Completing Missing Link between Business Incubation Model &
Startup Business Performance in a Developing Country
M. Ariza Eka Yusendra
1
, Niken Paramitasari
1
, Ribhan
2
, Ayi Ahadiyat
2
1
Institute of Informatics & Business Darmajaya
2
Lampung University
Keywords: Entrepreneurship, Startup Business Performance, Incubation Model
Abstract: This research attempted to create and explore the startup business performance improvement model through
an effective incubation model. In the model improvement, the researchers used the entrepreneurship and
resources based view theory to introduce a supportive entrepreneurial environment concept and empowered
business startup as a variable, which can be used to fill the gap in the research. The research model was tested
empirically to startupreneurs in a developing country who had joined business incubation with 120 respondent
samples. It was then analyzed using structured equation modeling. The research result shows that an effective
incubation model does not have a significant impact on startup business performance. However, it must be
mediated by an empowered startup business. Supportive Entrepreneurial Environment is known to have an
essential role in building an empowered startup business, which then will increase startup business
performance.
1 INTRODUCTION
Many studies and research acknowledge that
entrepreneurship has a significant contribution to the
economy and industry development in a country
(Gabriel and Kirkwood, 2016). Today,
entrepreneurship develops so rapidly; the economy
experts specifically postulate that the world is
entering the “entrepreneurial economy” era (Nabi et
al., 2011). This trend has been growing not only in
developed countries but also in developing countries.
(Fahmi et al., 2016). There were even several studies
which found some eye-opening facts about interest in
entrepreneur being higher in developing countries
than in developed countries (Chari and Dixit, 2015).
How is it possible? According to a study conducted
by Poole (2018), in developing countries, the
eagerness to increase the level of economic, health,
and well-being has become the primary factor for the
entrepreneur to create startup businesses. Such a
primary factor then triggers the entrepreneur world in
developing countries to educate, enhance the
capability, innovate, and finally lead to spreading the
entrepreneurship paradigm to the society, which is a
social responsibility to the community (Paul and
Shrivatava, 2016).
The importance of entrepreneurship role will
cause stakeholders, who are starting a business in a
country to develop the initiative in increasing the
number of their startup businesses. (Pillai and
Ahamat, 2018). One of the strategic initiatives which
can accelerate the growth of startup businesses is
business incubator development (David-West et al.,
2018). A business incubator is considered to have a
role in boosting a startup business success and
survivability level. In achieving that role, a business
incubator usually has four services. The first service
is providing infrastructures, such as office rooms,
meeting rooms, laboratories, and other facilities,
which will support a startup business to start
operating (Hong et al., 2018). The second service is
providing business services such as business
consultation, market research, workshop, and training
(van Weele et al., 2017). Besides that, a business
incubator also provides a capital system and can
collaborate with many financial providers to give
leverage for the startup business in developing its
business scale (Wright, 2017). The fourth service is
usually related to people connectivity, which is
mentoring, coaching, and linking to other
entrepreneurs, both new or experienced. This service
will provide the opportunity for business sharing and
market expansion (Kiani Mavi et al., 2019).
Yusendra, M., Paramitasari, N., Ribhan, . and Ahadiyat, A.
Completing Missing Link between Business Incubation Model Startup Business Performance in a Developing Country.
DOI: 10.5220/0009959606030613
In Proceedings of the International Conference of Business, Economy, Entrepreneurship and Management (ICBEEM 2019), pages 603-613
ISBN: 978-989-758-471-8
Copyright
c
 2020 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
603

Through those services, the business incubator
will conduct business incubation activities to assist
and construct its startup business partner. These
incubation activities are essential because they will
establish the foundation of the capability
enhancement and are the facilities support for each
startup business to develop its business (Pomerol,
2018). Each business incubator has a different
incubation model. However, generally, startup
businesses which become the partner usually will
obtain several things in the business incubation such
as basic knowledge in business and management,
business networking development, market and
market research training, finance access and
integrated technology for commercialization
(Iyortsuun, 2017). When the startup business
participates in these business activities, the output is
that the business performance will increase and will
step up to the bigger scale of business (Bikse et al.,
2018).
However, not all startup business which had done
business incubation can improve its business
performance. Several studies conducted by Hong et
al. (2018), Wonglimpiyarat (2017), and Fischbacher-
Smith (2017), stated that in several developing
countries, it is found that post business incubation
activities, many startup business performances were
not very satisfying or were stagnant. Several
researchers like De Mattos and Salciuviene (2017)
and Bergmann et al. (2018), who administered
entrepreneurship study in several university business
incubators, found that interest and orientation in
entrepreneurship were stagnant even though the
students had joined in the university business
incubation activities. This matter is the reason why
the startup business growth in the academic
community is low – perhaps because the academic
community's focus is only on the academic activity.
However, several researchers like Liu and Bell (2019)
and Petrucci (2018) in their study stated that the
business incubation activities in which the
startupreneur participated did give significant
influence to the business performance, even though it
came from practical experience in developed
countries. Researchers such as Galvão et al. (2019)
and Blanck et al. (2019) also found business incubator
success from the people connectivity and technology
integration side, though it does not touch the
precondition required, so that the business incubation
will support the startup business performance.
From the studies mentioned above, it can be
concluded that there is a missing link that must be
identified more precisely, so that the business
incubation can improve startup business
performance, especially in developing countries.
Thus, this research tempted to create and explore the
startup business performance improvement model
through improving the effective incubation model. In
improving the particular model, the researcher
borrows entrepreneurship theory and resources based
view in introducing the supportive entrepreneurial
environment and empowered business startup as a
variable that can be used to fill the research gap. This
article is arranged into several parts. First, we will
discuss the concept and theory as the base of the
model development and several hypotheses that are
tested to support the operational model. In part two,
we will provide a model which its goodness of fit has
been tested to be used in proving the hypotheses. In
the last section, we will discuss findings that will
complete the research gap explained.
2 LITERATURE REVIEW
2.1 Developing Effective Incubation
Model
In general, a new business or initiative needs a sort of
test, market testing, or piloting before it will run
entirely. In this stage, the business will encounter
limited experience, minimum managerial skill, small
business network, or limited public trust and support
(David-West et al., 2018). With all of those
limitations, the success possibility of a new business
or initiative is relatively low. The business incubator
could be a solution to improve business performance
and get through the early stages, which often come
with uncertainty (Ayatse et al., 2017).
There are many approaches and methods for
business incubators to implement their incubation
model in developing the startup business (Somsuk et
al., 2012). For instance, Smilor (1987) created a
structured incubation model by explaining primary
incubator affiliation, supporting system, and main
description result of the incubation process. He
considered the incubator as the transformation
mechanism, which will assist the entrepreneurs in
building their business. Sara et al. (2009) also
introduced the Generic Five-Step Incubation Process,
which consists of Idea Formulation, Post Entry
Development, Opportunity Recognition, Entry and
Launch, Pre-Start Planning and Preparation which are
often adopted by several established business
incubators. From these elaborations, it can be
concluded that there are many incubation models and
each has a different focus: some focus on the result,
some discuss the importance of internal process, and
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some provide holistic unity between the power of
community and internal process (Moreira and F S
Carvalho, 2012). Thus, in general, incubation
business models can be defined as a unique and
flexible combination of business development
process, business infrastructure provider and human
empowerment which are designed to support the
startup businesses to survive, grow and pass the early
development stages, which are often vulnerable
(Soetanto and Jack, 2016).
The success of a business incubation in mentoring
its business partner depends on whether or not the
program initiated can reduce the possibility of failing
in the early stages of the startup business, and at the
same time support the business development in order
for the business to survive in the future (Xiao and
North, 2017). With that being said, for a business
incubation to be considered effective, it has to be able
to provide the infrastructure required in running a
startup business, give healthy and sustainable
entrepreneurial support, which can be in the form of
training and workshop to improve the partner
capability. This will create space and access to the
market where startup businesses will conduct
leverage of the market share and product or service
selling.
2.2 Presenting the Supportive
Entrepreneurial Environment
By the Entrepreneurship theory, it is not sufficient to
“cultivate” interest and orientation in
entrepreneurship through training and mentoring. It
requires a welcoming environment for the innovator
and the startup business (Pillai and Ahamat, 2018). It
can be inferred that the capability and
competitiveness of a startup business can be
improved if they are in the supporting entrepreneurial
environment, atmosphere, or ecosystem. (Cowell et
al., 2018). Furthermore, Resource-Based View theory
states that to obtain a competitive excellence –
valuable, rare, distinctive, and irreplaceable business,
an entrepreneur must pay attention to the business and
entrepreneurship environment where it is possible to
create Resources Based Opportunity (Björklund and
Krueger, 2016).
Creating a supportive environment for
entrepreneurial activities is not an easy task. The
people need to be educated to accept entrepreneurship
as one of the promising professions, especially in a
developing country, where people still consider being
an employee or civil servant is more secure (Soetanto
and van Geenhuizen, 2019). Besides that, the
entrepreneurs' surroundings must be set to trigger the
measured risk-taking and to prompt new ideas in
creation, such as products, services, marketing
activities, and even technology usage (Long et al.,
2018). In addition to that, a business incubator can
create a sharing and consultative atmosphere which
are flexible among the entrepreneurs, established
business owners as the mentors, government,
universities, banks, capital provider, and
entrepreneurial activity related government
stakeholder (Ferrandiz et al., 2018). Business
incubator often expands its networking to present the
people connectivity service, which is also a
collaboration between the startup business and the
customers. (Ao and Liu, 2015).
2.3 Forming the Empowered Startup
Business
Resources-Based View theory emphasizes that in
strategic management, the primary resources and the
factors which will boost competitive advantage and
superior performance are often associated with costly,
and difficult to be imitated element (Davcik and
Sharma, 2016). This concept is built with the
assumption that strategic resources are evenly
distributed between the company and the fact that
each difference is stable. There are four main
conditions that indicate resources can be a
competitive advantage; these conditions are when the
resources are valuable, rare, difficult to imitate, and
irreplaceable. (Barney and Mackey, 2005). Barney
(1991) also stated that resources include all assets, the
process in the organization, information, and
knowledge owned and controlled by the company to
support the running strategy.
For that reason, to obtain company capability as
described by Resource-Based View, a startup
business must have the power to compete. A
particular empowered startup business must be able
to utilize information in its business environment to
create a business development opportunity (Huo et
al., 2016). Besides that, to create a business which is
valuable to its customer, all entity in the startup
business must have the superior technical skill to
overcome all operational problems, and at the same
time, plan a strategy with a tested managerial skill
(Warnier et al., 2013). Also, to become a distinctive
and difficult to imitate and irreplaceable business,
high innovation skill is required as well. A startup
businessman must own enthusiasm to explore new
updates in the market, seize every opportunity, and
transform it to become innovation while running the
business (Tselepis, 2018).
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2.4 The Relation between Effective
Incubation Model and Startup
Business Performance
A business incubator aims to combine service and its
resources to form an effective incubation model,
which is useful for startup business development.
(Gao and Hu, 2017). This purpose is conducted
through supportive business infrastructure –
coworking space, laboratory to make the prototype,
until digital technology access provider. Business
service is also given to startup businesses in the form
of training, workshop, and strategy consultation,
which can affect the partners' business skill
improvement. Besides that, business incubation
activity also provides access to the market, both
markets to offer product or service, and capital market
(Mrkajic, 2017). Through these activities, the startup
business performance is expected to improve
significantly, which can be seen through market share
control, sales growth level, and new product
launching (Selase Asamoah, 2014).
The explanation above formed a hypothesis that
represents the relation between Effective Incubation
Model and Startup Business Performance.
H1: The more effective business incubation
model conducted by the business incubator, the
higher startup business performance is.
2.5 The Relation between Effective
Incubation Model and Empowered
Startup Business
Effective Incubation Model initiated by a business
incubator might not be immediately able to improve
startup business performance. To achieve
performance which is competitive and able to grow
strategically, the startup business entity must first
become empowered and competitive (Torun et al.,
2018). According to Tselepis (2018), business
incubation activity enables startup businessmen to
have power, which is characterized by their ability to
search, filtering and processing information from the
market to be used as a strategic weapon. On top of
that, the business incubation in which they are
participating can be a medium to test their technical
skills in conducting business. The business incubator
must as well include motivation material in order to
trigger endless startup businessman enthusiasm in
innovating and business development because
innovation and continuous improvement are the
requirements to obtain strategic competitiveness.
(Tselepis, 2018).
The explanation above formed a hypothesis which
represents the relation between Effective Incubation
Model with Empowered Startup Business:
H2: The more effective business incubation
model conducted by the business incubator, the more
empowered its startup business partner is.
2.6 The Relation between Supportive
Entrepreneurial Environment and
Empowered Startup Business
Supportive Entrepreneurial Environment is one of the
requirements to create Empowered Startup Business.
A startup business will be improved if supported by
an accepting environment. (Yi and Uyarra, 2018).
Entrepreneurs will be encouraged to enhance their
competitiveness if their surrounding has the culture of
risk-taking and innovating. The passion for becoming
empowered in startup business will also be pumped if
the society supports all activities in creating the value
of entrepreneurship activities that have been
conducted. Supportive Entrepreneurial Environment
also gives freedom for the entrepreneurs to initiate
sharing, consultation, or counseling both with a
business incubator, succeeded business mentor, or
even directly collaborating with the community
(Qian, 2018). Those described conditions will surely
create enthusiasm and passion for the entrepreneurs
to develop their business. (Ao and Liu, 2015).
The explanation above formed a hypothesis which
relates Effective Supportive Entrepreneurial
Environment with Empowered Startup Business:
H3: The more supportive the environment in
which entrepreneurship is conducted, the more
empowered the startup business is.
2.7 The Relation between Empowered
Startup Business and Startup
Business Performance
Empowered Startup Business enables every entity in
the business to utilize its resources strategically in
facing competition in the market (Hahn et al., 2018).
Technical and managerial capability, the skill in
utilizing information strategically, and enthusiasm in
developing innovation is the fundamental asset to
create a valuable business model for the customers, to
make a significant distinction from the competitors,
and also to gain profit. (Tselepis, 2018). The startup
business’ awareness to initiate empowerment allows
forming a productive team and competent to do
optimum planning, follow the consumer change in
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preferences, take market opportunities, and also to
achieve efficiency (Hsieh and Wu, 2018). If the
startup business performance can be maintained
continuously, the possibility for it to scale up is high,
and it can even spread to a bigger market. (Grossberg,
2018).
The explanation above formed a hypothesis which
relates Empowered Startup Business and Startup
Business Performance which is formulated below:
H4: The higher level of Empowered Startup
Business is, the company will achieve higher Startup
Business Performance.
Based on the discussion of the theory and
hypotheses above, a framework can be formed to
explain how the business incubation model and
entrepreneurship environment can improve startup
business performance through empowered startup
business development in a developing country. The
theoretical framework of the developed model is
shown in Figure 1.
Figure 1. Theoretical Framework
3 METHOD
3.1 Sample and Data Collecting
This research involved startupreneurs from 20
business incubators in Indonesia as the sample, both
a university-based business incubator and the private
sector. The sample was 120 mentored startupreneurs.
These startupreneurs had joined business incubation
conducted by its partner business incubators. The
method which was used to collect the data is the
survey method, and the data collecting instrument
was questionnaires.
3.2 Measuring Method
The survey instrument was measured in 10 Likert
scales ranging from Strongly Disagree to Agree
Strongly. The instruments first passed the validity and
reliability test and then were distributed offline and
online. The survey instrument created was the
development of the previous research measurement
scale, namely: For the Effective Incubation Model
construct, was developed by Mrkajic (2017), while
Supportive Entrepreneurial Environment was the
development of measurement conducted by Ao and
Liu (2015). The Empowered Startup Business was
developed from Tselepis's (2018) measurement, and
Startup Business Performance was the development
of Selase Asamoah (2014) measurement.
3.3 Analysis Method
The researcher used the Structural Equation
Modeling analysis method, supported by statistic
AMOS 24.0 software, which allowed to test several
complicated alternative models. The test using SEM-
AMOS was conducted in two stages: the
measurement test, and then the structural test. The
purpose of this analysis is to explore the effect of the
Effective Incubation Model towards Startup Business
Performance and adds Empowered Startup Business
as a mediation variable. This research also aims to
explain the effect of the Supportive Entrepreneurial
Environment variable towards Empowered Startup
Business and Startup Business Performance.
4 RESULTS
The data collected from the 120 startupreneurs
respondents, were then analyzed using SEM IBM-
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AMOS 24 Software to test the model compatibility
and the relation among variables in the model. Before
further analysis, the researcher first conducted a data
normality test to ensure the data quality. From the
analysis result and normality test conducted, the c.r
value in all indicators was between +2.58 and -2.58,
and the Courtois multivariate showed 3.273 below cut
off value 8. Thus, it can be concluded that there was
no proof of non-normal distribution in the data.
After the model passed the data normality test, the
process continued to the validity and reliability test.
Table 1 provided the list of measurement items with
standardized estimates to evaluate the validity of the
construct of the concepts used in this research based
on the output AMOS 24.0 from confirmatory factor
analysis.
Table 1. Scale, Measurement, Validity & Reliability
Scale Indicators Reference
Std.
Estimate
Critical
Ratio
Convergent
Validity-AVE
Construct
Reliability
EFFECTIVE INCUBATION
MODEL
Mrkajic (2014)
0.815 0.930
Infrastructures Provider 0.909 15.067
Business Capability Development 0.893 14.544
Market Reach Development 0.906 14.544*
SUPPORTIVE
ENTREPRENEURIAL
ENVIRONMENT
Ao & Liu
(2015)
0.888 0.960
Creation & Risk Taking Culture 0.928 20.161
Public Attitude Towards
Entrepreneurship
0.947 21.808
Counselling & Support Services
Availability
0.952 21.808*
EMPOWERED STARTUP
BUSINESS
Tselepis
(2018)
0.755 0.902
Information Utilization Skills 0.930 14.01*
Enhanced Technical & Business
Skills 0.863 14.01
Enthusiasm to make innovation and
Development 0.810 12.262
STARTUP BUSINESS
PERFORMANCE
Selase
Asamoah
(2014)
0.802 0.924
Market Performance 0.877 13.835*
Sales Growth 0.904 13.835
New Product Success 0.905 13.855
*) This variable is estimated twice. First, as the constrained variable, second as the unconstrained variable to count the
critical ratio.
In the confirmatory factor analysis, it can be seen
that each indicator showed acceptable
magnitude/value, which means all was above 0.60
with a critical ratio above 1.96. Therefore, the
indicators were able to reflect well in representing the
construct. Meanwhile, the measurement of the
construct validity showed that each variable has a
pleasant AVE (Average Variance Extracted) value:
Effective Incubation Model (0.815), Supportive
Entrepreneurial Environment (0.888), Empowered
Startup Business (0.755) and Startup Business
Performance (0.802). All of the values are above the
cut off AVE>= 0.50. Therefore, it can be concluded
that the instrument used to measure the four variables,
and the indicators are valid and reliable.
The measurement of the reliability of the
construct also showed a good result: Effective
Incubation Model (0.930), Supportive
Entrepreneurial Environment (0.960), Empowered
Startup Business (0.902), and Startup Business
Performance (0.924). All of the values are above the
cut off CRI>= 0.70
Having finished with the validity and reliability
analysis conducted, the next stage is to test the
hypotheses. Diagrammatically, the empirical model
analysis and testing are shown in Figure 2.
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Figure 2. Empirical Research Model Testing
In Figure 2, we can see the result of the structural
equation model analysis. The goodness of fit test was
conducted using two methods, which are Statistic and
Non-Statistic Measurement. The result obtained from
the Statistic Measurement method is Chi-Square
value = 80.043, and the degree of freedom = 49 with
probability = 0.003. This result proves that this model
does not fit, because the SEM prerequisite requires
low Chi-Square value or near zero, and the
probability value must be higher than 0.05.
However, if we use the Non-Statistical Measures,
the model can be considered fit because the GFI
(0.903); TLI (0.970); CFI (0.978) index is above the
cut off value 0.90. RMSEA also shows a good result:
0.073, which is in the expected range of 0.03 – 0.08.
Because the model can fit in one of the methods used,
which is Non-Statistical Measurement method and
seeing from the GFI, TLI, CFI and RMSEA value
which meets the SEM prerequisite, it can be said that
the developed model fits and compatible to the
empirical data.
Table 2. The Coefficient of Regression
HYPOTHESIS
Std.
estimate Estimate
Std.
error
Critical
Ratio Significance Conclusion
H1: Effective Incubation
Model --> Startup Business
Performance
-0.080 -0.065 0.088 -0.733 0.463 Not Supported
H2: Effective Incubation
Model --> Empowered
Startup Business
0.369 0.333 0.070 4.734 *** Supported
H3: Supportive
Entrepreneurial
Environment -->
Empowered Startup
Business
0.557 0.530 0.074 7.205 *** Supported
H4: Empowered Startup
Business --> Startup
Business Performance
0.723 0.645 0.105 6.149 *** Supported
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The analysis suggests that H1 Hypothesis, which
stated “the more effective business incubation model
conducted by the business incubator, the higher
startup business performance is” was rejected
because the critical ratio value is only -0.733 < 1.96
with a weak parameter value of 0.463 – either at the
significance level of 0.05 and 0.10. This means that
even though the incubation model has been conducted
effectively, it does not immediately improve the
startup business performance. H2 Hypothesis H2,
which stated, “the more effective business incubation
model conducted by the business incubator, the more
empowered its startup business partner is” is
accepted, revealed by the critical ratio value of 4.734
> 1.96 and the parameter value of 0.369. H3
Hypothesis, which stated, “The more supportive the
environment in which entrepreneurship is conducted,
the more empowered the startup business will be” is
also accepted, due to its critical ratio value of 7.205 >
1.96 with parameter value 0.557. The last but not the
least, H4 hypothesis, which stated, "The higher the
level of Empowered Startup Business is, the higher
the Startup Business Performance will be achieved by
the company” is accepted as well. This is conveyed
through the critical ratio value of 6.149 > 1.96 and the
parameter value of 0.723.
5 DISCUSSION
This research aimed to seek a fundamental answer to
the question: why some of the incubation business
fails to improve its startup business performance? To
answer that particular question, the researcher
attempted to introduce the empowered startup
business concept as the result of business incubation,
which is derived from Resources Based View theory.
Besides, this research also attempted to explore the
answer to the question: “what is the role of a
supportive entrepreneurial environment in forming
empowered startup business? The research then
combined those questions in the developed model
where the antecedent variable is the effective
incubation model, and the supportive entrepreneurial
environment is aimed to improve startup Business
performance while mediated by the empowered
startup business. Based on the accepted hypotheses
and the magnitude of the relation between the
variables, the findings will be elaborated in the next
part.
Building upon the developed structural model, the
result obtained is that the effective incubation model
does not automatically improve the startup business
performance. This finding confirmed the research
conducted by Hong et al. (2018), Wonglimpiyarat
(2017), and Fischbacher-Smith (2017), which
suggested that the incubation activity does not always
significantly stabilize the business started. Based on
the result of the observation and interview regarding
this matter, the researcher found that several business
incubators run the incubation model too long and not
to the point – the incubation period could last for 8-
14 months. This condition caused the startup business
could not validate the ideas effectively, which caused
a delay in product launching. Some of the
startupreneurs only expected initiative from the
business incubator and tend to be passive when it
comes to the effort to develop their business. Another
problem that induced the failure in the incubation
activity is the lack of attention from the business
incubator toward the partners. This is often done by
an incubator that has too many partners. When the
incubators become unfocused, they only run the
business incubation activities without monitoring and
maintenance toward the startup business partner.
(Blanck et al., 2019).
Inadequateness in the market, mentor, investor,
and other entrepreneurship development-related
stakeholder networking could also be the cause of the
failure in business incubation activity. Business
incubation usually only focus on the technical
training and workshop, and neglect to expand
networking, which can boost the expansion of the
startup business market share and even further
development. This typical incubator usually assumes
that training and workshops are enough to improve
business performance. Unfortunately, that is not the
fact. All of the incubation business elements must be
implemented completely, starting from infrastructure
providers, capability development, and also
connectivity with the market and investor.
Lastly, the reason for the business incubation
activity fails is when the incubator is inexperienced in
adopting the replicated the incubation business
model. Multiple business incubation business
varieties exist; however, to find effective business
incubation is not an easy task. It requires consistency
and adjustment in order for the model compatible
with the custom and culture of a particular place.
If the business incubator can handle the problems
mentioned above, the incubation activity will run
well, and it usually will not directly affect business
performance. Almost all the business incubation
models – both process-oriented and result oriented
has the same characteristic. All of them attempt to
plant the entrepreneurial mindset and orientation in
the startup business partner. (Aloulou, 2018). With
the mindset and orientation planted, the startup
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business will have enthusiasm in creating new ideas,
innovating, and developing technical and managerial
skills. This is the essence of the acceptance of the
second hypothesis.
Startup business empowerment will then
automatically direct the startupreneurs to the
activities which enhance their performance. The
acceptance of the H4 hypothesis can prove this. They
are fully aware that once they dived in this business,
there is no going back, they must set their focus on
the performance-enhancing in order to survive in the
fierce business competition. This does not necessarily
apply to all startup businesses, because some new
entry business player might decide to be easy going,
and some might only do it only for the experience.
That is why it is crucial for the business incubator
always to motivate the partner to form KPI (Key
Performance Indicator) to monitor how successful the
empowerment activities are. (Hsu and Wang, 2018).
An environment that can support entrepreneurial
activity also plays a vital role in establishing an
empowered startup business. This is conveyed in the
acceptance of the H3 Hypothesis. The conducive
environment will allow the startupreneur to freely
explore their capability while collaborating with the
stakeholders in the form of sharing and business
consultation. The supportive environment can also
support the community in which they take shelter –
this is proven to be one of the essential factors to
empower the business. Whether they like it or not,
business incubators must try to create a condition the
environment for it to be supportive toward
entrepreneurship. This is not an accessible initiative
to make. It demands a great effort, for in the process
of conditioning the environment, it requires culture
shaping and positive attitude toward entrepreneurial
professions (St-Pierre et al., 2016). Another challenge
to this attempt is the stigma owned by the people
living in the developing countries, the stigma which
consider entrepreneurship is a less decent profession
compared to the profession in a multinational
company or government sector.
Several strategies can be implemented to create a
supportive environment for entrepreneurship –
surely, these strategies cannot be implemented by the
business incubator alone; it requires all stakeholders
to collaborate. The first strategy requires a business
incubator to collaborate with multiple stakeholders,
such as local government, the business community,
established company which pays more attention to the
entrepreneur development. This collaboration is
expected to strengthen the business networking
among startup businesses, and at the same time to
spread the “seed” and the passion of entrepreneurship
in the society. The second strategy is creating a public
relations program, possibly through mass media or
entrepreneurial events, to introduce the startup
business to society. This strategy should emphasize
the benefits of becoming an entrepreneur. Besides
that, it will also promote the startup business partner.
The third strategy is to create a business competition
that is open to the public – this will need funding
which can be obtained from either the third party or
donation. This competition will give motivation to the
startup business and at the same time, shape the
surrounding's positive attitude towards the
entrepreneurial professions.
6 CONCLUSION AND FUTURE
RESEARCH
The implication of this research is the formed startup
business performance enhancement model through an
effective Incubation model, mediated by empowered
startup business variables. This variable is also the
solution to the missing link, which caused the
business incubation not able to improve the startup
business performance. Therefore, even though the
business incubator can conduct the effective
incubation model – which is characterized by its
capability to become the Infrastructure Provider, give
Business Capability Development to its business
partner, provide access to the market, it does not
necessarily mean that it can automatically improve
the business performance in market share control, or
ensure the launching of a new product. The
incubation business should be directed to trigger the
enthusiasm in the startupreneurs in innovating and
developing, passion for enhancing technical and
managerial skills, gaining skill in utilizing
information strategically to promote the startup until
they earn their title as the empowered business
startup. An environment that is supportive of
entrepreneurship plays a vital role in the model as
well. It is in the shelter of a supportive environment,
the opportunity for an empowered startup business to
grow shall rise.
Studies about empowered startup business and a
supportive entrepreneurial environment related to
startup business performance and supportive
entrepreneurial Environment is not commonly
explored. This means that there is room for further
research to complete the model. The Key
Performance Indicator to measure the empowered
startup business can be researched further to find out
how the business incubator should monitor and scale
Completing Missing Link between Business Incubation Model Startup Business Performance in a Developing Country
611

up its potential partners. This model can also be
combined with the business uncertainty variable to
test whether or not the empowered startup business
concept is still proper to be used as the basis for the
business performance enhancement. This model can
also be tested, especially in business incubators in
universities, because recently, many universities
progressively create a business incubator to create a
university-based entrepreneurial atmosphere.
ACKNOWLEDGMENT
This research was conducted with the favor of DRPM
Kemenristekdikti of the Republic of Indonesia in the
PKPT schema. Therefore, researchers express their
gratitude toward DRPM Kemenristekdikti for
funding assistance. Researchers sincerely hope that
this research will contribute significantly to the study
of the entrepreneurship field.
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