Enterprise and Small Business Principles

Ethnic minority enterprise: an international perspective

Throughout virtually the entire economically advanced world, immigration has increased steadily from the mid-twentieth century onwards and immigrant-origin ethnic minorit­ies have emerged as a burgeoning presence among the entrepreneurial self-employed. Indicative of a tension that permeates the ethnic business literature, some observers have argued that particular groups are culturally predisposed to engage in these types of activities (see Werbner, 1984, for example), while other contributors have stressed the importance of wider structures in shaping the entrepreneurial activity of ethnic minorit­ies (Jones et al., 2000; Rath, 2000). For Rath (2003: 7), ethnic enterprise arises out of ‘the intersection of rising immigration and the post-industrial transition’, immigration coinciding with a shift towards services and flexible production, which has created conditions for new small enterprises to flourish.

In France, high levels of business activity among individuals of Moroccan, Tunisian and Chinese origin have been noted. These enterprises tend to offer the same product as indigenously owned firms but provide a different quality of service. Competitive advantage is achieved over their rivals through longer opening hours, easily available credit and the sale of produce in very small quantities (Ma Mung and Guillon, 1986; Ma Mung and Lacroix, 2003). The Tunisians are the smallest of the three groups ori­ginating in North Africa but they have the greatest affinity towards self-employment. Research has shown the concentration of approximately 180 Tunisian catering estab­lishments in only a few neighbourhoods of Paris. Within these outlets strong traditions are fostered and the firm provides much needed work for family members and co-ethnics (Boubakri, 1985). Yet despite their numerical profusion, ethnic minority firms in France are very much restricted to a ‘narrow path’ (Ma Mung and Lacroix, 2003), concen­trated very much at the lower, least-profitable end of catering and retailing. It is import­ant to note that this clustering in ill-rewarded labour-intensive sectors is a hallmark of EMB, an internationally recurrent pattern recorded for the UK (Barrett et al., 2003), the Netherlands (Rath, 2000), Germany (Wilpert, 2003) and Austria (Haberfellner, 2003). In the latter two countries especially, this narrow focus is attributed to tight legal regulation of migration, citizenship and employment, emphasising that ethnic business patterns are subject to politics as well as economics and ethnic culture itself.

Mention of culture reminds us that, for historical reasons, the ethnic origins of entre­preneurs are variable from country to country. In Germany it is Turkish entrepreneurs who occupy centre stage, with Turkish-owned businesses proliferating considerably since the 1980s. As elsewhere, this rise is explicable with reference to a combination of positive and negative factors. On the plus side, the Turkish community retains strong family traditions, with family members furnishing the valuable resource of labour power. Additionally, the presence of a large Turkish population creates a market demand for culturally specific products. At the same time, self-employment has also arisen as a means of material survival in the negative circumstances of rising unemployment. Over time, business activity has begun to break out of its reliance on the co-ethnic market towards providing such items as fast food and transport for the wider non-Turkish market (Wilpert, 2003). Turks in Belgium also appear to be following a similar traject­ory, particularly in relation to restaurants (Kesteloot and Mistiaen, 1997).

The Netherlands too has witnessed growing EMB activity. Ex-colonial subjects con­stitute the largest ethnic minority in the country and the Surinamese are the largest single group (Blaschke et al., 1990). Low levels of entrepreneurial activity have been officially noted for Turks, Moroccans, Chinese, Javanese and Creoles among other groups. However, recent attention has turned to examining the informal economic activities of ethnic minorities in the Netherlands (Kloosterman et al., 1998; Rath, 1998). Informal activities, defined as income-generating activities which do not meet the requirements of regulatory frameworks, are a feature of post-industrial urban economies throughout the world (Pugliese, 1993). They not only provide income for the business owner but may also be instrumental in providing much needed income for other ethnic minorities who may be, for example, between regular jobs or have no regular source of income whatsoever.

The immigration of Surinamese to the Netherlands has been characterised by a stop-start process, with immigration peaking in 1974-75 and then declining sharply following the independence of Surinam in 1975. The entrepreneurial behaviour of the Surinamese in Amsterdam reflects this pattern of migration, with the first wave of busi­nesses established in the 1960s concerned with serving the dietary needs of the early migrants. As the numbers of co-ethnics rose in subsequent years, there was both a proliferation in the number of these tropical food-stores and a diversification into other activities. According to Blaschke et al. (1990) there were, in 1983, approximately 250 Surinamese ventures in Amsterdam, mostly occupying the cheapest sites in the older parts of the urban centre, where Surinamese residents had settled (Byrne, 1998).

In North America, immigrant enterprise has historically been prominent for far longer than in Europe (Light, 1984) and often tends to be taken as a theoretical template for similar businesses elsewhere in the world. Business ownership has been repeatedly pro­moted as a self-help strategy through which oppressed American minorities can achieve economic advancement. Japanese Americans, Chinese, Jews, Middle Easterners, French Canadians and Cubans among others have all been the focus of research studies into the business activities of these diverse ethnic minorities (see respectively Light, 1972; Min and Bozogmehr, 2003; Razin, 1993; Light et al., 1993; Langlois and Razin, 1995; Portes and Bach, 1985). Much of this interest in ethnic business has tended to focus on the question posed by Waldinger (1995: 62) of ‘why some visibly identifiable and stigmatised groups make it through business and others do not’. A recent manifesta­tion of this is the comparison between Koreans and African-Americans in business (as we shall see, this has echoes with the juxtaposition of South Asian and African - Caribbean entrepreneurship in Britain).

‘Business-minded’ Koreans have been presented as the archetypal role model for all disadvantaged minorities to aspire to in their logical quest for socio-economic advance­ment. Both Kim (1981) and Min (1991) discuss the propensity of Korean-owned busi­nesses to become established in low-income Black areas of central cities. Their decision to service the population in these areas is twofold. First, there is a desire to exploit the vacant niche which has not been filled by African-American entrepreneurs who (allegedly) lack the necessary cultural and class-based resources conducive to small business for­mation. In New York City, the emergence of these niches has been precipitated by an ageing population of Jewish and Italian business owners whose fear of crime, their age and the reluctance of heirs to inherit businesses have prompted them to sell their busi­nesses on. Second, Korean entrepreneurs perceive that the Black ghettos represent a relatively less hostile environment than predominately White areas. Whilst Korean entre­preneurs have brought much needed services to central city ghettos, their strong ethnic ties and cultural attachment has served to exclude others (Light, 1995). These exclu­sionary practices have prompted violent responses from inner-city Black communities angered by the failure of Korean-owned firms to employ African-American workers and contribute finance to African-American community organisations. The organised boycotts of Korean-owned outlets have also been a feature. Hence the entrance of Korean businesses into African-American locales is often viewed as risky because of simmering inter-ethnic tensions (McEvoy and Cook, 1993).

Bates (1994) questions whether the educational merits of Korean entrepreneurs are sufficiently rewarded in their business activities. Min (1991) notes that the vast majority of Korean immigrants have received a high school or college education in South Korea, hence their employment in retail and service activities represents an under-utilisation of their human capital. Across the Atlantic a similar argument has been proposed for South Asians in Britain (Aldrich et al., 1981, 1985; Srinavasan, 1995). Hence self­employment has afforded the entrepreneur the opportunity to make their own deci­sions about the operations of the enterprise but the wider structures of society regulate access to the different types of activities. Moreover, despite the ethnic and economic solidarity exhibited by Korean enterprise and their heavy investment in their ventures, actual returns on their human and physical capital are very small and inferior to the returns accruing to African-American-owned ventures (per dollar invested in capital) (Asante and Mattson, 1992). This suggests that the appropriateness of the Korean entrepreneurship model as the benchmark for all marginalised minority groups to follow should be treated with caution.

As early as the 1880s some intellectual African-American leaders in the US, such as Booker T. Washington, propagated the rise and development of a Black (African - American) bourgeoisie (Asante and Mattson, 1992). This emerging strand of the middle classes would lead to the full emancipation of African-American people as business opportunities and property ownership became widespread and an accepted facet of African-American culture. These developments would be underpinned by the bond of shared values, racial cooperation and self-help.

However, Frazier (1957) points out that the capital mobilised within the African - American community was insignificant in relation to the American economy, and that African-American entrepreneurship provided very few jobs for co-ethnics. Hence to promote African-American business activity as a panacea for the deep-seated and intractable problems of disadvantage and institutionalised racism is highly problem­atic. Frazier (1957: 153) labels the belief that entrepreneurship represented an over­arching solution to the endemic problems of racism as a ‘Social myth. . . [and] . . . one of the main elements in the world of “make-believe” which the black bourgeoisie has created to compensate for its feeling of inferiority in a white world dominated by busi­ness enterprise’.

The comparatively low rates of African-American business ownership are generally attributed to the lack of socio-cultural and class resources, which can be mobilised in the pursuit of entrepreneurship. Both Light and Bonacich (1988) and Waldinger et al. (1990) affirm that the fragmented nature of African-American communities militates against the development of group social networks and mechanisms of in-group attach­ment, which help to nurture business opportunities. The absence of petit bourgeois values is also a serious setback to encouraging new firms. Low educational attainments among African-Americans, small amounts of financial capital and the absence of resource-generating mechanisms such as rotating credit schemes are among the class - related factors that severely hinder the processes of business formation (Bonacich and Modell, 1980; Curran and Burrows, 1986; Light and Rosenstein, 1995).

However, a fundamental hindrance to Black progression is the persistence of racism. Unequal access to health, education, capital and labour market opportunities have stunted the growth of a Black entrepreneurial class (Marable and Mullings, 1994; Waldinger and Perlmann, 1998). The promotion of an ‘enterprise culture’ during the 1980s under President Ronald Reagan actually involved considerable cuts in welfare and health expenditure and the proclaimed belief that poverty was a self-induced state of being. Hence socially, politically and economically marginalised groups such as the homeless, un/underemployed and visible minorities were held responsible for their own plight (Murray, 1990). Neo-conservative thinking acted to create a pool of exploitable low-cost labour so that US industrial capital could begin to compete more readily with international competitors (Kasarda, 1989; Sassen, 1991). Whilst in the late 1990s some economic progress was detected for ethnic minorities in the US, this is extremely uneven. The recent founding of initiatives such as inner-city enterprise zones and Specialised Small Business Investment Companies (SSBICs) has failed to galvanise a new generation of Black entrepreneurs in the US (Bates, 1994b).