The significance of relationships in entrepreneurship: A case study of the ecology of enterprise in two business incubators

This research examines two questions: What is the significance of relationships and how do they influence entrepreneurship? What kinds of settings or networks of relationships are conducive to entrepreneurship and how do we create them? A two track approach was used. First, a conceptual framework was developed in order to understand the questions and to make sense of observations about relationships and entrepreneurship. Second, actual examples of relationships were examined in order to see how they influence entrepreneurship and to learn under what circumstances they are successful. Two business incubators, the Fulton-Carroll Center in Chicago and the Enterprise Development Center on Route 128, were chosen as settings in which to explore these behaviors. The research methods used include in-depth interviews, participant observation and focus groups. The major finding is that the most important contribution of business incubators to entrepreneurship lies in the opportunities they provide for entrepreneurs to interact and develop relationships with other entrepreneurs, the incubator manager and other individuals associated with the incubator. Entrepreneurs receive three types of benefits: instrumental (such as increased sales, lower costs, enhanced capabilities and reduced risk), psychological and developmental. A typology which distinguishes the content of the exchanges and the structure of the relationships is presented in order to describe the variety of interactions within the incubators and to provide a basis for comparing them. Nine factors collectively influence the development of relationships and the interaction: the types of businesses, the personal characteristics of the entrepreneurs, the stage of the firms' development, the existence of a critical mass of firms, the layout of the incubator space, norms and attitudes, the existence of forums for discussion and the actions of the incubator manager. Lacking sufficient resources and skills, entrepreneurs must create or establish access to them by developing relationships of interdependence with others. Relationships are the vehicle that make the interactions as well as these benefits, possible.