Business incubation tenants' service needs: Implications for early firm growth

Lipp, Christopher

Abstract

This thesis explores the role of business incubators in supporting entrepreneurs and small business founders. While some research suggests that incubators can be effective in fostering firm survival, employment growth, and sales growth, recent work questions this effectiveness and with it the justification for continued investment in such facilities. This raises the fundamental question of how business incubators can best support early firm growth.

A systematic literature review highlights that the ideal conditions for early firm growth are not well understood, and the growth process remains elusive, lacking a solid theoretical foundation. The literature often portrays growth as a linear succession of stages, despite limited empirical support and recent criticism of this view. The foundations for business incubators to offer effective support appear uncertain, necessitating further investigation. The review also reveals that business incubation organizations come in various forms and have different strategic aims, leading to ambiguity in their definition and scope, to difficulties in comparing their performance, and to potential incompatibilities between these aims and their tenant’s preferred paths.

The research adopts a critical realist perspective to gain a deeper understanding of early firm growth and how incubation can support it. In line with the philosophical perspective, a retroductive approach is used in this work. Data collection methods involve a questionnaire assessing growth antecedents and service needs, and a subsequent qualitative study focusing on tenants of innovation centres in the UK. The findings highlight the subjective nature of growth, and the complexity of the value perceived by incubator tenants. The research also explores the impact of contextual changes, such as management shifts in incubators, and exposes the limitations of relying on specific growth metrics.

The study proposes a new perspective on early firm growth, suggesting that a firm is a confluence of needs manifested as bundles of networks, systems, and structures, the development of which follows a path dependent on the combined value that individuals attribute to their representations of the firm’s future state. This perspective explains misalignments between founders' ambitions and incubator strategies and suggests mutual transparency as a possible remedy.

In terms of theoretical contributions, the research rejects the concept of growth linearity, emphasizing the subjective nature of firm growth and of the value provided by business incubation. It also advocates adopting a critical realist lens in entrepreneurship research. For practice, the thesis offers clarity on issues related to business incubation, particularly innovation centres. It identifies underprovided services in business incubation and underscores the importance of careful entry selection processes and tailored services for optimizing support to small firms. Overall, this research provides a critical perspective on business incubation and offers new insights into the nature of early firm growth, presenting numerous potential avenues for future research and implications for practice in supporting small businesses.

• Thesis Type: Thesis
• Deposit Date: Nov 3, 2023
• Publicly Available Date: Oct 1, 2024
• Public URL: https://uwe-repository.worktribe.com/output/11405078
• Award Date: Oct 1, 2024