Exploring business incubation from a family perspective: How start-up family firms experience the incubation process in two Australian incubators

Abstract

This qualitative study explored how family start-up firms, housed in an incubator during their first three years of operation, experienced the business incubation process. There is limited research conducted on family business experiences during the start-up phase when money is tight, entrepreneurial activity is basic and business know-how is in its infancy (Dyer, 2003). Thus, the purpose of this study was to identify the reasons why start-up entrepreneurs choose to locate their firms in an incubator setting and how two incubators assisted the family firms to build their business going through the incubation process.

The research sample consisted of twelve start-up entrepreneurial family firms of which seven were located in the Brunswick Business Incubator (BBI) and five located within the Monash Enterprise Centre (MEC) in Melbourne, Australia. Data were collected via semi-structured interviews then analysed using NVivo7 following a grounded theory approach. The findings showed the majority of start-up family firms moved into an incubator environment because they were not familiar with business practices, felt isolated working from home, were hoping to share business ‘know how’, to find other family business entrepreneurs, and hoping to find a small business ‘community in which they could participate and network.

In addition, the findings revealed that for family start-ups, the boundaries between personal relationships and business relationships appeared to dissolve or overlap, and relationships with other tenants and the incubator manager developed from a strong trust base and camaraderie.

The value of this study is threefold. First, the study’s findings contribute to Habbershon, Williams and MacMillans (2003) assertions that viewing family firms as a meta-system is meaningful, as it sheds light on the organisational behaviour of small family firms based within incubator environments. Secondly, Chua, Chrisman and Steiers (2003) and Dyer’s (2003) concerns that family variables are regularly omitted from the main stream management literature, and third, Hackett and Dilts’(2004a:56) observation that there is a shortage of variables “explaining how and why the incubation process leads to specific incubation outcomes”.

The analysis uncovered emerging themes which were similar to each of the family businesses, yet there were subtle differences within each theme. These findings support Melin and Nordqvists (2007) assertion that whilst there is emphasis on similar characteristics displayed by family businesses, there are differences within the categories that researchers often underestimate. Given the lack of studies addressing both the ‘within family category research and family businesses located in incubators’ research, this field study identifies and addresses a gap in the family business literature whilst also contributing to incubation research.

Keywords:

• Start-up family firms
• business incubation
• small business