Enterprise and Small Business Principles

Ethnicity and enterprise

Throughout advanced industrial societies, the last two decades have witnessed a signi­ficant increase in self-employment and small business activity among ethnic minorities (Kloosterman and Rath, 2003; Ram and Jones, 1998; Waldinger et al., 1990). Many of these businesses are embedded in immigrant-origin communities which grew out of post-war demand for low-skill and low-wage labour, particularly in labour-intensive manufacturing industry. Since the 1970s, de-industrialisation and the growing import­ance of the service sector have reduced traditional job opportunities for immigrant labour, while simultaneously creating openings for self-employment (Phizacklea and Ram, 1996; Sassen, 1997).

In Britain, EMBs have been the subject of growing interest from a variety of sources. The media have not been slow to publicise the ‘rags to riches’ stories of conspicu­ously successful South Asian entrepreneurs, even though more careful accounts of this community in business convey a more complex picture. Researchers continue to offer competing explanations for the apparent entrepreneurial flair of some ethnic groups, noticeably South Asians, and the below-average propensity for self-employment among other communities, in particular African-Caribbeans. To varying degrees, business sup­port agencies have attempted to respond, on the one hand, to high levels of unemploy­ment in Black communities and, on the other, to the increasingly significant phenomenon of ethnic enterprise in particular localities and economic sectors. These developments need to be set against a political context which, during the 1980s, was punctuated by civil disturbances in a number of British inner-city areas. A consensus among policy makers rapidly developed that exhorted the Black population to engage in ‘productive pursuits’ (Scarman, 1981): encouraging self-employment among ethnic minorities there­fore emerged as a means of maintaining social harmony in urban areas.

This interest is testimony to the growing importance of the ethnic presence in the small-firm population. In this chapter, key aspects of EMB activity in Britain are assessed. These include explanations of the different patterns of self-employment among ethnic minority groups, particularly African-Caribbeans and South Asians; the contentious question of entrepreneurial motivation and the apparent impact of ‘cultural’ resources on the business-entry decision; the role of the often lauded ‘family’ in the ethnic minor­ity firm; the constraining nature of the market environment; the relationship between ethnic enterprise and high-street banks; and the role of business support agencies in EMB development. However, since ethnic minority entrepreneurship is not a peculiarly British phenomenon, we begin with a brief assessment of EMB activity from an inter­national perspective.