Informal networks in business development services: case studies from two Brazilian business incubators

Introduction: The central idea of this paper is claiming business incubators as brokerage environments where entrepreneurs have access to resourceful actors. Brokerage relates to the development of bridging social capital (Knorringa, Staveren 2006) through which new information, ideas and resources circulate. The locus of these exchanges includes the internal environment of business incubators and external institutional settings, represented, for instance, by the local government and regulatory agencies. The main bridging actor between business start-ups and internal and external environments is the business incubator’s manager. These managers can actively foster an environment of exchanges that goes beyond the formalised strategic services of business incubators (i.e, regular consultancies) (Altenburg, Stamm 2004, Tötterman, Sten 2005). Part of these exchanges may become formalised in business partnerships in the medium and long run, building bonding ties between the actors involved. This longer term outcome may impact local development dynamics when businesses establish partnerships that strengthen their individual capabilities, for the deployment of local resources. This process characterizes a scenario of endogenisation, “the progressive development of local capacities and local control over an export base that was previously shaped by external factors and forces” (Helmsing 2010, p. 13)

The building blocks of a resource-based theory of business start-ups

Firm dynamics are commonly explained through learning processes by evolutionary economics and resource-based theories of the firm. The literature, however, also highlights the methodological difficulty to unpack learning. With the support of cognitive-behavioural theories of learning and the use of a multi-method approach, this study investigates the evolution of business start- ups and interactions between markets, institutions and learning strategies. In retrospective interviews, entrepreneurs-founders of 43 Brazilian start-ups reconstructed the storyline of the first three to five years of their firms, focussing on critical learning episodes. Analyses of the narratives resulted in 207 critical learning episodes, based on the analytical framework, empirical content, expert evaluation and the literature. These episodes were clustered in five categories. Quantitative descriptive analysis showed the cross-cutting dynamics of these episodes. Then, relationships between episodes were investigated through grounded theory principles. Results showed that the key linking factor between episodes is the resource-base of each episode, which generated five typical pathways. The final step identified the properties of these pathways. It is argued that the iteration between qualitative and quantitative methods was crucial to unpack the relationships described. This study provides a viable methodology and a comprehensive framework to investigate the evolution of business start-ups, contributing to the literature on organizational learning, entrepreneurship, and theory of the firm

Critical Learning Episodes In The Evolution Of Business Start-Ups: Business Incubators In South-Eastern Brazil

This study investigates the evolution of business start-ups in the first three to five years. Evolution is defined here as a non-continuous learning process of entrepreneurs that creates and changes organizational routines. Two concepts are central: critical learning episodes and pathways. Critical learning episodes are discontinuous learning events in the storyline of these business start-ups. A critical learning episode is composed of endogenous or exoge-nous events that trigger search activities to acquire or create resources, which, when applied to the firm, will change the current organizational routines. Pathways are arrangements of critical learning episodes. This study develops a multidisciplinary analytical framework with concepts of learning from organizational psychology, concepts of the internal dynamics of firms for the Penrosian resource-based theory, and concepts of economic change from evolutionary economics. This thesis fills in the gap of describing evolutionary and learning processes of business start-ups in the resource-based theory of the firm. The research question about how learning-based pathways explain the evolution of business start-ups was investigated through semi-structured interviews with entrepreneurs of 43 business start-ups. All these start-ups were linked to business incubation programmes in the two most resource-rich regions of Brazil: São Paulo and Minas Gerais. These start-ups were in three sectors: a) manufacturing, b) information and communication, and c) professional, scientific and technical activities....

Critical learning episodes in the evolution of Brazilian business start-ups: a theoretical and analytical tool

This study investigates critical learning episodes as landmarks in the evolution of business start-ups. A framework that combines individual learning processes with the Penrosian resource-based theory of the firm, and the concepts of search and routines from evolutionary economics provides the theoretical ground on which this study is developed. Multilevel factors, ranging from entrepreneurial agency to the institutional setting of business development services, represent different levels of analysis. These levels are connected through critical learning episodes, which are triggered by endogenous or exogenous factors and culminate in the creation of new or in the change of current organizational routines. These episodes were narrated by 43 entrepreneurs-founders through semi-structured interviews. Their business start-ups were operating for an average of 4 years (s.d.=1,9) and were linked to business incubation programmes in the two most resource-rich regions in Brazil. These start-ups were in three sectors: a) manufacturing, b) information and communication, and c) professional, scientific and technical activities. The analysis of these narratives combined qualitative (i.e., grounded theory principles) and quantitative (i.e., social networks analysis) techniques. This paper focusses on the most common type of critical learning episode: entry and survival in the market (n=36 start-ups). Results show how micro-processes of learning influence access and creation of resources at the firm level. A temporal analysis of networks configurations shows how processes of embeddedness in market relations influence intra- and inter-organizational dynamics. It is argued that critical learning episodes, for combining multiple factors and levels of analysis, are a useful theoretical and analytical tool to better understand the evolution of these businesses. In addition to this, issues of path-breaking and innovation are discussed in light of institutionalized practices of business development services

Evolution of business start-ups in the South-Eastern Brazil: critical learning episodes as a theoretical and analytical tool

Economic theories, such as the theory of the firm and the evolutionary economics, hold on concepts that explain the acquisition and the transformation of resources by enterprises. These theories describe a process of identification of needs, search for inputs to fulfil them, and transformation of these inputs into services for survival and growth of firms and of industrial sectors, respectively. All of them highlight the importance of learning but they do not detail how learning processes come about. Additionally, there is little attention to small scale enterprises, characterised by the scarcity of initial resources. This paper focuses on business start-ups as dynamic entrepreneurial initiatives that aim to survive and grow in the market. To the explanation of the evolution of business start-ups, it introduces the concept of critical learning episodes. Critical learning episodes are turning points in the start-up history. They are composed by three main subplots: processes of development of meaning (creation of values and culture), processes of development of commitment (networks of the start-up with partners and other actors), and processes of development of method (ways of doing things). To examine these episodes, entrepreneurs were interviewed from 44 business start-ups in South-Eastern Brazil, all enrolled in a business development service designed to promote enterprise development and growth by providing operational and strategic services at lower costs. From these start-ups, 37 are documented in this paper for the most common critical learning episode, entry and permanence in the market (n=70). This type of episode is triggered by three main needs: 1) needing to enter a well-established market; 2) needing to create a new market niche for an innovative product; and 3) needing to outlive the threats to the permanence of the business in that market. Learning strategies applied by the entrepreneurs in response combined cognitive (mainly extrinsic reflection) and behavioural strategies (remarkably practical application and interpersonal/inter-organisational help seeking). These episodes led to the creation of the identity of the firm, to reconfigurations in its network, and to the development of new methods of functioning. A number of new routines were observed in all start-ups. These routines, for instance, included developing combinations of formal and informal business transactions, producing simpler and more marketable products, establishing partnerships for research and development, developing specialised services, broadening the scope of the target market, creating spin-offs, selecting buyers, speeding up the creation of new products, defining tasks among associates, and relying on trust-based relationships with buyers. Comparisons between the initial networks and their configuration by the time of the interviews indicated the embeddedness of these business start0ups in the institutional setting provided by support institutions. To systematise the narratives into plots, the concept of critical learning episodes was a fundamental analytical tool showing that the evolution of business start-ups can be theoretically described in terms of the creation of new meanings, new commitments, and new methods. It also enabled comparisons per sub-category of market and per learning strategy, as well as the description of the evolution of the start-ups networks

Participation for what: social change or social control?

The publication is special, both content-wise and process-wise, as it is entirely produced by (alumni and present) ISS PhD students, and Open Acces available. The book contains seven articles that were carefully selected out of the contributions for the Development Dialogue, which was held at ISS in 2008. All the articles question participatory processes and practices in development: participation by whom, for what, and how? These remain vital questions for moving forward in building new narratives and generating appropriate development strategies