Restricted spatial markets
Most EMBs are located within Britain’s inner cities, which is perhaps a reflection of ethnic settlement patterns (Basu, 1991; Reeves and Ward, 1984). Labour Force Survey data indicate that 70% of the economically active ethnic minorities live in metropolitan county areas. This compares with 30% of the White population (Employment Gazette, 1994: 68). An inner-city location can have important implications for the viability and growth prospects for small businesses. It was often ‘white-flight’ from decaying inner - city areas that provided the opportunity for ethnic minorities to take over businesses, particularly in the retail distributive sector (Jones et al., 1994b). But, despite providing this initial opportunity, the problems inherent in an inner-city location often temper the potential for the development of such businesses. For example, local environmental conditions like physical dilapidation, inadequate parking and vandalism are depressingly commonplace. They can often prove a major constraint in securing high-quality markets from outside the immediate locality (Basu, 1991). Moreover, they accentuate the problem of raising appropriate finance (Deakins, Hussain and Ram, 1994) and insurance cover (Patel, 1988).
Although co-ethnic consumer tastes may provide an initial opportunity for business activities, continued reliance acts a major constraint on business development. This is due to the comparatively small size of ethnic minority communities. Furthermore, minority entrepreneurs tend to cater for mainly local residents within inner-city areas where customers have relatively low spending power (Basu, 1991). Moreover, such ‘community markets’ are likely to be in long-term decline since successive British governments have made immigration progressively difficult and there is the likelihood of later generations of ethnic minorities being more integrated with the dominant White culture and economy (Curran and Blackburn, 1993). However, as Curran and Blackburn’s own findings (1993: 60) show, break-out may be less of an issue for minority firms located in areas where there is still a large ethnic minority population. They found that businesses in London, where there is a very significance ethnic minority presence, were more dependent on co-ethnic markets for their sales than those in Sheffield and Leeds. Hence demographic trends are likely to have a bearing on the urgency of break-out for EMBs.
In the light of such unpromising trading circumstances, encouraging ‘break-out’ into majority markets has emerged as an issue of particular importance (Curran and Blackburn, 1993; EMBI, 1991; Jones et al., 2000; Ram and Jones, 1998). But what actually constitutes break-out? Clearly, it is rather more than simply servicing White markets. For instance, a corner store in a White inner-city area may be in no better position than a similar business situated in an ethnic enclave; in both cases, highly competitive market conditions and geographic location militate against any real prospect of substantial growth. A recent study of African-Caribbean entrepreneurship in Britain (Ram and Deakins, 1996) remains cautions against simplistic notions of ethnic business development. Contrary to many previous studies, Ram and Deakins found that firms in their investigation had an average of 50% sales to the majority population. Hence, at a basic level, many entrepreneurs may have heeded the advice of commentators advocating the servicing of ‘White’ markets as the way forward for ethnic enterprise. But it was not uncommon for these mixed-market-oriented firms to remain low-yielding marginal concerns with little prospect for significant development in the future.
Curran and Blackburn (1993: 12) provide a rather more sophisticated view of breakout. They argue for the assessment of plans for expansion with evidence of preparation for growth; examples of the latter would include investigating sources of finance, planning for the re-fitting of premises to enhance potential for growth, and the revamping of existing products or services offered by the business to appeal to a wider market or achieve higher mark-ups. Precise measurement of these facets might be difficult, but, none the less, a genuine attempt at break-out would need to address such issues. However, given the sectoral and spatial confines of many ethnic minority firms, and their usually labour-intensive modus operandi, break-out in these terms is likely to be highly problematic.