• International Journal of Technology (IJTech)
  • Vol 9, No 5 (2018)

Critical Success and Moderating Factors Effect in Indonesian Public Universities’ Business Incubators

Critical Success and Moderating Factors Effect in Indonesian Public Universities’ Business Incubators

Title: Critical Success and Moderating Factors Effect in Indonesian Public Universities’ Business Incubators
Lina Gozali, Maslin Masrom, Teuku Yuri M Zagloel, Habibah Norehan Haron, Dahmir Dahlan, Frans Jusuf Daywin, Mohammad Agung Saryatmo, Docki Saraswati , Asril Fitri Syamas, Eko Harry Susanto

Corresponding email:

Published at : 25 Oct 2018
Volume : IJtech Vol 9, No 5 (2018)
DOI : https://doi.org/10.14716/ijtech.v9i5.1363

Cite this article as:
Gozali, L., Masrom, M., Zagloel, T.Y.M., Haron, H.N., Dahlan, D., Daywin, F.J., Saryatmo, M.A., Saraswati , D., Syamas, A.F., Susanto, E.H., 2018. Critical Success and Moderating Factors Effect in Indonesian Public Universities’ Business Incubators. International Journal of Technology. Volume 9(5), pp. 1049-1060

Lina Gozali - Industrial Engineering Tarumanagara University
- Universiti Teknologi Malaysia, Kuala Lumpur Malaysia
Maslin Masrom Universiti Teknologi Malaysia
Teuku Yuri M Zagloel University of Indonesia
Habibah Norehan Haron Universiti Teknologi Malaysia
Dahmir Dahlan Universitas Pancasila
Frans Jusuf Daywin Tarumanagara University
Mohammad Agung Saryatmo Asian Institute of Technology
Docki Saraswati Universitas Trisakti
Asril Fitri Syamas Asosiasi Inkubator Bisnis Indonesia (AIBI)
Eko Harry Susanto Tarumanagara University
Email to Corresponding Author

Critical Success and Moderating Factors Effect in Indonesian Public Universities’ Business Incubators

This study aims to examine the effect of critical success and moderating factors in Indonesian public universities’ business incubators. The study of business incubators benefits university professors in their roles as managers and advisors, university faculty entrepreneurs and start-ups/tenants in the knowledge transfer and entrepreneurship learning processes, and government officials in effective policy making. For the universities, the incubators serve as a platform for the commercialization of their research efforts. The incubators assist the universities’ stakeholders in fulfilling their newly identified responsibilities towards building the nation’s economy and giving the faculty members and graduate students the chance to conduct research. Regarding the economic environment, the incubators help create job opportunities, increase the country’s economic value, and reduce poverty. This research employed the quantitative method approach, and the data were analyzed using the IBM SPSS version 23 and Smart PLS version 3 statistical software packages. The samples of this research were comprised of 31 business incubator managers from Indonesian public universities. Although there have been previous models about critical success and moderating factors for business incubators in other countries, this study is the first that was conducted in Indonesia and found direct and indirect relationships between critical success factors and moderating success factors for Indonesian Public University Business Incubators. The results of the research demonstrated that good system and infrastructure showed a strong direct relationship with success factors and that information technology showed a strong relationship with the moderating factors, namely age and quality of  facilities. Furthermore, mentoring and networking showed a strong relationship with the moderating factors good system and infrastructure and that university regulation had a strong relationship with moderating factor credit and rewards. Entry criteria, exit criteria, and funding support showed strong direct relationships to success factors. These findings could improve the management of business incubators in Indonesian Public Universities and allow them to more successful.

Critical success factors; Indonesian public universities; Moderating factors; University business incubators


While the term “entrepreneurship” has various meanings, it can be defined as “the process of uncovering or developing an opportunity to create value through innovation” (Macke & Kayne, 2001). According to Feldmann (2014), research on university faculty, staff and entrepreneurial capacities may be extended and investigated in various areas of study. In the long run, business enterprises are crucial elements in determining economic success (Romer, 1994). In addition, during economic recessions, new firms play a crucial role in providing employment, proliferating inventions and driving a country’s economy (Dana, 2004; Engle et al., 2010; Ahmed et al., 2010).

Researchers, policymakers, operators of business incubators and stakeholders do not have an adequate and proper method to monitor and appraise business incubators’ performances in various business sectors and diverse geographical areas. Previous studies lack the theories, methodologies and empirical data to appraise business incubators’ performance and their impact on the economy, even though they are of particular interest to academics and industry practitioners alike (Lewis, 2001; Cornelius & Bhabra-Remedios, 2003). Therefore, business incubators are expected to define their own performance measurements (Voisey, 2006).

According to the National Business Incubation Association (NBIA) (2003), an important factor in the appraisal of an incubator’s performance is the service provision method, but it has not been given enough attention. There is a lack of research about how the services have been extended to the incubators. The incubators goal is to discover whether the services are provided by their managers, boards or mentors, or through internal courses or other methods.

The failure rate in the early stage of start-ups is 90% (Griffith, 2014; Patel, 2015). Data on the rates of business failures are frequently quoted (NBIA, 2003). According to the U.S. Small Business Administration, only 44% of firms stay in business four years after the commencement of operation. This is contradictory to the data gathered by the NBIA, which reports that 87% of graduate firms remained in business ten years after the commencement of operation. On account of the data of failed start-ups, it becomes necessary to identify the critical success factors of building business incubators for public universities in Indonesia. This study’s objective is to identify the critical success factors in those incubators. The focus of this study is on the activities of Indonesian public universities’ business incubators, especially the capabilities and the activities of 31 business incubator managers.

Indonesia's fast growing middle-class market is a fertile ground for start-up enterprises, both local and foreign. This trend presents promising prospects across various industries, including technology, communication, creative and social enterprises. Nurturing a resilient business sector will result in the creation of new jobs and more business prospects across industries, which makes it critical for the economic growth of developing countries (Singtel, 2017).

There is no previous research that addresses the effect of critical success and moderating factors towards a business incubator’s success, especially among Indonesian public university business incubators. The main purpose of this research is to identify the direct and indirect relationships between critical success factors and moderating success factors for Indonesian public university business incubators.

A well-known cultural issue is that Indonesians are less initiates their own business ventures. According to a study by the Global Entrepreneurship Monitor, 14.5% of Americans and 7.2% of Singaporeans are keen to start up their own businesses. These statistics stand in contrast to the less than one percent of Indonesians who are willing to do the same (Frazier, 2012).

Experimental Methods

2.1.   University Business Incubators

The clients of the University of Central Florida’s Business Incubation Program receive extensive benefits regarding business, technology and entrepreneurial support (O'Neal, 2005). The incubator is emphasized the several critical success factors that will ensure a client’s success by: (1) incorporating clients into a larger technology development system; (2) encouraging interaction among clients, incubator management and its employees, external parties and the incubator’s advisory panel; and (3) giving access to external financing, university resources, economic development agencies in the local community/government and other business support organizations.

Currently, there is a higher degree of support from the university incubators for small firms in the latter’s quest for long-term viability and development that involves networking among the entrepreneurs. Several previous studies have investigated the importance of networking for entrepreneurs in detail, and they emphasize the steps towards developing and maintaining relationships within the business setting (Aldrich & Zimmer, 1986; Shaw & Conway, 2000; Hoang & Antoncic, 2003; Neergaard, 2005). Among the advantages offered by the incubator are networks and cooperation, and many businesses would be keen to collaborate with the best of them if they were given the opportunity (Agnete Alsos et al., 2011). Therefore, according to Miller et al. (2011), more attention ought to be given to keeping and preserving knowledge because it would assist in the universities’ technology transfer processes, especially on account of the fleeting nature of spin out companies evolving through the process.

2.2.    Regulation of Business Incubators in Indonesian Universities

To improve the well-being of Indonesia’s citizens, it is necessary for the government to resolve a major challenge, namely unemployment. The Central Bureau of Statistics (CBS) of Indonesia revealed that 5.33% of Indonesia’s workforce were unemployed and 11.5% of the population were below the poverty line in 2017. In support of the government’s program to alleviate poverty, entrepreneurship projects at public universities are expected to help provide employment, which will also reduce the number of poor people.

In September 2017, the Federal Open Market Committee (FOMC) reported that the normal unemployment rate should be between 4.4% and 5% with a median value of 4.6%. Regrettably, 5.33%, or 7.02 million of Indonesia’s population, were unemployed (CBS, 2017). To make matters worse, uneducated people are often used in demonstrations in Indonesia. These people are in dire need of jobs that can help improve their economic and financial conditions. Business incubators, therefore, play an important role because they will help Indonesia resolve some of its economic problems by creating jobs and graduated firms.

With assistance from the Cooperative Department and universities, the government of Indonesia has established the incubators in the country since 1992. This initiative was given a boost in 1997 by a program known as the Development of Entrepreneurship Culture in Universities, where activities included the New Entrepreneurs’ Incubators (Bank Indonesia, 2006).

In addition to Indonesian regulations about business incubators, the terms of business incubators, incubation activity, and incubation participation are governed by the Presidential Regulation number 27/2013, the Development of Entrepreneurial Incubators.  Further, in the Ministry of Cooperatives and Micro, Small and Medium Enterprises had introduced Regulation No. 24/Per/M.KUKM/IX/2015 on Norms, Standards, Procedures, and Criteria (NSPK) of the Management of Entrepreneurial Incubators. This regulates the administrative matters of an incubator, including registration, required standards, required services, expected output of an incubator and its tenant and a targeted number of incubators in the country. Some of the parameters regarding the regulation, however, are unspecific, such as the employees’ standards of professionalism, the provisions of sufficient facilities and infrastructure and measurements of the incubators’ success indicators.

2.3.    Business Incubator Successful Factor Development

Most problems that entrepreneurs encounter at the early stages of business development are a lack of legitimacy, experience, tangible resources and accumulated knowledge, which are success factors that allow them to recognize and seize business opportunities. Business incubators do not guarantee graduate tenant company. Evaluating all of the emerging critical success factors, however, can minimize failures once the company enters the business incubator (Lumpkin & Ireland, 1988).

The initial framework by Campbell et al. (1985) emerged with the simple business incubator services and facilities. The business incubator framework started with entry criteria, selection processes, funding and mentoring-networking for tenant business growth.

Smilor (1987) introduced a non-profit business incubator framework whose model implicates the tenant business mission, such as economic development, successful products, a tenant’s profit, technology diversification and job creation. Smilor’s framework involved support systems, namely administration, facilities and business expertise, from universities and the government. His extensive work strives to ascertain and elaborate upon the different elements of an incubation system. Berge et al. (1989) introduced a new incubation process model that consisted of a pre-incubation process, entry criteria and selection processes and monitoring and controlling processes. The previous models by Campbell et al. (1985) and Smilor (1987) did not introduce the processes and activities from the pre-incubation and incubation processes until successful outcomes were achieved. Mian (1997) provided more detailed processes, criteria, policies and programs and sought the involvement of universities, communities and other stakeholders for the development of a theoretical model to evaluate and manage the university-based technology business incubators’ (UTBI) performance. For the first time, Mian introduced the university involvement and developed performance criteria for technology business incubators in the public and private sectors.

The business incubator model is categorized as pre-incubation activities or input (entry criteria), incubation or process and graduation or output (exit criteria) (Costa-David et al., 2002). Costa-David et al. were the first to outline the detailed skill requirements, such as management, finance, business advice, networking and training for start-ups until their graduation. Verman (2004) framework introduced more detailed success factors, namely shared services, facilities and location, financing and support, control of incubators, mentoring-networking, entry criteria and exit criteria, as well as moderating factors, such as age and the quality of facilities for a successful business incubator framework. Voisey et al. (2006) introduced the concepts of hard (profitability, sales turnover, etc.) and soft (business skill improvement, cost saving, etc.) performance measurements of business incubator practice achievement.


The results of this study demonstrated that the effect of critical success factors, namely entry criteria (Berge et al., 1989), exit criteria (Berge et al., 1989), funding support (O’Neal, 2005), mentoring-networking (Agnete Alsos et al., 2011; Miller et al., 2011) and university regulations (Mian, 1997), directly affect the business incubators for Indonesian public universities. Furthermore, the results showed that the moderating factors, namely credit and rewards (O’Neal, 2005), good system and infrastructure (O’Neal, 2005) and the age and quality of the facilities (Verman, 2004), significantly affect university regulations, mentoring-networking and information technology, respectively.

A good system and infrastructure showed a strong relationship with the success factors, and information technology showed a strong relationship with the moderating factors, especially age and the quality of the facilities. Mentoring and networking had a strong connection to the moderating factors, namely good system and infrastructure, and university regulations had a strong relationship with the moderating factor of credit and rewards. It cannot be denied that entry criteria, exit criteria and funding support are associated with the success factors. This finding could improve the management of business incubators in Indonesian public universities

and make them more successful. These research findings may persuade Indonesian public university business incubators to give more attention to the development and management of the business incubators on their own. 

This study has ascertained the effect of critical success factors and moderating factors for the business incubators in Indonesian public universities. Voisey et al. (2006) utilized business incubator measurement to manage business incubators performance, economic policymakers and stakeholders of the importance of learning strategies.  Universities’ business incubator regulations and environments enable and encourage the start-ups to exchange ideas and achieve success in business creation. The entry criteria are important not only to select start-ups to implement their business ideas, but also to support business learning communities in entrepreneurship learning programs.


We are indebted to my mentor : Lesa Mitchell (Techstars and Kauffman Foundation), Abdul Yuli Andi Gani (Universitas Brawijaya), Jann Hidajat Tjakraatmadja (Institut Teknologi Bandung), Meika Syahbana Rusli (Institut Pertanian Bogor), Kristanto Santosa (Business Innovation Center), Sayu Ketut Sutrisna Dewi (Universitas Udayana), Munzir Busniah (Universitas Andalas), Aris Yunanto (Universitas Indonesia), Deva Primadia Almada (Institut Pertanian Bogor), Harjum Muharam ( Universitas Diponegoro), James D.D. Massie (Universitas Sam Ratulangi),  Lilik Setiabudi MS (Universitas Brawijaya), Elly Munadziroh (Universitas Airlangga), Elly Agustiani (Institut Teknologi Sepuluh November), Arif Firmansyah (Universitas Airlangga), Yudha Prasetyawan (Institut Teknologi Sepuluh November), Ahmad Rifai (Universitas Riau), Ayu Desi Indrawati (Universitas Udayana), Bambang Purwanggono (Universitas Diponegoro), Hais Dama (Universitas Gorontalo), Wahyudi Sutopo (Universitas Sebelas Maret), Agus Syarif (Universitas Jambi), Fung Fuk Lestario (Global Entrepreneurship Program Indonesia), Suhono (Institut Teknologi Bandung), Lies Endarwati (Universitas Negri Yogyakarta), Arwina Sufika (Universitas Sumatera Utara), Heni Rachmawati (Institut Teknologi Bandung), Rinovia Simanjuntak (Institut Teknologi Bandung), Fatma Sri Wahyuni (Universitas Andalas), Irsan Pawennei (Center of Innovation Policy and Government), Harini Yaniar (LIPI), Agus Heri Purnomo (Ministry of Marine Affairs and Fisheries), Fahmi Rizal (Universitas Padjajaran), Bambang Sunarko (LIPI) Raldi Artono Koestoer (Universitas Indonesia), Nur Alam La Nafie (Politeknik Negri Ujung Pandang), Lucy Chairoel (Universitas Dharma Andalas Padang), Reiny Iriana (International Macquarie University Australia), Agustinus Purna Irawan (Universitas Tarumanagara Jakarta), Lamto Widodo (Universitas Tarumanagara Jakarta), Adianto (Universitas Tarumanagara Jakarta), Harto Tanujaya (Universitas Tarumanagara Jakarta)

Supplementary Material
R7-IE-1363-20180828190420.pdf Proof Read Acknowledgement

Agnete Alsos, G., Hytti, U., Ljunggren, E., 2011. Stakeholder Theory Approach to Technology Incubators. International Journal of Entrepreneurial Behavior & Research, Volume 17(6), pp. 607–625

Ahmed, I., Nawaz, M.M., Ahmad, Z., Zeeshan, M., Usman, A., Ahmed, N., 2010. Determinants of Students’ Entrepreneurial Career Intentions: Evidence from Business Graduates. European Journal of Social Sciences, Volume 15(2), pp. 14–22

Aldrich, H., Zimmer, C., 1986. Entrepreneurship through Social Networks. In: The Art and Science of Entrepreneurship. Sexton, D.L. and Smilor, R.W., (eds.). Cambridge: Ballinger

Bank Indonesia, 2006. Kajian Inkubator Bisnis dalam Rangka Pengembangan UMKM (Study of Business Incubator in the Framework of UMKM Development). Tim Penelitian dan Pengembangan Biro Kredit. Available online at http://www.bi.go.id/id/umkm/penelitian/nasional/kajian/Pages/riil6.aspx, Accessed on 17th  November 2016

Bagozzi, R.P., Yi, Y., 1988. On the Evaluation of Structural Equation Models. Journal of the Academy of Marketing Science, Volume 16(1), pp. 74–94

Berge, D., Janus, J., Olsen, K., Campbell, C., 1989. Change Agents in the New Economy: Business Incubators and Economic Development. Economic Development Review, Volume 7(3), pp. 56–57

Byers, T.H., Dorf, R.C., Nelson, A.J., 2010. Technology Ventures: From Idea to Enterprise. New York, NY: McGraw-Hill

Campbell, C., Kendrick, R., Samuelson, D., 1985. Stalking the Latent Entrepreneur. Economic Development Review, Volume 3(2), pp. 43–48

Central Bureau of Statistics, 2017. Available online at https://www.bps.go.id/Brs/view/id/1376, Accessed on 27 October 2017

Cornelius, B., Bhabra-Remedios, R., 2003. Cracks in the Egg: Improving Performance Measures in Business Incubator Research. In: 16th Annual Conference of Small Enterprise Association of Australia and New Zealand, 28 September - 1 October 2003

Costa-David, J., Malan, J., Lalkaka, R., April, 2002. Improving Business Incubator Performance through Benchmarking and Evaluation: Lessons Learned from Europe. In: 16th International Conference on Business Incubation. National Business Incubation Association, Toronto, Canada, Volume 28

Dana, L., 2004. Handbook of Research on International Entrepreneurship. Cheltenham: Edward Elgar Publishing

Engle, R.L., Dimitriadi, N., Schlaegel, C., Delanoe, S., Alvarado, I., He, X., Buame, S., Wolff, B., 2010. Entrepreneurial Intent: A Twelve-country Evaluation of Ajzen’s Model of Planned Behavior. International Journal of Entrepreneurial Behavior & Research, Volume 16(1), pp. 35–57

Feldmann, B.D., 2014. Dissonance in the Academy: The Formation of the Faculty Entrepreneur. International Journal of Entrepreneurial Behavior & Research, Volume 20(5), pp. 453–477

Fornell, C., Larcker, D.F., 1981. Structural Equation Models with Unobservable Variables and Measurement Error: Algebra and Statistics. Journal of Marketing Research, Volume 18(3) pp. 382–388

Frazier, D., 2012. Indonesia Minister: 'We Need Four Million Entrepreneurs'. Forbes. Available online at https://www.forbes.com/sites/donaldfrazier/2012/05/14/indonesian-minister-we-need-four-million-entrepreneurs/#61347b841f1b, Accessed on 27 October 2017

Gozali, L., Masrom, M., Haron, H.N.,  Zagloel, T.Y.M, 2015. A Framework of Successful E-business Incubator for Indonesian Public Universities. The Asian Journal of Technology Management, Volume 8(2), pp. 118–132

Gozali, L., Masrom, M., Haron, H.N., Zagloel, T.Y.M., 2016. A Framework of Successful Business Incubator for Indonesian Public Universities. International Journal of Technology, Volume 7(6), pp. 1086–1096

Gozali, L., 2018. Framework Towards a Successful Business Incubator for Indonesian Public Universities, Ph.D thesis, Universiti Teknologi, Malaysia

Griffith, E., 2014. Why Startups Fail, According to Their Founders. Available online at http://fortune.com/2014/09/25/why-startups-fail-according-to-their-founders/, Accessed on June 26, 2017

Hair, J.F., Ringle, C.M., Sarstedt, M., 2011. PLS-SEM: Indeed a Silver Bullet. Journal of Marketing Theory and Practice, Volume 19(2), pp. 139–151

Hair, J.F., Sarstedt, M., Ringle, C.M., Mena, J.A., 2012. An Assessment of the Use of Partial Least Squares Structural Equation Modeling in Marketing Research. Journal of the Academy of Marketing Science, Volume 40(3), pp. 414–433

Hoang, H., Antoncic, B., 2003. Network Based Research in Entrepreneurship: A Critical Review. Journal of Business Venturing, Volume 18(2), pp. 165–187

Jackson, J.L., Dezee, K., Douglas, K., Shimeall, W., 2005. Introduction to Structural Equation Modeling (Path Analysis). Precourse PA08. Washington, DC: Society of General Internal Medicine (SGIM)

Lewis, D.A., 2001. Does Technology Incubation Work?: A Critical Review. Economic Development Administration. US Department of Commerce, Washington, DC

Lumpkin, J.R., Ireland, R.D., 1988. Screening Practices of New Business Incubators: The Evaluation of Critical Success Factors. American Journal of Small Business, Volume 12(4), pp. 59–81

Macke, D., Kayne, J., 2001. Rural Entrepreneurship: Environmental Scan. Kauffman Center for Entrepreneurial Leadership, Kansas City, USA

Mian, S.A., 1997. Assessing and Managing the University Technology Business Incubator: An Integrative Framework. Journal of Business Venturing, Volume 12(4), pp. 251–285

Miller, K., McAdam, R., Moffett, S., Brennan, M., 2011. An Exploratory Study of Retaining and Maintaining Knowledge in University Technology Transfer Processes. International Journal of Entrepreneurial Behavior & Research, Volume 17(6), pp. 663–684

Mitchelmore, S., Rowley, J., 2010. Entrepreneurial Competencies: A Literature Review and Development Agenda. International Journal of Entrepreneurial Behavior & Research, Volume 16(2), pp. 92–111

Neergaard, H., Shaw, E., Carter, S., 2005. The Impact of Gender, Social Capital and Networks on Business Ownership – A Research Agenda. International Journal of Entrepreneurial Behavior & Research, Volume 11(5), pp. 338–357

O'Neal, T., 2005. Evolving a Successful University-based Incubator: Lessons Learned from the UCF Technology Incubator. Engineering Management Journal, Volume 17(3), pp. 11–25

Patel, N., 2015. 90% of Startups Fail: Here's What You Need to Know About the 10%. Available online at http://www.forbes.com/sites/neilpatel/2015/01/16/90-of-startups-will-fail-heres-what-you-need-to-know-about-the-10/, Accessed 26 June 2017

Romer, P., 1994. The Origins of Endogenous Growth. Journal of Economic Perspectives, Volume 8(1), pp. 3–22

Romano, A. Passiante, G., Del Vecchio, P., Secundo, G., 2014. The Innovation Ecosystem as Booster for the Innovative Entrepreneurship in the Smart Specialization Strategy. International Journal of Knowledge Based Development, Volume 5(3), pp. 271–288

Shaw, E., Conway, S., 2000. Networking and the Small Firm. In: Enterprise and Small Business, Carter, S. and Jones-Evans, D. (eds.), Prentice-Hall, Harlow

Singtel, 2017. Business in Indonesia: Start-ups Can Leverage Incubator Program for Growth Available online at https://mybusiness.singtel.com/techblog/business-indonesia-start-ups-can-leverage-incubator-program-growth, Accessed on 27 October 2017

Smilor, R.W., 1987. Managing the Incubator System: Critical Success Factors to Accelerate New Company Development. IEEE Transactions on Engineering Management, Volume 3, pp. 146–155

Verman, S., 2004. Success Factors for Business Incubators: An Empirical Study of Canadian Business Incubators. Eric Sprott School of Business, Carleton University, Ottawa, Ontario

Voisey, P., Gornall, L., Jones, P., Thomas, B., 2006. The Measurement of Success in a Business Incubation Project. Journal of Small Business and Enterprise Development, Volume 13(3), pp. 454–468