60

Exploring business incubation from a family

perspective: How start-up family fi rms experience the

incubation process in two Australian incubators

Hermina HM Burnett

Murdoch University Business School

South St, Murdoch, 6150

Western Australia, Australia

Adela J McMurray

RMIT University College of Business

Melbourne

Victoria, Australia

Corresponding author: [e-mail]

Abstract

This qualitative study explored how family start-up fi rms, housed in an incubator during their fi rst 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 fi rms in an incubator setting and how two incubators
assisted the family fi rms to build their business going through the incubation process.

The research sample consisted of twelve start-up entrepreneurial family fi rms of which seven were located in
the Brunswick Business Incubator (BBI) and fi ve 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 fi ndings showed the majority of start-up family fi rms 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 fi nd other family business entrepreneurs, and hoping to
fi nd a small business ‘community’ in which they could participate and network.

In addition, the fi ndings 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 fi ndings contribute to Habbershon, Williams and
MacMillan’s (2003) assertions that viewing family fi rms as a meta-system is meaningful, as it sheds light on
the organisational behaviour of small family fi rms based within incubator environments. Secondly, Chua,
Chrisman and Steier’s (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 specifi c 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 fi ndings support Melin and Nordqvist’s (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 fi eld study identifi es and
addresses a gap in the family business literature whilst also contributing to incubation research.

Keywords: Start-up family fi rms, business incubation, small business.

61

Exploring business incubation from a family perspective

Introduction

Incubation

The incubation literature shows a lack of family research studies conducted within incubator contexts.
Thus the aim of this study is to explore how 12 family start-up fi rms experience the incubation process
and why they choose that particular business environment. The incubator concept that was adopted in
this study is illustrated in Figure 1 below and shows an incubator as being a catalyst for business growth,
and functioning as a bridge between the internal ‘protected’ incubation environment and the external
‘exposed’ business environment.

Figure 1: Basic Incubation Concept

Space, equipment,
Business services

Mentoring, advice,
networks

Monitoring tenant
performance

New
business
recruitment

New technologies,
products, services

New networks

Joint ventures,
partnerships

Inside
incubator
environment

Outside
incubator
environment

Local business
community

Civil society

Global environment

Graduation

Source: Burnett, 2009, p. 16.

A business incubator is viewed here as an entity, mostly incorporating a physical facility (offi ce, industrial
or factory space) that assists new business growth by providing incubator tenants (start-up entrepreneurs)
with access to internet access, shared equipment, administrative services and sometimes access to
fi nancial resources, including venture capital, during their fi rst years of operation (Mian, 1997).
Business incubators also provide a ‘nurturing’ context (European Commission, 2002; NBIA, 2004;
OECD, 1999; UKBI, 2007). They often offer business advice, business monitoring and facilitate
strategic networking and business seminars to the new start-ups (Allen and McCluskey, 1990; Barrow,
2001; Bøllingtoft and Ulhøi 2005; Burnett, 2009; Hansen et al, 2000; Smilor and Gill, 1986). The
incubator thus functions as a nurturing bridge between the inside, somewhat protected incubation
environment, and the outside real-world business environment.

Over the past 25 years, incubation has proved itself as being so successful in the assistance of start-ups
that the phenomenon has become a fast growing and popular ‘economic development tool’ for the

62

development and sustainment of local and regional economies, specifi cally in low socio-economic areas
(Allen and Rahman 1985; Barrow 2001; Bøllingtoft and Ulhøi 2005; Campbell and Allen, 1987;
European Commission, 2002; Hackett and Dilts, 2004a; Sherman and Chappell, 1998).

Incubation in an Australian context

There are approximately 80 small business incubators in Australia that are sponsored, in one form or
another, by the Australian Government. The incubators house approximately 1,200 start-up businesses
or incubator tenants (BIIA, 2009; TPIA, 2006). Most incubators are not-for-profi t entities and generally
classifi ed according to their fi nancial sponsors or stakeholders, such as (local) government, universities
or technology parks (Allen and McCluskey, 1990; Barrow, 2001; Hulsink and Elfring, 2001; Rice and
Matthews, 1995; OECD, 1999; Bhabra-Remedios and Cornelius, 2003). Space offered by the various
incubators ranges from light industrial, factory per square meter, or serviced offi ces of various sizes to
fully equipped laboratories, and their tenants range from light manufacturing, wholesaling, food
processing to Bio-technology, ICT and a variety of other business services and consultancies, including
building industry, medical, art and crafts and fashion design (Barrow, 2001; Pacholski, 1988; NBIA,
2004; OECD, 1999; Rice and Matthews, 1995).

Family fi rms and incubation

During the fi rst years of trading, start-up entrepreneurs are faced with tasks they may not have previously
encountered, such as building a customer base, developing and or selling products and services and
accessing resources such as capital, equipment and networks (Schaper and Volery, 2007; Timmons and
Spinelli, 2003; Wiklund, 1999). Therefore, the aim of this research is to contribute to a better
understanding of how start-up family fi rms experience and build new relationships and networks within
business incubators to facilitate the entrepreneurial process.

Family dynamics and family fi rm behaviour

A large number of successful businesses are run by family structures and over the past ten years family
business research, including the challenges of start-up family-controlled fi rms, has increased (Hoy and
Sharma, 2006) and is being recognised internationally and in Australia (Connolly and Jay 1996; Barrett
and Rajapakse (2003). In the US alone, family businesses comprise over 90% of businesses employing
59% of the workforce (Dyer, 2003). In the UK, 73% of businesses are defi ned as family businesses
(Poutziouris, Sitorus and Chittenden, 2002) and in Australia, 67% of businesses are family owned
(Smyrnios and Walker, 2003). These businesses generate over 50% of Australia’s employment growth
and thus contribute substantially to Australia’s economy and wealth creation (Smyrnios, Romano and
Tanewski, 1997).

Defi nitions, characteristics and social structure of a family business

Research views the defi nition of a family business as complex. Most defi nitions focus on the important
role the family plays in terms of the running of the business (Birley, 2001), or focus on family relationships
based on blood or marriage (Westhead and Cowling, 1998). Others focus on the control of the business,
for example, through a clear majority of the ordinary voting shares (Naldi et al., 2007). In studies
addressing the running of a business, defi nitions focus on vision, strategy, control of the business and
succession (Chua, Chrisman, and Sharma, 1999; Habbershon, Williams and MacMillan, 2003;
Astrachan, Zahra and Sharma, 2003). Many start-ups, particularly those located in a business incubator,
are the size of micro businesses with fewer than fi ve employees, hence, Westhead and Cowing (1998)
suggest if researchers decide to use a single family fi rm defi nition, they should consider utilising a
reasonably broad defi nition. For this reason, the authors utilised Westhead and Cowing’s (1998) broad
notion in the study in that start-up family fi rms were owned and personally managed by members of a

Small Enterprise Research 16: 2: 2008

63

family group, or groups of relatives and members who were related by blood or marriage.

The culture within a small family business is infl uenced by the values and norms of its founder and the
behaviour of other family member employees including their commitment to each other and the
organisation (Hall and Nordqvist, 2008; McMurray et al., 2004). Hence, the characteristics of family
businesses are unique, as the whole institution of family impacts on the business’ strategic plan and on
processes such as decision making, culture and organisational leadership (McMurray, 2003; Melin and
Nordqvist, 2006; Sharma, 2004).

Small family fi rms possess that unique mix of social, human, and fi nancial capital, which can combine
family matters and community building with the generating of income (Astrachan, Zahra and Sharma,
2003). It could be said that family fi rms are more ‘personal’ businesses than non-family fi rms and have
business objectives that differ from non-family fi rms, preferring to focus on the value and quality of
family relationships or particular forms of altruistic behaviour (Barrett and Rajapakse, 2003; Dyer,
2003; Gomez-Mejia, Nunez-Nickel and Gutierrez, 2001; Habbershon, Smyrnios and Walker, 2003;
Williams and MacMillan, 2003). An example of this would be an owner who does not particularly care
about performance appraisals, accepts a lower turnover or lower return on investment when it involves
a family member, or is reluctant to fi re or discipline a family member employee. This attitude may be in
contrast to non-family businesses, which predominantly focus on fi nancial capital, business growth and
separation between family relationships and business life. Hence, small businesses function within
complex social systems (Van der Sijde, Groen and Van Bentham, 2004).

The social structure of family businesses may therefore be defi ned as a ‘‘meta-system’’ comprising of
three broad subsystem components: i) the controlling family unit, made up of the history, traditions,
and life-cycle of the family, ii) the business entity, representing the strategies and structures utilised to
generate wealth, and iii) the individual family member, including their interests, business skills, and life
experience (Habbershon et al., (2003). These three components bestow the family individuals with
complex interactive psychodynamics as they endeavour to make meaning for themselves whilst
interacting with the family, employees and business (Kets de Vries, 1996). In this context, incubators
may be viewed as learning organisations or learning communities, encouraging the members of family
fi rms to fi nd a sense of belonging and ‘familiness’ (Chrisman, Chua and Steier, 2005)

In addition to exploring family meta systems, this study utilised a network framework developed from
Higgins and Kram’s (2001) network theory to uncover the way in which incubator networks play a key
role in successful incubation and the development of new ventures, including family fi rms (Hackett and
Dilts, 2004b). Studies addressing networks often research notions of strong and weak bonds or ties
(Granovetter, 1973). Higgins and Kram (2001) identifi ed four different types of networks: i)
entrepreneurial networks, which they found to be high diversity networks with a strong development of
relationships, ii) opportunistic networks, with high network diversity but weak relationship strength,
iii) traditional networks, with low network diversity, but strong relationship ties, and iv) receptive
networks, having both low network diversity and weak relationship strength.

Three open research questions were designed to uncover why the family business chose to be located in
an incubator environment, their incubator experience, and the types of networks they used when
building incubator relationships.

The following broad research questions, accompanied by relevant sub-questions, underpinned this
study:

Research Q1:

Why do family start-up fi rms choose to grow their business in an incubator?

Sub questions regarding the move were broadly posed as:

How did the family fi rm experience business before they moved into the incubator?

What did the owners perceive were the advantages of moving into the incubator for their family?

Exploring business incubation from a family perspective

64

Research Q2:

How do family start-up fi rms experience the incubation process?

The sub questions regarding this research area was broadly posed as:

How would the family characteristics play a role in the incubator with regards to relationships?

Research Q3:

Which types of networks were used by family start-up fi rms when building relationships

within the incubator?

Sub questions regarding these research areas were broadly posed as follows:

What were their relationships like with other tenants in the incubator?

What were their relationships like with the incubator management?

Research Method

A qualitative case study approach, based on the personal nature of incubators, the research questions
and the absence of rich data addressing the research questions in the literature, was deemed as appropriate
to this study. In practical terms, this case study refers to the investigation of a phenomenon (family
fi rm) within its natural setting, by collecting detailed information about particular issues, frequently
including the accounts of subjects (Eisenhart, 1989; Yin, 2003). Two different incubators provided a
rich context within which to gather primary data from the relevant participants that met the criteria of
family business and incubators. The Brunswick Business Incubator (BBI), a large incubator in Victoria
based in the inner city of Melbourne and the Monash Enterprise Centre (MEC) a small incubator
located in an outer suburb 20km from CBD Melbourne. The BBI had facilities to house over 50 start-
ups and the smaller MEC had the capacity to house around 15 businesses at the time of research.

Operationalising Westhead and Cowing’s (1998) defi nition to identify family fi rms, and with the
support of incubator management, seven case organisations based at the Brunswick Business Incubator
(BBI) and fi ve case organisations based at the Monash Enterprise Centre (MEC) participated in the
study. Semi-structured interviews consisting of open ended questions guided the interview dialogue
which, as Witzel (2000) suggests, assists with familiarising both the researcher and participant with the
study’s key concepts and themes. In addition, the study followed grounded theory principles, which
seeks to methodically understand the context of what is being studied; investigating an organisation,
its managers or other actors, including their interactions and interrelationships (Glaser and Strauss,
1967).

Semi-structured interview questionnaire development

The concepts of reliability and validity of any measurement instrument, including an interview
schedule, are two fundamental aspects of the quality and rigor of measures (Hinkin 1995). This is
specifi cally so in qualitative research where the reliability is mainly achieved by describing carefully
which procedures have been used (Yin, 2003). Following a review of the incubation of start-up fi rms
conducted by the European Commission Enterprise Directorate-General (2002), the demographic
items were generated addressing family fi rm structure, age of fi rm, industry, age of owner, how long the
owner had been based in the incubator, the owner’s gender and number of staff.

Prior to conducting the main study, the study’s questions were pre-tested on four family businesses to
determine their appropriateness, content validity, and whether or not any additional items required
inclusion in the interview schedule. The main study followed where one hour semi-structured interviews
were underpinned by the study’s three main research questions, supported by sub questions to uncover
the themes of decision making, incubator experiences including services, and support, as shown in
Table 1 below.

Small Enterprise Research 16: 2: 2008

65

Table 1: Research questions, sub questions and concepts.

Main Research Question

Sub Questions

Theme

Q1: Why do family start-up fi rms choose
to grow their business in an incubator?

1. How did the family fi rm experience business before they
moved into the incubator?
2. What were the advantages of moving into the incubator for
the family fi rm?

Decision making

Q2: How do family start-up fi rms
experience the incubation process?

1. What were the experiences of the owners using incubator
service and how was the incubator making a difference to their
family fi rm?
2. How would the family characteristics play a role in the
incubator with regards to relationships?

Incubator experiences
including services

Q3: Which types of networks were used
by family start-up fi rms when building
relationships within the incubator?

1. What were family fi rms’ relationships like with other tenants
in the incubator?
2. What were family fi rms’ relationships like with the incubator
management?

Networks and
support

Source: Authors

Being semi-structured in design, the questions were used as a guide or springboard, designed to elicit
dialogue discussing the advantages and disadvantages of previous business premises, reasons participants
moved into incubators and the types of relationships they formed. Further discussion addressed
networking and communication between the incubator tenants and incubator management and how
the participants rated the importance of the incubator to the survival of their business. In addition, data
was collected about internal trading or cross-selling and the development of joint ventures between
tenants to demonstrate incubator experiences based on mutual support and trust.

Analysis and Outcomes

Rich primary data benefi t greatly from using an ordered theory-based approach during the coding
process. This is why grounded theory was used as a method of analysis. The method is based on Glaser
and Strauss’ (1967) discovery of grounded theory, which was aimed to provide insights on how to
generate new theory from research that was grounded in data, rather than through the deduction of
hypotheses from existing theories. Glaser (1992) defi nes grounded theory as:

“…a general methodology of analysis linked with data collection that uses a systematically applied set
of methods to generate an inductive theory about a substantive area” (Glaser, 1992: 16).

In this case, this was an open coding process (coding text into so called free ‘nodes’ or ‘meaning units’),
followed by axial coding (identifying relationships between the open coded or free nodes) and selective
coding (selecting core variables and dependent variables) process. In practice, this meant that the coding
process consisted of sifting through text identifying experiences and labelling coded passages, words or
paragraphs either as specifi c nodes (independent variables) or as dependent variables under those specifi c
nodes. In line with the grounded theory approach, the research database was examined through a
continuous and cyclical process of familiarising, coding, conceptualising, cataloguing, re-coding and
evaluating of the data, until the researchers were able to identify distinct themes that described the
experiences and behaviours of family business partners in relation to the incubator process.

Family Firm Demographics

Table 2 shows the demographics of the participants by type of business, family structure, age of business,
how long the owners had been based in the incubator, gender and age group and the number of
employees including the owner (s). Besides the participants, no other family members were actively
involved in the business and there were no family fi rm participants representing age groups between
18-25 years and 51-65 years.

Exploring business incubation from a family perspective

66

Table 2: Firm Demographics

Type of Business

Family Structure

Firm Age

Time in Incubator

Gender

Age

Loc.

Staff

1

IT

Married

0.7

<12

months

M

26-35

BBI

6

2

Software design

Father / son

2.9

<12 months

M

36-50

BBI

8

3

Printing

Mother /daughter

1.5

>12 months

F

26-35

BBI

2

4

Apparel

Married

2.8

>12 months

M

26-35

BBI

3

5

Management
consultants

Married

1 <12

months

F

36-50

BBI

2

6

IT search engine

Brothers

2.6

<12 months

M

36-50

BBI

2

7

Graphic Design

Married

1.7

>12 months

M

26-35

BBI

2

8

Building

2 married couples

1

<12 months

F

36-50

MEC

4

9

Business Services

Married

3

>12months

F

26-35

MEC

2

10

Vocational training

Married

1.6

>12 months

F

36-50

MEC

3

11

Building

Married

1.8

<12 months

M

26-35

MEC

4

12

Recruitment

Mother and son

2.6

>12 months

M

26-35

MEC

5

Source: Authors

Outcome of the three interview questions

The three core nodes representing the research questions: ‘Why Incubation’, the ‘Use of Services’, and
the types of ‘Networks and Relationships’ were answered by all participants (sources). This was
uncovered several times and from various angles using different words or phrases. Table 3 below
describes the meanings given to each theme.

Table 3: Tree nodes (Variables)

Outcome Coding Process

No of sources

No of references

Node Description (Meaning Unit)

Why Incubation

12

34

Reasons for moving into the incubator. These could be fi nancial
reasons, (e.g., words like cheaper, economical) business
assistance or other mental reasons, such as wanting to leave
home, looking for other start-ups or networks or personal
reasons.

Use of Services

12

26

Covers words or phrases that represent incubator services such
as equipment, admin support, networks, access to seed capital,
business training, events.

Relationships

12

21

Types of relationships existing in the incubator and with whom
(e.g., making friends, visits, networking, mentoring, socialising,
and doing business with.

Source: Authors

Findings and discussion on the why of incubation

To gain an understanding of research question one: what drove the start-up family fi rms to move from
home or previous premises into an incubator environment; related nodes were identifi ed and labelled in
relation to their meaning (why). These were then modelled by frequency (number of times mentioned
by participant) and signifi cance (is it important). If they were mentioned by many sources and mentioned
several times, they were labelled ‘parent’ node (important) and if they were mentioned by less than half
the sources and few times they were labelled ‘child’ node, which meant they were of less importance. If
they were mentioned by fi ve to seven sources, but only once, they were labelled ‘sibling’, meaning they
were important, but not the overriding reason to move into the incubator. Any words or meaning units

Small Enterprise Research 16: 2: 2008

67

mentioned fewer than three times were excluded from the research. Figure 2 shows the fi rst research
question as identifi ed in the NVivo7 analysis process model.

Figure 2: Why Incubation?

Why of incubation

Location advantages

Local business

comes into

incubator

BI services

Role models

Economical

Sibling

Child

Parent

Child

Parent

Parent

Sibling

Sibling

Sibling

Child

Parent

Networking

Joint business

ventures

(Better)

survival rate

Access to

funds

Business

expansion

Isolation in

previous premises

Source: Authors

As can been seen from Figure 2, there were 11 reasons to move into an incubator according to the
participants, but there were three main reasons (parents). The fi rst reason and predominant one was the
feeling of being isolated from others whilst working from home; this led to the second reason, the
opportunity to network with others; and the third

reason, access to the various incubator services. Isolation was mentioned more than once by seven
different sources during the interview. Networking was mentioned by all participants and access to
incubator services was also raised by all participants. The opportunity to expand the business and the
incubator location were viewed as being a particular incubator advantage by half of the participants.

Several extracts from interviews are introduced here to provide a true sense of the gathered data and to
illustrate how the needs of the fi rm are driven by the owners’ circumstances during the start-up phase
of the fi rm’s lifecycle, moreover, how the various components within mega system interact (Habbershon
et al., 2003). In addition, they illustrate the difference in meaning from one family fi rm to the other, as
noted by Melin’s and Nordqvist’s (2006) assertions that whilst there are similarities within the family
fi rm, there are differences within categories.

Exploring business incubation from a family perspective

68

Participant 11:

“We were doing very well working from home. We each have a different role in the business,

but my wife was struggling after a few months and told me that we did not network enough. She needed more
and looking back she was right, because our (marketing) ideas were drying up. Sitting at home working was
not enough for her. I used to go out visiting customers, but she did the books and the phone and did not really
get out much, other than to pick up the kids from school and doing the shopping. Our lives changed after we
moved into the incubator and she loves it here.” The participant appears to imply that there was a ‘family’
as well as ‘business team’ with both partners attending to family as well as business matters. He also
implies that the incubator environment and networks were assisting with bringing relationships and
creativity back into the business.

The importance to keep home and business lives balanced triggered other responses.

Participant 4:

“After the baby was born, we felt very isolated and wanted to meet with other business owners

in our position. We were forever working in our business and changing nappies, our relationship suffered, our
business suffered and I said: we need to get out of here…” Also these participants felt isolated. However,
this time it was a male rather than female owner who seemed to lack a business environment. A similar
perspective was provided by Participant 7 stating: “…Another advantage of this incubator is that we are
clustered together with other companies that are probably sharing the same teething trouble. That has given
us confi dence … a home based family business can be stifl ing. Being here (the incubator) has provided our
business but also ourselves with an outward focus…”

Finally, Participant 1 a software engineer sums up the ‘why’ “…..Support, I actually went out and looked
at how we could get some more business advice and support. We had three employees working in our house
and we had little privacy. I looked at service offi ces, but they were way too expensive. I also realised that if I
went with the normal offi ce scenario, I was dislocating myself from any support, like my neighbours, my
parents, everything, so what I did was to put myself into a situation where we had more instead of less support
to run the business.”

These fi ndings suggest that the small family teams were feeling isolated in different ways and were
seeking new ideas and support from others. However, each was driven by different motivators. Within
the households of participants 11 and 4, the work/life balance was at stake, while participants 1 and 7
were more successfully functioning family wise, but lacked space, motivation and being engaged with
other business owners. This fi nding supports Melin and Nordqvist’s (2006) assertions that there are
differences within theme categories when analysing family fi rm data, but also sheds new light on why
family businesses might not necessarily be better off working from home during the start-up phase and
how incubators provide another perspective.

Findings and discussion on the use of incubator services

Figure 2 sheds light on research question two as various advantages and services were mentioned by all
participants as reasons for relocating into an incubator. Incubators were found to be more economical;
the location (e.g., close to home or school) played a role, and the provision of fl exible spaces and internal
expansion was also appreciated. However, incubator services are discussed in more detail in Figure 3
which shows the specifi c analysis in relation to the use of incubator services.

Small Enterprise Research 16: 2: 2008

69

Figure 3: Incubator services

Incubator services

The incubator

enterprise

Business

assistance

Business

training

Economies

of scale

Parent

Parent

Parent

Parent

Parent

Parent

Child

Child

Child

Child

Child

Child

Child

Access to

business

professionals

IP protection

and search

Access to other

(global) partners

Access to

funds

Physical Space

Mentoring

Access to

markets

Access to
networks

Source: Authors

Figure 3 shows 11 identifi ed nodes in relation to services that were of importance to the family start-ups.
However, four nodes particularly were prominent. These were; accessibility to markets, the participant’s
access to internal networks, the physical space that the incubator was offering, and the access to in-
house mentoring. The access to networks and business mentoring scored high, yet business assistance
such as help with books and records or administrative assistance did not. In all cases, the incubator size
appeared to be irrelevant, although two participants in the smaller incubator used the term ‘intimate
atmosphere’ and ‘like a home’. The access to other business markets was mentioned in the light that
incubator seminars provided access to other professionals and new customers. Networks and mentoring
are further discussed later in this paper.

Findings and discussion on family fi rm relationships

Family fi rms rated a mentor or personal business advisor as highly important to the survival of their
business. The type of mentoring that occurred in both incubators embraced a variety of business issues,
for example, help with marketing strategies, such as identifying a market and developing a marketing
plan, IP protection, and other areas of business planning. Eight family fi rms regarded relationships with
their mentors with high levels of trust and indicated they encountered no problems disclosing personal

Exploring business incubation from a family perspective

70

challenges or fi nancial issues to their mentors. This was particularly indicated in the husband and wife
family fi rm partnerships. Analysis of the discourse addressing the item ‘Could you tell me about the
relationship you have with your mentor?’ generated data shown in Figure 4 and addresses the second
part of research question three pertaining to relationships.

Figure 4: Internal BI relationships

Source: Authors

Analysis in Figure 4 uncovered two related concepts in relation to the incubator process for family fi rm
relationships. These were networking and trust. NVivo revealed four nodes identifying major
relationships. Of these, three were labelled as most important. The fi rst being the relationships with the
incubator manager; the second being the relationships between particular tenants; and the third being
the internal fi rm relationships. In both incubators the incubator manager was seen as highly important
and both incubator managers were discussed as being mentor and friend of the family fi rms. Participants
clearly differentiated between the participation in ‘networking’ with other tenants and the making of
real ‘friends’. Extracts are as follows. Participant 10 states: “There are many events and networks here
such as the innovation group, who organise business lunches as part of their network events, but you also need
operational business owner networks just talking about business and how to do it”. Also Participant 2 feels
that, “We’ve built a small group of network contacts who are more than happy to be mentors for us, which is
very important”. Once there seemed to be a basis of trust, new relationships grew into friendships of
which some were perceived as becoming ‘part of the family’.

Collaboration

Friendship

Trust

Comfortability

Closeness

Familiarity

Respect

Belonging

Safe

Incubator

process

Incubator

relationships

External

relationships

Relationships with

BI manager

Relationships with

BI team

Family fi rm internal

relationships

Tenant to tenant

Internal BI

relationships

Parent

Parent

Parent

Parent

Parent

Parent

Parent

Parent

Child

Child

Child

Child

Child

Sibling

Sibling

Sibling

Small Enterprise Research 16: 2: 2008

71

Participant 12

(son of mother/son business) tells the story: “John (another incubator tenant, viewed by

participant as peer and mentor) has been a real mate…he has looked after my business on and off when my
father was very sick and is always there for us. I owe John …thanks to him my business is still here and making
money…”

To further illustrate similarities, yet differences, in these categories, Participant 3 discussed the
infl uence business mentors can have on family business partnerships. As the daughter of a mother/
daughter business stated: “Mum and I see our business advisor every month. It’s the time I feel I can really
talk about new ideas I have for the business. Shirley has become more a family friend than a mentor and she
knows that my mother bosses me around in the offi ce (laughs) …mum normally disagrees when I want to
change things like printing layouts for customers or try something new … she can so behind at times … so
now, when we get together with Shirley, I talk about anything. I feel Shirley is a bit like a buffer between my
mother and me and when she says it’s a great idea, my mother gives in.”

And a last example from Participant 11: “There’s a couple who I’m really good friends with, I invited them
to my kid’s fi rst birthday.” According to this participant, networks are: “Absolutely number one criteria. A
lot of people who start a business from home don’t have networks and coming into an incubator gives them
those networks. For any business, no matter how established it is, networking is always the key. I now give
seminars on strategic networking inside and outside the incubator.”

These statements reveal how business relationships turn into friendships and may possibly create
incubator communities with small family businesses at the centre of this development.

Findings and discussion on which types of networks

In answering the last research question: which types of networks were used by family start-up fi rms
when building relationships within the incubator, Table 3 provides an overview of the Higgings and
Kram (2001) networks that were identifi ed in the study.

Table 4: Network types sought by family business owners

Network Types

Network Description

Family

Number of

Participants

Entrepreneurial Networks

high diversity networks with strong
development of relationships

Looking for new business and new
relationships

5

Opportunistic Networks

high network diversity but weak
relationship strength

Looking for new business but keep to
the family relationships

1

Traditional Networks

low network diversity, but strong
relationship ties

Looking for other family businesses/
friends

4
husband /
wife teams

Receptive Networks

low network diversity and weak
relationship strength

Looking predominantly for clients and
relationships from inner circle

2

Source: Table developed from Higgins and Kram, 2001, pp. 264-288.

Analysis revealed that even though most start-up family fi rms sought ‘networking’ relationships, more
in-depth probing uncovered that the driving motivators were varied. Five sets of family businesses had
developed diverse networks with high interaction and four husband and wife teams were part of the
more traditional networks. Of these four, three couples emphasized the importance of meeting other
business ‘couples’, who could share their family business experience. What both groups had in common
however was that they were looking for strong ties within the networks; be it connected to a diversity of
contacts in a number of networks or just few specifi c business relations within one or two networks. The
emphasis was on the strength of the connection.

Exploring business incubation from a family perspective

72

Conclusion

Although this paper presents an explorative case study, the three research questions addressing why
family start-up fi rms choose to locate their businesses in an incubator, what services they seek and what
types of relationships they establish, sheds light on family behaviour in incubators and thus provides a
contribution to the literature.

The family businesses felt more isolated at home, were looking for other families to exchange business
experiences with and were obtaining business and also ‘family’ coaching. In this research sample, the
two incubators signifi cantly encouraged networking, the building of interpersonal relationships and
mentoring processes.

The study supports researchers such as Dyer (2003), Smyrnios and Walker (2003) and Barrett and
Rajapakse (2003) in asserting that family variables provide insights into small business team dynamics,
particularly family fi rms. However, these previous studies were not conducted on start-up family fi rms
during their fi rst years of trading and within incubator environments. It is in this way that the current
study provides an original contribution to the incubator and family literature.

The study’s fi ndings also support Melin and Nordqvist’s (2006) assertions that whilst there is emphasis
on characteristics displayed by family businesses, there are differences that are underestimated within
family business categories. This study confi rms differences in a specifi c Australian context and shows
that small family start-ups relocate into incubators for a variety of family circumstances; for example to
avoid isolation and to seek out different types of business networks, support and personal friendships.
Future research into this area may consist of using larger population samples and exploring family and
community entrepreneurship in different incubator settings.

Small Enterprise Research 16: 2: 2008

73

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