CFDJ-Volume 2-Issue العدد الثاني - الجزء الأول- Page 191-220

Entrepreneurship and SMEs Sustainable Development
through Business Incubators: The case of Oman

By
Dr. Hesham Magd Dr. Aiman El Gharib
Associate Dean – Quality Assistant Professor, Higher
Assurance & Accreditation and Institute for Computer and
Faculty of Business and Business Administration,
Economics Head Modern College Damietta, Egypt,
of Business & Science (MCBS), A.farouk@za.edu.eg
Muscat, Oman,
Hesham.Magd@mcbs.edu.om
Scientific Journal for Financial and Commercial Studies and

Researches (SJFCSR)
Faculty of Commerce – Damietta University
Vol.2, No.2, Part 2., July 2021
APA Citation:
Magd, H. and El Gharib, A. (2021). Entrepreneurship and SMEs
Sustainable Development through Business Incubators: The case of Oman,
Scientific Journal for Financial and Commercial Studies and Research,
Faculty of Commerce, Damietta University, 2(2)1, pp.191-220.
Website: https://cfdj.journals.ekb.eg/
Scientific Journal for Financial and Commercial Studies and Researches
(Vol.2, No.2 Part1, July 2021)
Dr. Hesham Magd and Dr. Aiman El Gharib
ABSTRACT
Oman’s developing economy has relied heavily on hydraulics for
its expenditure since the early 1970s. However, due to the current business
environment and the new direction of the country; the 2020 and 2040
vision tends to focus on transforming the country into an economy which
relies on new sector development, new entrepreneurial business startups
and SMEs. Entrepreneurial startups and SMEs are significant factors in
the development of sustainable growth of a national economy and it is
expected that entrepreneurship in Oman will contribute greatly in its
economic development and sustainability. This is since using SMEs to
increase diversification in the economy, consequently, results in an
increase of job opportunities. A startup entity tends to face several hurdles
and challenges during the various stages of development such as rigid
labor regulations, business knowledge, networks, attracting market
segmentation, raising funds, procuring and operations, people
management, policies and regulations and social culture.
These challenges tend to arise because there is a lack of support for

both business and for an existing entrepreneurial ecosystem. Business
incubators can play a crucial role in developing an effective and supportive
entrepreneurial ecosystem to support entrepreneurs in building their
startups at different stages. The introduction of business incubators has the
potential to help foster entrepreneurial talent as well as creating an
environment for entrepreneurship; this is reflective of business incubators
being tools at both the micro and macro level. Therefore, Business
Incubation is viewed as a combination of business development processes,
infrastructure and knowledgeable business experts - designed to nurture
and grow startups.
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Somewhere in the region of 7000 business incubators exists around

the world in 2020, according to the National business Incubation
Association. The aim of this paper is to showcase how business incubators
may be capable of playing a critical role in developing the entrepreneurial
ecosystem within Oman. Furthermore, the authors will show how our
understanding of business incubators function may help with national
development. After considerable review of business incubators where it
was concluded that business incubators represent the cornerstone of
entrepreneurship and economic development and sustainability in any
economy and especially in Oman.
For example, the current study concluded that business incubators

lead to job creation, new business formation, business stabilization and
expansion, commercialization of research and knowledge and business
sustainability. All these benefits in turn will lead to economic
development and sustainability, and in sustaining such benefits, there are
certain critical success factors must be followed for the success of business
incubators and they are having stringent incubate selection criteria; access
to facilities and resources; access to consultant, advisors, and experts;
access to regulations and legal framework; selection of quality of
entrepreneurs, performance measurement and acceptance of innovative
products or services.
Keywords – Entrepreneurial Ecosystem, Business Incubation,

Oman, and Sustainable Development.
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1. INTRODUCTION
In today’s environment nations are seeking to achieve market

competitiveness, organizational sustainability and economic growth in
emerging and successful economies. One effective approach for achieving
this strategy is through the development of entrepreneurship.
Maroufkhani, et al., (2017) explain further that the entrepreneur is a driven
individual who can find new factors or innovative elements to develop new
products or services and contribute to economic development. Cha & Bae
(2010) defined entrepreneurship as a pioneering process that results in the
creation of new products and services as well as providing innovative
solutions to existing problems. Kuratko & Kruetts (2004) indicated five
key characteristics required for entrepreneurship, and these are: Taking
calculated risk; Building, leading and managing a team; Ability to manage
resources effectively; Mastering the art of drafting business plan; and
Opportunity Recognition. This perspective is called ‘Entrepreneurial
Perspective’ and the functioning assumption is that it can be taught to
others (Kuratko, 2005). Other benefits of promoting entrepreneurship were
established by Magd & McCoy (2014), such benefits include
product/service innovation, and creativity, and such benefits led to the
offerings of entrepreneurship education programs/courses (Karimi et al.,
2014).
Consequently, entrepreneurs would require a favorable and
supportive environment to thrive and flourish. The notion of this favorable
environment is reflected in the development of a supportive ecosystem.
Business incubators can play a crucial role in developing an effective and
supportive entrepreneurial ecosystem to support entrepreneurs in building
their startup ventures at different stages. At a micro level business
incubator hold the potential to create and develop entrepreneurial talent
and innovation, as well as fostering environments suitable for
entrepreneurship at the macro level.
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The main aim of this paper is to focus on the critical role that
business incubators play in Oman and their role in building a successful
entrepreneurial ecosystem led to economic sustainability. In achieving the
goal of this paper, it was decided to divide the paper into the following
sections:
Section 2 offers a brief on the economy of Oman and its vision for
transformation and diversification and the movement towards
entrepreneurship where SMEs sector can be developed and nurtured.
Section 3 focuses on an overview of business incubators and its meaning
as a support mechanism for the development of entrepreneurship and
SMEs. Section 4 provides a closer and historical look at business
incubators, different types of business incubators, and its impact on
economic development and its impact on SMEs. Finally, section 5
investigates the available business incubators in Oman in support of the
growing number of incubators in Oman in support of the country’s strategy
of diversification into entrepreneurship. A closer look is offered on the
critical success factors required for the success of business incubators that
may lead to economic development. This section also offers a
conceptional model for economic development based on business
incubators data presented throughout the earlier sections
2. OVERVIEW OF THE ECONOMY
Over the past 50 years, Oman’s economy was dependent on oil and
gas resources. This focus is now under restructuring; where a gradual shift
to an economy that relies more on private initiative, national labor and
renewable resources is needed - which is part of the 2020 and 2040 vision
for Oman. A new strategy of ambitious diversification plans is emerging
which focus on transforming the country into an economy which relies on
new sector development such as manufacturing, logistics, tourism, mining
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and fisheries, technology, new entrepreneurial startups and SMEs. In

support of this, Table 1 indicates that the private sector contributes
approximately 38% of nominal GDP to Oman’s economy, while the
government’s dependency to spend on oil and gas production has declined
since 2016 by 4%.
For full implementation of the diversification plans as per the

government vision, there needs to be further increases in the private sectors
contributions to GDP. Looking closely at Table 1 - which indicates that
the government remains highly dependent on oil and gas production - will
inform on the strategies required to enable the diversification plans to take
effect and focus on increasing diversification activities to aid the economy
(Oxford Business Group, 2018). In doing so, Oman is now focusing on the
development of a stronger, capable, knowledgeable and talented
workforce through improving the skillset of the Omani workforce; making
the economy less reliant on expatriates. Table 2 highlights the following
observations:
▪ 54% of the population is either below the age of 19 or above the age of 55
and are outside the working age demographics
▪ 46% of the population are between the working age of 20 to 54, with 28%
aged between 20 – 34.
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Table 1: Nominal GDP Percentages in Oman
Economic Activity 2017 2016 2015 %

Progress
Oil & Gas Production 29% 26% 33.1% -4.1%
Agriculture & Fisheries 2.3% 2.3% 2% 2.0%
Industry Activities – mining, manufacturing, electricity 20.5% 21.4% 220.7% -0.2%

& water, building & construction
Services Activities – financial intermediation, wholesale 38.6% 39.5% 37.4% 1.2%

& retail, real estate, transport, hotels & restaurants,
education, health
Public Administration & Defense 13% 14% 12% 1%
Source: National Centre for Statistics and Information, 2018
In 2018, the National Centre for Statistics and Information revealed

that 438,862 Omanis are engaged in work in both the public and private
sector. Based on this data, it was further highlighted that this amount of
the Omani workforce represents 38% of the Omani employment, with
potentially 62% (this rate of unemployment is offered by the National
Centre for Statistics and Information and anyone who is seeking
employment and do not have a job is considered unemployed) unemployed
representing over a half a million. This is an alarming rate of
unemployment which requires immediate attention from the government
regarding training, job creation and Omanization to be addressed in the
new 2040 vision policy document. It is believed that one strategy which
is being utilized in Oman to overcome this rate of unemployment is the
promotion of Entrepreneurial cultures and SMEs startups through building
a sustainable entrepreneurial ecosystem with business incubators.
Mazzarol (2014) has emphasized the importance of government
intervention in formulating policies that focus on the development of the
private sector(s).
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Table 2: Oman Population by Age Group
Age Group Total Percentage
0 to 19 1,138,566 45%
20 – 34 711,245 28%
35 – 54 447,393 18%
55 to 64 101,308 4%
65 + 106,857 4%
Source: National Centre for Statistics and Information, 2018
3. BUSINESS INCUBATORS
The concept of business incubators originated from the USA in the

early 1950s, however it started to grow in the 1980s and gain popularity
across the globe in the late 1990s (Al Mubaraki and Busler, 2012).
Business incubators have been proven to be powerful tools in the support
of creating and developing SMEs, innovation and start-ups. In the time
they have been in increasing use, business incubators have been
recognized and evidenced to meet a variety of economic and socio-
economic needs which include but are not limited to; the creation of wealth
and employment, the promotion of innovation and technology transfer.
Depending on local and national needs required for the incubator(s) to
fulfil, and by extension their structure and function(s) – the support they
can offer will vary. In practice, business incubators which are well-
structured will provide critical services, products and resources needed to
enable the development, growth and endurance of small businesses.
Despite the differing types of business incubators, they are usually similar
in nature to one another in the processes and services they make use of
(United Nations Industrial Development Organization, 1999:85).
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As previously alluded to, the purpose of business incubators is to

provide the necessary services and resources to ensure that entrepreneurs,
start-ups and SMEs can progress and become the backbone of the
economy. These business incubators allow for a defined set of services to
be provided – the first set of services is related to providing functional and
fiscal resources i.e., access to financial support, necessary facilities,
workspaces and equipment. In addition, the latter half are soft services
such as legal, educational, professional development support. This can
include but is not limited to; legal advice, networking, coaching and
mentoring (UKBI, 2011; Aernoudt, 2004).
It cannot be disputed that during the start-up period, SMEs face a
great deal of challenges and unavoidable difficulty in the process of trying
to bring their business(es) to life (United Nations Industrial Development
Organization, 1999:85). The challenges to their growth and sustainability
which start-ups and SMEs face in the current business environment
include both labor and market regulations, lack of / exhausted resources,
lack of R&D infrastructure, a lack of capital for business start-ups and a
need to find the right market for products (Shanfari, 2012). The obvious
and critical solution to these challenges is the introduction of the business
incubator which facilitates SMEs and start-ups in the new venture process
and allows for technical development and sustainable growth. As defined
in a report in 2012 by the UKBI, a Business Incubator provides for the
creation of entrepreneurial and innovative firms by providing space and
assistance. According to Samsonova (1997:84), the role of business
incubators goes far beyond functioning as a landlord advisor. Albert and
Gaynor (2001:6) further defined the incubator as a “collective and
temporary place for accommodating companies which offers space,
assistance and services suited to the needs of companies being launched
or recently founded”. They went on to identify and clarify the four major
characteristics of the Business Incubator. These definitions support the
holistic view and characteristics/features of business incubators provided
by Markley and McNamara, (1996):
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• Providing spaces such as offices and workshops for rent at below

market prices and with flexible terms
• Providing administrative and technical support services
• Providing consulting / business planning for both start-ups and SMEs
Overall, the definition of business incubators can be summarized
as a support processes/services for businesses (primarily entrepreneurs,
start-ups and SMEs) that aid the development of entrepreneurial firms and
support the economy by offering different products and services (UKBI
2012). These services are commonly developed by incubator management
to be offered in both the incubator and through its network(s). The main
aim of a business incubator is to produce successful ventures that will be
financially viable and freestanding, without the support of the program.
The provision of management guidance, technical assistance and
consultation which has been tailored to fledgling companies is critical to
the definition of an incubator (NBIA, 2009 cited in Al Mubaraki and
Busler, 2012: 344). It is imperative to highlight the evolution of business
incubators since the 1980s until present day, in order to evaluate how it
has progressed over the years. The evolution is classified into three phases
where it started with affordable space and shared facilities until it reached
full-service provisions (see Figure 1).
Figure 1: Evolution of Business Incubator
(Source: Theodorakopoulos et al., 2014: 6)

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4. BUSINESS INCUBATORS AND ECONOMIC DEVELOPMENT

It is widely recognized that business incubators play a vital role in
contributing to the country’s economy on a local, regional, national and
global level (Campbell, 1989; AL Mubaraki, 2008; Ndabeni, 2008; Al
Mubaraki et al., 2010; Dee et al., 2011; Lewis et al., 2011; Lose et al.,
2016). Business Incubators have a positive impact on economic
development and sustainability through job creation across different
countries such as Oman, USA, China and Europe (Sanyal and Hisam,
2018; Wagner, 2006; Lalkaka, 2002; Ogutu and Kihonge, 2016).
Moreover, Mahmood et al., (2015) and Markley and McNamara (1995)
further confirmed that business incubators played a crucial role in creating,
nurturing and sustaining SMEs in the local economy and in turn
developing the economy of a nation. Lourenco (2004) highlighted that
economic development benefits can be measured in terms of the number
of jobs created, the number of SMEs created, firm graduation rates and tax
receipts as they are believed to be the major contribution to economic
development.
Prochazkova (2015) concluded that business incubators can have a
major impact on nations economic development through the enhancement
of business ideas; innovation, raising of national competitiveness;
reducing SMEs operational costs; new venture creation and SMEs survival
and sustainability. Mansano and Pereira (2016) highlighted that business
incubators can be used as mechanisms to stimulate innovation. While other
benefits included the creation and growth of social and intellectual capital,
where benefits are gained from participation in social events and in
developing networks (Al Mubartaki et al., 2010; Lourenco, 2004; Clark
and Minor, 2000). Scaramuzzi (2002) and Al Mubartaki et al., (2010)
highlighted that business incubators can be used within any economy for
the following objectives:
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• New business formation – Business incubators are used to support

the creation and formation of new business/ventures where jobs are
created, create wealth, create innovative products/services and
stimulate the flow of economic cycles
• Business stabilization – Business incubators can be used in aiding
existing SMEs with their stability and their ability to operate without
any challenges also reducing the risk of failure
• Business expansion and Sustainability - Business incubators can be
used to aid existing SMEs to expand into different markets and
improve operational efficiency, expanding production capabilities,
hiring and managing labour and securing capital
• Commercialization of Research and knowledge – Business
incubators can be used to commercialize research data and expertise
Types of business incubators
Mixed use incubators These types of incubators support and assist entrepreneurs
and SMEs from different sectors/industries. They are
created by the government to support economic
development, growth and jobs creation (Al Mubartaki et
al., 2020; Burger, 1999).
Technology These types of incubators tend to support technology-

incubators oriented SMEs and focus on how to combine technology
and initial knowledge to result in improvement of
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entrepreneurial talent. As well as speeding up the business

development and commercialization (Hackett and Dilts,
2004).
Manufacturing/Indus These types of incubators support and assist SMEs in the

trial incubators manufacturing industry and tend to offer physical and
production space and technical business assistance
(Sanyal and Hisam, 2018; Al Mubartaki et al., 2010).
Targeted incubators These types of incubators focus on a focused industry or

sectors such as food manufacturing, software
development, multimedia, and may focus on specific
demographics (Campbell, 2001; Al Mubartaki et al.,
2010)
Empowerment/micro These types of incubators focus on supporting and

enterprises/communi assisting targeted population where SMEs are created,
ty incubators developed and nurtured (Al Mubartaki et al., 2010).
Virtual incubators These types of incubators offer support and assistance to

those entrepreneurs and SMEs who are in different city
and wish to maintain their offices and these incubators
will offer advice through virtual platform (Van Tilburg et
al., 2002; Bessant and Tidds, 2009)
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Al Mubartaki et al., (2010) indicated that business incubators

reduce the risk of SMEs failure and 87% to 90% of all SMEs which
graduated from business incubators are still in business, this indicates the
impact of business incubators on business sustainability. Additionally,
SMEs tend to have increased sales based on the support received from
business incubators (NBIA, 2000). Moreover, Scaramuzzi (2002) has
summarized the typical incubator resources and objectives that are
applicable and practiced across the globe (see Figure 2) in reflection of
what has been discussed above.
Figure 2: Typical incubator Resources and Objectives

(Source: Scaramuzzi, 2002: 5)
5. BUSINESS INCUBATORS IN OMAN: CURRENT SCENARIO
After careful investigation of the available business incubators in
Oman, the authors compiled Figure 3 to illustrate the available business
incubators.
Alrudha: According to their mission statement, Alrudha is a group
of individuals who are looking to impact the Omani market and economy
by aiding and supporting entrepreneurs in developing their entrepreneurial
firms. Its mission is building working environments to help you succeed.
It was established in April 2015 by Omar Al-Harthi and Fatma AL-
Mukhaini for the purpose of providing services such as working space,
events, workshops, and platform for investors. It also established the
"ALhabta" event that brings together startups and investors to find
financing and investment opportunities. In addition to organizing the
"Start" event that aims to develop the capabilities of startups (ALRUDHA,
2020).
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Oman Sail was established in 2008 by His Majesty Sultan Qaboos

RIP for the purpose of establishing Muscat a destination hub for sailing
and hosting international competition in this sport from across the globe.
This will enable Oman to compete at different levels and bring the talent
and creativity of the Omani youth, and in turn, this will help economic
development (sail, 2020). In 2009, Oman Sail’s Mohsin Al Busaidi
became the first Arab to sail non-stop around the world, and The Wave,
Muscat’s Extreme Sailing team won the first of two successive. Currently,
Oman Sail operates four Sailing Schools and has plans for three more by
the end of 2020 (Kothaneth, 2020; Sail, 2020).
GlassPoint Innovation Spur: It was established in February 2009

by Rod MacGregor and Pete von Behrens to reduce the cost of solar
thermal energy—bringing the solar collectors indoors. The purpose is to
encourage small entrepreneurial to firms to focus on delivering and
offering lowest cost solar energy products.
OTF Wadi Accelerator: OTF Wadi Accelerator is a seed stage fund

and accelerator program, capitalized by the Oman Technology Fund, and
powered by 500 startups. It was established in August 2018 by Oman
Investment Fund (OIF) to support entrepreneurship by playing an integral
role in supporting the growth of promising startups and emerging
technologies in the MENA region and beyond. This program enhances and
improves the probability of startups’ success (Nair et al et al., 2017). Other
services include:
● 3 months training program
● Mentorship
● Funding US $100K
● 10 startups per batch

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Figure 3: Available Business Incubators in Oman
(Source: Compiled by the Authors)
OM.HUB: The Sultanate now has a platform for developing and

nurturing entrepreneurship. Called OM.HUB, the entrepreneurship
platform. Its vision is creating a collaborative environment among
stakeholders of the various platforms to support entrepreneurs. It was
established in February 2018 by The National Business Centre (NBC) in
cooperation with Oman Oil Company (OOC), Oman India Fertilizer
Company (Omifco) and Oman Telecommunications Company (Omantel)
to support the SME ecosystem by creating a super hub that caters to
entrepreneurs at different levels from ideation to start ups to scaling up and
high growth. OM.HUB adds tremendous value by creating a collaborative
environment among stakeholders of the various platforms to support
entrepreneurs. It also opens the door to entrepreneurs who would like to
have a temporary location to start their business according to the following
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offer (OMIFCO, 2020). OM.HUB hosts 28 candidates and an open

gathering area. OM. HUB offers various services to entrepreneurs such as
workshops, awareness programs, facilities support, one on one business
support sessions.
Riyada – Public Authority for SMEs: Al riyada was established

under the Royal Decree No. 36/2013. It was founded to develop small and
medium enterprises and to strengthen their contribution to Oman’s
economy and create employment. Riyada hopes to be a key pillar in
creating jobs for the young youth in Oman through supporting SMEs,
creating entrepreneurship culture, and enhance SMEs operations and offer
support to SMEs and entrepreneurial firms (Mena Innovation, 2020).
National Business Centre: It was established in 2012 under the Public

Establishment for Industrial Estate (Madayn). NBC was initiated to
support Omani Entrepreneurs, startups and SMEs as it aims to be the
premier platform to support and develop Omani entrepreneurs. The
purpose of NBC is to advance business ideas into growing business and
develop entrepreneurs and the economy. In turn NCB hope to achieve
business sustainability, growth and job creation/employment. NBC
supports entrepreneurs who are in the early stages of idea formation and
others who are in advanced stages. NBC offers their consultant to work
with entrepreneurs who are at the early stages of business idea formation
and admit them to idea development workshop. NBC offers other services
to advanced entrepreneurs such as financial, marketing, administrative
advice, product/service branding workshops, and workshops/training on
how to run small business.
SAS for Entrepreneurship: SAS was established by ITA Information

Technology Authority (N.D). SAS is a leading fund for ICT entrepreneurs
in Oman. SAS focus on also offering a physical and virtual platform
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environment for entrepreneurs. ITA and a wide range of committed and

trusted partners, stakeholders and the application of global best practice
will provide an inclusive and ICT-focused national business incubation
environment through the SAS Program (ITA, 2020). SAS offers services
such as space for entrepreneurs, consultancy, training and education,
networking, and working relationship with the community. The objectives
of SAS are:
● To develop and build a competitive IT industry in Oman
● To Provide new job opportunities/employment
● To Contribute in providing new services and local products in various IT

fields
● To Develop Start-ups and SMEs
OMIFCO: By focusing on developing microbusinesses in accordance

with the increasing number of youths entering the workforce each year,
and the demands on the national economy to create additional
opportunities for employment, the cell incubator was established by Oman
India Fertilizer Company OMIFCO (N.D) as its CSR to support the
creation of SMEs. OMIFCO collaborated with Al Jazeera Technical
Solutions LLC & Inspired Solutions Company to support entrepreneurship
and Development of Micro business (OMIFCO, 2020). Its Commitment
is Developing Oman's economy with special attention to the environment
and the training of Omani youth (OMIFCO, 2020) through its
entrepreneurial initiative as part of corporate social responsibility, where
its employees are engaged with the community to develop and sustain the
community economic situation.
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Zubair SEC: It was established by Zuabir Corporation in 2013 with

the idea of supporting SMEs success and contribute towards a rapid change
in the local business environment, where Zuabir becomes the hub for
offering business solutions advise to help SMSs to succeed, grow, and
penetrate other markets (Zubairsec, 2020).
In its current form, Zubair SEC is a professional body that remains

commercially viable and successful due to the diversified knowledge it
offers, its accumulated breadth of expertise, its high professionalism, and
a global and local network including strategic partners. The Centre also
continues to build on the strengths of The Zubair Corporation to lead
positive change in the local business environment, supporting small
businesses and providing for favorable initiatives in the Sultanate. Zubair
SEC members have access to services which have been outstretched to
them, such as; business development, capacity building, clinical solution-
based advisory, networking platforms, and a program which provides a
financial grant for ten winners annually. These winners will also receive
the benefit of business development, packaging, branding, product
stabilization and intense advisory services. It was originated for the below
benefits to Omani entrepreneurs:
• Access to business consultants, advisory experts and services

• Network opportunities with staff through suitable platforms, or in person
• Providing tools for management such as business plan templates,
feasibility studies and organizational structure options
• Events to be held for SMEs developments such as training workshops,
seminars and networking engagements
• Facilitating communication between fellow SMEs
• Providing access to the strategic partners of the incubators
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• Pairing the benefits from local and national partners interested in

supporting SMEs with preferred price(s) offers
• Facilitating communication between banks, traditional and nontraditional
financial institutions and creditable businesses
• Providing financial grants for respective entrepreneurs
• Business development opportunities
The focus on developing business incubators in Oman is based on the

pursuance of economic development through creating, developing and
sustaining SMEs. It is believed that the development of business
incubators in Oman have contributed positively to SMEs development,
where this sector employs more than 200,000 which reflects 40% of the
workforce (Riyada, 2018). The national GDP has benefited from SMEs
by 20% annually which contributes positively to economic development
(Al Abri et al., 2018). However, in comparison with developed markets,
where SMEs workforce account for 50-60% and on average 50-55% GDP
contribution, it is vitally important to expedite the growth of SMEs sector
in Oman considering the limited employment opportunities in the
governmental agencies for Omanis and also to scale down the reliance on
the hydrocarbon sector (Sanyal and Hisam, 2018). However, in order to
support entrepreneurship and SMEs development and growth, it’s
important to highlight some of the challenges faced by SMEs in Oman in
order to be considered within the frameworks developed by the various
business incubators available in Oman. There were various studies
conducted (Al Barwani et al., 2014; Al Bulushi and Bagum, 2017; Al
Maimani and Johari, 2015; Ashrafi et al., 2014; Atef and Al Balushi, 2015;
Bilal and al Mqbali, 2015; Jansen, 2017; Magd and McCoy, 2014; Saqib
et al., 2017; Talal, 2017), which highlighted the challenges of SMEs
development and growth:
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● Lack of business knowledge
● Lack of access to finance
● Lack of knowledge regarding trade policies and regulations
● Limited capacity to grow
● Lack of knowledge to utilize and incorporate technology for better results
● Lack of governmental support services/red tape
● Lack of circle of networks within the same field to work cooperatively
● Lack of financial and marketing knowledge to determine the viability of

certain projects
It’s clear that these challenges can be classified as the critical success
factors for SMEs to grow and contribute further to economic development
and therefore business incubators must focus on these challenges and
incorporate them into their programs as the next stage of development
phase of business incubators in Oman to achieve the vision regarding
entrepreneurship development. On the other hand, we must also pay
attention to the factors that contribute to the success of business incubators
to ensure their sustainability. According to Lose et al. (2016), Buys and
Mbewana (2007), and Ndabeni (2008) whom agreed on the following
business incubators critical success factors “Access to science and
technology expertise and facilities; Stringent selection criteria; Quality of
entrepreneurs; Comprehensive business plan; Stakeholder support;
Availability of funding; Competent and motivated management;
Supportive government policies; Financial stability; Experienced advisory
board; Networking; Policies and legal framework, and Society open to
innovation” (Lose et al., 2016:135). Additional to these factors,
Theodorakopoulos et al. (2014: 612) conducted an extensive literature
review since mid-1980s on the success factors in business incubators and
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reached to the following factors “incubate selection policy; exit/graduation

policy; shared office space and resources; incubator manager competences
and relationship with incubates; support services such as management
know how, advice on regulations; technology and RD support;
networking; access to funding; monitoring performance”.
Based on the comprehensive review of the critical success factors of
business incubators, it's clear that there are some common success factors
across studies which illustrate that these are the most reliable and valid
critical success factors and they are:
▪ Stringent incubate selection criteria;

▪ Access to facilities and resources;
▪ Access to support service such as consultant and advisory services,
networking; access to funding; legal advice;
▪ The availability of regulations and legal framework
▪ Quality of entrepreneurs (Motivation and Commitment)
▪ Monitoring performance;
▪ Acceptance of innovative products/services
212
Based on this, it can be highlighted that critical success factors of business

incubators will contribute to the success of business incubators and in turn
will lead to entrepreneurship and SMEs sustainability and economic
development. This can be illustrated in Figure 4.
Figure 4: Business Incubators and Economic Development
Source: (Compiled by the authors as a conceptional model)

6. CONCLUSION AND RECOMMENDATIONS
Oman has recognized the importance of SMEs contribution to
economic development and sustainability and designed the country’s
strategy based on the promotion of entrepreneurship and SMEs
development by building a sustainable entrepreneurial ecosystem through
business incubators. Business incubators contribute to the economy
positively through job creation, creating, nurturing and sustaining SMEs,
innovation, and raising national competitiveness. Small businesses do not
213
survive or lack the growth potential and it is believed that business

incubators would be able to enhance this sector further and as a result
Oman has adopted business incubators. Business incubators in Oman are
still in its early stages and this paper has discussed the available business
incubators in Oman which have the potential to aid the sector. This paper
has also revealed some of the challenges that faced SMEs such as lack of
business knowledge; lack of access to finance; lack of knowledge
regarding trade policies and regulations; and limited capacity to grow.
These factors are classified as success factors for SMEs survival and
growth, and the authors recommend that these critical success factors
should be included with the business incubators available in Oman as part
of their programs to aid entrepreneurs and SMEs.
In conclusion, it's fair to mention that business incubators play a crucial
role in the development of entrepreneurship and SMEs, and it contributes
to economic development and sustainability and Oman is no different. In
order to attain economic development and sustainability, it's important that
business incubators are successful in developing entrepreneurship and
SME, and this can only occur if the business incubators adapts the
highlighted critical success factors in the current study, such as stringent
incubate selection criteria; access to facilities and resources; access to
consultant, advisors, and experts; access to regulations and legal
framework; selection of quality of entrepreneurs, performance
measurement and acceptance of innovative products or services.
214
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Entrepreneurship and SMEs Sustainable Development

through Business Incubators: The case of Oman

Scientific Journal for Financial and Commercial Studies and

These challenges tend to arise because there is a lack of support for

Somewhere in the region of 7000 business incubators exists around

For example, the current study concluded that business incubators

Keywords – Entrepreneurial Ecosystem, Business Incubation,

In today’s environment nations are seeking to achieve market

2. OVERVIEW OF THE ECONOMY

and fisheries, technology, new entrepreneurial startups and SMEs. In

For full implementation of the diversification plans as per the

Table 1: Nominal GDP Percentages in Oman

Economic Activity 2017 2016 2015 %

Oil & Gas Production 29% 26% 33.1% -4.1%

Agriculture & Fisheries 2.3% 2.3% 2% 2.0%

Industry Activities – mining, manufacturing, electricity 20.5% 21.4% 220.7% -0.2%

Services Activities – financial intermediation, wholesale 38.6% 39.5% 37.4% 1.2%

Public Administration & Defense 13% 14% 12% 1%

Source: National Centre for Statistics and Information, 2018

In 2018, the National Centre for Statistics and Information revealed

Table 2: Oman Population by Age Group

Age Group Total Percentage

The concept of business incubators originated from the USA in the

As previously alluded to, the purpose of business incubators is to

• Providing spaces such as offices and workshops for rent at below

Figure 1: Evolution of Business Incubator

(Source: Theodorakopoulos et al., 2014: 6)

4. BUSINESS INCUBATORS AND ECONOMIC DEVELOPMENT

• New business formation – Business incubators are used to support

Types of business incubators

Technology These types of incubators tend to support technology-

entrepreneurial talent. As well as speeding up the business

Manufacturing/Indus These types of incubators support and assist SMEs in the

Targeted incubators These types of incubators focus on a focused industry or

Empowerment/micro These types of incubators focus on supporting and

Virtual incubators These types of incubators offer support and assistance to

Al Mubartaki et al., (2010) indicated that business incubators

Figure 2: Typical incubator Resources and Objectives

Oman Sail was established in 2008 by His Majesty Sultan Qaboos

GlassPoint Innovation Spur: It was established in February 2009

OTF Wadi Accelerator: OTF Wadi Accelerator is a seed stage fund

● 10 startups per batch

Figure 3: Available Business Incubators in Oman

(Source: Compiled by the Authors)

OM.HUB: The Sultanate now has a platform for developing and

offer (OMIFCO, 2020). OM.HUB hosts 28 candidates and an open

Riyada – Public Authority for SMEs: Al riyada was established

National Business Centre: It was established in 2012 under the Public

SAS for Entrepreneurship: SAS was established by ITA Information

environment for entrepreneurs. ITA and a wide range of committed and

● To develop and build a competitive IT industry in Oman

● To Provide new job opportunities/employment

● To Contribute in providing new services and local products in various IT

● To Develop Start-ups and SMEs

OMIFCO: By focusing on developing microbusinesses in accordance

Zubair SEC: It was established by Zuabir Corporation in 2013 with

In its current form, Zubair SEC is a professional body that remains

• Access to business consultants, advisory experts and services

• Pairing the benefits from local and national partners interested in