Critical learning episodes in the evolution of Brazilian business start-ups: a theoretical and analytical tool

This study investigates critical learning episodes as landmarks in the evolution of business start-ups. A framework that combines individual learning processes with the Penrosian resource-based theory of the firm, and the concepts of search and routines from evolutionary economics provides the theoretical ground on which this study is developed. Multilevel factors, ranging from entrepreneurial agency to the institutional setting of business development services, represent different levels of analysis. These levels are connected through critical learning episodes, which are triggered by endogenous or exogenous factors and culminate in the creation of new or in the change of current organizational routines. These episodes were narrated by 43 entrepreneurs-founders through semi-structured interviews. Their business start-ups were operating for an average of 4 years (s.d.=1,9) and were linked to business incubation programmes in the two most resource-rich regions in Brazil. These start-ups were in three sectors: a) manufacturing, b) information and communication, and c) professional, scientific and technical activities. The analysis of these narratives combined qualitative (i.e., grounded theory principles) and quantitative (i.e., social networks analysis) techniques. This paper focusses on the most common type of critical learning episode: entry and survival in the market (n=36 start-ups). Results show how micro-processes of learning influence access and creation of resources at the firm level. A temporal analysis of networks configurations shows how processes of embeddedness in market relations influence intra- and inter-organizational dynamics. It is argued that critical learning episodes, for combining multiple factors and levels of analysis, are a useful theoretical and analytical tool to better understand the evolution of these businesses. In addition to this, issues of path-breaking and innovation are discussed in light of institutionalized practices of business development services.