PurposeThe aim is to advance the conceptualisation of island entrepreneurship by investigating how the island context, for example, industry characteristics, social context and formal and informal institutions, influences the development of artisan food businesses in that context.Design/methodology/approachAn applied, qualitative and participatory research approach was implemented. Data were collected during a business development process focusing on food artisans in the Åland Islands. In total, 19 business owners participated in the process. Key informants and public officers were interviewed, and the literature was reviewed. Interviews were analysed using phenomenography to identify representative categories, and the literature was analysed using content analysis.FindingsIsland characteristics and context, local institutions, the quality of social capital and gendered institutions influence business activities positively and negatively. Island entrepreneurship entails mobilising agencies to find innovative solutions that enable businesses to overcome obstacles. Most previous research treats business activities as entrepreneurship; however, as self-employment is essential in the island context, it should be highlighted in future studies.Research limitations/implicationsThis study illustrates how the island context influences the business development of small firms. Results indicate that local policies (1) benefitting female entrepreneurs, (2) supporting local businesses and (3) promoting locally produced artisan food could generate benefits for the entire artisan food businesses.Practical implicationsLocal policies that (1) benefit female entrepreneurs, (2) support local businesses and (3) promote locally produced artisan food have the potential to generate benefits for the entire trade. Policies can benefit from an understanding of the role played by different ecosystem actors. Promoting self-employment can generate benefits for the local entrepreneurial ecosystem by providing agglomeration and helping to solve some challenges caused by the characteristics of islands.Originality/valueEmpirically, this research enhances the knowledge of post-productive responses in the island context. Theoretically, the study advances the conceptualisation of research on the island entrepreneurship context and the local food debate.