Unlocking Entrepreneurial Success Through Business Incubation: The Mediating Effect of Innovation Capability
Abstract
Entrepreneurship plays a critical role in promoting innovation, employment creation, and economic growth. Despite increasing investments in business incubation programs, many small and medium-sized enterprises (SMEs) continue to experience low entrepreneurial performance, suggesting that the mechanisms through which incubation support enhances business success remain insufficiently understood. This study examined the effect of business incubator support on entrepreneurial success and investigated the mediating role of innovation capability among SMEs in Uasin Gishu County, Kenya. The study was anchored on the Resource-Based View, Knowledge-Based View, and Dynamic Capabilities Theory, which posit that competitive advantage is achieved through the acquisition, development, and effective deployment of strategic resources and capabilities. An explanatory cross-sectional survey design was adopted. Primary data was collected from SME owner managers using a structured questionnaire. Data were analyzed using Structural Equation Modeling (SEM), and mediation was assessed using bootstrapping procedures. The results revealed that business incubator support had a significant positive effect on innovation capability while innovation capability significantly enhanced entrepreneurial success. Business incubator support also exerted a significant direct effect on entrepreneurial success. Furthermore, innovation capability significantly mediated the relationship between business incubator support and entrepreneurial performance, indicating partial mediation. The findings demonstrate that the influence of business incubation on entrepreneurial performance is achieved largely through strengthening SMEs' innovation capability. The study concludes that innovation capability is a strategic mechanism through which business incubation creates entrepreneurial value. It recommends that county governments, universities, and development partners strengthen innovation-oriented incubation programs by emphasizing mentorship, technology transfer, digital skills, collaborative networking, and product development. The study contributes to entrepreneurship literature by providing empirical evidence on the capability-building process linking business incubation to entrepreneurial performance within the context of SMEs in an emerging economy.
Keywords: Business incubator support; innovation capability; entrepreneurial performance.
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