*Article* **Sustainability Goals and Firm Behaviours: A Multi-Criteria Approach on Italian Agro-Food Sector**

**Lucia Briamonte <sup>1</sup> , Raffaella Pergamo <sup>1</sup> , Brunella Arru 2,\* , Roberto Furesi <sup>2</sup> , Pietro Pulina <sup>2</sup> and Fabio A. Madau <sup>2</sup>**


**Abstract:** Today, the transition to a more sustainable model of the agro-food system is increasingly impellent, requiring all actors' commitment. In particular, small and medium agro-food business (SMABs) play a decisive and central role in the food and economies of national and underdeveloped areas. Our study aims to identify, through desk research, the level of commitment and communication to the sustainability of SMABs operating in southern Italy. In this study, we followed the Food and Agriculture Organization's (FAO) approach to implementing such a transition, using their principles as a diagnostic tool to interpret business operations. The data were analysed using two approaches: a regime analysis to assess which FAO principles are commonly followed to make the above transition possible, and an extension of the Abraham and Pingali (2020) framework to describe the commitment of SMABs to the Agenda 2030 goals with respect to the behaviour of small and medium enterprises (SMEs). We found that the SMABs' behaviours are more oriented towards some FAO principles: those that explain their commitment to improving natural resources and livelihoods, fostering inclusive economic growth, and achieving sustainable development goal 7 of Agenda 2030 than towards others. The contribution of our study lies in providing detailed insights into sustainable actions taken by SMABs while testing the FAO's principles as a new model to evaluate business operations.

**Keywords:** agro-food business; small and medium enterprise (SME); Food and Agriculture Organization (FAO); Agenda 2030; regime analysis

#### **1. Introduction**

Global food challenges in the 21st century require substantive changes in agriculture and the food system. These challenges are accelerating the transition to sustainable food and agriculture (SFA) to enable world food security and healthier diets, societal well-being, and environmental safeguards [1].

SFA is at the centre of the 2030 Agenda, which, in shifting the debate from 'willingness' to 'the ability to act', aims to spur people and institutions to an urgent rethinking of the global development model. In this vein, the Food and Agriculture Organisation (FAO) [2] has also developed a vision for SFA based on five principles which are aimed at providing a basis for developing policies, strategies, regulations, and incentives that enable SFA and rural development: (1) increasing the productivity, employment, and value addition in food systems; (2) protecting and enhancing natural ecosystems; (3) improving livelihoods and fostering inclusive economic growth; (4) enhancing the resilience of people, communities, and ecosystems, and (5) adapting governance to new challenges. Twenty interconnected actions, which countries together with key stakeholders should take to accelerate the transition to SFA, are derived from these principles. Moreover, these 20 practical and interconnected FAO actions, in addiction to aiming to transform food and agriculture, intend to drive achievement across the sustainable development goals (SDGs) of Agenda 2030 [2]. In effect, FAO plays a critical role in the 2030 Agenda [3] and FAO's strategic

**Citation:** Briamonte, L.; Pergamo, R.; Arru, B.; Furesi, R.; Pulina, P.; Madau, F.A. Sustainability Goals and Firm Behaviours: A Multi-Criteria Approach on Italian Agro-Food Sector. *Sustainability* **2021**, *13*, 5589. https://doi.org/10.3390/su13105589

Academic Editors: Margarita Martinez-Nuñez and Mª Pilar Latorre-Martínez

Received: 22 March 2021 Accepted: 14 May 2021 Published: 17 May 2021

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**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

framework is explicitly aligned with the SDGs [4]. This is why FAO punctually indicates for each action which the SDGs are on which a contribution is made [2]. Evidence on business behaviours undertaken along the interlinks among FAO's actions and SDGs allow one to display whether and how the agri-food sector contributes to achieving sustainable development according to the Agenda 2030 [4].

Among the agents of SFA transition, the agriculture and agro-food business (hereinafter AFBs) play an essential role in improving and revitalising rural contexts [5], responding to a growing world population's food demand, and fostering inclusive growth; these are the cornerstones of the success of Agenda 2030 [6]. In particular, the role of SMABs, as well as of families and smallholders, has become increasingly more decisive, being the backbone of many rural societies, promoting innovation, and playing a central role in national food and economies [7–11].

Against this background, the transition to SFA from conventional unsustainable food practices requires the consideration of pivotal interlinks among the incomes of family and smallholder farms, sustainable practices, improved productivity, and technological innovation and efficiency across the sector [12–17].

This is also the approach of the European Green Deal, which calls on the European farmers and AFBs to re-adjust their work practices to the new green objectives (EU COM/2019/640 final; EU COM/2020/381). In effect, the European Green Deal, with the 'Farm to Fork' and 'Biodiversity' strategies and a reformed Common Agricultural Policy (CAP), aims to switch Europe's agricultural sector towards a more sustainable model, ensuring food security and the preservation of environmental and human health and making the EU the first climate-neutral continent in the world. The CAP and European Green Deal objectives' achievement requires that the entire agro-food sector (farms, agro-food industry, and organisations), which is known to be one of the main drivers of the EU economy [18], is involved in the changing process.

However, wanting to get upstream of the speech, although the European Green Deal is Europe's new growth strategy to transform the EU economy for a sustainable future, we need to refer first of all to the Agenda 2030 program, which also includes some of the strategic objectives of the CAP, and that is "the cornerstone of defining EU policies and interventions" [19] (p. 9). This is why Agenda 2030 is the ideal strategic framework for addressing the issue of sustainability for investigating AFBs.

In Italy, within a few years, many AFBs have been initiated that pursue social, environmental, and economic sustainability goals; Italy ranks third (preceded by Israel and Spain) at the international level in terms of sustainable agro-food start-ups [20]. These start-ups aim for innovative solutions for implementing more efficient use of resources, introducing the 'short supply chain', and using natural materials in production. The Italian agro-food system has shown progressive advancement and a good capacity for the sustainable management of agricultural resources [21]. Moreover, Italy's civil, social, and political traditions have contributed over time to an orientation towards sustainable entrepreneurship, fostered by a positive bond with the territory and the environment, along with a high level of social cohesion and stakeholders' proximity [22]. Within this context, SMEs, considered the backbone of the Italian economy, epitomise the entrepreneurs' ethical values that lead to adopting sustainability practices and strategies and contributing to sustainable development [22,23].

However, Italy has prominent differences between its north and south. South Italy is one of the EU's most underdeveloped areas and has a lower gross domestic product (GDP) and industrialisation rate than the peninsula. According to ISMEA, "in the South, the agri-food sector assumes greater economic importance than the Italian average and the rest of the country [ . . . , and] the agri-food chain is an important production pillar in the South" [24] (p. 37). Previous studies have shown that commitment to sustainability provides SMEs with competitive advantages, creating new market access, aligning activities with shifting customer preferences, capitalising on innovative solutions, filling market gaps due to market failure, and addressing economic disequilibria [8,25–27]. In this sense, the recovery of competitiveness of the agro-food sector of southern Italy must take place through the transition towards a sustainable AFB model to address this region's economic backwardness.

Based on these considerations, investigating the level of commitment and communication to sustainability among southern Italian SMABs is an important research topic.

Our study contributes to addressing this topic by diagnosing the current sustainability objectives mainly promoted by the southern Italian SMABS as well as analysing the issues that need to be addressed to achieve a higher level of sustainability. Specifically, a qualitative analysis was carried out to assess the FAO's principles and actions [2] towards which the sustainability practices of southern Italy's SMABs tend to be the most commonly oriented. Another contribution of this study is to present the FAO's principles as a diagnostic tool for evaluating business operations.

Furthermore, since FAO [2] links each action to several SDGs of the 2030 Agenda, we analysed the sustainable behaviours of SMABs also from the SDG point of view, adapting the Abraham and Pingali framework [28].

To our knowledge, this is the first study that has highlighted SMABs' behaviour regarding their compliance with the sustainability principles of the FAO. Moreover, as far as we know, this is the first study that uses the Abraham and Pingali framework [28] to look into the compliance of SMABs' behaviours with the SDGs in light of the specificities of the agro-food sector.

Our results can be a good starting point for future discussions on actions to be taken to improve SMABs competitiveness in this macro area.

#### **2. Methodology**

#### *2.1. Data Source*

The analysis presented in this study was carried out using a qualitative research approach, focusing on the SMABs operating in southern Italy. The firms' data were selected from the AIDA database (the Bureau van Dijk), which offers financial, demographic, and commercial information on Italian firms. Before selection, the firms were screened for the following criteria:


A total of 720 Italian firms were selected. The research was carried out in July 2019 through a two-phase analysis of each firm's website.

First, we only selected the AFBs that have their own active websites, reducing the sample to 650 firms, of which 616 were SMABs. Then, companies that communicated one or more concrete actions (and not a simple declaration of intent) in line with the FAO's principles of sustainable food and agriculture actions were identified. This criterion helped to identify firms that implement and communicate sustainable actions in the field and not just state a commitment to sustainability. After applying these criteria, a total of 193 southern Italian firms were selected, of which 180 were SMABSs.

Websites were used as valid sources of data for several reasons. Communication plays a fundamental role and is an integral part of every sustainability plan or strategy [29]. In the case of AFBs, entered in the database consulted, the website, in addition to carrying out a communication function, also could refer to an idea of the web reputation of the company itself that can trace the picture of the main sustainable behaviours assumed over time and highlight the path taken.

Due to the growing demand from stakeholders for greater transparency, social and environmental responsibility, and dialogue, companies' awareness of the need to not only adopt sustainability activities but also inform their stakeholders about sustainability performance has grown, leading to constant growth in the size and complexity of communication on social and environmental issues [30].

Websites are the main communication channels for sustainable initiatives. They enable the communication of relevant information about the firms' commitment towards sustainable practice to a wider range of stakeholders than traditional media [31–33]. This is why many researchers chose companies' websites to measure their sustainability practices [34].

Our research focuses on SMABs' commitment towards sustainability. According to Hasim et al. (2018), 'commitment' can be understood as the extent of information provided by firms on their website, with demonstrated actions towards achieving sustainable development [35]. Moreover, due to the advantages offered by the Internet [36–38], websites are particularly appealing to SMEs because they mitigate traditional burdens related to firm size [39].

Therefore, this study considers website analyses as a legitimate research tool.

#### *2.2. Research Model*

The analysis focuses on assessing the ongoing sustainability behaviours mainly promoted by southern Italy's SMABs according to the five FAO principles stated in 'transforming food and agriculture to achieve the SDGs' [2] and the Agenda 2030 goals, bearing in mind the interlinks between the former and the latter. In effect, the FAO document [2] explains how each FAO action links multiple SDGs and integrates the three dimensions of sustainable development (economic, social, and environmental).

Regarding the five principles of FAO, although they are complementary, by highlighting the importance assigned to each one, it is possible to deepen which aspect is favoured by AFBs and offer considerations on the process of integrating sustainability targets into their practices. Moreover, we think that the analysis of the AFBs' behaviours according to the FAO principles and actions [2] is a suitable tool to overcome the limitations of the sustainability assessment of SMABs [40,41].

In reference to the Agenda 2030—keeping in mind the pivotal role of the private sector in entrepreneurs' engagement and know-how transfer; job creation; and alternative revenue streams, and in particular, of the role of SMEs for the implementation of the 2030 agenda—we examined the agro-food SMEs' behaviours in light of the 17 sustainable development goals (SDGs) of Agenda 2030 according to the nature of the promoted actions of firms.

To this end, the Abraham and Pingali framework [28] was adapted. The authors offer a seminal paper that makes clear the link between the SDGs and the agri-food sector, with a particular focus on smallholder farming, identified which explicitly depend on firm growth for their achievement, and classified the SDGs that specifically pertain to the agricultural sector into four clusters: poverty goals, nutrition goals, social goals, and environmental goals. To look at the goals in the context of agro-food SMEs' behaviours, and considering the need to broaden the horizons from the agricultural sector to the agro-industrial one, the Abraham and Pingali clustering has been revisited, offering its evolved version, which includes all SDGs. The relevance of the SDGs not previously included in the Abraham and Pingali framework with the four clusters identified by the authors was assessed based on the content of the Agenda 2030, leading to the attribution of SDG 4 to the social cluster and of SDG7 and SDg14 to the environmental cluster. The SDGs 11, 16 and 17, not being directly attributable to one of the 4 clusters of the framework, were included in a new cluster named "residual cluster". This "extended framework" can produce a picture of SDGs' categories on which to act by stimulating, accelerating and supporting SMEs' behaviours to foster their transition to sustainable food and agriculture.

Figure 1 shows the existence of the link between the five FAO principles and the SDGs (which we have decided to analyse in light of the extended classification proposed by Abraham and Pingali [28]) and that SMABs' sustainable behaviour can be read in light of these two frameworks.

**Figure 1.** Research model.

#### *2.3. Method*

Given the exploratory character of this study and our research objectives, qualitative research was considered the most appropriate technique for analysing AFB behaviours' diversity. Qualitative research is gaining popularity in the small business and entrepreneurship research community [42]. It deals with non-numerical information, allowing the interpretation of a phenomenon and building a meaningful picture without compromising its richness and dimensionality [43].

Our qualitative analysis aimed at describing the diversity of sustainable behaviours of AFBs. Since the description of the diversity of characteristics of some topics of interest within a given population can be carried out using coding, the unidimensional description with downward coding [44] was deemed suitable for the purpose of our analysis. In effect, it involves organizing data into three logical levels of diversity; that is, objects, dimensions for each object and categories for each dimension, allowing us to move towards a lower level of abstraction [44]. Therefore, based on the unidimensional description of diversity proposed by Jansen [44], we analysed the diversity of sustainable behaviours of AFBs starting from the higher level of abstraction; that is, the sustainability behaviour of firms (the main object), following the middle level of abstraction; namely the FAO's principles and actions (the dimensions of objects), down to the lower abstraction level analysis consisting of the SDGs to which each FAO's action contributes (the categories of objects). It is important to highlight that the identification of SDGs relevant to each principle and actions FAO was made based on the explicit links indicated by FAO [2]). This articulation is indicated in Figure 2.

A chart with double entries was used to grasp each company's behaviour according to the three logical levels of diversity (Figure 3).

The vertical reading of the blue columns of the chart makes it possible to highlight each company's behaviour concerning the 5 FAO principles and their respective actions (the last two lines of the blue cells). It concerns the analysis of the "dimensions of the object" that has been extended to all AFBs to offer an overview of the overall scenario of the agro-food sector in southern Italy.

To analyse the categories of dimensions (each company's behaviours concerning each FAO principles and actions respects to SDGs), based on the FAO document [2], the SDGs on which each FAO action has an impact were first identified. These interlinks are signalled with green cells in the chart. Each green cell allows a dichotomous response variable (yes/no). The sum of the "yes" is shown in the cells of the totals.

**Figure 2.** Articulation of object, dimensions, and categories. \* Each SDG on each FAO's action gives a contribution according to the FAO framework [2].

**Figure 3.** Contribution of FAOs to SDGs, according to FAO's framework [2].

Information on the AFBs' behaviours was collected based their descriptions on their websites. More precisely, we focused on information on sustainability real actions, tools and the performance of each company.

The drawing-up of the chart required a preliminary step and two subsequent steps.

In the preliminary step, for each firm's website, the presence or absence of a sustainability report and a section of the website dedicated to the sustainability field was noted. This was interpreted as the first signal of an AFBs' awareness of the importance of sustainability.

The next step aimed to describe the dimensions of the object. The behaviours (in conformity with the FAO's principles) of each selected AFB were individuated and related to each action indicated by the FAO guidelines [2]. The output was a dichotomous response variable (yes/no). Two researchers independently analysed the firms' websites. They looked for the presence or absence of a firm's behaviours according to the FAO's actions ('yes' for the presence of each behaviour and 'no' for its absence).

The sum of the positive responses was reported in the blue cell totals.

In the final step, for each selected AFB, we tried to relate each behaviour catalogued as previously described to the 17 SDGs of Agenda 2030 (analysis of categories of dimensions). In short, each FAO's action of the firm was ascribed to the SDG on which it has had an impact (i.e., by vertically selecting a cell among the green ones). Multiple behaviours of each firm related to one FAO action and the same SDG hold a value of one. Multiple behaviours for the same FAO's action and SDG were not considered.

Care was taken to ensure that all behaviours represented were real behaviours and not a simple declaration of intent. The presence of SA800 certification was interpreted as acting in line with action 9 (third principle) and SDG 8. Similarities among the independently generated data were noted, and after several iterations, a consensus was reached on the final coding of the major and minor themes. Finally, a third researcher checked for problems and inconsistencies; discrepancies were resolved through discussion.

The values attained by each firm in each cell of the chart shown in Figure 3 were added in the summary chart, shown in Figure 4.

**Figure 4.** Summary chart of SMABs' behaviours.

It must be underlined that the analysis of the categories of dimensions concerns only SMABs under the role they play in the southern Italian economy.

The SMABs' behaviours were analysed based on the extended Abraham and Pingali framework [28], providing important insights worthy of further thought.

To better grasp the behaviour of the SMABs, a multi-criteria analysis (MCA) was applied to the sample.

MCA allows one to compare alternative courses of action based on multiple factors. Among various MCA methods, regime analysis (RA) was chosen to rank the five FAO principles based on how the selected firms promote sustainability. RA is an evaluation method suitable for handling sustainability problems owing to its applicability to complex scenarios [45]. This method allows the management of quantitative and qualitative information, which is why it was previously used to rank different sustainable development attributes [45–47]. RA requires defining a priori a distinct set of ith alternatives, evaluating each one's impact on a plurality of jth criteria for all criteria together [48,49].

The first phase of RA concerns building an 'impact matrix' by assignment of the 'behaviour indices' (*pij*) of each alternative with respect to each criterion, thereby adopting an appropriate judgement scale.

The second phase is devoted to constructing a 'regime matrix' through a pairwise comparison based on the 'behaviour indices' attributed to the 'impact matrix'.

The elements of the impact matrix are composed as follows:

$$a\_{\mathbf{i}\ \mathbf{i}', \mathbf{j}} = +1 \text{ if } p\_{\mathbf{i}\mathbf{j}} > p\_{\mathbf{i}\ \mathbf{i}'\mathbf{j}} \\ a\_{\mathbf{i}\ \mathbf{i}', \mathbf{j}} = -1 \text{ if } p\_{\mathbf{i}\mathbf{j}} < p\_{\mathbf{i}\ \mathbf{i}'\mathbf{j}} \\ a\_{\mathbf{i}\ \mathbf{i}', \mathbf{j}} = 0 \text{ if } p\_{\mathbf{i}\mathbf{j}} = p\_{\mathbf{i}\ \mathbf{i}'\mathbf{j}\prime} \tag{1}$$

where for each comparison, *j* is the value arising from comparing the two alternatives i and *i* ′ according to the *j* criterion.

The final phase concerns obtaining the ranking of the alternatives. The aggregate priority of each alternative, i.e., the preference of option *i* respect to alternative *i* ′ (considering all the criteria adopted) is expressed by the *C<sup>i</sup>* value:

$$\mathbf{C}\_{i} = \frac{\sum\_{l'=1}^{n-1} \mathbf{c}\_{ii'} \cdot j}{n-1} \tag{2}$$

where *cii'* is the weight attributed to the criteria. *C<sup>i</sup>* is conveniently normalised so that it can be included between −1 and +1. The alternative that reports the highest final value is the most attractive one according to the criteria set adopted.

In our study, the impact matrix is represented by the relationship between the 180 observed SMABs—i.e., the alternatives in the RA—and the five FAO principles. The behaviour indices reflect (for each firm) the frequency of 'yes' reported in the scheme shown in Figure 3. Since the highest frequency assessed was 8, we adopted a 1–9 judgement scale, i.e., *pij* could assume a value from 1 (any presence of firm action related to the FAO principle) to 9 on the basis (8 actions).

The regime matrix was built based on Formula (1); it means that, in each cell, the value is equal to +1, −1, or 0 in cases of positive, negative, and null difference, respectively, between the behaviour indexes (from time to time) considered in the pairwise comparisons; finally, Formula 2 was applied to estimate the ranking among the FAO principles.

It is important to stress that in the MCA, for analytical purposes, the variables should be independent [48]. For this reason, the principles and actions of FAO were considered methodologically independent variables and interlinks among principles and actions were not investigated.

#### **3. Results**

A preliminary descriptive analysis was carried out to offer a snapshot of what is occurring in southern Italy regardless of the agricultural firms' size. This will lead to an understanding of the role of SMABs in achieving the objectives of sustainable development.

Findings showed that among the AFBs located in South Italy that had a website (n = 650), only 30% (n = 193) implemented at least one action as defined by the FAO [2]. What emerges is a picture of the different attentions paid by firms to the issues of sustainable development. Only 38% of large AFBs (13 out of 34) implement these objectives, and the percentage is even lower in the case of SMABs (of which only 29% (180 out of 616) declared on the website to have put actions that positively impact sustainable development). Of these, 26% (n = 8 large firms and 42 SMABs) had a section of their respective websites dedicated to sustainability, although only seven in all (of which there were three large firms) had a sustainability report. These data can be interpreted as a sign of how many sustainability values are adopted by the SMABs.

Speaking about the actions taken in detail, Table 1 shows that 20% of AFBs take at least one action related to the protection and enhancement of natural resources (second principle), followed by 13% of firms being committed to improve livelihoods and foster inclusive economic growth (third principle). These overall rates take different values according to firm size, but the principles' positions do not change.

Looking at the actions taken by firms for each FAO principle, the findings show that the most reported action concerns the reduction in losses, encouraging 'reuse and recycling', and promoting sustainable consumption (action 8), followed by action 12 (improving nutrition and promoting balanced diets).



The total number of firms that take at least one action per principle is reported in the TP columns (TP = total for a given principle). This number can be lower than the sum of firms per single action because some firms can appear in more actions.

> In order to describe the dimensions of the object and categories of dimensions with regard to SMABs, each of their behaviour was assessed according to the FAO's actions that impact the SDGs that have been listed. Table 2 summarizes the actions taken by the SMABs.

**Table 2.** Summary of actions performed by SMABs according to FAO's actions and SDGs.

Using the Abraham and Pingali's [28] extended framework, we analysed the categories of dimensions, classifying the SMABs' behaviour from SDGs' viewpoint (Table 3).

**Table 3.** Number of actions reported for each sustainable development goal.


The findings show that the environmental goals receive, without doubt, the greatest attention from the SMABs. This indicates that they understood that natural resources are the material basis of human society and made this the foundation of their primary sector activities. The maximum attention given to SDG 12 (responsible consumption and production) shows that the actions of the SMABs are inspired by the aims of reducing

their environmental impact, promoting the use of renewable energy sources, and making responsible purchases. In particular, 43% of the behaviours concern the FAO action 8. This action is also the most important in SDG 7, which is affordable clean energy (17% of businesses). These data demonstrate companies' commitment to promoting their transition towards a sustainable energy system through technological investment in renewable energy resources.

The second priority was nutrition goals. The results show that companies' actions aimed at reducing hunger were mainly aimed at favouring their transformation to the SFA system by sharing knowledge, building capacities, and fostering participation in modern value chains (action FAO 4).

Finally, the poverty goals, and in particular the SDG 8 (decent work and economic growth), recorded a commitment from businesses for FAO action 9, which is 'empower people and fighting inequalities'.

The extent of the actions attributable to the social and residual SDGs are negligible.

The application of regime analysis allowed us to rank the FAO principles according to the behaviour of each SMAB that is summarised in Table 2. Using a 180 (firms) × 5 (principles) matrix and developing the method illustrated in the methodological section, we assessed that the second FAO principle, i.e., 'protect and enhance natural resources' was preferred over other principles (Table 4). This principle shows a score of about 0.7, implying that, as a whole, SMABs that are expressly sustainability-oriented complied with it with a probability of approximately 70%.

**Table 4.** Final ranking of Food and Agriculture Organization principles.


'Improve livelihoods and foster inclusive economic growth' ranks second, with an estimated score of 0.548.

The other principles showed probabilities of less than 50%. This is particularly surprising for the first FAO principle because increasing productivity and added value in the food system should represent the primary objectives of the SMABs. These firms probably tended not to declare this effort on the website or elsewhere because they considered it implicit.

#### **4. Discussion**

SMEs are considered to be the 'major engine' of economic growth and socio-economic development [50] and they play (now and in the near future) a leading role in SFA [51]. Therefore, this study aimed to investigate which sustainability actions are most important for the SMABs and which are neglected so as to provide policymakers with the basis for planning appropriate strategies to achieve all the SDGs of the 2030 Agenda.

Despite the variety of sustainability practices pursued by SMABs, the propensity for actions that lead to protect and improve natural resources prevails (65%), disavowing previous studies that perceived SMEs as failures in relation to environmental sustainability due to their low take-up rates of sustainable business practices [52] (p. 172). This datum fits well with the CAP's aim of protecting natural resources, which, in the SMABs, is a worthy ally to push for SFA.

A possible explanation of this result suggests that SMABs, due to the rapid transformation of the agro-food system and the pressure on them to tackle environmental, health, and food safety problems [53], are more aware of both their environmental responsibility

(ER) and competitive advantage derived from voluntary ER practices and their disclosure [54,55]. Indeed, organisations driven by sustainability competitiveness are prone to improve their performance related to energy and waste management, increase production and decrease sources of input, introduce eco-products, and implement ecological labelling and green marketing [56]. This interpretation of the results contrasts with previous studies in the Italian context, according to which SMEs understood the environmental responsibility as an added cost rather than a market opportunity, while not considering the market that is highly responsive to their environmental practices [57].

Within the second FAO principle, more actions were recorded for FAO action 8 (reduce losses, encourage reuse and recycle, and promote sustainable consumption). This indicates that SMABs have begun to understand that even if they are small, they contribute to pollution worldwide [52], and as producers, they will be central stakeholders in achieving an optimised, zero-waste production and distribution system [58] because they are likely to design business systems that reduce environmental impacts [59]. This propensity of SMABs bodes well for the transition towards the circular economy paradigm and meets the aim of the 'Circular Economy Package', which is the new action plan of Europe's new agenda for sustainable growth (EC 2018) and the Green Deal.

The second principle mainly considered is 'improve livelihoods and foster inclusive economic growth' (24% of large AFBs and 42% of SMABs), which is primarily directed to reduce poverty and food insecurity in rural areas. This principle shares several aims with the CAP that supports farmers' income and adopts market measures, and seeks to ensure sustainable and inclusive rural development. The fact that SMABs are engaged in behaviours related to this FAO principle is of considerable importance.

First, because SMEs dominate the agro-industry sector and are a core component of any rural development strategy [60,61], our results can be read in the light of previous studies focused on social sustainability in agriculture according to which firms producing more social outputs are considered of great value [62]. Therefore, investments in the social dimension [63] in SMABs can find a perfect breeding ground for the success of policies aimed at promoting sustainable rural development, especially rural vitality and food security, which are considered among the most significant public goods from agriculture [64].

Second, we have noticed that many businesses have the tab 'territory' site menu, in several cases positioned before the 'about us' tab. This datum can be read according to two opposing interpretations. On the one hand, SMABs, especially Italian ones and producers of traditional food products, use 'territory' as a strategic resource in a fiercely competitive market, leveraging the synergistic link between authentic agro-food products and their region of origin [65,66]. On the other hand, it can be the expression of sincere interest in promoting its territory as a lever to increase the attention towards all local products and promote food and wine tourism. In this context, the producer feels part of a community and aims to contribute to its survival and growth.

Looking at the single FAO actions, the most important appears in the FAO action 12 (improve nutrition and promote balanced diets). The overwhelming majority of firms that have implemented policies/steps under this action have carried out nutrition education and awareness programs, promoting the consumption of locally grown nutritious food.

However, the commitment shown in action 9 (empower people and fight inequalities) is no less important. This action aims to provide rural firms with the tools and capacity to build resilient livelihoods. In this respect, many firms have activated programs to help small producers and young people enter networks that allow them to enter the market. This behaviour generates benefits that fall under social indicators related to the society as a whole (such as the quality of rural areas and contribution to local employment) [67] and can complement the concept of supply chain responsibility (SCR). Within the two-way relationship between supply chains (SCs) (that depend on community resources such as entrepreneurs) and the social well-being of communities (that build and maintain prosperity, thanks to the opportunity offered by SCs), the firms that participate in the agro-food supply chain reduce the producers' disadvantages and enhance the rural community's develop-

ment. It is not just actions aimed at meeting external pressures, disclosing their "status of responsibility", maintaining their reputation and obtaining legitimacy to their operations and presence in the market [68–70]. SMABs also feel that they "have the responsibility to promote functional communities or community sustainability proactively" [71].

By focusing on the third most-widely reported principle (increase productivity and employment and value addition in food systems), on the one hand, SMABs are committed to creating the conditions for the producers' skills and knowledge so that they can participate in modern value chains (FAO action 4). On the other hand, just over 10% of the adopted behaviour related to FAO action 2 (connecting smallholders to markets). To make resilient and stable agro-food business, this system must encourage all the actors (and therefore, also smallholders) to cooperate, since, through cooperation, the agro-food system creates a new development process centred on sustainability, thereby creating value for territories and agro-food districts, promoting their uniqueness, and enhancing environmental protection and social cohesion [72]. In this sense, the policymakers' role is crucial in fostering such collaboration, particularly improving specific assistance to local AFBs for collective projects and spreading knowledge amongst other rural stakeholders [73].

Concerning the last two indicators reported, the lack of attention to principle 5 is not surprising (adapt governance to new challenges). Only four companies reported the FAO action 18 (strengthen innovation systems), having made investments in agricultural R&D with collaboration between firms and universities. The least attention to principle 4 (enhancing the resilience of people, communities, and ecosystems) raises some questions.

On the one hand, the FAO actions 13, 14, and 16 may appear to be out of the reach of SMABs. On the other hand, only three large companies, but as many as 25 SMABs, have implemented actions aimed explicitly at reducing greenhouse gas emissions (FAO action 15—address and adapt to climate change). It is a sign that climate change is becoming a primary issue not only within the political agenda but also in businesses. In this context, education programs and outreach plans for SMABs can find fertile ground.

Turning our gaze towards SMABS' behaviours recorded based on the SDGs in which each FAO's action impacts, it appears that SMABs are more likely to adopt behaviours aimed at protecting and improving natural resources. The fact that there is only about 50% of probability that companies invest in actions aimed at 'increasing productivity and employment and adding value to food systems' raises doubts about the willingness or ability of companies to create networks in which skills and knowledge can be shared with small producers to develop their skills so as to connect small farms to markets.

Finally, by moving the analysis towards the SDGs, a significant finding was made: many SMABs are committed to achieving SDG 7, especially adopting innovations in the field of renewable energy. Its importance stems from the fact that the European Commission states that the clean energy supply for food and agriculture is crucial to deliver the European Green Deal. Once again, SMABs are proving to be agents of sustainable development.

#### **5. Final Remarks**

The aim of this study was to understand the behaviours of SMABs that promote the transition towards the SFA. In effect, the agro-food sector has always performed essential functions on the food, environmental, and social levels. Still, today, it is called and engaged in an even more complex effort if we consider that the future economy cannot ignore the social, economic, environmental, food, water equity, and energy issues and preserve biodiversity.

Our analysis has contributed to the literature by using the FAO approach outlined in 'transforming food and agriculture to achieve the SDGs' (2018), aiming to support and accelerate the transition to more sustainable agro-food systems. The previous literature investigates the agro-food system's actors' behaviours about single or multiple dimensions of sustainability or SDGs. However, as far as we know, no studies investigate specific behaviours according to FAO's actions.

Another relevant contribution lies in investigating which categories of SDGs are greatly promoted by SMABs, bringing to light the important signs of their pivotal role in achieving effective Green Deal targets.

Finally, a further contribution lies in having carried out an analysis of sustainability actions of SMABs through the lens of digital disclosure, i.e., of firms that use online tools to communicate their commitment to sustainability. In fact, among the different types and tools available for external communication of corporate sustainability, online has experienced rapid growth in recent years [74] because it is "a privileged means of communication towards sustainable development, where information disclosed knows no border" [75] (p. 253). In this vein, the corporate website represents an important medium for voluntary sustainable disclosure, and their dialogical communication capabilities may be considered an indication of demonstrated willingness and preparedness to promote and support communication with external actors [76]. For that reason, the choice of the website as a tool for our investigation arises from the consideration that it is no longer a simple 'channel' among many, but often the strategic lever of dialogue and confrontation with the outside world.

This study had some limitations. First, it was based on a sample of southern Italian firms; thus, the results need to be tested in different areas and countries. Second, the study did not consider multiple behaviours relating to the same FAO's action and SDGs. Future research can account for such multiple behaviours as well as other common standards used by SMABs. Future research can also expand the study with direct interviews with companies to see if they take more actions than those posted on their website, with an undoubted advantage in terms of verifying our results. Finally, we used the FAO's principles as a diagnostic tool to interpret business operations. In this perspective, our findings do not allow one to give information about possible management implications on the prescriptive side. In effect, while providing a detailed overview of corporate behaviour, our findings are not directly able to give indications on the intentions that led to the adoption of observed behaviours by firms. However, we are conscious that the analysis of how pursuing the formal sustainability objectives can affect the company's management can be a valid next step of our research.

**Author Contributions:** Conceptualization, B.A., F.A.M., L.B., R.P., P.P. and R.F.; methodology, B.A., F.A.M., L.B., R.P., P.P. and R.F.; formal analysis, B.A., F.A.M.; investigation, B.A., L.B., R.P.; writing original draft preparation, B.A., F.A.M., L.B., R.P.; writing—review and editing, B.A., F.A.M., L.B., R.P., P.P. and R.F.; supervision, R.F., P.P.; project administration, P.P. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Data Availability Statement:** The Aida database—Bureau Van Dijk was used to select the sample of firms.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**


## *Article* **Capability Assessment toward Sustainable Development of Business Incubators: Framework and Experience Sharing**

**Nathasit Gerdsri 1,\* , Boonkiart Iewwongcharoen <sup>2</sup> , Kittichai Rajchamaha <sup>1</sup> , Nisit Manotungvorapun <sup>3</sup> , Jakapong Pongthanaisawan <sup>4</sup> and Watcharin Witthayaweerasak <sup>5</sup>**


**Abstract:** Business incubators have been widely developed to advise, support, promote, and provide a nurturing environment for new business start-ups and entrepreneurs. The development of a framework for capability assessment allows the management of each incubator to understand its strengths and room for further improvement. Moreover, assessment results across a community, such as a nation or state, can provide insights into resource allocation and various management policies so that policymakers can support the development of business incubators under their supervision. This article describes the development of a capability assessment framework for business incubators (BIs) in Thailand. A case study demonstrating how the capability assessment is analyzed is also presented in the article.

**Keywords:** capability assessment; business incubator; maturity model; sustainability; Thailand

#### **1. Introduction**

There are various roles and duties of business incubators depending on the structure of the unit. One of the widely accepted business incubator configurations is the InfoDev configuration developed by World Bank. InfoDev addresses the roles of a business incubator as: To help clients (entrepreneurs) develop a business model, set up a plan, and find a source of funding; to provide access to experts who can give technical advice; and to create the appropriate environment for active engagement. However, business incubators do not have a primary role as an investor. InfoDev's configuration aims to harmonize with the four stages of the entrepreneurial life-cycle: Germination, pre-incubation, incubation, and post-incubation [1]. The UBI Global benchmark 2015/2016 report identifies the three critical success traits of an incubation program as attracting high-potential startups, ensuring enough resources for operations, and creating a supportive entrepreneurial environment among startups [2].

In East Europe and Central Asia (ECA), InfoDev interviewed nine businesses from eight countries with distinct performance incubators. The results showed that the current business incubators in those countries are mainly supported by the federal government, such as the ministry of ICT, ministry of education, and/or ministry of science. The study also showed that the role of business incubators in the private sector is increasing in many countries. Moreover, some business incubators can reach financial self-sustainability after 2–4 years of operation, and experienced experts, such as CEOs and high-level executives, tend to gratefully participate more with incubator activities [1].

In Brazil, ANPROTEC (Brazilian Association of Science Park and Business Incubators) is composed of private and public members that promote innovation to increase Brazil's

**Citation:** Gerdsri, N.; Iewwongcharoen, B.; Rajchamaha, K.; Manotungvorapun, N.; Pongthanaisawan, J.; Witthayaweerasak, W. Capability Assessment toward Sustainable Development of Business Incubators: Framework and Experience Sharing. *Sustainability* **2021**, *13*, 4617. https://doi.org/10.3390/su13094617

Academic Editor: Andrea Pérez

Received: 15 March 2021 Accepted: 13 April 2021 Published: 21 April 2021

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

economic and social welfare value by providing a variety of activities and services to support entrepreneurs and companies. ANPROTEC is currently a member of the International Association of Scientific Parks and also represents Brazil in the Triple Helix Association (THA). The financial income of ANPROTEC comes from membership, training courses, research, and events. A major feature of incubation in Brazil is the degree of private/public coalitions of partners that support incubation efforts. The Brazilian case has strong national incubator associations. For instance, the Federation of Industries for the State of Sao Paulo (FIESP) operates a dozen incubators [3].

The International Business Incubation Association (InBIA) is a global nonprofit organization in the USA. For over 30 years of service, the goal of InBIA has been to enrich the entire ecosystem by providing industry resources, education, events, and global programming to help their members better serve the needs of their unique communities and regions. Currently, InBIA consists of business incubator developers and managers, corporate joint venture partners, venture capital investors, and economic development professionals. There are more than 2200 members in 62 countries. The Services of InBIA include training and education for members, such as the Business Incubation Management (BIM) Certificate, NewCo Academy Courses, Online Courses, and Customized Training. In addition, InBIA also provides information for their members about industry news and resources and hosts International Conferences on Business Incubation (ICBI). InBIA's income is from membership, training courses, research, and events.

In South Korea, the Korea Business Incubation Association (KOBIA) facilitates technologybased start-ups in collaboration with the Korean Intellectual Property Office (KIPO). The organization trains start-up managers (business incubator managers) as well as students through short-cycle start-up schools or start-up competitions for university students [4]. The association plays this role in five areas. First, the policy area aims to support higher education institutions and research institutes to establish incubators for research commercialization. Second, the business area targets the expansion of the role of incubator entities to support marketing programs. Third, the education area puts an emphasis on the development of an entrepreneurship curriculum in higher-education institutions. Fourth, the international networking area focuses on overseas marketing. Fifth, the public area aims to provide online access and develop the communication tools [5].

In Taiwan, the Chinese Business Incubation Association (CBIA) is a non-profit and membership basis organization. CBIA promotes efficient management, the exchange of information and experience, and resource sharing for the incubators in Taiwan. In addition, CBIA creates networks, conducts research, and provides assistance to policy-makers. CBIA also develops appraisal system and related training programs for incubator professionals. The CBIA's mission is the development of incubation centers, assistance to incubated enterprises in diversified fields, arrangement of specialized activities and skill training courses, provision of educational and practical assistance and materials for incubators and their tenants, publications related to business incubation, and contract establishment with relevant domestic and foreign partners for exchange of experiences (Chinese Business Incubation Association) [6].

The discussion above exemplifies how the executives and management team of business incubators attempt to make the better uses of their capabilities and resources to drive the future development rather than rely on external supports, particularly from government. This attempt has been considered as the pathway toward sustainable development of future business incubators.

Thus, the current capabilities of each incubator need to be assessed in various dimensions. The management team can use the assessment results to guide the future development of each incubator toward sustainable operations.

This leads to two major research questions. The first one is how the capabilities of business incubators can be assessed. The second one is what dimensions of capabilities and their measuring parameters should be used for assessment. Responding to these two research questions, this study reviews different assessment frameworks and presents the development of a capability assessment model for incubators in Thailand. The later section of this paper provides managerial implications on how the assessment framework and model can be strategically implemented.

#### **2. Incubator Development and Evolution in Thailand**

Thailand's business incubator was first initiated in 2002 at the country's National Science and Technology Development Agency (NSTDA) where the Business Incubator Centre was established to support startup companies and firms with innovative and technologically driven products. Later in 2004, the Office of the Higher Education Commission (OHEC) under the Ministry of Education initiated the University Business Incubator (UBI) program to reinforce the country's technological commercialization from both public and private higher education institutions [7].

There are currently three platforms of business incubators in Thailand: (1) Business Incubation Center (BIC), (2) University Business Incubator (UBI), and (3) incubators in the private sector. The first two platforms are operated by governmental agencies. The third one is managed by different private firms. BIC is under the supervision of NSTDA. UBI is run by OHEC. For the third platform, there are various companies that support the country's business incubator.

BIC has incubated 74 start-ups and supported established companies with a total of 320-million-baht annual revenue, such as Flexoresearch (an R&D service provider for the pulp, paper, printing, and packaging industries) and KEEN (a bio-remedial firm) [8]. For UBI, the country's fifty-six higher-education institutions have participated in the UBI platform (http://www.mua.go.th/users/bphe/bs/ubi.html (accessed on 20 March 2020)). The third platform of non-governmental agencies is run by private companies/firms in different industrial sectors, for instance, telecommunication service providers and real estate companies. These are companies such as AIS The Startup, The FinLab Accelerator Program, Digital Ventures Accelerator, AddVentures, and Ananda Urban Tech.

A critical problem of the country's university business incubator is a lack of strategic support and insufficient, fragmented, and uncertain financial resources. This is due to the lack of understanding of the risky nature and financial support of start-ups, particularly the technologically based ones. Financial resource support provided by UBI has been spread too thin (due to program rigidities) and has been spent inefficiently (such as duplicate trainings) [7,8].

#### **3. Areas of Capability Development for Business Incubators**

Academics have adopted various theoretical lenses spanning different disciplines to study the complexities of the business incubation process and to understand the mechanisms that make a business incubator more effective [9–13]. Those frameworks used in incubator capability assessment can be found to be divergent. For instance, Mian [14] proposed the assessment framework of the University Technology Business Incubator (UTBI) and determined four features that combined the goal approach, the system resource approach, the stakeholder approach, and the internal process approach. On the other hand, Irshad [15] in the "Incubator Support Programme Evaluation Report 2008" by the Ministry of Economic Development of New Zealand utilized three key phases of incubator lifecycles as the framework (the startup phase, the growth phase, and the maturity phase).

According to the literature review, the capability of business incubators can be grouped into seven areas as hereafter described.

#### *3.1. Strategy and Organizational Structure*

Strategy and organizational structure are key components of the survival and sustainability of incubators. Incubators need to create their own differentiation strategy, position themselves as specialists, and focus on particular domains [16–21]. Eccles, Perkins, and Serafeim [22] also highlight the three fundamental elements of organization culture as innovation, trust, and capacity for transformational change. In other words, the dimension

of strategy and organizational structure should be created with a focus on specialized areas, the continuity of process, and the adaptation to dynamic environmental changes.

#### *3.2. Finance*

The conceptual resource-based views of Barney [23] and Gassmann and Becker [24] are applied. Both contributions lead to the connection between the incubation process and resource allocation. In general, incubators utilize two types of tangible and intangible resources. Tangible resources are used through the flows of finance, infrastructure, and explicit knowledge [25–27], while intangible resources are managed through the flows of implicit knowledge and branding [28,29]. These authors' works point to the importance of financial resources for the incubation process. The incubators need efficient financial management, which involves investment and subsidy as well as salary and wages. Moreover, based upon a relevant literature review and preliminary interviews with the sampled incubators, these authors found that incubators earn revenue from five sources, namely (1) subsidy, (2) activity-based revenue, (3) asset-based revenue, (4) fundraising, and (5) revenue from investments.

#### *3.3. Knowledge Body*

Since the degree of incubators' service excellence and specialization depends on their proprietary knowledge body [29], the incubator's capability assessment requires the determination of the management of the knowledge body [25,30,31]. This dimension employs Nonaka's A Dynamic Theory of Organizational Knowledge Creation [32] as the conceptual framework to understand the management of the knowledge body within incubators. Nonaka's work found that there is more explicit knowledge than tacit knowledge at the ratio of 80:20. The tacit nature and explicitness of knowledge can be shifted over time depending on the emergence of new knowledge from influential situations. This continuous shifting of knowledge forces firms to adopt the process of knowledge management through the cyclic of a continuous knowledge management process, which is composed of socialization, externalization, combination, and internalization (SECI) [33].

#### *3.4. Human Resource Development*

Human resource development (HRD) involves the process of improving working approaches, knowledge, skills, and attitudes among employees in order to achieve organizational objectives [34–36]. Human resource development needs techniques, tools, and measures in order to align the goals of individuals and organization as well as to support and solve problems for employees. Tseng [37] investigated the relationship between HRD and incubator management and development and revealed that the effectiveness of the incubation process is influenced by HRD's six roles: As a catalyst, a failure rate reducer, a multiplier effect generator, a pilot demonstration center, an entrepreneurship and innovation promoter, and a productive endeavor inspirer.

#### *3.5. Infrastructure*

This dimension adopts Smilor's incubation model [38] to understand the roles of infrastructure for incubators. The model indicates that business incubators need a support system that contains four elements: (1) Administrative (such as documentation and file processing); (2) secretarial (such as service work); (3) facilities (such as space, tools, equipment, and other supporting objects); and (4) business expertise (such as technical knowhow and market knowledge). These four elements support the agility and the continuity of services and other activities provided for incubatees [39–41]. Hence, incubators need to invest in facilities in order to be able to provide services with minimum dependence on other incubators within the network.

#### *3.6. Network*

It is essential for business incubators to foster a relationship with other agencies, such as research centers, industrial agencies, government agencies, funding organizations, experts, and the market. Moreover, the management of an incubator needs to engage with the networks of local, national, and international incubators to obtain benefits from the pool of shared resources [41–44]. This dimension attempts to understand the adoption of networks among incubators by focusing on the New Economy Incubator Model developed by Lazaroeich and Wojciechwoski [45]. The model highlights that incubators who have a broad network at the regional, local, and international levels tend to have a high degree of service excellence.

#### *3.7. Services*

The core function of business incubators is to support incubatees to survive and thrive in the market through the delivery of service excellence [46–49]. This dimension of services employs the Customer Satisfaction Model developed by Zeithaml et al. [50]. The model highlights that service quality can be divided into three levels, depending upon the distance between customer perceptions and expectations. The base level of meeting basic customer requirements is achieved when organizations reach the customer requirements and prevent customer complaints. The mid-level of satisfying unstated customer needs is accomplished when organizations reach the customer requirements and develop customer confidence. The top level of achieving customer delight is reached when organizations provide services that exceed customer expectations and build customer loyalty.

#### **4. Methodology: Development and Validity of Assessment Model**

This study addresses two research questions of how the capabilities of business incubators can be assessed and what dimensions of capabilities and their measuring parameters should be used for assessment. In this study, the operation of business incubators from many countries have been reviewed from the literature and their official websites. Although various operations of business incubators can be found, the characteristics can be categorized into seven dimensions as described in Section 3.

Three rounds of focus group interviews were held to test the content validity of seven dimensions and to obtain insights on how business incubators in Thailand should be developed toward sustainability. Fifty managers and executives from various business incubators across the country were invited to participate in three rounds of the focus group interviews organized and moderated during March–April 2018, lasting for 4–5 h per round. The first round focused on opportunities and challenges of business incubators in Thailand, aiming to shed light on the potential of Thai business incubators toward sustainability. The second round discussed the necessary capabilities required toward the future development of business incubators. The participants were allowed to reveal their perspectives of ideal business incubators. As a result, all participants agreed with the seven dimensions as earlier described. For the third round, participants were asked to discuss about the assessment model including what proper indicators and measuring parameters should be used for assessment. The 5-point scale was introduced, and participants were encouraged to give the description of each of the five levels (from initial, defined, established, systemized to matured) of each dimension.

Findings from the three rounds of focus groups led to the conclusions on seven dimensions along with their descriptions, parameters, and measuring indicators. Then, the assessment model was validated through the workshop organized during December 2018 with business incubator managers and operational teams. The assessment model was tested with a prepared case study. The details of model development and the case demonstration are presented in Sections 5 and 6, respectively.

The scales developed in this study may have to be adjusted in the future as many disruptions arrive and the role of business incubators may have to change overtime. Consequently, the validity of assessment model might have to be revisited from time to time in order to adapt with changing circumstances.

#### **5. Capability Assessment Model: Lessons Learned from Thailand**

A capability assessment model for business incubators that is widely accepted and used internationally is still being debated. However, there are a few related studies. Each study has similarities, but they use different assessment models. For instance, ANPRO-TEC in Brazil uses the CERNE framework (Centro de Referencia para Apoio a Novos Empreendimentos) by setting four levels of capabilities according to the process and the ability in operation. In New Zealand, The Humaira Irshad (2014) [15] and Incubator Support Programme Evaluation Report (2008) by the Ministry of Economic Development [51] defined three levels of capability according to the lifecycle of incubators from the early state, growth state, and maturity state of operational capability.

The community of business incubator managers is still in search of the ideal incbation strategy and models. The UBI Global benchmark 2015/2016 highlights that it is a much more complex endeavor due to the particularities of each center's business model [2]. The different contexts have different types of problems and diverse cultural underpinnings embedded in their structural systems and social relations. Therefore, the consequences of the same incentives and assessment mechanisms applying/functioning in different individual contexts might not be identical [52]. This is the same case for applying any model for capability assessment of incubators in countries that have specific contextual factors. Mian et al. [9] pointed out that although a model needs to develop a unified theory of incubation, which covers the business incubation mechanisms, the key challenge is how to address varying policy objectives, organizational forms, and contexts.

In this study, the capability assessment model is developed by incorporating multidimensional perspectives into the consideration. Not only the vision, mission, and objective of business incubators, but also the opportunities and possibilities to further develop the incubators are considered.

The capability dimensions and maturity levels required for the operation of an incubator were defined during a brainstorming session with experts and top management from leading incubators in Thailand. The meeting was held to define the capability dimensions and their description. The following seven dimensions were agreed up-on (as shown in Figure 1): (1) Strategy and organizational structure; (2) finance; (3) knowledge body; (4) human resource development; (5) infrastructure; (6) network; and (7) services.

. . **Figure 1.** Dimensions used in capability assessment model.

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The experts then discussed and agreed upon the capability rating scale by using five maturity levels ranging from initial (the lowest level), defined, established, systemized, and matured (the highest level). The description of an incubator in each level is shown in Table 1. . . . . . . . . . . - - . . %

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**Table 1.** Maturity level used in the capability assessment model for incubators in Thailand. - - . .

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#### . **6. Description of Capability Assessment Model for Business Incubators in Thailand**

. . This study proposes seven dimensions to be employed in the capability assessment model for business incubators in Thailand. They are strategy and organizational structure, finance, knowledge body, human resource development, network, services, and infrastructure.

#### . *6.1. Dimension 1: Strategy and Organizational Structure*

. . : : [ ]. . . . The organization can be sustained with a corporate culture consisting of three elements: Innovation, trust, and capacity for transformational change [53,54]. It is crucial to establish a corporate identity to build the corporate culture. The corporate identity features reframing identity, codifying new identity, and leadership commitment. Leadership commitment is essential since any changes or any operations in the organization require an organizational structure that appoints the leader who is distinctly responsible for managing and attending to the specific matters. Furthermore, leaders in the sustainable organization are different from the leaders in the traditional organization. Leaders from the sustainable organization exercise long-term vision in decision making and have tolerance against changes and risks.

. - . The detailed description of each maturity level under Strategy and organizational structure are illustrated in Table 2. At the initial level, business incubators have the operation plan but still lack a distinct goal. At the established level, business incubators have a strategic roadmap, risk assessment, and capability to solve the immediate problems.

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At the matured level, they can adapt their strategies due to the changing situations as well as predict the future shortcomings that may affect the business incubators.

**Table 2.** Maturity levels and their description on "Strategy and organizational structure" dimension.


#### *6.2. Dimension 2: Finance*

The sources of funds supporting business incubators can be divided into five categories: (1) Government-related subsidies; (2) activity-based revenue (e.g., business consultant fee, training fee); (3) asset-based revenues (spaces and equipment rental fees); (4) grant from graduated incubatees or large private corporations; and (5) revenue from other investments.

This study considers the percentage of revenue that business incubators are able to generate by themselves. The detailed description of each maturity level under Finance is illustrated in Table 3. At the initial level, business incubators obtain a subsidy from an outside source of funds. At the established level, business incubators can generate some revenue by themselves, but they still need some subsidization from the external sources of funds. At the matured level, business incubators will create enough revenue to run their operational activities and allocate support to other business incubators.

#### *6.3. Dimension 3: Knowledge Body*

The key elements to assess the knowledge body include basic knowledge, value-added knowledge, knowledge for innovation, knowledge management system, knowledge of international standards, and knowledge sharing.

The detailed description of each maturity level under Knowledge body is illustrated in Table 4. At the initial level, business incubators have a knowledge body that is able to solve fundamental problems of incubatees. At the established level, they have a knowledge body that is able to support the incubatees to enter the new market or create innovative products. The knowledge body at the established level also includes proprietary intellectual service. At the matured level is the creation of a new knowledge body and alteration and application the knowledge body to be practical for each incubatee.


**Table 3.** Maturity levels and their description on "Finance" dimension.

**Table 4.** Maturity levels and their description on "Knowledge body" dimension.


#### *6.4. Dimension 4: Human Resource Development*

Human resource development includes the efficiency of human resource management as well as the development of human resources (skills and career path). The maturity level of human resource development for a business incubator can be clarified in five levels. The detailed description of each maturity level under human resource development is illustrated in Table 5. At the initial level, the support for human resource development is very limited and unplanned. At the established level, an incubator specifies the personnel capability characteristics required for each job position as well as providing the support for staff to complete training and skill development activities. At the matured level, each person is not only aware of his/her role, duty, and responsibility but is also able to set personal working goals in line with the business incubator's goal.


**Table 5.** Maturity levels and their description on "Human resource development" dimension.

#### *6.5. Dimension 5: Infrastructure*

The key elements of infrastructure are comprised of administrations that are related to standard operation procedures (SOPs) for providing services to incubatees as well as facility management (e.g., office, maker space, equipment). The detailed description of each maturity level under Infrastructure is illustrated in Table 6. At the initial level, business incubators have rental space services, essential facilities, and staff. However, it is inadequate for all incubatees. At the established level, there is sufficient infrastructure and ability to appropriately and sufficiently meet the requirements of all incubatees. At the matured level, they can construct or procure the new resources and modify or develop the existing resources to be concurrent with the external changing factors and continuous requirements of the incubatees.

**Table 6.** Maturity levels and their description on "Infrastructure" dimension.


#### *6.6. Dimension 6: Network*

It is essential for business incubators to have a relationship with other agencies, such as the knowledge institutes, research centers, industry sectorial agencies, government institutions, fund agencies from both government and private sectors, experts from various areas, and the market. Moreover, it is necessary for the management of incubators to engage in the networks of local, national, and international incubators.

The detailed description of each maturity level under Network is illustrated in Table 7. At the initial level, business incubators have very limited alliances. At the established level, they will be part of the national level alliance network that can make an impact or create national level economic value. At the matured level, business incubators have roles as critical mechanisms or the central nodes of alliance networks.

**Table 7.** Maturity levels and their description on "Network" dimension.


#### *6.7. Dimension 7: Services*

The analysis of service capacity is based on balancing customer perceptions with expectations. The acceptance and satisfaction of services is considered to range from meeting basic customer requirements, satisfying unstated customer needs, achieving customer delight that exceeds expectations, and building customer loyalty.

The detailed description of each maturity level under services is illustrated in Table 8. At the initial level, the variety and capacity of services offered by an incubator are still limited. There are the knowledge transfer activities to the locals and the public promotion of the duties of the business incubators. At the established level, an incubator can provide services covering the whole value chain of operations as needed by incubatees. At the matured level, there are unique services. They can see opportunities and offer services that support the dynamics of the business environment.

**Table 8.** Maturity levels and their description on "Services" dimension.


#### **7. Case Demonstration for Assessing the Maturity Level of a Business Incubator**

This case study demonstrates how to operate the proposed model to assess the capability level of a business incubator. This demonstration case will be presented in three steps: (1) Data collection; (2) analysis; and (3) result presentation of the capability assessment level. . : ( ) ( ) ( ) .

#### *7.1. Step 1: Data Collection* . . :

.

To collect the inputs for assessment, the triangular interview approach is applied. The interview sessions are organized into three rounds. The first round is with executives of the incubator and the second round is with employees of the incubator. The third round is with clients of the incubators (see Figure 2). The interviewees are asked questions related to the seven dimensions of the capability assessment model. All interviews are recorded and transcribed. . . . ( ). . .

**Figure 2**. Data collection—triangular interview approach. **Figure 2.** Data collection—triangular interview approach.

. . The outputs of interviews in step 1 represent the case background and the conditions in which each business incubator operates. One example is shown in Table 9.

#### . . *7.2. Step 2: Analysis*

 ( ) . . Interview transcription in step 1 is analyzed along the seven dimensions. Key interview quotations are then extracted and assessed according to the maturity levels specified for each dimension (see Figure 3). For example, in Figure 3, quotations regarding to dimension 1 Strategy and Organizational Structure have been analyzed and can be connected with the definition of level 3 Established.

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*Sustainability* **2021**, *13*, 4617

#### **Table 9.** Case description.

#### **XYZ University Business Incubator \***

This university business incubator (referred to as XYZ in this case example) has been established for a decade. It is operated under the supervision of the university committee with the mission to promote and support new entrepreneurs through potential commercialization of the university research.

With this mission, XYZ plays a role in enhancing the capabilities and competitive advantages for businesses, co-developing innovation projects between academia and practitioners, and forming a network of experts from various fields.

XYZ has a flat structure, governed by the science park of the public university. This incubator is composed of five units including 1. Technology Licensing (TLO) 2. Innovation Design Office (IDO) 3. Office of Industrial Liaison (OIL) 4. University Business Incubator and 5. Development Unit for Startup (DUS). The executive meeting for strategic modification is held every three years. The board consists of executives from governing university, government, association, and business sector.

This incubator has large service areas; however, the primary services are focused on food products, agricultural products, IoT (Internet of Things), local wisdom, and area-based creativity. Nowadays, XYZ still rents the building space from the governing university. Over the past years, XYZ has prepared sufficient facilities, laboratories, and equipment to serve the entrepreneurs' basic needs along with customized designs and services for individual entrepreneurs.

The incubator produces a case study report every six months. However, most reports are still related to local food, agricultural products, and herbs. Internal knowledge-sharing activities among academic researchers, employees, and entrepreneurs are regularly held. Moreover, it has international linkages with countries in Asia, including Taiwan, Indonesia, and Vietnam, in activities of site visits, business matching, and cooperation.

The incubator used to experience financial obstacles, but it overcame them by seeking a variety of revenue sources and cutting unnecessary expenses. During the first three years, the incubator received 100% total funding support from the government. Nowadays, the incubator can generate revenue by itself and needs less support from the government. Furthermore, this incubator plans to operate with self-reliance in the long run.

As for internal management, this incubator provides financial rewards and honors for researchers and employees. Although the incubator accepts that the financial incentive might not be high, it attempts to use other non-financial incentives such as freedom, open and flexible working conditions, and training.

Currently, the proportion between the number of employees and the number of incubation projects is 1:12. The rate of terminated projects (when incubatees do not keep in touch for longer than three months) is 12%. This incubator does not clearly limit the period of incubation service, but it recruits applicants in 3–4 rounds a year. For each round, the interviews are conducted by professionals to screen applicants into 20 incubatees. However, this incubator still provides services by itself without any linkages with other incubators or with its networks.

**\*** Based on the actual organization but the name has not been disclosed.

. As the result of step 2, Table 10 shows the analysis linking the interview quotations to the maturity assessment level for each dimension.


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**Table 10.** Linking the extracted quotations to the assessment.

#### *7.3. Step 3: The Presentation of Capability Assessment Results*

The numeric results of capability assessment in Step 2 as shown in the right column of Table 10 are presented in a radar chart as shown in Figure 4. For example, the right column in Table 10 reveals that XYZ University Business Incubator performs seven dimensions at .

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levels of 3, 4, 2, 2, 2, 3, and 3, respectively. These numeric levels of seven dimensions are visualized in the form of radar chart format (see Figure 4 below). . ( ).

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. . **Figure 4.** A radar chart representing the capability level of XYZ University business incubator.

#### **8. Discussions and Managerial Implications**

This section addresses the managerial implications of capability assessment from three aspects: (1) The development of a proper strategy and strategic roadmap toward becoming an effective business incubator; (2) the cluster development among business incubators according to their capabilities and not just by size or geographical location; and (3) the development of a knowledge-based community among incubators. The details of each aspect are hereafter described.

First, the radar chart (as shown in Figure 4) reveals the current capability level of business incubators in each dimension. In a case in which the capability level is below expectations, managers need to focus on how to close the gap. The wider gap the between the assessed level and the expectation, the more seriously managers need to pay attention. In other words, the results on a radar chart analysis can lead to the priority for closing the gaps. The extended approach of technology and strategic roadmapping can be applied [55–57]. Managers can begin to draft a strategic roadmap by using a radar chart as the reference to identify what gaps they need to bridge and when to do so (see Figure 5 below). The extended details of integrating capability assessment into road mapping can be found in the study by Chutivongse and Gerdsri [58].

Second, the capability assessment results can be analyzed together with operational performance (such as number of incubatees, number of graduate incubates, the survival rate, etc.). The consideration of both capability and performance can be visualized in the form of a performance–capability matrix (see Figure 6). This matrix reveals the positions of business incubators indicating how high/low are their performances and capabilities. This matrix leads to four clusters. Business incubators in different clusters require different strategies to drive their development. Clustering can help policymakers or business incubator promotion agencies at the national level to customize their decisions on effective budgeting and resource allocation to strategically serve the needs of business incubators in each cluster rather than focusing on their size or geographical location. Figure 6 also shows the possible pathways to drive business incubator positioning in Q3 to eventually become the high-capability/high-performance incubator (Q1).

*Sustainability* **2021**, *13*, x FOR PEER REVIEW 18 of 23

**Figure 5.** A strategic roadmap guiding development activities for the specified incubator. **Figure 5.** A strategic roadmap guiding development activities for the specified incubator.

Second, the capability assessment results can be analyzed together with operational

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. – . **Figure 6.** The performance–capability matrix.

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Third, the capability assessment results can be used to develop the knowledge-based community among incubators by focusing on knowledge exchange [59] and the development of knowledge cluster [60]. The incubator with the highest level of capability in each dimension is considered as an incubator champion that is expected to act as a coach or a mentor sharing experiences on its developmental journey with other business incubators. Furthermore, the incubator champion can actively engage in community development by leveraging its capabilities and resources to work with other incubators to develop their capabilities. Engaging activities include holding regular meetings and seminars to transfer knowledge, setting up a talent mobility program, or collaborating in some projects with less capable incubators. These approaches have been practiced into develop the sectoral innovation system [61,62]. Figure 7 reveals that business incubator U performs better than business incubators C and N in the three dimensions of finance, services, and network. Business incubator U is expected to act as the incubator champion who shares experiences and its journey of development in light of how to manage finance effectively, improve service quality, and coordinate with partners of business incubators C and N.

. . **Figure 7.** The radar charts of Business incubators U, C, and N.

#### . **9. Conclusions**

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' . . ( . . .). - - . . The assessment of business incubators is significant for the country's incubation development. In this paper, the proposed model for capability assessment of business incubators is developed and applied to business incubators. The demonstration of the model is contextualized with the case of a business incubators in Thailand since these business incubators still rely on governmental supports through various forms (e.g., funding, creating business networks and communities, developing specialties in particular areas, etc.). For the longterm development, these incubators have to find the ways to become self-reliance in order to sustain their operation. It is very important for the management and executives of any business incubator to understand their current capabilities and limitations so that they can properly plan for their future development.

: ( ) ( ) ( ) ( ) ( ) ( ) ( ) . The capability assessment model consists of seven dimensions: (1) Strategy and organizational structure; (2) finance; (3) knowledge body; (4) human resource development; (5) infrastructure; (6) network; and (7) services. Each dimension is divided into a capability rating scale by deploying five maturity levels ranging from initial, defined, established,

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systemized to matured levels. The assessment result in the form of radar chart reports the current status of incubators' capabilities. Managers and executives of any incubator can use it as the reference to determine the areas for development and the degrees to which it needs to be developed. The proposed model can be utilized as the assessment platform for both individual units and national levels. Due to the dynamic of business environment, monitoring progress and re-assessing the capabilities are periodically recommended.

**Author Contributions:** N.G. coordinated the project and drafted this paper. B.I., K.R., N.M. and J.P. undertook case study and analysis. W.W. coordinated with informants and led the interview study. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Data Availability Statement:** Not applicable.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**

