to institutional access (Child &
Rodrigues, 2011), which means that decision-making power over resources is re-
served exclusively for the institutional environment, in this case mainly repre-
sented by the City of Windhoek. The BEC can only rely on external partners and
hope that they can benefit from regional resources (Harris et al., 2012).
The institutional barriers are particularly noticeable at the regulative/normative

level in that political decisions prevent SMEs from getting to available land
quickly. In addition, the fact that the BEC does not have the permission to create
its own website in order to carry out communication and marketing activities more
effectively is based on political decisions which have an impact on the absorption
capacity of the incubator.
At the cultural-cognitive level, it has been shown that the mindset of many actors
is not necessarily focused on entrepreneurship. There are no concepts in the area
of entrepreneurial education that could counteract this and significantly increase
the innovation potential in the region (Acs & Virgill, 2010). This would allow the
BEC to select more innovative entrepreneurs with more promising future pro-
spects (Hackett & Dilts, 2004).
All in all, the interaction of different barriers ensures that (5) no or only a slower
absorption of resources/knowledge can take place. Although there are significant
absorption capacities in the form of external resources, the implementation of ab-
sorption is hampered in most cases. It has been shown that it is not sufficient for
an incubator to have recognized the value of a resource and to have absorption
intentions. Due to the decentralized decision-making processes, which involve a
high degree of bureaucracy, many actors are involved in important decisions. They
have to be convinced by the incubator in order to be able to exploit the absorption
capacities.
Because of the limited absorption of external information, BEC fails to benefit

from regional resources. This is due to the fact that Realized Absorptive Capacity
is not achieved and external resources cannot be transformed into organizational
competencies for this reason.
Nevertheless, the incubator has a lot of potentials. Demand for incubation pro-
grams is high. In order to be able to use this potential in the long term, adjustments
at the institutional level are necessary. The BEC would benefit from faster deci-
sions, which could be achieved, for instance, by centralizing decision-making pro-
cesses. This would provide more independence for the incubator. In addition, the
focus should lie on Need Knowledge, i.e. on intangible resources. This could be
achieved by supporting the incubator in terms of tangible resources and giving it
more room for maneuver through additional technological and financial resources.
Finally, an increase in the internal knowledge base is recommended. Both the em-
ployees and the entrepreneurs would benefit from a collaboration with educational
institutions (national and international universities) that can address the challenges
of the incubator and promote the entrepreneurial mindset with adequate courses in
entrepreneurship.
6 Discussion & Conclusion
6.1 Theoretical Contributions
This master thesis contributes to the existing literature by offering qualitative re-
search evidence and generating new insights. A case study was conducted to ex-
plore which resources are important for survival for incubators in developing
countries and how incubators in developing countries can absorb these (external)
resources and transform them into their own organizational competencies. In order
to answer these questions, a suitable resource taxonomy from the literature was
first used to categorize and classify the relevant resources for incubators in devel-
oping countries. To investigate the absorption of resources by corresponding in-
cubators, the concept of Absorptive Capacity was applied. This concept was first
linked to a resource taxonomy since the model has so far only investigated the
non-specific dimension "knowledge", which must be absorbed by organizations
(Cohen & Levinthal, 1990; Schweisfurth & Raasch, 2018; Todorova & Durisin,
2007; Zahra & George, 2002). In the context of this thesis, however, it was neces-
sary to define resources that must be absorbed by the incubator, since the literature
suggests that all organizations are dependent on resources. In order to enable the
linking of absorptive capacity and resource taxonomy, the definition of relevant
knowledge was specified in order to clarify which type of knowledge is required
for which type of resource in order to be able to absorb the respective resource. In
this context, the differentiation between Solution Knowledge and Need
Knowledge took place (Schweisfurth & Raasch, 2018). As a further modification,
the Institutional Theory was taken into account to additionally investigate the re-
lationship between the incubator and its institutional environment. This modifica-
tion was necessary in order to include external influencing factors in the analysis.
Current literature suggests the importance of institutional environments in devel-
oping countries, therefore this step was helpful for research (Mrkajic, 2017).
The modifications enabled the concept of Absorptive Capacity to be applied to the

investigated incubator in Namibia, as all relevant dimensions could be considered.
The existing absorptive model was thus improved and formed the basis for the
analysis of the case study. Due to its applicability, this model closes an existing
research gap.

66 6 Discussion & Conclusion
The case study proved that the incubator is essentially confronted with five core
hindrances: (1) lack of resources, (2) lack of prior knowledge, (3) focus on solution
knowledge, (4) influence of institutional environment and (5) lack of absorption
of resources/knowledge.
These findings supplement the existing literature and open up new possibilities for
investigating incubators in developing countries.
6.2 Practical Implications
This paper is addressed to three stakeholders: (1) decision-makers with reference

to incubators in developing countries, (2) incubator managers in developing coun-
tries and (3) SMEs in developing countries who are already part of an incubation
programme or are considering this option.
The results show that (1) decentralized decision-makers play an important role in
the SME development of their region. This thesis points out that this position is
accompanied by a responsibility for the sustainable development of incubators in
developing countries. For such an incubator the fact of decentralized decision
making is a hindrance regarding the realization of absorption capacities. Further-
more, they are confronted with restrictive rules that prevent the implementation of
simple solutions. The findings of this thesis thus provide recommendations for
action for decision-makers, in order to be able to exploit the existing potential.
In addition, the work is addressed to (2) the responsible employees of incubators

in developing countries. On the basis of the results the responsible persons receive
extensive insight into the situation of the tenants and thus also into the challenges,
with those the SMEs see themselves confronted. Thus, the results generated in the
case study could provide valuable feedback for incubators in developing countries.
Finally, this paper is addressed to (3) SMEs in developing countries to show how
incubators operate there due to the special circumstances and what benefits they
would have from participating in such an incubation programme; but also what
mindset is expected of them in order to ensure that the duration of the relationship
can be improved for both sides.
6.4 Research Outlook 67
6.3 Limitations
This study is based on various limitations, which may lead to a narrowed validity
of the generated results. On the one hand, it must be stated that the investigated
case study is an individual case and therefore only a few conclusions can be drawn
about the representability of incubators in developing countries. The reason for
this is that not many representative studies have been carried out in this field of
research, yet (Akçomak, 2009; Hausberg & Korreck, 2018; Mrkajic, 2017). It is
thus possible that the results in other incubators in developing countries may differ
in some dimensions. In addition, the application of the concept of Absorptive Ca-
pacity led to problems in that not all dimensions could be examined in detail, since
the data analysis indicated that the acquisition could already be regarded as prob-
lematic. Therefore, the focus in this case study was placed on this phase of Poten-
tial Absorptive Capacity. The remaining dimensions of the Realized Absorptive
Capacity, therefore, tended to be neglected due to the circumstances.
6.4 Research Outlook
Due to the limitations mentioned above, it is recommended for future research to

carry out similar studies in different incubators in developing countries. In order
to gain a better understanding of incubators in developing countries and their ab-
sorption capacity, additional studies must be carried out in this field of research,
as the results may differ in a different context, i.e. different developing countries.
In addition, future research could focus on incubators that have already overcome
the barriers discussed and have already absorbed numerous external resources. In
this context, a possible object of analysis would be the dimension of Realized Ab-
sorptive Capacity in order to better understand the transformation and exploitation
processes taking place in an incubator.
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Incubators in Developing Countries and Their Benefit From Regional Resources

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Incubators in Developing Countries and Their Benefit From Regional Resources

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Roman Liedtke

More information about this series at http://www.springer.com/series/13198

ISSN 2625-3577 ISSN 2625-3615 (electronic)

2 Conceptual Backgrounds ........................................................................... 7

3 Formation of Preliminary Assumptions.................................................. 23

6 Discussion & Conclusion .......................................................................... 65

BEC Bokamoso Entrepreneurial Center

CII Company Internal Incubator

ICI Independent Commercial Incubator

ICT Information and Communications Technology

LEMEX Lehrstuhl für Mittelstand, Existenzgründung und Entrepreneurship

NGO Non-governmental organization

NUST Namibia University of Science and Technology

OLT Organizational Learning Theory

RBI Regional Business Incubator

RBV Resource-based view

RDT Resource Dependency Theory

SME Small and medium-sized enterprise

Figure 1: Absorptive Capacity on Incubators in Developing Countries ............. 25

Table 1: Dimensions of Absorptive Capacity ..................................................... 21

1.1 Practical and Theoretical Relevance

These benefits are important particularly in developing economies for several

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020

1.2 Research Aims and Research Questions

RQ1: Which resources are valuable for incubators in developing countries?

It is expected that this thesis will give recommendations for decision-makers in

1.3 Research Setting – Governmental Incubators in Namibia

1.4 Thesis Structure

This thesis is structured as follows:

characteristics of incubators in developing countries, an application of the litera-

knowledge is expected through the combination of various theoretical concepts

2.1 Business Incubators

2.1.1 Delimitation of Incubators

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020

„a facility that provides affordable space, shared office ser-

2.1.2 Organizational Structure of Incubators

Therefore, researchers have derived and distinguished different archetypes of in-

In particular, resource dependence is of major importance with regard to the exist-

2.1.3 Resource Dependency in Organizations

strictly internal view is increasingly directed to the external organizational envi-

As soon as organizational behavior is detected, dependence on external resources

In case of lack of access to resources, which can be caused by lack of strategic

The above-mentioned VRIN approach can, therefore, be extended by the letter

2.1.4 Relevant Resources of Incubators

Organizational resources include:

„a firm’s formal reporting structure, its formal and informal

In this respect, the selection process of an incubator can be seen as an essential

Technological respectively physical resources include:

„the physical technology used in a firm, a firm’s plant and

The fourth group in the taxonomy of resources considered is human resources.

„refer to attributes of the founding team, a business incuba-

The resource taxonomy is used to respond to RQ1. It illustrates which resources

2.2 Institutional Theory

2.2.1 Definition of Institutional Theory

Institutional Theory relies on the perspective of an open system that influences

„the issue of [social] legitimacy — how organizations adapt

and understand the behavior of an organization in a cross-border context and thus

2.2.2 ‚Three Pillars of Institutions‘

„[include] regulative, normative and cultural-cognitive ele-

2.2.3 Institutions and Developing Countries

The literature suggests possible reasons for an existing dependence on entrepre-

to benefit from external information and resources in a wide variety of situations

2.3 Absorptive Capacity & Organizational Learning