A study about the importance of Networking in the early stages of a start-up. Factors that foster and hinder networking.

1. A Work Project, presented as part of the requirements for the Award of a Masters
Degree in Management from the Faculdade de Economia da Universidade Nova de
Lisboa.
BUSINESS INCUBATION IN PORTUGAL – THE ROLE OF COHABITATION FOR
NETWORKING BETWEEN INCUBATED AND MATURE FIRMS IN A SCIENCE
AND TECHNOLOGY INCUBATOR
BRUNO MIGUEL DA SILVA SERRANO 1
A Project carried out with the supervision of:
Professor Stefan Meisiek
JUNE 2008
1
Former student of the Master degree on Business Management at Universidade Nova de Lisboa.
E-mail: serranobruno@gmail.com

2. BUSINESS INCUBATION IN PORTUGAL – THE ROLE OF COHABITATION FOR
NETWORKING BETWEEN INCUBATED AND MATURE FIRMS IN A SCIENCE
AND TECHNOLOGY INCUBATOR
Abstract:
Business incubators (BI) have assumed an important role in fostering the growth
and development of science and technology (S&T) based SMEs in Portugal in recent
years. Networking between entrepreneurs has been recognized by several authors as the
most critical advantage that these organizations can offer to its firms, leading to the
called Networked Incubator. This paper studies the cohabitation between incubatees and
mature firms in the buildings of Taguspark, a S&T park in Lisbon, the factors that
facilitate and hinder networking, in the light of social capital theory, along with the
benefits that incubatees can draw from it. Findings suggest that cohabitation, alone, is
crucial for networking, however, it can be enhanced or hindered by some factors related
to the individuals and others related to the organization of the incubator.
Key words:
Entrepreneurship
Business Incubation
Networking
Cohabitation
1

3. Introduction:
Research on business incubation has evolved in the last three decades from a
concept of incubator that focuses on providing for the technical aspects of business,
such as work space or funding, into the called networked incubator. This last type of
incubator focuses on including tenant firms in a wide network that will give them
privileged access to resources beyond those the incubator itself can provide, while
fostering their entrepreneurial drive and offering economies of scale and scope.
Presently, researchers recognize that these are the main advantages that an incubator can
offer to its tenant firms, allowing them to establish themselves in the marketplace ahead
of competitors, increasing their chances of long-term survival [1].
In the context of networked incubators, several authors have discussed the
importance of the interaction between entrepreneurs of incubated firms; however the
possible networking advantages in an incubator model that promotes the cohabitation
between incubated and established firms seems to be insufficiently considered so far.
This paper presents a study on the cohabitation of young and mature firms in a
Portuguese business incubator (BI), aiming to explain “the role of cohabitation for
networking between incubated and mature firms in a science and technology incubator”.
We’ll start with a brief review on the literature on business incubation, leading
to the networked incubator. Then, the chosen BI will be presented as well as the
methodology used is this study. The findings will then be presented and discussed,
concluding with comments and suggestions about further studies in this area.
2

4. Literature review
Business incubators (BIs) have emerged in the last few decades as a response to
the difficulty of young firms to successfully thrive during their first years of existence.
Recognized as the hardest period of the life of a firm, this period poses a series of
obstacles to entrepreneurs, often suffocating the new born firm. BIs are organizations
that offer a protected environment to these firms, providing a wide range of resources,
in an attempt to address market failures, having proved to be efficient in accelerating
start-ups growth and development [2]. According to Cutbill (2000) [3], firms that
started their activity in a supported environment such as a BI had an 87% chance of
succeeding, contrasting with an 80% failure rate among start-ups outside an incubator in
their first 5 years of operation.
BIs vary in objectives, services and resources offered, organizational models,
sponsors and type of clients served, among others, ranging from public funded
organizations focused on the creation of jobs in less developed regions [4], to privately
funded corporate incubators that focus on creating synergies between experienced
companies and the fresh entrepreneurial drive of new ones, leveraging both towards
innovation [5], although the involvement of the public and non-profit sectors
predominates over the private sector [6].
In the last 15 years, BIs in science and technology parks have assumed an
increasingly important role in fostering the development of S&T based SMEs in
Portugal. During this period the country saw the emergence of several S&T parks and
technological centres nation-wide such as Lispolis, Taguspark, Madan Parque, Madeira
Tecnopolo, Parkurbis, Beira Atlântico Parque, Tagus Valley, among others. Technology
based incubation aims to foster local innovation capacity and technology development,
which has been held as increasingly important in the actual economy. One particular
3

5. characteristic of S&T parks is that often firms are put in close proximity with
universities and research centres. The linkages with universities in S&T parks has been
considered very important by some authors [7], although it has been argued that its role
in the success of the business incubation process is less direct than generally assumed
and that this physical proximity, alone, accounts little for fostering the technology
transfer that’s expected from this relationship [8].
During BIs’ first years of existence as a tool for business development, two
types of BIs were identified: on one hand there were those focused on providing a
physical space, like multi-tenant commercial buildings, and on the other hand, those
focused on business development [9]. The latter would often take the form of shared-
services office networks, focused on the technical aspects of business, offering not only
workspace, but also other shared services that usually included secretarial support,
telephone answering services, office equipment, such as photocopiers or information
systems. In some cases, incubators helped new ventures with financing, whether
through direct investment in the ventures or by arranging contact with investors [10].
The provision of these important, time and resources consuming services, would
allow entrepreneurs to concentrate efforts on their core businesses, increasing their
chances of survival by allowing a reduction of labour and operational costs [11].
Nevertheless, it has been argued that one of the main reasons why firms fail in
their early years are the lack of managerial skills of the entrepreneurs [12-13].
Entrepreneurs often have the technical skills, acquired through formal education or from
previous professional experience, but few have the necessary knowledge on how to
manage the firm effectively [14]. Thus, it became crucial that incubators offered not
only the technical services and resources to get the business started, but also on-site
4

6. provision of business consulting assistance [15]. These services and resources
represented an advantage for incubated firms once it often represented a luxury that
newly formed firms didn’t have access to or couldn’t afford at that initial phase [16].
In this way, incubators would not only help entrepreneurs by providing basic
services and facilities that allowed cost reductions during the venture’s early years, but
by providing support services that complemented their existing talents and resources,
incubators would allow the maximization of their entrepreneurial talent and potential
[17], augmenting their chances of success.
In addition to the provision of business support services, such as counselling and
consulting, another factor that has been considered increasingly important for an
effective incubation process was the networking advantage that these firms could get
from being integrated in the incubator [18].
Social Capital theory argues that, in addition to purely economics-driven
contractual relationships, important socially driven dimensions also need to be taken
into account when explaining entrepreneurship [19]. As Aldrich and Zimmer (1986)
[20] put it, entrepreneurship is “embedded in a social context, channelled and facilitated
or constrained and inhibited by people’s position in social networks”. These social
networks have three important functions for entrepreneurs: 1) to provide access to new
ideas and resources that support the entrepreneurial process; 2) as a means of gaining
credibility and reputability through the formation of alliances with reputable partners; 3)
to exchange knowledge and to facilitate the generation of collective learning. [21-22-
23]. In the early years of a business venture, these networks are particularly important to
test ideas, gain feedback and gather relevant information [24].
This approach to entrepreneurship lead to the emergence of a new type of
business incubator: the networked incubator.
5

7. Networked incubators acknowledge the importance of networks in the process of
firm creation and development and take as their central role to help entrepreneurs form
appropriate social and business networks, knowing that this is a crucial factor to
leverage firms’ survival and growth [25-26].
In addressing the role of incubators in the formation of networks, two types of
networks must be taken into account: internal and external networks, considered as
equally important in the whole process of entrepreneurship [27]. The internal network
refers to the relationships between start-ups inside of the incubator, enabling
entrepreneurs within the incubator to share resources, ideas, experience and expertise,
while enhancing entrepreneurial spirit. The external network refers to the relationship
between incubated firms and other entities outside of the incubator, such as established
firms or universities. Such networks allow the access to resources beyond the incubator
itself, from potential partners to customers, business experts or local businesses [28].
According to Hansen et al. (2000) [29], the characteristic that differentiates
networked incubators from the commonly called BIs is the existence of mechanisms put
in place to foster the creation of partnerships, not only between firms within the
incubator, but also with external partners. According to the same authors, the
institutionalization of networking allows benefits for the individual firms that surpass
their individual ability to network, once there are different mechanisms and people
building a network on behalf of numerous firms. Besides, when the networking activity
by an incubator is institutionalized through formal processes and mechanisms, it no
longer depends on the connections of a few people, guaranteeing equal access to the
network for all firms in the incubator [30]. The privileged access to the referred
networks, and the benefits that result from it, help firms establishing themselves in the
6

8. marketplace ahead of competitors, enabling them to stand on their feet after they leave
the protected environment of the incubator, which can be defined as the ultimate
indicator of success of an incubator.
Methodology
In this study I have employed a single case study methodology. The BI of
Taguspark was chosen for this study because it is recognized as one of the most
successful cases of business incubation in Portugal, but also because it presents some
characteristics that differentiate it from the commonly known concept of BI. At a given
stage of the incubation program, incubatees cohabit with established mature firms
(firms that are not receiving any kind of incubation support) in the same buildings,
which makes of this BI a special case in terms of the interaction between these two
groups of firms.
Research site:
Created in 1992 by governmental initiative, as a response to the awareness of the
delay of the Portuguese economy in terms of technological activity, and operating since
1995, Taguspark has been held as the “flag” of S&T parks in Portugal.
Tagusparque, S.A. is the entity responsible for the installation, promotion and
management of the park, which shareholders include both public and private institutions
in a rather even balance. Relying mainly on public initiative at the project’s early stage,
the private sector has gained weight overtime, accounting now for 49% of the capital of
this society.
The vision of Taguspark is to foster the development of science and technology
activity, working as an economical and social development engine for the region where
7

9. it’s situated. This concept involves the cohabitation of universities, R&D institutions
and S&T based Industries, in order to facilitate a market oriented transfer of knowledge
and technology.
Presently, there are 4 Universities, 6 R&D Institutions and 130 S&T based firms
in the park, as well as complementary services firms, such as restaurants, banks,
insurance companies and a child care institution, among others. Moreover, the concept
of the park also involves the creation of conditions beyond the productive activity itself,
such as sports facilities, green areas or cultural and leisure related services.
Furthermore, the park offers an array of services and benefits to all of its resident
firms, that include a congress centre, a library, business advisory, support in matters of
intellectual property, privileged access to national and EU R&D projects and the access
to relevant information from the park’s network of partners.
In order to be admitted, firm must go through a selection process. Namely, only
S&T based firms with non-pollutant activities are accepted. The applications received
are analysed by the park’s administration and the Scientific Counsel. This process takes
place not only to mature companies that simply aim to open an office in the park but
also to entrepreneurs that intends to start their business there.
The Incubator:
The incubation activity in Taguspark is run by the administration, aiming to
commercialize the results of the scientific investigation and dissemination of new
technical competencies to the market. The business incubator is not an independent
entity, but rather, it is like a service provided by the park to its firms.
Potential “incubatees” are identified after processing the before mentioned
applications. Once pre-approved, they’re inserted in one of the 4 incubation
8

10. programmes available, according to the level of maturity of the firm or project, the type
and potential of the project and the entrepreneurs themselves. The incubation
programmes offered by Taguspark are: 1) R&D projects; 2) incubator of ideas; 3)
business incubator and 4) business development.
The first program is designed to provide support in the investigation process of
R&D projects with market potential.
The second program, the incubator of ideas, is designed to help entrepreneurs
with a S&T based project or just-formed S&T based ventures in their very first steps.
The third program, i.e., the business incubator program aims to provide support
to firms graduating from the incubator of ideas, or others that enter the park with a
similar maturity level. Firms can be in this program for up to 9 years.
Finally, the business development program is aimed at more mature, providing
support to firms’ internationalization process, namely through access to government
programs or institutes such as AITEC, IASP and ICEP.
For the purpose of this study, I’ll focus on the second and thirds programs, i.e.,
the incubator of ideas and the business incubator.
Regarding funding of the young ventures, the incubator never provides initial
funding for incubatees under these programs. Having held small parcels of the capital of
some incubatees in the past, its role is now limited to helping accessing other sources of
funding (venture capitalists, banks or public funding programs such as “Finicia”).
Data Collection:
Aiming to study the proposed phenomena from the perspectives of the different
entities involve, interviews were held with Taguspark incubator staff, CEOs of
incubated firms, representatives of ex-incubated firms (firms that have left the park) and
9

11. representatives of mature firms established in the park. Data was collected through
semi-structured interviews, both personal and by telephone, and emailed questionnaires
to less available informants, in a total of 21 interviews, as detailed below.
Table 1: Number of interviews held, by type.
Entity Incubator CEOs of Representa- Representatives
staff incubated tives of mature of ex-
Type of interview firms firms -incubated firms
On site personal interviews 1 5 - -
Telephone interviews - 4 1 2
E-mail questionnaires - 2 6 -
The before presented collected information was transcripted and translated into
English. The data collected from the different groups of interviewees was displayed
into tables to compare each topic directly, by question answered (see sample in Exhibit
1). Once the data was collected through semi-structured interviews, where interviewees
were given the opportunity to talk about issues that were not directly related to the pre-
formulated questions, this method allowed a qualitative analysis of the trends of the
answers of interviewees for each topic discussed.
Findings:
In this section we’ll start by seeing how the BI of Taguspark is organized and
how it delivers value to its incubatees, through the resources it offers and how is the
value of these resources perceived by entrepreneurs. Then we’ll focus on networking, to
find the different types of networking that take place in Taguspark, namely how
organized and spontaneous networking happen inside of the park, and how firms draw
benefits from it.
10

12. Finally we’ll see that, while resources are fairly valued by most entrepreneurs,
the networking that results from physical proximity is commonly held as the most
critical element in the incubation process, and is among the main advantages from being
installed in the park.
Figures 1 and 2 give us a starting point to understand the organizational aspects
of the business incubation programs of Taguspark, as well as the internal networking
aspects, to which will come back further down this section.
Fig. 1: First incubation program – incubator of ideas Fig. 2: Second incubation program – business incubator
Taguspark Building Taguspark Building
Building Building
Building Building
Incubator of ideas Incubator of ideas
Established firms Incubated firms Universities and R&D institutions
Connections between incubatees and
Connections between incubatees
established firms
From the different types of entities present in the park, this study focuses on the
S&T based firms, more specifically on the relationships between incubated and mature
firms.
11

13. The resources offered by the BI of Taguspark and the way it is organized differ
from one incubation program to another. In this study we’re focusing on the “incubator
of ideas program” and the “business incubator program” which, from now on will be
referred to as first and second incubation programs, respectively.
In the first incubation program, incubated firms are installed in the same
building, as observed in Figure 1. Resources offered to incubatees in the first incubation
program include workspace in a shared room, during up to 6 months, with services like
internet access or telephone, at below-market rates, support and orientation for
developing a business plan and legal constitution of the firm, counselling and training
for entrepreneurs and help in accessing funding sources.
In spite of accounting for only a small percentage of the duration of the
incubation process (6 months out of a maximum of 9 years), the first incubation
program and the support received during this period were the most valued by incubated
firms, in terms of “tangible” support services. In the opinion of entrepreneurs, in
general, this support contributed to a faster and more successful start-up process, once it
helped setting the grounds for “building and planning the future of the firm” and
allowed a “smoother start in terms of costs”.
Firms graduating from this program are given the choice to move to the next
program. Unlike the incubator of ideas, firms in the second incubation program aren’t
clustered in a specific room or building. Firms rent an office that fits its needs, which
can be located anywhere in the park, as observed in Figure 2, according to a simple
matching of space required and space available, being mingled with the other firms of
the park, of different businesses, dimension, and maturity levels. In this phase, the
incubator is no longer a defined physical space, but rather is like an entity that provides
resources to incubatees. According to the incubator staff, firms in this program benefit
12

14. from incubation resources that include discounts in the rents paid for their offices,
support from the Intellectual Property Office, if needed, free access to the resources of
the Taguspark library and information received from the incubator partners’ network.
Although for some of the entrepreneurs, including those from the ex-incubated
firms, the support received on this program was fairly valued, for the majority of the
interviewees of incubated firms, no benefits were perceived in this phase. When asked if
the firms had benefited from discounts on the rents of their first offices, entrepreneurs
had a vague perception of these discounts and couldn’t measure the actual value of this
benefit.
Several authors had discussed that a gap often exists between the actual support
offered by incubators and the way firms experience the value of that support. This has
been evident by the statements of the majority of the interviewees. Not being as tangible
a way of support as logistics or business advisory, benefits like discounts are not as
visible to firms when not clearly communicated.
Entrepreneurs from incubated and mature firms, in general, felt that the
incubator had a rather passive attitude in what concerns the provision of services to
firms. Firms on the second incubation program felt that the Incubator was distant from
the firms. Moreover, it was referred by 3 interviewees that during the first months of
the activity of the firms, managers spent most of their time gathering their first clients,
suppliers and partners, not being able to focus on the core activity of the firm. Here,
entrepreneurs felt a lack of support from the incubator as well.
In spite of being commonly agreed that the resources offered by the incubator
had a fairly important role in the first years of existence of incubatees, the aspects that
were mentioned by all interviewees, from incubated, ex-incubated and mature firms, as
13

15. the main advantages from being in the incubator and in the park, in general, were the
proximity with other entrepreneurs (and the favourable environment for networking that
comes with it) and the recognition associated to the name of the park and to the
presence of firms with good reputation in the market. In other words, the networking
aspects were more valued than the actual support services.
When addressing networking in Taguspark, some remarks must be made in what
concerns the definition of internal and external networks, which result from the
organizational aspects of the incubator, especially the second incubation program.
The fact that the incubator doesn’t present physical boundaries that would
otherwise allow a clear distinction between the inside and outside of the incubator, and
the cohabitation of incubatees and established firms in the same buildings add some
new dimensions to the called internal networking. as given by Lyons (2000) [31]
When referring to internal networking in Taguspark, we’ll not only consider the
relationships between incubatees, but also the relationships between incubatees and
established firms in the same building. An additional distinction will be made between
building-level internal networking (within the same building) and park-wide internal
networking (between all entities in the park).
The external networking that concerns the relationships between the firms of the
park and entities outside the park, despite being believed to have an equally important
role in the development of young firms and in the process of transition of these firms to
the outside of the park, was left out of the scope of this study.
Internal networking in Taguspark takes place under various forms. On the one
hand, there are events organized by the park in order to promote the interaction between
entrepreneurs and other entities at a park-level, either formally or informally. On the
14

16. other hand, networking happens spontaneously, fostered by the close physical proximity
between firms that share buildings and corridors.
As for the initiatives organized by the Incubator to promote the informal
interaction between the firms and other entities of the park, we’ve found that some have
taken place, either on a regular basis or in special occasions. Examples of these are the
seminars and conferences, the “breakfasts at the park”, the “mini-feira”, the “Safari” in
Mafra or going to the Circus on Christmas. These events were opened to everyone in
the park and were seen as valuable opportunities for knowing more about the firms of
the park and establishing contacts in an informal manner. Nevertheless, all interviewees
referred that these initiatives were very sporadic, and should take place more regularly,
while others mentioned that these events usually had little attendance, seeming apparent
that not all entrepreneurs were interested in engaging in such networking activities.
In terms of organized events to promote formal interaction between
entrepreneurs, one of the interviewees, whose firm was started in the Incubator in 1997,
mentioned that the Incubator had a very important role in bringing firms into contact, by
organizing a meeting with all the incubated firms and a couple of other meetings with
mature firms, considered potential partners. On the contrary, the firms formed more
recently didn’t benefit from this kind of formal mechanism of networking and neither
did the ex-incubatees and mature firms interviewed. Apart from this example, most
interviewees answered that there weren’t any formal mechanisms of networking, but
rather networking depended on the entrepreneur’s initiative alone.
Taguspark holds a database of all the firms of the park, which contains a
description of the firms, their industry, activity and contact details. The aim of this
called search engine is to serve as a tool for networking, allowing firms to know more
about the firms established in the park and establish contacts. To access this search
15

17. engine firms come to the central services of the park and ask for the sought after service
or firm. However, the value of this tool has been questioned. While some of the
interviewees had received useful contacts through the search engine, others saw it as a
source of misdirected advertising.
Conversely, a different type of networking seems to be assuming an increasing
importance. When incubatees move to offices in the various buildings of the park
(figures 1 and 2) they are given the opportunity to interact directly with the more mature
and experienced firms. The sharing of buildings and corridors, by itself, and the
spontaneous networking that happens as a result of this proximity was unanimously
held as doubtlessly valuable to all firms in the park.
While the interaction and cooperation among incubated firms have already been
fairly discussed [32], the cohabitation between incubatees and established mature firms
appears as a singular characteristic of the object of this study.
This shift of environment has brought both negative and positive effects in terms
of networking. On the one hand, it deteriorates the linkages between incubatees. On the
other hand, it raises a discussion related to the synergies and networking advantages that
might be derived from the cohabitation between incubatees and established firms.
Findings regarding this topic reveal rather dissonant answers from incubatees.
While some had experienced advantages from this cohabitation, others didn’t feel like it
brought any benefit.
The first group stated that this interaction has been fundamental for the growth
and development of the young firms, allowing entrepreneurs to share their experience,
solve problems, debate ideas and receive advice from more experienced entrepreneurs.
16

18. When problems or challenges emerge, young entrepreneurs can walk across the corridor
and knock on the door of another firm and seek help from more experienced firms.
Conversely, those who didn’t feel any benefit from the cohabitation with mature
firms in the same building, argued that there wasn’t any effort from the incubator to put
these firms into contact, and that most buildings of the park lacked common areas where
people could meet informally. Firms in peripheral buildings argue that the areas that
promote the interaction of people in the park and concentred in the central building
(cafeteria, central services, etc), leaving firms installed in other buildings outside of
these “centres of informal internal networking”.
In the same way, the experiences of mature firms regarding the cohabitation with
incubatees haven’t been unanimous.
For some of the interviewees from mature firms, there actually exist mutual
benefits from the cohabitation of incubated and mature firms. The environment of
proximity stimulates the interaction and sharing of experience and knowledge between
these two groups of firms. For some mature companies, incubated firms constituted a
group of potential clients, while others see them as potential partners. According to one
interviewee, “young entrepreneurs sometimes present interesting and innovative
projects that allow leveraging the innovation potential of a mature firm and, at the same
time, supporting and leveraging these firms’ position in the market, which would be
much more difficult to achieve without this relationship”. Another proof of the
advantages drawn from this closeness is the fact that one of the ex-incubated firms
interviewed maintained commercial relations with firms of the park during the process
of leaving the park and still, two years passed.
17

19. In contrast, another interviewee argued that younger firms are mostly focused on
discovering their first clients and not so much on establishing partnerships with other
firms, whose business may eventually complement its own.
As a general overview of the findings just exposed, we’ve seen that, more than
services and resources that allow a reduction of costs in the first years of existence of a
firm, entrepreneurs value networking as an advantage to their firms, and here,
networking with established firms in close physical proximity. Nevertheless, it seems
like physical proximity, by itself, is not enough to forge a kind of interaction that may
result in partnerships between firms.
Discussion:
Pointed out as the most relevant distinguishing feature of the BI of Taguspark,
the fact that incubated firms live next doors to mature firms raises a discussion about the
existence of synergies between these two groups of firms and how this can contribute to
the efficiency and success of networking in the incubation process. This feature appears
as an innovative approach towards the called networked incubator, as discussed by
Hansen et al. (2000) [33] and Bøllingtoft and Ulhøi (2005) [34], among others.
Furthermore, it leads to a redefinition of the concept of internal and external
networking, as defined by Lyons (2000) [35].
Referring back to figures 1 and 2, the first incubation program is what resembles
the most to the traditional concept of incubator (figure 1). Entrepreneurs are placed in
the same room for 6 months, where they forge relationships among them which, allied
18

20. to the resources provided by the incubator, allows faster problem solving, discussion of
ideas and learning, accelerating the process of development and growth of these firms.
This scenario takes a totally different appearance when firms move to the second
incubation program, which accounts for the longest part of the incubation process.
On this transition, we observe that there is a significant variation in the concept
of internal networking as previously defined by Lyons (2000) [36], in a simple way, as
the linkages between incubatees inside of an incubator. In the described situation, there
are some factors that add to the complexity of this concept: in the incubator of
Taguspark there are two levels of internal networking. Therefore, when addressing
networking in this S&T park, 3 dimensions must be considered: 1) external
networking; 2) “park-level” internal networking and 3) “building-level” internal
networking.
External networking:
As for the concept of external networking, here defined as the linkages between
entities of the park and entities outside the park, in terms of physical location, little
change is seen in the transition from the first incubation program to the second (figures
1 and 2). In other words, whether incubatees are gathered in one place or mixed with
mature firms, external networking, as a concept, remains the same.
However, a discussion is raised concerning the extent to what do incubatees
have privileged access to external networks as a result of their relationship with mature
firms in the buildings of Taguspark. Yet, such discussion will not be further explored in
the present paper.
19

21. Park-level internal networking:
This dimension of internal networking represents the linkages between all the
entities within the park, regardless of the building they’re settled in. These include the
linkages between incubatees that were once under the same roof and are now in separate
buildings and other linkages involving incubatees, mature firms, universities and R&D
institutions installed in the park.
Building-level internal networking:
Considered the most relevant in terms of its potential impacts on the networking
advantages to incubatees, this dimension has been given the central position in this
paper. Unlike the traditional concept of internal networking in an incubator, here a
given incubatee is not only surrounded by other incubatees, but also by established
firms, usually bigger and more experienced.
According to social capital theory, applied to the entrepreneuring process,
entrepreneurs need to get in contact with other people who can provide complementary
knowledge and resources [37]. Moreover, this theory states that such activities as the
exchange of advice and information and access to resources are influenced by the
relative position of these actors within social networks.
Having more experienced firms within the same building, increases the potential
benefits incubatees can draw from this network. In this situation, not only incubatees are
placed in the center of a network (a group of firms under the same roof), but also this
network is enriched by the presence of mature firms. The resources that these mature
firms have to offer incubatees are potentially greater than those offered by another
incubatee, who struggles with similar obstacles.
20

22. As it has been discussed by Hansen et al. (2000) [38], the cooperation between
start-ups and mature firms is very likely to bring mutual advantages. On one hand, start-
ups benefit from mature firms’ experience and knowledge of a certain market, business
or technology, while the latter benefit from the fresh entrepreneurial drive of the first.
As confirmed by two of the interviewees from mature firms established in Taguspark, it
represents a win-win situation, where both mature and young firms benefit from this
environment of close proximity, which reveals that some of the established firms do
experience these synergies in Taguspark.
The potential for deriving advantages from this cohabitation between young and
mature firms in Taguspark has been recognized by both of these groups of firms.
Nevertheless, the dissonant findings regarding these benefits reveal that there may be
some ingredients missing, which prevent this potential to be fully explored.
As can also be seen in figures 1 and 2, the transition from the first to the second
program affects the relationships between firms. On the one hand, young firms that had
spent their first few months of existence in close proximity with other incubatees in the
incubator of ideas are then scattered throughout the park, weakening their links of
communication and cooperation, and even causing them to lose contact with each other.
On the other hand, incubatees are given the opportunity to create new links with more
experienced firms. The way individuals value these two types of linkages and the
benefits that they actually draw from each one cause individuals to perceive the
advantages of this new environment differently.
Furthermore, social capital theory gives a valuable contribution in explaining
why are some entrepreneurs benefiting from this cohabitation, and others are not. Using
the framework created by Bøllingtoft and Ulhøi, (2005) [39], the factors that facilitate
or hinder networking between incubatees and mature firms can be divided into 2 types:
21

23. 1) factors related to the construction of the incubator and 2) factors connected to the
individuals.
The first group of factors is concern the way the incubator is organized. Among
these is the number of firms in a given building. On the one hand, it seems to be more
difficult to establish social relationships with 60 individuals than with 15. On the other
hand, as the number of firms increase, individuals tend to undervalue their role in this
whole process, reducing their efforts towards networking.
Another factor that may explain the success of networking at a building-level in
Taguspark is the criteria used to place firms in the buildings. Bøllingtoft and Ulhøi
(2005) [40] state that, in general, potential synergies come from complementarity of
skills and competencies. Thus, the higher is the complementarity of skills and
competencies between firms in a given building, the greater will be the potential for
drawing benefits from cohabitation.
The existence of common areas within each building where entrepreneurs can
meet spontaneously and the implementation of initiatives that foster the encounter of
people of the same building are examples of ways of fostering the creation of social
relationships that overtime may turn into business relationships.
While these factors can explain, to some extent, why is or isn’t networking
taking place, they do not explain why, in the same conditions, some people do benefit
from this networks and some not, once these factors are imposed equally to all firms.
Thus we must take a look at the factors that are related to the individuals.
One important characteristic of networks that stands out is that they are not
given, but created by individuals. Moreover, individuals understand and value networks
differently. As a consequence, given the same set of conditions, it is possible that one
entrepreneur builds a solid and useful network, while other just sits in his office
22

24. thinking it’s not worth spending time and energies on networking activities.
Consequently, the success of networking between mature and incubated firms within
the same building depends much on how individuals are motivated to establish linkages
with each other.
Furthermore, a solution-driven kind of interaction cannot be established by
imposition, but rather by the initiative of entrepreneurs. According to social capital
theory, the actual forces behind this interaction are not the economics-driven or
contractual relationships, but rather the social relationships and trust between people,
which will lead an entrepreneur to walk across the corridor and ask for advice and
cooperation from another one when a problem arises.
Conclusion:
This study has allowed confirming some of the early assumptions, and raising
other discussion topics.
Physical proximity between incubatees and mature firms, by itself, represents an
important advantage to both groups of firms, for the advantages it brings in terms of
spontaneous networking. Nonetheless, the incubator should have a proactive role in
increasing the chances that these firms actually come into contact.
Having in mind that not all the variables are manageable by the incubator, some
issues have been identified as possible determinants of the success of networking
between firms of the same building, which can be used by the incubator of Taguspark.
The attribution of offices to incubated firms in the park seems to be solely based
on a criterion of space needed/ space available, “like any Real Estate project” in the
opinion of some of the interviewees. However, in order to increase the probability of
firms that share buildings to become partners, some logical criteria should be used.
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25. Among these criteria could be the industry in which the firms operate, the technology
used or the horizontal or vertical complementarity of its businesses, skills and
competencies. This requires that the incubator knows very well the firms that are in the
incubation programs and in the park as a whole. Besides, the incubator should use this
knowledge to identify possible opportunities for synergies, and put the firms in contact
– entrepreneurs are too busy with their day-to-day activity to take a look around and do
this work themselves.
A solution-driven spontaneous interaction requires the existence of social links
and trust between entrepreneurs. The creation of common spaces in all buildings would
be one of the ways to improve the conditions for entrepreneurs to create this type of
networks. Such common areas would allow people from the whole building to meet
over coffee or a meal, creating an environment of actual closeness, where people know
the faces behind the firms established in the building.
Additionally, mechanisms of organized networking need be implemented in
order to foster the interaction betwen firms. As discussed by Hansen et al. (2000) [41],
and confirmed by Bøllingtoft and Ulhøi (2005) [42] and Mcadam (2006) [43], the
implementation of mechanisms of organized networking is crucial for the success of
networking in an incubator. Moreover, the initiatives that have been organized so far by
Taguspark, namely the “breakfasts at the park”, were highly valued by most of the
entrepreneurs interviewed, which reveals a fair openness to this kind of initiatives.
Concerning the resources offered by the incubator, a few remarks should be
made. It is important that the incubator works on eliminating the gap that was identified
between the actual support offered by the incubator and the way firms experience the
value of that support. If the different programs and the resources provided to each firm
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26. aren’t clearly communicated, entrepreneurs will undervalue these resources and feel like
the incubator is not putting much effort on supporting them.
Still on the resources and services offered, the incubator should use its
experience in incubating firms to anticipate the challenges faced by the firms, and offer
its help actively rather than waiting for the firms to come ask for it.
In futures studies, other dimensions of networking should be explored, namely
the relationship between firms and the universities installed in the park. Some authors
have stated that this relationship hasn’t had the expected effects in terms of synergies.
These statements were confirmed by the data collected for this study. Only 3 of the
interviewees felt there were real benefits from the proximity with universities in the
park, which usually came from the fact that students were often recruited for part-time
jobs. However, one entrepreneur mentioned that there have been initiatives by one of
the universities to have students participating in projects with the firms of the park,
which shows that some efforts are being made in order to explore the potential of this
proximity between firms and universities. Studies should be undertaken on this subject
in order to understand the factors that facilitate and hinder this relationship and in what
ways could it be enhanced.
Another important dimension that should also be given attention is the external
networking. It was found that the park, through its “competence centre”, maintains a
network of contacts which is composed of research institutes, universities, business
incubation associations, companies, among others. In order to establish the connection
between the firms of the park and this network, the competence centre disseminates the
information received from this network, which is considered interesting for the firms in
the park. Apart from this mechanism, it seems like little more is done concerning
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27. external networking, which has been considered by several authors to be as important as
the internal networking explored in this paper.
Still concerning external networks, this paper raised a discussion about the role
of cohabitation with mature firms in giving incubatees privileged access to external
networks. We suggest that this topic should be explored in future studies.
Furthermore, comparative studies between incubators should be carried out, in
order to understand how networking takes place in different Portuguese business
incubators. On the research process for this study, contacts were established with 6
other business incubators of S&T parks nation-wide; however, the progress of the
research process lead to focusing on Taguspark alone, leaving this comparison outside
the scope of the study.
26

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