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Critical Factors in the Formation and Development
of Technology-Based Firm Networks in Incubation
Environments in Brazil
Cleber Carvalho de Castro
*,§
, Luiz Guilherme Rodrigues Antunes
*,†,¶
and Clarissa Dourado Freire
‡,||
*
Department of Administration and Economics
Federal University of Lavras, Lavras, Brazil
†
School of Economics, Administration and Accounting
University of S~ao Paulo, S~ao Paulo, Brazil
‡
Department of Production Engineering
Federal University of S~
ao Carlos
S~ao Carlos, Brazil
§
clebercastrouai@gmail.com
¶
luguiantunes@yahoo.com.br
||
clarissadourado21@hotmail.com
Received 28 July 2020
Revised 26 July 2021
Accepted 4 August 2021
Published 16 November 2021
This research aims to identify the critical factors that in°uence the formation and development
of the interorganizational networks that have emerged within incubators of technology-based
¯rms in Brazil. For this purpose, semi-structured interviews were conducted with startups form
two networks of incubated companies (Education Network and Technology, Information and
Knowledge Companies Network) and two incubators (Center of Innovation, Entrepreneurship
and Technology CIETEC and Incubator of Technology-Based Companies of Itajub
a
INCIT). As a result, this study found eight critical factors: Actions by entrepreneurs, leader-
ship, shared spaces, facilitation, network management, ¯nancial and brokerage, which can be
framed in four characteristics: heterogeneity of the ¯rms, lack of cooperation, interactions and
the actions of the incubator. As a contribution, this research allows re°ection on the e®ec-
tiveness of the incubator, in addition to highlighting the complementarity of networks in the
incubation processes. The study analyses di®erent models of incubated ¯rm networks that have
been little explored as an object of study in the incubation literature and networks and what is
the role of the incubator in each of these models.
Keywords: Incubated ¯rm networks; technology-based ¯rm networks; formation and develop-
ment networks; Brazilian incubators.
1. Introduction
Literature, since 2000, recognizes that the patterns of the competitive era have been
shaken, and a new period has emerged based on cooperative relations [Snow (2015)].
¶
Corresponding author.
International Journal of Innovation and Technology Management
(2021) 2150044 (22 pages)
#
.
cWorld Scienti¯c Publishing Company
DOI: 10.1142/S0219877021500449
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As a result of environmental changes, incubators have evolved over for three gen-
erations to keep pace with the needs of incubated ¯rms [Bruneel et al. (2012)]. In the
¯rst generation, the focus of the incubator was on providing infrastructure at re-
duced costs. In the next generation, services, such as management support, were
established. More recently, they began to stimulate the formation of networks be-
tween the incubated ¯rms and other organizations in order to provide business
growth, stimulating the exchange of knowledge, as well as facilitating access to
resources, decisive for the growth and survival of small businesses [Aaboen et al.
(2016)].
No matter how much incubators aim to stimulate the development of incubated
¯rms [Raupp and Beuren (2011)], in the empirical ¯eld, the incubators cannot meet
all the needs of incubated ¯rms [Soetanto and Jack (2013)]. The incubated ¯rms, at
di®erent times, need di®erent resources [Soetanto and Jack (2016)]. Because of that
the phenomenon of formation and development of business networks within incu-
bators emerged [Soetanto and Jack (2013)] in order to complement the incubation
process.
However, two aspects reveal the gap between the formation and development of
incubated ¯rms networks: (i) although main studies on the subject of incubated ¯rm
networks, such as Bollingtoft and Ulhoi [2005], Totterman and Sten [2005] and
Soetanto and Jack [2013], highlighted the relevance of relationships to incubated
¯rms, these same studies fail to explain how these incubated ¯rm networks have
developed over time; and (ii) in recent years that researchers on the incubation
process recognized the importance of relationship capital to incubated ¯rms, in the
form of interactions and bene¯ts to incubated ¯rms [Shih and Aaboen (2019);
Petrucci (2018)]. In this sense, the theoretical starting points describes relationships
as important resources for the incubator ¯rms, since these relationships allow
complementing the o®ered value of the incubator [Shih and Aaboen (2019)]. These
two gaps, therefore, reinforce the need for e®orts to understand, in a deeper way, the
interorganizational relationships in incubators, especially on the formation and de-
velopment processes of the incubated ¯rms networks [Thorgren et al. (2009); Schepis
et al. (2018)]. For this, we propose to answer the following question: what are the
main factors that in°uence the formation and development processes of these
incubated ¯rm networks?
The main objective of this study is to verify the critical factors in°uencing the
formation and development of interorganizational networks that have emerged
within the incubators of technology-based ¯rms in Brazil. In addition to being an
emerging country, Brazil was chosen because of the di±culties that the incubators of
these emerging countries have in obtaining resources, which may propitiate the
emergence of incubated ¯rm networks. For the operationalization of the research in
Brazil, we used the qualitative approach, through semi-structured interviews,
applied to the Incubator of Technology-Based Companies of Itajub
a(INCIT), lo-
cated in Itajub
a, State of Minas Gerais, and the Center of Innovation, Entre-
preneurship and Technology (CIETEC), located in São Paulo, State of São Paulo.
Although we researched two incubators, the level of analysis is in the interorgani-
zational networks within the incubators, that is, in two networks that emerged
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within the incubation process. Additionally, the actors that made up this process of
formation and development were investigated, such as the incubated companies
associated with the network, represented by the managers of the companies, and in
some cases the representatives of the networks, and the stakeholders directly asso-
ciated with this process, such as the managers of the incubated companies. There-
fore, the choice of this research approach allows us the immersion in the research
¯eld, in order to obtain greater detail in the process of formation and development of
the networks, enabling the recognition of the critical factors.
As our motivation and justi¯cation for the development of this paper, the role,
format and nature of incubators are still changing over time, so that their services
can complement each other [Soetanto and Jack (2016)]. There is a theoretical and
empirical evidence that emphasizes that the concept of incubator is still under
construction, and that it has not yet incorporated the interorganizational relation-
ships between incubated, within di®erent types of incubators and in the contexts of
emergence of networks [Petrucci (2018)]. In the context of interorganizational net-
works, besides we are observing that the discussion on the formation and develop-
ment of these incubated ¯rms networks, the two main approaches studied on
interoganizational networks alternative role between hierarchies and markets
[M
enard (2013)], and role of ¯rms and network management [Grandori and Soda
(1995)] has not yet been able to reveal, in fact, how clusters arise, reproduce and
transform. Therefore, this work can contribute to this theoretical basis. Finally, the
results of this paper have potential contribution to the e®ectiveness of the incubator,
since the critical factors obtained can help, in a complementary way, the perfor-
mance of the incubator, mainly in strengthening the startups. No less important, this
paper becomes original as it studies: (i) an emerging country; (ii) the networks of
incubated ¯rms from the perspective of the interorganizational theory; (iii) analyzes
the incubator-network-incubated triad, something not yet observed in the literature
and (iv) considers two di®erent network formation models bottom-up and
top-down.
This paper has six more sections in addition to this introduction. The following
two sections present the business incubators and incubated ¯rm networks and the
formation and development of clusters. Then, the methods and procedures as well as
the results and discussions are presented. The study is therefore concluded by the
¯nal considerations and references.
2. Business Incubators and Incubated Firm Networks
Several scholars have addressed the history of the emergence of the incubator phe-
nomenon in Brazil and around the world, and research shows that the ¯rst signs of
this business in the world emerged in the 1940s, in New York, with the creation of
the Inc. Student Agency [Mayer-Granados and Jim
enez-Almaguer (2011)]. In Brazil,
the advent of incubators took place through government incentives during 1985.
Since then, business incubators have become more well known and important for
national and international programs, and discussions about their value propositions
have increased and become more complex. Bruneel et al. [2012] point out three major
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generations of business incubators. It is important to highlight that the importance
attributed to the value of these institutions has varied from generation to generation,
and is linked to the dynamics of the incubation industry in meeting the emerging
needs of new ¯rms [Grimaldi and Grandi (2005)]. Thus, each generation of incubator
has strengthened its value proposition by adding new dimensions to its o®er [Bruneel
et al. (2012)], originating new incubation models [Grimaldi and Grandi (2005)], as
can be seen in Fig. 1.
The ¯rst generation of business incubators was established in the 1950s and is
strongly in°uenced by the competitive era. The o®er of value of these incubators is
based on the provision of infrastructure, i.e. good quality and low-cost physical
space, such as rooms for installation of the ¯rm, shared resources, among them,
meeting room, auditoriums and laboratories. This value is related to the economy of
scale obtained by the capacity to generate subsidies, which they share partially with
their occupants [Bruneel et al. (2012)].
The second generation of incubators, established in the 1980s, is in the period of
transition from the competition era to the cooperation era. Thus, the focus of these
incubators was on providing value in support services and business development,
such as training, mentoring, coaching, among other services [Bergek and Norrman
(2008)]. The value of this generation is associated with the acceleration of the
learning curve, in which companies that needed support and management training
could reduce their learning curve by being instructed by experienced people [Bruneel
et al. (2012)].
The last generation of incubators, in evidence since the 1990s, is in the cooper-
ation era. Consequently, cooperative ventures emerge. In which the o®er of value is
based on the creation of and access to networks, favoring the obtaining of resources
Fig. 1. Generations of incubation models.
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as well as the promotion of knowledge and the gain of legitimacy [Bruneel et al.
(2012); Aaboen et al. (2016)]. Hence, the de¯nition of a Tavoletti business incubator
(2013 APUD [Petrucci (2018)]), more appropriate for this work, in which incubators
can be understood as controlled processes based on the interdependent co-produc-
tion relationship between incubators, incubators and external network actors, is
highlighted.
In this generation, the role of mediator, facilitator and broker of network relations
to the incubators [Shih and Aaboen (2019)] was assigned to the incubators in order
to create links and add value to the incubation process through access to tangible
and intangible resources of the partners [Shih and Aaboen (2019)]. Consequently,
the o®er of networks helps small businesses in the development of their cooperation
relationships, which can be critical in their formation and development stages
[Madichie (2010)]. These cooperative relationships can be developed by both ex-
ternal and internal incubator networks and help incubator growth [Soetanto and
Jack (2013)]. External networks are intended to link the incubated ¯rms to insti-
tutions outside the incubator, such as service providers, universities, local business
and the government [Lyons (2000)]. The incubator has the potential to add value by
adding the resources, competences, and legitimacy of partners to its core business
[Du® (1994); Bruneel et al. (2012)]. On the other hand, internal networks can be
perceived as a speci¯c type of organizational arrangement based on a system of
interconnected nodes (actors), in a dynamic governance structure and with speci¯c
attributes, such as trust, cooperation, relational symbiosis and territorial synergy
[Bollingtoft and Ulhoi (2005); Totterman and Sten (2005); Johnson-Cramer et al.
(2007); Antunes et al. (2021)].
The networks are a source of social capital, that is, the norms, values, institutions
and relationships that are established among the actors, resulting in cooperation
[Marteleto and Silva (2004)]. Incubated ¯rm networks allow the construction of
social capital and economies of agglomeration, as it generates symbiosis, where in-
cubated ¯rms share resources and experiences, learn from each other, exchange
contacts and establish businesses [Du® (1994); Bergek and Norrman (2008)].
The incubated ¯rms use the incubator to develop relationships between incu-
bated ¯rms [Sherman and Champpell (1998)], which is facilitated by shared space,
which makes collaboration more likely [Lyons (2002)]. These formal and informal
collaborative relationships allow creation of joint ventures [Bollingtoft and Ulhoi
(2005)]. According to Bollingtoft and Ulhoi [2005], internal networks can be orga-
nized by the incubated ¯rms themselves (bottom-up model) or by the incubator
(top-down model).
In the ¯rst case, bottom-up, incubators develop links with other incubated ¯rms.
By sharing space, ¯rms generate synergies, relationships and social capital designed
for interactions and sharing of the resources, knowledge, information and experiences
[Soetanto and Jack (2013)]. In these cases, the incubator can stimulate the network
by shifting its value o®er to the network [Antunes et al. (2021)]. Finally, in the
second case, top-down incubated ¯rms can obtain targeted support from incubators.
According to Antunes et al. [2021], the incubator can act as a network orchestrator,
creating value through the formation and management of the network.
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3. Formation and Development of Firm Networks
The study of how and why networks emerge and evolve is not recent. However, this
questioning permeates interorganizational research, that according to Thorgren
et al. [2009], Tonin et al. [2016] and Schepis et al. [2018], these subjects need further
research, especially those that reveal its aspects and demonstrate its evolutionary
character. Research on network formation addresses two complementary themes:
aspects related to the background of network formation and network structuring
[Schepis et al. (2018)]. The ¯rst theme is related to background, that is, the reasons
for forming the network. These reasons can be diverse and are related to the com-
petitive advantages. The structuring of the network, on the other hand, is a second
theme, ranging from model propositions to the association of these with aspects of
non-cooperation, cooperation, economic and social rules, dynamic formation of
networks, interference of the environment and social context and other aspects
[Johari et al. (2006); Burger and Buskens (2009); Caulier et al. (2015)].
The mainstream of studies on structuring networks has addressed that networks
involves the arrangement of intertwined interpersonal bonds that are related to the
actions of the actors. Therefore, networks do not exist alone, but are created by
individuals and their interactions [Acioli (2007); Bollingtoft and Ulhoi (2005)].
Through the social ties that are formed by the networks, the actors can access
complementary knowledge and resources, as well as obtain support, stimulating
cooperative action among these actors [Bollingtoft and Ulhoi (2005)]. According to
Dubini and Aldrich [1991], networks promote access to capital, work and opportu-
nities, as well as involve relationships of trust and cooperation.
Regarding structuring, there are studies considering the models of formation of
the networks, that is, bottom-up or top-down [Mariotti and Haider (2017)]. Thus, in
the bottom-up model, common interests are responsible for the emergence of the
network. These common interests are the result of trivial objectives and continued
interactions between the ¯rms (Eze and Chinedu-Eze, 2018). From this perspective,
the exchange of knowledge between ¯rms becomes the main purpose of interactions
in order to deal with environmental pressures arising from government regulation,
changes in the market, competition and other environmental factors [Mariotti and
Haider (2017)].
Alternatively, in the top-down model, the network emerges from a central actor,
in other words, an orchestrator [Mariotti and Haider (2017)]. Thus, network or-
chestration is a planned and coordinated action of network activities as a whole,
which involves the intentional action of someone to create and extract value, in the
processes of network formation and management [Dhanaraj and Parkhe (2006)].
This central actor presents power and gains derived from individual characteristics
and position in the network structure, so that by using such power, the central actor
is able to be presented as a leader and to pool resources and abilities for group
members [Dhanaraj and Parkhe (2006)].
For this research, we were established as the period of formation of the network
the moment when the actors of the network visualized the bene¯ts of acting coop-
eratively (background). From then on, the actors develop actions and international
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practices, with interpersonal bonds among the actors. Indicators such as common
objectives, previous social relations, network orchestration, coordinated initial
movements and cooperative relations are metrics of the formation of the networks.
Regardless of the network structure model (bottom-up or top-down), over time, it
can evolve [Halinen and T€
ornroos (1998)]. Studies have presented interorganiza-
tional networks under life cycle theory. This theory can be characterized, ontologi-
cally, by the staticity, sequentiality, unitarism and cumulativeness of events as well
as by considering that the actors of the network, as well as their relationships, are
not able to in°uence the life cycle of the grouping, even with the entry and exit of
new members [Alves (2016)]. On the contrary, Wegner et al. [2015] disagree with this
perspective, since they argue that the network, being dynamic models, does not ¯t
into these tight perspectives as organizations in isolation do.
Far from discussing such issues, our positions are on the idea that the development
of networks is vinculed with the holding of non-exclusive events that can bring the
network to maturity. These events can be related to the de¯nition and establishment
of mechanisms for coordinating the network. In other words, the period of develop-
ment of the network begins after the relationships of the network are consolidated,
frequent and legitimized, when its leadership, being it orchestrator or not, establishes,
directly and indirectly, mechanisms of coordination, as demonstrated below. The
main metrics of network development are based on the frequency of relationships in
the network and the presence, or absence, of governance mechanisms.
In this sense, Grandori and Soda [1995] present ten mechanisms, which are:
communication, decision and negotiation, control and social coordination, rules and
units of integration and linking, common team, relations of hierarchy and authority,
planning and control systems, incentive systems, selection systems and information
systems. Jones et al. [1997] present four other mechanisms: careful analysis of the
potential partner and size of the network, creation of a proper culture for the net-
work, collective social sanctions, and reputation of the network members. These
variables allow the network to develop in order to provide its governance, thus,
allowing the network to act more e®ectively. The following methods and procedures
are presented.
4. Methods and Procedures
This study is qualitative and has exploratory-descriptive approach, using the re-
search strategy of multiple case studies. The qualitative approach can be understood
as one is based mainly on qualitative data and inductive theorizing [Bansal et al.
(2018)]. The descriptive nature intends to detail the facts and phenomenon of a
reality as accurately as possible, so that it covers the characteristics of an individual,
situation or group, as well as reveal the relationships between the events [Corbetta
(2003); Gil (2008)]. As research strategies, we used multiple case studies, which,
according to Yin [2011], are allowed to extend beyond individual case analysis. While
individual analyses determine their own data, the multiple cases allow the identi¯-
cation of models, providing a basis for the elaboration of theories [Eisenhardt
(1989)]. To analyze the formation of networks of ¯rms within technology-based
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incubators, we studied the business networks in two incubators, CIETEC and
INCIT. The choice of these incubators is justi¯ed, as they are the only incubators in
the country that present the networks of companies incubated during the incubation
process. Finally, the level of analysis of this research is in the interorganizational
networks within the incubators, that is, in two networks that emerged within the
incubation process. In this way, the actors that made up this process of formation
and development were investigated, such as the incubated companies associated
with the network, represented by the managers of the companies, and in some cases
the representatives of the networks, and the stakeholders directly associated with
this process, such as the managers of the incubated companies.
Within this context, we identi¯ed seven categories of networks of ¯rms at
CIETEC: biotechnology, medicine and health, chemistry, electronics, environment,
information technology and education network. These networks emerged due to the
number of ¯rms installed in the incubator (from incubated and graduated). As a
consequence, the management of the incubator proposed the creation and man-
agement of networks of incubated ¯rms, in such a way that it followed them based on
markets in which the incubated ¯rms operate, characterizing the process of forma-
tion of top-down networks. In 1997, the CIETEC was created by a government
agreement and is a non-pro¯t civil society. It is located at the University of São
Paulo (USP). In 2019, the incubator had 105 incubated ¯rms, and has already
graduated about 160 technology-based ¯rms since its foundation.
At INCIT, there are three categories of networks: Energy Firm Group, Health
Products and Services Firm Groups and Technology, Innovation and Knowledge
Firm Network (RETIC). These networks emerged in 2010, as part of the incubation
process, which is initiated by movements of the incubated ¯rms themselves
process of formation of bottom-up network. In 2000, INCIT was founded and is
located in Itajub
a, in the state of Minas Gerais. It has already had 26 ¯rms incubated
in 2019, most of them in the information technology and communication, electro
medical and energy sectors. INCIT has graduated 42 ¯rms.
For the choice of incubated ¯rm networks, we determined that the networks
should have started activities within the incubation process, in addition to having at
least one year of activities. Only two networks met these criteria: at CIETEC, the
education network (EDU), with 12 companies, and at INCIT, the Network of
Technology, Innovation and Knowledge Companies (RETIC), with 35 companies.
The de¯nition of such criteria allowed the networks to have su±cient time to form
and develop.
We noted that each of these networks presented di®erent theoretical models
[Bollingtoft and Ulhoi (2005)], which allows us to extend theories to other objects of
study through polar cases [Eisenhardt (1989)]. Pettigrew [1990] points out that the
choice of cases in extreme, or polar, situations refers to the criterion of theoretical
sampling, which can extend the emerging theory, in this case of business incubators
and interorganizational networks. The network from CIETEC, EDU, was in the top-
down model. On the other hand, the network from INCIT, RETIC, was in the
bottom-up model. The research on di®erent models of incubated ¯rm networks
provided a wealth of details on each formation and network development, since the
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literature itself does not identify particular aspects for each of these models. This
comparative analysis between the models was not previously investigated [Eveleens
et al. (2017); Antunes et al. (2021)].
We used semi-structured interviews for data collection. The interviews were
conducted with three groups of actors: network managers, incubated and/or grad-
uated ¯rms and those responsible for the incubators, in which the analysis focus on
the relationship between them. The use of di®erent actors can be con¯gured as data
triangulation [Denzin and Lincoln (2005)]. This procedure brings a richer and more
detailed view of the investigated phenomena. We emphasize that all these actors
were linked to the phenomenon emergence and development of business net-
works. However, in the case of CIETEC, there was an incubator coordinator who
also managed the networks. Hence, in addition to the interviews with the incubated
¯rms of this incubator, only the interview with this coordinator took place, which
addressed both the managed network and the incubator.
For the operationalization of the interviews, we developed a script with 32 open
questions on the stages of network formation and development. These questions were
organized into three research sections, Table 1, according to the theoretical basis.
Interviews were previously scheduled with the subjects. They lasted approximately
45 minutes, and all were transcribed in full. In order to choose the interviewed ¯rms,
we decided to approach four ¯rms belonging to each network, which proved to be
su±cient for the saturation criterion. The choice of such ¯rms occurred due to the
intensity of actions (leaders) in the network, since the formation process of the
groupings. A total of 11 investigated actors were obtained, as shown in Table 2.
We highlighted that, as the INCIT network is oldest, the interviewed ¯rms found
themselves as participants in the incubation process. These interviews were con-
ducted with all the actors who participated in the entire process of formation and
development of the networks. Finally, we conducted nine interviews in person and
two by video conference.
After data collection, we transcribed the interviews and, therefore, we carried out
the analysis of content. Content analysis aims to discover the core meanings present
Table 1. Theoretical foundation of the interview script.
Sections Goal blocks Theoretical foundation Researchers
Network
characterization
Characterize the socio-
historical process of
the network of incu-
bated companies.
Formation and develop-
ment of ¯rm net-
works and incubated
¯rm networks.
Bollingtoft and Ulhoi
[2005]; Soetanto and
Jack [2013] and Mariotti
and Haider [2017]
Network formation Investigate the process
of forming networks.
Formation and develop-
ment of ¯rm
networks.
Dhanaraj and Parkhe
[2006]; Wegner et al.
[2015] and Mariotti and
Haider [2017]
Network
development
Investigate the process
of developing
networks.
Formation and develop-
ment of ¯rm
networks.
Grandori and Soda [1995];
Jones et al. [1997] and
Mariotti and Haider
[2017]
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in the interviewees' statements [Bardin (2016)]. Three procedures were developed for
its operation: pre-analysis, exploration of the material and treatment of the results
obtained and interpretation. In the ¯rst procedure, we carried out the preparation
and organization of the material, reading and coding. Later, in the exploration and
treatment procedure we located the most pertinent narratives considering the close
grid. In other words, we delimit two dimensions within each formation and devel-
opment process in two theoretical model of incubated company networks, bottom-up
and top-down, which are: facilities and di±culties. For each dimension, we observed
spontaneous appearance of the categories. The emergence of spontaneous categories
based on empirical evidence is an incremental approach to case selection and data
collection [Eisenhardt (1989)]. To Eisenhardt's [1989] tactical indications for cate-
gorization were used to verify the similarities of the objects of study, i.e. the cate-
gories were obtained only when all subjects approached them. Subsequently, the
categories and the selected procedure were analyzed against the literature, aiming to
identify the reasons for the emergence of each category. The results are presented in
what follows.
5. Results and Discussions
In this section, we present the critical factors in the formation and development of
incubated ¯rm networks.
Table 2. Characterization of the interviewed subjects.
Firms/
Codi¯cation
Status before
the incubator
Institution
age**
Attachment to the
network Survey respondent*
I1 Incubator
CIETEC
21 years Incubator and networks
manager
Business, international
relations and special
projects coordinator
I2 Incubator
INCIT
19 years Incubator manager Manager
R1 Graduated 7 years RETIC manager Owner (current manager of
the network)
E1 Incubated 3 years EDU Commercial director
(partner)
E2 Incubated 3 years EDU Executive director (partner)
E3 Incubated 3 years EDU Owner
E4 Incubated 3 years EDU Technology director
(partner)
E5 Graduated 7 years RETIC Owner (¯rst network
manager)
E6 Graduated 6 years RETIC Owner (second network
manager)
E7 Graduated 7 years RETIC Owner
E8 Graduated 7 years RETIC Owner
Note: * the interviewed ¯rms presented more than one partner, however according to the interviewees
the other partners did not participate on the activities of the networks, because they lived in other cities
or did not have interest on the group's subjects. These partners, therefore, were excluded from the
research, because they could not contribute with details of the formation and development of the
networks. ** age until 2019.
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5.1. Critical factors in the formation of incubated ¯rm networks
We found four critical factors of the formation of incubated ¯rm networks. However,
only one of them hindered the formation process and the others acted as facilitators
of this stage. The only complicating factor was the action of the entrepreneurs, which
concerns the attitudes of entrepreneurs towards the network. There was low par-
ticipation of members, lack of time for network issues and opportunism. Subse-
quently, there are illustrative fragments mentioned by I1, E5 and E4.
The main di±culty in networking is to break the inertia (...) as the entrepreneur
has 100% of his time dedicated to the various projects, you emerge with a net-
working activity for him, and as he is not focused on this, then we need to break
this inertia by selling him the idea that, by networking, he will earn something
(...). [I1]
(...) the companies that were early on, were not always able to participate in
everything and also were not always able to work for the network, propose
themselves there and make themselves available for that (...). [E5]
I thought the participation of members was too low, a vicious circle ended up in
collaborations, that is, network members help each other a lot (...). [E4]
In all the networks we analyzed, there was diversity between companies. This
di®erence between the companies generated a lack of cooperation and commitment
from the companies incubated to the network, since the younger incubated ¯rms had
little time available to take care of its a®airs. The younger members, therefore,
participated less because they devoted their time to structuring and organizing their
companies, di®erently from members that were more established and could devote
themselves more to the network. We noted that participation in the networks pro-
vided bene¯ts to the actors, as well as allowing social relationships to be developed
among members [Perrow (1992); Gulati et al. (2000)].
In contrast, the leadership presented itself as the ¯rst ease in the process of
forming networks of incubated ¯rms. Leadership is perceived as a relational process
of people who develop joint activities, seeking to bene¯t everyone [Komives et al.
(1998)]. This is how the following excerpts from I1, E2, E1, I2 and R1 were extracted:
The leader of the educational network was myself. [I1]
(...) When the person responsible for the networks invited our startup to
participate, he came to talk to me (...) he started sending e-mails, calling for
network meetings (...). [E2]
(...) who started the network was responsible for the networks (...) he ended up
inviting a ¯rm that was incubated here at CIETEC to help form this network
(...). [E1]
(...) It was the INCIT companies that led, who passed the incubator program,
who were motivated to join. The entrepreneurs themselves saw that this union is
strategic (...). [I2]
(...) Entrepreneurs were the leaders (...) they were fundamental people in this
process (...). [R1]
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We observed two di®erent leaderships. In the case of CIETEC, leadership was
developed by the head of the network, that is, the incubator itself (top-down model);
and in the case of INCIT it emerged from the incubated ¯rms themselves, in which
some ¯rms took over (bottom-up model). This category is detached from the more
traditional approach of leadership, and associated with a relational approach, which
links relationships of social in°uence and interactions between leaders and followers
[Akram et al. (2016); Uhl-Bien (2006)].
The facilitation comprises the incubator actions in providing contacts to net-
works and their members [Shih and Aaboen (2019)]. In the case of the top-down
network, the incubator played a key role in setting up the network and facilitation
was a key factor in its formation, as shown in the sections below. We observed in
sections below an orchestration by the incubator, as it is responsible for the for-
mation of the network, as well as for coordinating the activities involving the actors,
consequently occupying a central actor role, with the ability to group resources and
abilities of groups, that is, of incubated ¯rms [Dhanaraj and Parkhe (2006)].
(...) it was not CIETEC saying what to do, but it was CIETEC saying how we
should act, in other words, facilitating (...). [I1]
(...) The representative of the networks that brought everyone together (...)he
simply made a network of connections where everyone could get to know each
other and understand the products of all companies (...). [E2]
(...) INCIT promoted from one company to talk to the other, or to supply with
the other. [R1]
Finally, the shared space was the most relevant aspect in the formation process.
This occurred as ¯rms were already installed under the same infrastructure before
the network was set up and this approach allowed constant interactions between the
incubated ¯rms. Therefore, shared spaces are places of communal use among
entrepreneurs and other tenants and promote interaction with economy of scale
[Lyons (2002); Bollingtoft and Ulhoi (2005); Totterman and Sten (2005); Bruneel
et al. (2012); Soetanto and Jack (2013)].
The spaces destined for the network tighten the bonds, that is, we ended up
knowing exactly what the other startups were doing, which made it easier for us
to sell the product of this startup to our customers, and for them to sell our
product to their customers. [E2]
(...) the bond there was something that we generated, especially because of the
environment of the incubator. This is something that the incubator provides
you, because every time you meet the person, in the cafe, in or out of the
place. [R1]
As we were in the next place, there was facilitation. Integration, exchange of
experience, participation in events, so we always saw each other in common
spaces. [E7]
The daily interaction provided by the incubator through informal and formal
meetings in these spaces enabled the development of territorial synergies and rela-
tional symbiosis between the members. Such synergies, in some cases, have
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strengthened feelings of belonging as well as con¯dence in cooperative work.
According to the study of Totterman and Sten [2005], when trying to determine the
social capital in the context of incubators, the authors found that the functional
space of the incubators were central assets for the construction of the analyzed
networks, since they presented the existence of cooperative relations between the
incubators. In what follows, we show the critical factors in the development of
incubated ¯rm networks.
5.2. Critical factors in the development of incubated ¯rm networks
As in the previous section, we presented four critical factors. Three aspects hindered
the development of networks and only one facilitated this process. The ¯rst critical
factor was again the actions of entrepreneurs. In the cases analyzed, the opportu-
nistic activities and participation of ¯rms continued to be an obstacle to the de-
velopment of the network, that is, due to the diversity of incubated ¯rms and lack of
cooperation. However, a new subcategory emerged, which is the culture of cooper-
ation, as presented by E4 and E6.
The participation of ¯rms in the network is very low, what ends up occurring is
that members help each other very little (...) we could join our e®orts to conquer
other markets and grow together, but I see this as little occurring (...) I at least
do not see this existing, could exist more (...). [E4]
With the geographical distance, participation was greater. When we were in the
same building, it was going down or up two °oors and we were having a meeting,
not today (...). [E6]
As evidenced by E4, cooperative practice is underdeveloped in the networks,
mainly because of the low participation of members. According to Bollingtoft and
Ulhoi [2005], ¯rms do not co-operate in \command", since there must be, as a
background, synergies between ¯rms. Such synergies require prior social relations. In
other words, the lack of a culture of cooperation between members is a consequence
of the lack of synergies obtained by previous social relations.
Another aspect that hindered the development of the network was its manage-
ment. According to Hibbert et al. [2008] network management can be understood as
a joint process developed by teams of diverse competencies, which aim to de¯ne both
the direction to be taken by the network and the allocation of resources to achieve
the objectives. The problems encountered are related to its generation of activities,
contractual formalism, strategic orientation and number of members.
For the generation of activities, the leaders argued that the frequency of actions
within the grouping is di±cult to maintain, since the demands and the types of the
¯rms are diversi¯ed, and the objectives of the networks are long-term. Regarding
contractual formalism, at a certain point in the network, the leaders questioned
whether there was a need to establish the formalization of the network. It was
pointed out as a need in the case of RETIC, as reported by E6, and in a di®erent
way, it was veri¯ed as an obstacle in EDU, according to I1.
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(...) It was di±cult for us to organize ourselves with the documentation, that is,
minutes and records of the formalization. Everyone had their activities, allo-
cating time for this is also a complicating factor (...). [E6]
(...) Formalization would complicate the network's activity a lot (...) formalism
would be an additional di±culty for the entrepreneur, to put this on his shoulder,
while he already has a lot of things he already has in his day- his day (...). [I1]
In the matter of strategic orientation, we identi¯ed that when the initial objec-
tives of the network were completed, there was a need to set new objectives. How-
ever, the stipulation of these objectives proved to be con°icting as they should be
general and long-term, since aspects of individualism and lack of cooperation
emerged among the members. In addition, they should also generate periodic returns
so as not to discourage members. Finally, regarding the number of members, there
was dissatisfaction about the number of members that would be considered
ideal. Some networks mentioned low membership and the need to recruit more
players, while in other networks, the high number of members caused management
di±culties.
The last di±culty that we obtained was the ¯nancial aspect, meaning lack of
¯nancial resources to run the network. The consequences were the impossibility of
holding events, hiring employees, assisting members in the participation of techno-
logical and commercial excursions and promoting projects of member ¯rms. E7 and
E8 mention:
Lack of money is a problem because we need resources to pay accountant, to
invest in the network itself, to make events and so on. [E7]
Heterogeneity can even have its positive side. But in the case of ¯nancial
resources it is not (...) for those who have microenterprises the payment of the
monthly fee may be expensive, for mature enterprises it may not be (...) [E8]
As justi¯cation for the emergence of this category, it is necessary to understand
the obstacles of this type of company. According to Clarysse and Bruneel [2007]
technology-based ¯rms, such as those studied in this research, present high risks
inherent to the business, which consequently present low possibilities of investment
and ¯nancing. The ¯nancial resources that can be made available to the network are
scarce, due to the diversity of incubated ¯rms, interfering in the network itself.
Finally, the critical factor that acts as facilitator of this process was the broker-
age. It is understood that a broker is one who weaves strategic relationships between
partners from various spheres in order to renew or add them to the existing network
[Chandra et al. (2014)]. The incubator, as exempli¯ed in the R1, E8, E1 and I1
reports, identi¯ed this role.
(...) the incubator has always encouraged us to collaborate with other ¯rms.
Always promoted conversations with other ¯rms, to be suppliers or partners of
other ¯rms. [R1]
(...) We wanted to have a speci¯c project for the network together with the
Brazilian Micro and Small Business Support Service (SEBRAE), so in this case,
the incubator went to talk to this entity (...). [E8]
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(..) one of our members had contact with the Union of Private Schools. The
person in charge of the network will represent the network and CIETEC for the
Union, aiming to hold a joint event with this institution (...). [E1]
(..) On Friday I go to the Union of Schools in São Paulo to hold a meeting, trying
to generate an event within the union with our educational network (...). [I1]
One of the main roles of the incubator was to encourage interaction between the
¯rms. The incubator acts in attracting new suppliers or complementing business, as
also observed by Totterman and Sten [2005] and Shih and Aaboen [2019].
The relationships between the critical factors of the formation and development
processes of the networks are discussed in what follows.
6. Discussion: Exploring Critical Formation and Development Factors
of Incubated Firm Networks
On each critical factor (leadership, shared space, facilitation and broker
facilitator, and actions of the entrepreneurs, network management and ¯nance
hinderer), individually, we observed intrinsic aspects that permeate the categories.
When the factors are analyzed together, we verify attributes about heterogeneity,
cooperation, actions of the incubator and interactions. Figure 2shows the common
attributes of the critical factors. We understand attribute as proper to someone or
something. In Fig. 2, the arrows indicate positive association between the attributes
and the critical factors. In other words, in the context analyzed, we can verify that
Fig. 2. Intrinsic aspects of critical factors in incubated ¯rm networks.
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when there was the presence of these critical factors (facilitators and hindering)
within the process of formation and development of networks of incubated compa-
nies, there were, intricately, the attributes of heterogeneity, lack of cooperation,
actions of the incubator and interactions. These aspects reveal, therefore, that
critical factors are positively associated with the attributes, although our data do not
allow us to more reliably infer the cause-and-e®ect relationship. Therefore, we in-
dicate further studies that advance this understanding.
In Fig. 2, we perceive that the action categories of entrepreneurs, management
and ¯nance are related as the life cycle of the incubated ¯rms. According to Oliveira
et al. [2015] and Gupta and Chin [1994] the life cycle is used metaphorically to
analyze the phenomena related to changes in the attribute of the business over time
and the organization's ability to adapt to the environment. In the cases analyzed, the
incubated ¯rms are at di®erent stages of the life cycle, which tends to enhance the
heterogeneity of ¯rms in the network. Heterogeneity is di®erences between ¯rms in
di®erent ways such as size, power, resources, abilities and others [Tavares et al.
(2015)]. Consequently, when heterogeneity is linked to the actions of entrepreneurs,
we verify that incubated ¯rms dedicate little time to network issues, and when they
participate, they act opportunistically. Moreover, the heterogeneity with the net-
work management identi¯es di±culties in the management of members and expec-
tations, division of labor, reconciliation of network strategies, among other obstacles
[Xavier Filho et al. (2015); Wegner and Padula (2012)]. In the ¯nancial area, the
di®erent levels of maturity are associated with the volume of resources obtained for
¯nancing technological and business projects, where the more immature the ¯rm,
the less investment and ¯nancing is available for startup and investments in the
network.
Besides the heterogeneity, when linking the actions of entrepreneurs to network
management, we identify the attribute of lack of cooperation. The culture of coop-
eration emerges as a latent aspect, since its lack provides low participation and
interaction among network members, enabling the emergence of opportunism.
Opportunism is a behavior based on cunning, which is overlaid by cooperative
behaviors when formal control mechanisms fail, such as contractual relations, in a
market context [Williamson (1985); Hill (1990)]. Likewise, the lack of cooperation
leads to problems in the direction of the network and strategic orientation, since
individualism causes the organizations themselves to prioritize their own interests
rather than the interests of the group. Hence, the network, by presenting low
member participation and ine±cient management, potentiates the lack of coopera-
tion, as well as its culture.
By analyzing the critical factors of leadership, facilitation, shared spaces and
brokerage, one ¯nds them convergent attribute to the actions of the incubator. The
incubator plays a fundamental role in the process of formation and development of
incubated ¯rm networks, providing facilities. When the incubator has the role of
encouraging or taking over the network, it is acting as a central actor, that is, as an
orchestrator who, through interactions, legitimizes and in°uences the incubated
¯rms to participate and remain associated in the cluster. Similarly, by extending
facilitation and brokerage to networks, incubators provide important contacts for
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the groups themselves to consolidate internally (among the incubated) and exter-
nally (society) [Shih and Aaboen (2019); Mian et al. (2016); Chandra et al. (2014);
Soetanto and Jack (2013); Schwartz and Hornych (2010)].
In addition, the incubator, by ceding its facilities to the networks, allows the
creation of social bonds between the incubated ¯rms, establishing and strengthening
the relationship between the ¯rms, favoring the creation of social capital. It is fa-
voring the access to resources and thus, producing a relational symbiosis and
physical and mental proximity [Bollingtoft and Ulhoi (2005)]. In addition, the in-
cubation process itself considers positive aspects for networks, such as the possibility
of new ¯rms joining the groups, so that they can bene¯t from the externalities of
joint location.
However, we consider that the relationships between incubators, networks and
incubated ¯rms present dynamic attribute and change as the interaction process
a®ects the positions of the actors in the relationship [Petrucci (2018)]. The incu-
bation relationship brings about co-evolution of the actors, since interactions result
in e®ects for both [Petrucci (2018)]. The actions of the incubator, regardless of
the network model, are changeable and can be bene¯cial and/or harmful to the
network.
Finally, by linking leadership factors and shared spaces lies interaction. Inter-
action occurs within the formal and informal shared spaces, where social relations
provide symbioses through the exchange of knowledge, information and experiences,
thus, increasing the practices of cooperation and trust between incubated ¯rms
resulting in the creation of social capital [Dubini and Aldrich (1991); Bollingtoft and
Ulhoi (2005)]. The interactions themselves occur through stimuli such as leaderships,
understood as actions that encourage the cohesion of network members through
greater participation in assemblies, development of joint activities and other beha-
viors. Therefore, the very nature of network leadership presupposes interactivity by
social in°uences between leaders and followers [Akram et al. (2016); Uhl-Bien
(2006)]. However, we emphasize that by associating the factors that facilitate
leadership and shared spaces, these have become an alternative (remedy) to diminish
the e®ects of the critical factor that hinders the actions of entrepreneurs.
7. Final Considerations
The objective of this paper was to verify the critical factors in°uencing the formation
and development of interorganizational networks that emerged within the incuba-
tors of technology-based ¯rms in Brazil. The ¯ndings are as follows: The actions of
entrepreneurs, leadership, shared spaces, facilitation, network management, ¯nan-
cial and brokerage. However, these results ¯ndings implies common attribute such as
business stages, cooperation, role of the incubator and interactions. However, these
aspects must be observed within the context of incubation.
As the main theoretical contribution to the interorganizational ¯eld, the study
advances in the understanding of the process of formation and development of ¯rm
networks, by unveiling the characteristics intrinsically associated to the eight critical
factors, which are: Heterogeneity of the ¯rms, lack of cooperation, interactions and
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actions of the incubator (or any other entity that leads and orchestrates the net-
work). As contributions to the ¯eld of incubators, paper broads the understanding of
the incubation process, covering the emergence of interorganizational relationships
when establishing the incubator-incubated-network relationship. The originality of
the research lays on in the analysis of di®erent models of incubated ¯rm networks
that have not yet been studied in the incubation literature and networks, as pointed
out by Eveleens et al. [2017], it was also possible to observe that in the top-down
network model the incubator occupies an orchestration function, due to its position
as a central actor.
We contribute too managerially to re°ections on the incubator's e®ectiveness,
especially on the complementarity of networks in the incubation processes. We also
argue that these ¯ndings can contribute to the model of the Reference Center for
Support of New Enterprises (CERNE), which is a Brazilian business incubation
model. No less important, the critical factors identi¯ed can contribute to the incu-
bator's management, enabling them to encourage, form or develop the networks of
incubated ¯rms. Finally, we also point out the bene¯ts for the networks themselves,
demonstrating the critical factors that must be carefully observed and managed.
Finally, as a limitation of the research, we point out the di±culty between
establishing the boundaries between the personal networks of the entrepreneurs and
the organizational networks. As proposals for future research, quantitative studies
are indicated in order to validate the critical factors found, as well as the role of the
incubators and the broadening of the discussion of the function of the incubator in
the orchestration of the networks. In addition, the possibilities of: reapplying this
study in other countries with the aim of enhancing the contributions of this research;
analyze the performance of internal networks for incubated ¯rms and incubators;
and check the social relations established between members of the network.
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Biography
Cleber Carvalho de Castro, PhD in Agribusiness at Federal University of Rio
Grande do Sul (2006) and associate Professor at the Department of Agro-industrial
Management at the Federal University of Lavras (UFLA). I have been a professor
and student's mentor (master's and doctorate) of the Postgraduate in administra-
tion Program at UFLA. I also have been working as director of the Technological
Innovation Center (NINTEC) and Member of the Council of Ethics at UFLA. I have
been Institutional Coordinator of the Open University of Brazil (UAB), since 2019,
and ad hoc consultant for Institutional Evaluation and Higher Education Courses at
the Ministry of Education, since 2006. I have experience as Professor, Researcher,
Educational manager, and Consultant, and have been studying with: Networks of
organizations, Capacity Relational, Productive clusters, Agribusiness and Tech-
nology and innovation management since 2006.
Luiz Guilherme R. Antunes, PhD Student in Business Administration at School
of Economics, Administration and Accounting at University of São Paulo (FEA/
USP-Brazil). I have been working as Assistant Coordinator in the Fast-Track
Process and Special Issues at Administration Seminars (SemeAd) - One of the big-
gest administration events in Brazil. I have been undergraduate Lecture at FIPE-
CAFI, and also have been Editorial Assistant at The Bottom Line Journal. I have
Critical Factors in the Formation and Development of Technology-Based Firm Networks
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interest in research that focus on innovation environment, startups and performance
evaluation.
Clarissa Dourado Freire, PhD student in Production Engineering at the Federal
University of São Carlos (UFSCar). Doctoral internship period at Lancaster Uni-
versity Management School (LUMS) - England. I have been working as Coordinator
of the Treasury and Purchaser Section of the Faculty of Law of Ribeirão Preto,
University of São Paulo (FDRP/USP). I also have been coordinating of the Organi-
zational Studies Center (NEO). I have interest in Organizational Studies, Entre-
preneurship, Technology and Innovation, Economic Sociology, People Management,
Organizational Strategy.
C. C. de Castro, L. G. R. Antunes & C. D. Freire
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