Role of Incubation Centers in Growth of Small-Scaled Businesses in Afghanistan

Abstract

For past three-years unemployment has been growing in Afghanistan, which has caused many socio-economic problems. One of the solution to this problem is private sector development. A lot of attention has been paid toward attraction of investments at large scale from private sector, however, experience of many countries including industrial economies show that small scaled businesses has contributed to employment and economic development to remarkable extend. Small scaled businesses have a very high rate of failure at their initial stage. Development of these businesses requires promotion of entrepreneurship. This study attempts to highlight the role of business incubation centers for this purpose in Afghanistan context. Studies have shown that factors such as incubation centers physical infrastructure, provision of business assistance, management guidance and counselling, enabling environment and sound practices of incubation centers have led to survival and growth of many small businesses. Through extensive review of literature this paper has defined the above factors in the form of services to be rendered by incubation centers and has highlighted their role on fostering entrepreneurship. With a scientific approach the analysis of this study has identified how these services are perceived by its recipients i.e. tenant companies. Basically tenant companies are entrepreneurs who receive incubation centers services to minimize the chance of their businesses failure. The result reveals that many services that incubation centers claim to offer them efficiently must be improved as many of these services perceived to be ineffective or neutral by their recipients. Furthermore, through the use of statistical tool this study has identified gaps between business incubation practices in global context and Afghanistan. The purpose of this analysis is to introduce best practices that have great impact to success of business incubation centers and thus, survival and growth of small companies that can lead to economic development.