Enterprise and Small Business Principles

Ethnic minority business activity: the British experience

As in the US, one of the most debated features of the EMB population in Britain is the marked disparity between the circumstances of different groups, most clearly evid­ent in the patterns of self-employment among ethnic minority communities. South Asians are particularly well represented in self-employment, with people of Pakistani or Bangladeshi origins three times as likely to be self-employed as West Indians or Guyanese. While there are inescapable transatlantic echoes here of the Korean/African­American gap, we shall see later that the picture has begun to change significantly. In the meantime, however, we shall concentrate on the ‘Afro-Asian gap’, the question of ‘Why so few black businessmen?’ (Kazuka, 1980), which has attracted an almost obses­sive interest since the 1980s (Peach, 1996; Ward, 1991).

10.5.1 African-Caribbean experiences

Many of the explanations accounting for African-Caribbean ‘under-representation’ in self-employment appear to make reference to the apparent lack of cultural resources that are often documented in other ethnic minority groups. Unlike Asians, who are invariably portrayed as richly endowed with family resources, communal networks and other forms of social capital (Basu, 1998; Metcalf et al., 1996), African-Caribbeans are argued to be under-endowed in various crucial respects. These include the different value base of the African-Caribbean family unit, which apparently does not predispose them to running a family business (Reeves and Ward, 1984); the legacy of slavery, which had a deleterious effect upon African-Caribbean culture (Fryer, 1984; Gilroy, 1987; Pajackowska and Young, 1992; Rex, 1982); and the absence of extended family and community networks (Blaschke et al., 1990).

However, explanations that focus exclusively on the absence or otherwise of ‘cul­tural’ resources often fail to appreciate the impact that the opportunity structure can have on the facilitation of business opportunities. Basu (1991) in particular eschews culturalist interpretations and presents a cogent case for locating African-Caribbean under-representation in the socio-context of Black people in Britain. To this end, a number of factors need to be considered. First, many African-Caribbeans originally migrating to Britain were from a working-class background, essentially a ‘replacement’ workforce who came from working-class backgrounds to fill occupational and resid­ential niches vacated by Whites.

‘Class’ resources (Light, 1984) are important in developing attitudes, beliefs, educa­tional qualifications and social networks conducive to entrepreneurship. South Asian migrants in Britain appeared to have a broader socio-economic profile and, therefore, greater access to class resources. The greater entrepreneurial success of the more affluent Blacks that migrated to the US and Canada (Foner, 1979, 1987) would seem to bear out the importance of class background. Ethnic identity is cross-cut by class background in this as in many other instances.

Second, comparatively high levels of unemployment among the Black community (Jones, 1993) serve to induce self-employment in low-skill, highly competitive and poorly rewarded industrial sectors. Often such ‘no-choice’ businesses operate in the informal economy (and thus are not accounted for in official statistics) or remain marginal concerns with little prospect of real progress (Basu, 1991).

Third, negative stereotyping of African-Caribbeans in British society impinges upon their capacity to mobilise resources potentially useful in business. Less preferential treatment by the banks (Jones et al., 1994a) and racist customer behaviour (Jones et al.,

1992) are important business processes where such stereotyping has been noted.

Fourth, residential settlement patterns appear to influence business development among minority groups. For example, Reeves and Ward (1984) argue that the relative dispersal of African-Caribbean settlement (compared with the concentration of South Asians), their numerically smaller population and the apparent lack of culturally spe­cific needs combine to limit market potential for growth in small businesses.

Finally, African-Caribbeans are further constrained by their comparatively low levels of home ownership, which diminishes their capacity to offer collateral for business start-up funding (Basu, 1991). It appears, then, that this group is faced with a power­ful combination of structural handicaps to entrepreneurialism, handicaps which in themselves have little directly to do with ethnic cultural attributes. This needs to be borne in mind in comparative assessments of ethnic minority entrepreneurship.

Also to be borne in mind are recent trends that threaten to undermine many of the stereotypical assumptions about an Afro-Asian gap. Since the 1990s, there are signs that the onward march of South Asian enterprise has gone into reverse, notably among Indians. Due in part to a supermarket-induced decline in small retailing and in part to young Asians shunning self-employment for professional careers, there is now a palpable reduction in Asian self-employment (Jones and Ram, 2003). With African - Caribbean self-employment continuing to rise, any inter-ethnic entrepreneurial gap can only diminish and even disappear. In any case, what matters in the final analysis is quality not quantity. Though diminishing numerically, the signs are that Asian busi­ness is shifting away from low-profit, labour-intensive sectors into human-capital-rich activities like information technology (Ram et al., 2003).

10.5.2 The Asian entrepreneurs

A further recent line of enquiry focuses on emerging differences within the South Asian entrepreneurial population itself. According to such sources as Metcalf et al. (1996),

Indians and East African Asians are the real Asian entrepreneurial success stories in terms of business resources, good practice, positive motivations, earnings, profitabil­ity, growth and scale. Conversely, much Pakistani and Bangladeshi enterprise appears relatively weak in performance, economically marginal and arising out of a context of disadvantage. Once again caution must be urged, since other researchers have found much less of an inter-ethnic gap and have identified many Pakistani firms as outstand­ing high-flyers (Ram et al., 2003).