Paul Lassalle

26th November 2008

'Ethnic Minority Entrepreneurs: communities, social capital, actors' strategies'

Paper presented at Loughborough University, Workshop: 'EU nationals in the UK Labour force: Economic igrants or !ree" oving #iti$ens of the EU%' &ovember '(()* Abstract* Literature dealing with Ethnic Minority Entrepreneurship has endeavoured to explain the specific situation of immigrant Entrepreneurs in the host country. How different are the Ethnic Minority Businesses (EMBs) from the native and white populations usinesses in the !"# or in the !$% &hy does an immigrant enter'self' employment% How do Ethnic Minority Entrepreneurs (EMEs) raise up resources from their networ(s% &hat are the strategies pursued y EMEs% )he *push+ and *pull+ factors or the reasons for an immigrant to enter'self' employment are the central topic in the EMBs literature. ,nterestingly- the participation rates for most ethnic minority groups in self'employment in "cotland are higher than for the white natives. Living in the context of foreignness and facing language arriers- lac( of (nowledge of institutional and entrepreneurial framewor(as well as issues with access to finance or advice from pu lic agencies- Ethnic Minority Entrepreneurs seem to e resourceful and prospering in "cotland. Ethnic Minority Entrepreneurs use co'ethnic ties to secure resources from their own community including finance and advice. )his affects their strategies- although the role of influence of social capital on entrepreneurial activity remains complex. )hese ties with the co'ethnics can act as positive or negative factors ( onding and ridging social capital) and give irth to specific strategies for the EMEs such as serving co' ethnics- ecoming a middleman entrepreneur or rea(ing'out to the mainstream mar(et.

Introduction #lthough the notion of mobility is rarely used literally in Ethnic Minority Businesses (EMBs) studies- it is a crucial point of research in this field. ,ndeed- the literature is dealing with immigrant Entrepreneurs moving to a host country. )he latest examplessince /001 and the E!'enlargement- over 200 000. wor(ers from the eight 3entral and Eastern European countries/ that have entered the E! in /001- have officially entered the !$s la our mar(et. )his recent immigration wave has een a crucial concern for British 4overnment and researchers. 5oles li(e 5a(istanis or 3hinese immigrants are out rooted (deprived of social capitalhaving language issues- lac(ing (nowledge of the institutional and entrepreneurial framewor(- lac(ing awareness of the existing pu lic or agencies support- finding difficulties in raising finance to start a usiness- etc67) 89ea(ins et al. /00:;. 9espite these difficulties- Ethnic Minority Entrepreneurs (EME) seem to e resourceful and prospering 89ea(ins et al. /00<;. )his a ility to secure resources from their co'ethnics depends on the strength of the existing community that they =oin. )he immigrant is em edded in a structure of relations- especially with co'ethnics and is a le to access social capital from their networ(s. )he social capital raised y the immigrant entrepreneur within his>her community may e an explanation to the success or failure of the entrepreneurial firm- although the role of influence of social capital on entrepreneurial activity is complex 89ea(ins et al. /00:- 5ortes and "ensen renner .??7- $loosterman and @ath /00.;. Aurthermore- the relation with the community of the co'ethnics gives irth to specific strategies for the EMEs- including breaking"out to the mainstream mar(et. )his paper presents the wor( in progress as part of the 5h9 thesis focusing on 5olish Ethnic Minority Businesses (EMBs) and Entrepreneurs in "cotland. ,t is ased on the EMBs literature in different areas such as the !"# or the !$ and on literature a out the em eddedness of economic action in social networ(s including the role of social capital. )he first part will deal with the notions of entrepreneur and ethnicity in order to uild an efficient wor(ing definition of the concept of Ethnic Minority Entrepreneur. 3onsidering the discrimination faced y the immigrant in the host countrys la our mar(et and higher self'employement rates than the natives amongst immigrants- one should consider the *push+ and *pull+ factors to understand this decision (.). )he second part will focus on the importance of the community of co' ethnics in starting'up and managing a usiness. ,n addition- the relation etween the individual entrepreneur and the opportunity structure in the host country is crucial to explain the decision to start'up. )he notions of bonding and bridging social capital will e further explored in the case of EMEs (/). )he third part will focus on the sectors of presence of EMBs in the !$ as well as on the Businesss strategies pursued y the EMEs. #mongst the latter- survival strategies- the strategy of breaking"out- that

"ourceB Home Cffice Border and ,mmigration #gency- +ccession onitoring ,eport +) #ountries, ay '((- . /une '((0. / )he eight 3entral and Eastern European countries that =oined the European !nion in May /001B 5oland- 3Dech @epu lic- Estonia- Hungary- Latvia- Lithuania- "lova(ia and "lovenia. 7 "ee next.

is leaving the ethnic economic enclave to =oin the mainstream mar(et and so1ourner strategies will e descri ed (7).

Part I: Ethnic Minority Entrepreneurs: definitions and specificities.

1. Working on a definition #lthough Entrepreneurs are o viously represented in the economical field- the term Entrepreneur has een developed y writers outside mainstream economic thin(ing such as "ay- $irDner- "chumpeter or 3asson. )he Entrepreneur has een defined as an organiDer of factors of production- a middleman facilitating the exchange- an innovator- a motor for economic change- a ris('ta(er a out uncertain future- someone having capacity of ma(ing =udgement in a scarce resources context. )he literature highlights the fact that there is no clear definition existing of what is exactly an Ethnic Entrepreneur. ,s it a first generation immigrant% "econd generation% #n Entrepreneur selling *ethnic+ products% )he Ethnic Minority Entrepreneur is usually defined y s(in colour (3hinese- #fro'3ari ean- 5a(istanis- etc.)- minority status- religion (Eews) or cultural ac(ground. ,t is important to develop a wor(ing definition of the term *EME+ to e used as a mar(er of description throughout the current research. 4iving a definition to *2ho is an Entrepreneur%+ is the first step to understand *2ho is an Ethnic inority Entrepreneur%+. )he ethnic dimension will e studied considering policy'ma(ing in favour of disadvantaged groups. ,n addition- ecause 5olish immigration post'E! enlargement is an original phenomenon- the concept of ethnicity will e alanced with the notion of nationality. Ainally- the issue of generation and gender in Ethnic Minority Entrepreneurships studies will e presented.
he definition of !ntre"reneur.

,n conventional neo'classical economic theory- the figure of the Entrepreneur is confined in a ac(ground position of organiser of factors of production. 3apitalist employer or owner'manager- the Entrepreneurs role is not studied in depth 89ea(ins and Areel /007;. &hen attention has ecome more and more focused on the role of "mall and Medium Enterprises ("ME) sector for economic development- growth and =o creation- greater attention has also een directed at theories of entrepreneurship. )he role of unorthodox thin(ers has een crucial to uild a definition of who is an Entrepreneur and to give him an active role within the economic sphere. Feverthelessprevious research has a tendency to use indifferently the terms Entrepreneurbusiness"o2ner or o2ner manager. &e can ac(nowledge differences etween those considering their particular approach to strategic decision'ma(ing activities 8Hatten and 3oulter .??:;. ,ndeedentrepreneurs have the aptitude to innovate ("chumpeterian entrepreneur)- to spot opportunities ($irDner)- to ta(e ris(s ($night)- and to influence their environment y organiDing resources (3asson) or factors of production ("ay).

Economic theories of who is an EntrepreneurB $irDner- "chumpeter and $night. &hile physiocrats such as 3antillon and "ay focused on agrarian economy- $irDner gives a general definition of the Entrepreneur individual. $irDners Entrepreneur has the a ility to spot profita le opportunities for exchange. #cting as a middleman 1- the entrepreneur uses the asymmetry of information and (nowledge in a specific mar(et as resources to ma(e profits 8$irDner .?:7;. Fevertheless- it is impossi le to give a definition of the concept of Entrepreneur without any reference to "chumpeter. ,n his definition- "chumpeter highlights the relation etween the Entrepreneur and innovation, motor of the economic growth 8"chumpeter .?7?- .?1?;. ,n "chumpeters view- the Entrepreneur introduces technological processes or products into the mar(et. )his a ility to innovate allows the Entrepreneur to move the limits of what is possi le y moving the constrains of production<. )he "chumpeterian Entrepreneur is part of the Businesss 3ycles 8"chumpeter .?7?;. Having introduced an innovation- the Entrepreneur exploits a niche in the mar(et and is in a temporary situation of monopoly. )his situation gives the entrepreneur a *rent+ to enefit from their monopoly position. )hen- other actors of the mar(et learn the new technology- the competition increases- the price drops as the rent disappears until the next Entrepreneur introduces a new innovation and the cycle starts again. &e can complete the two latter definitions using $night and 3asson to emphasiDe two important aspects of entrepreneurshipB ris('ta(ing and organisation of resources. #ccording to $night- an Entrepreneur is a ris('ta(er 8$night .?/.;. )he Entrepreneur is a le to spot ris(y opportunities in a changing and uncertain environment. 3onsidering the Ethnic Minority Entrepreneurs- the notion of a changing environment is of even greater importance. ,ndeed- the immigrants are moving to another country where the usiness- legal and economic environments are different. )he immigrant Entrepreneurs are willing to spot additional usiness opportunities than the natives 8Light .?:/;. )he entrepreneur is rewarded when the ris('ta(ing has een successful. )his definition is not far from the innovation of "chumpeters entrepreneur. )he entrepreneur is indeed a ris('ta(er (investing for innovation is a ris( as well) and the reward for ris('ta(ing is profit generated for the firm. Aurthermore- the Entrepreneur ' in contrast to the manager ' is directly responsi le for his>her own actions 2. )he Entrepreneur and the usiness'owner ta(e ris( for their firm and themselves. Fonetheless- the very starting'up of ones own usiness is ta(ing a ris(. Aollowing this definition- economic agents starting their own usiness are entrepreneurs. Ainallyan Entrepreneur is an organiser of resources. ,n 3assons view- the Entrepreneur ma(es =udgemental decisions involving the reallocation of resources considering the conditions in the environment. #s mentioned a ove- the environment is uncertain and gives constrains (legal- technological- economic- etc.) to the individuals actions. )he entrepreneur is a le to evaluate the ris(s in this environment and then to reallocate the resources availa le in order to generate profit.
1 <

,n Arench the term *entre+ means * etween+- *preneur+ means *ta(er+. #voiding the dead'end of the law of diminishing returns 8)urgot .:2G- @icardo; and falling rates of profit in Marxs theory of capitalism 8Marx .G2:;. 2 )he Entrepreneur and the usiness owners have shares in the firms and are directly interested in its success. #lthough the manager can e accounta le for their actions- they are not directly involved in the ris('ta(ing actions.

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Entrepreneur or usiness manager% 3onsidering their a ility to innovate- the Entrepreneur is a le to ma(e strategic decisions regarding the allocation of resources and he is a le to create firms with the potential to generate a high level of profits and growth. )hese firms are entrepreneurial firms- continually loo(ing for opportunities in ris(y mar(ets. ,n contrast- usiness'owners may settle down instead of loo(ing for growth and opportunities. )hey are willing to pursue common strategies in small local geographic niches 89ea(ins .??2- Barret- Eones and McEvoy /00.;- or- to a certain extent- they are ound to pursue survival strategies as a reaction to geographical- cultural and psychological dislocation 8Light and Bonacich .?GG;. )he statements made a ove are not specific to the mainstream mar(et- i.e. the non' ethnic mar(et. )hey could eHually e applied to the EMEs de ates.
he ethnic dimension.

)here is still no clear and universal accepted definition of the term ethnic Entrepreneur neither from an economic nor sociological perspective. Airstly- the economic conditions and the socio'political environment change and have an impact on the dynamic and changing nature of the ethnic entrepreneurial process. "econdlyas mentioned a ove- an immigrant starting'up is an Ethnic Minority Entrepreneur (EME). However- is it still the case of second- third or later generations of Entrepreneurs% )his underlines how lur the concept of ethnicity can e. 3onseHuently- there is a conceptual am iguity concerning political I and thus research I agenda on EMBs and the supportive policies provided to them. Ainallythere is a gap in (nowledge and a stri(ing lac( of data concerning specific ut nonetheless important communities- such as 5oles in the !$. )hat said- how to esta lish a definition of EMBs% Cn the one hand- we can follow the definition used y the !"# government (the !"# are also the most important place for research on EMBs in terms of num er of pu lications- and with a long'term interest on the issue of ethnicity and integration and of the enclave economy 8Jhou .??1;). Aollowing their definition- a usiness is ran(ed into the EMBs category if <.K or more of the usiness is minority o2ned or controlled y one mem er of a minority disatvantaged group 8"onfield /00<;. )he term disadvantaged group is interesting ecause it underlines the aims of this classification to help immigrants to enter the la our mar(et and>or to start'up their own usinesses and to contri ute to local economic development. ,n the !"#- the socially disadvantaged minority groups refer to oth !"' orn and first generation. )here is no differentiation etween native and foreign' orn minority groups- as it assumes oth groups face arriers to integrate into the la our mar(et. Cn the other hand- we can present the european model. "tudies on EMBs y $loosterman- @ath- "mall one- and @am do not consider the <.K share to define a usiness as an ethnic usiness. #ttention is given to solely owned usiness status within a roader mixed'em eddedness research agenda including socio'economicspolitical and institutionnal issues 8$loosterman and @ath /00.- @am and "mall one

/00.;. Arom a !$ perspective this definition has een used for various studies and includes research on usinesses staffed and owned y ethnic minorities or usinesses that serve an ethnic minority clientele. !nli(e the #merican definition- the attention will e focused on the nationality of the immigrant rather than on ethnic origin.
# $orking definition of !thnic %inorit& !ntre"reneur.

)his presentation will thus offer what could e considered as a wor(ing definition of an ethnic entrepreneur. Airstly- the term ethnic excludes s(in colour. ,t is thus possi le to include immigrants from the same phenotypical type of population such as Eewish in the !"#- 5olish or ,rish immigants in the !$. )hese populations will also e considered as ethnic. )he definition chosen will instead include the concept of minority status- that is to say community- location- socially disadvantaged group- siDe in comparison to an ideal'typical- or average !$ #nglo'"axon Entrepreneur. )his definition will also include distinctive national and>or cultural attri utes such as religion- ethnicity- language and the existence of communal infrastructures and social networ(s manifesting from recent or settled immigrant arrivals. Most of all- the proposed wor(ing definition will e presented according to the nationality of the immigrant. Airst and second generation )he second generation of immigrants is usually acculturated and has acHuired the linguistic (nowledge to pass over the language arrier. )heories of *second generation decline* 8&aldinger- @oger- 5erlmann- .??G- 5ortes and Jhou .??7@um aut .??:; or *segmented assimilation* are interesting to see the social effects on second generation integration and promotion in the la our'mar(et 85ortes and @um aut .??2;- i.e. the social capital that has een acHuired from minority community networ(s can act as a resource for second generation EME ut could although act as a arrier to their am ition 89ea(ins /00<- 5ortes .??2;. #ccording to a survey conducted for the "cottish Executive in /00<- most of the EMBs in "cotland are family' usinesses. )herefore- it could e a conflict etween generations for the succession- if the second generation is reluctant to continue the usiness. Fevertheless- the second generation of EMEs is more li(ely to leave the ethnic mar(et and traditional sectors to reach the mainstream mar(et 8@usinovic;. However- the reluctance to approach institutionnal providers of finance or advice persists with the second generation of EMEs 89ea(ins /00<;. 3oncerning immigrants coming from E! mem er states- the issue of racial discrimination for children of the second generation seems less important than for non'white or non'caucasian immigrants 8Jhou .??7- 4ans .??/;. 4ender )he relation etween ethnicity- gender and racism have een explored 85hiDac(lea .??0- @am and Holliday .??.- 5hiDac(lea and &ol(owitw .??<;. )hese studies assess the importance of flexi le la our in the family'run usiness 8see also @am .??/;. #ccording to Barret- Eones and McEvoy- it represents the transplantation of

patriarchy into the family' usiness. )he recent reports from the 3ender and Employment in Local Labour arkets hihglight that there is a *need for urgent action to improve the position of ethnic minority women* ecause of the discrimination faced y women EMEs 84ELLM- in Law /00:;.
he case of Polish !thnic %inorit& !ntre"reneurs in 'cotland.

)he (nowledge of the recent 5olish immigrants in the !$ is low ecause of the lac( of data availa le. ,ndeed- there are few official sources and information concerning the 5olish community in "cotland. )he /001 E!'enlargement and the resulting immigration wave to the !$ is an original phenomenon. Airstly- the immigrants are classified in the 3ensus under the *other white+ category and do not present phenotypical differences to the natives. "econdly- the immigrants come from the European countries and do not need a visa or a wor( permit to settle in the !$. #s a conseHuence- easier so1ourners strategies seem to e a rational ehaviour in the European mar(et (see hereinafter- 5art ,,,). )he gap in the EMBs literature is moreover due to the stri(ing lac( of data and official sources concerning these populations in the official census. )he use of the terms *other white+ and * registered immigrants+ from Eastern Europe 8Home Cffice /00G; are vague. Fevertheless- it is possi le to give an estimation of the populations siDe. "ince /001 and the E!' enlargement- over 200 000: wor(ers from the eight 3entral and Eastern European countriesG that have entered the E! in /001- have officially =oined the !$s la our mar(et. )his recent immigration wave has een a crucial concern for the British 4overnment. &ithin this category- we can estimate? that the 5olish immigrants represent a ove 2<K of the total .0. )he siDe of the 5olish immigration which has formed here since 5olands accession to the E! in /001- poses new challenges to policyma(ers in terms of usiness support and policy in the la our mar(et...

"ourceB Home Cffice Border and ,mmigration #gency- +ccession onitoring ,eport +) #ountries, ay '((- . /une '((0. G "ee p. /. ? ,n the a sence of precise data. .0 22K of the #G immigrant registered wor(ers arrived in !$ etween . May /001 and 70 Eune /00: were 5olish nationals. .. "o far- literature concerning EMBs in "cotland has focused on far'east immigration and communities.

2. 'tarting(u" 9ifferences in self'employment rates etween the communities. ,n /001 people in employment from 5a(istani- 3hinese and &hite ,rish groups were more li(ely to e self'employed than those in other ethnic groups in 4reat Britain. Cne in five 5a(istanis in employment were self'employed (/. per cent)- as were =ust under one in six 3hinese (.2 per cent) and &hite ,rish (.< per cent) people. )his compared with around one in ten (./ per cent) &hite British people and fewer than one in ten people from a mixed or Blac( ethnic group 8#nnual Local #rea La our Aorce "urvey- Cffice for Fational "tatistics /001;. EMBs contri ution to the economy. Aor "cotland- the overall contri ution of the EMEs to the economy is crucial. ,ndeedthere are 1-100 Ethnic Minority Businesses- i.e. 7K of self'employed (.-200 registered in 4lasgow alone). )hese usinesses contri ute from L<00 to L:00 million toward "cotlands 495. 9espite a concentration in traditional sectors of retailing and catering- they have growth and diversification potential. Aurthermore- the EMEs ring a socio'cultural contri ution to civil society and a demographic contri ution in rural areas (e.g. Highlands and ,slands) 8"cottish Executive /00<;. *5ush+ and *5ull+ factors for immigrants to enter self'employment. )he motivations for starting a usiness are oth positive (pull) and negative (push) 89ea(ins and @am .??<;. Fevertheless- motivation is the result of an interplay of these two factors 8Areel- .??G;. Cn the one hand- the push factors are essential- ecause they stress the importance of policy'ma(ing for integration of immigrants in civil society 8H=erm /001;- to fight against discrimination in the la our mar(et 8Metclaf et al. .??2; and in access to finance and support 89ea(ins et al. /00<;. ,nclusion o stacles to =oin the British la our Mar(et areB language arriers- lac( of (nowledge a out the institutions in the la our mar(et- and lac( of trust in these institutions. )hese factors push the immigrant to self'employment. Cn the other hand- the community networ(s- the a ility of immigrants to spot usiness opportunities and the wish for independence are factors that pull the immigrant into self'employment. )he immigrant is su =ect to the acculturation lag. )his process acts as a capacity of the EME from a lower'wages country to exploit opportunities more effectively than local entrepreneurs 8Light .?:/;.

). # ma*or issue for !%!s+ accessing to formal source of finance 5revious research has underlined the fact that the immigrant Entrepreneur has greater difficulties to raise finance and face greater difficulties to access usiness support- as well as finance or advice support- than the mainstream population of Entrepreneurs 89ea(ins et al. /007- 3urran and Blac( urn .??7;. Airstly- EMEs have a lac( of awareness of usiness support initiatives and face language arriers 8@am and Eones /00:;. "econdly- there are deli erate strategies to avoid these institutions 89ea(ins et al. /00<;- i.e. an a sence of trust etween Ethnic Entrepreneurs and providers of support. )his reluctance may also e explained y considering the immigrant Entrepreneurs self'elected goals of independence 8Barret- )revor- McEvoy .??2;. )he relations etween EMEs and the institutions in the host country is a ma=or issue to ensure the sustaina ility and growth of EMBs. )he low access of EMEs to mainstream and pu lic institutions has different aspects. Airstly- there is a comparatively low access to formal sources of finance. #s shown in "cotlands situation- there is a mar(ed reluctance to approach an(s and institutional providers of formal sources of finance- although there is little reporting of any dissatisfaction with the commercial an(s 89ea(ins et al. /00<;. ,ndeed- immigrant Entrepreneurs have a lac( of awareness of usiness support initiatives ut also face language arriers 8@am and Eones /00:;. Aurthermore- there is a lac( of engagement y EMEs with mainstream support or agencies. )he latter authors also report a lac( of intermediaries etween the an(s and the ethnic communities leading to a lac( of trust. Met- trust is reHuired to esta lish relationships etween individuals and institutions- here etween EMEs and an(s 89ea(ins et al. /00<- 4ranovetter .?G<;. "econdly- there is also a lac( of engagement with the mainstream and formal sources of advice./. Cnce more- these dimensions underline a lac( of awareness of source of support or advice. Fevertheless- according to recent case studies conducted in the !$the lac( of awareness of the existence of mainstream support is not necessarily the explanation to the lower propensity of EMBs to use formal source of finance and advice. )hese researches have identified deli erate strategies to avoid engagement. Aor instance- the lac( of understanding of the types of support availa le- dou ts a out the relevance- a lac( of confidence and a low level of willingness and a ility to pay can explain this avoidance 8@am and "mall one /00.- 9ea(ins et al. /00<;. Ainally- it is important to ac(nowledge differences etween ethnic communities of Entrepreneurs. Aor instance- 3hinese Ethnic Minority Businesses in the !$ are more li(ely to access financial or external advice from mainstream sources. ,n comparison to white Entrepreneurs- they present the same dependence to mainstream and formal sources of finance 89ea(ins and Areel /007;. #t the other end of the scale- 5a(istani Entrepreneurs are more li(ely to draw finance from informal sources. )he EME has a relatively low access to formal sources of finance 89ea(ins et al. /00<;. )his reinforces the dependence y EMEs *on personal and informal community sources of

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Business 4ateway- formal training- etc.

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finance+ 8i id.;.7. Cnce again- lac( of awareness- language arriers- discrimination and reluctance to contact formal institutions are part of the explanation. )hus- EMBs have a low propensity to access mainstream support provision 8@am and "mall one /00.- 3urran and Blac( urn .??7;- they have a *Mar(ed reluctance to approach institutional providers- even y second generation+ 89ea(ins et al. /00<; relying instead on self'help and informal source of assistance (see hereinafter- 5art ,,). )he low access of mainstream support and source of finance is a ma=or issue to ensure the sustaina ility and the potential of growth for EMBs. Fevertheless- Ethnic Minority Entrepreneurs (EMEs) seem to e resourceful and prospering 8i id.;. )he role of informal networ(s and family ties is indeed crucial to explain the success of EMBs. )he EMEs draw upon resources from familial and co'ethnic ties (see next).

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Fevertheless- there are *larger differences etween minority ethnic groups in their success in raising external finance at start'up than etween EMBs as a group and white'owned firms* 8"cottish Executive /00<;.

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Part II: Community and social capital

"ocial structures and economic action. )he following part deals with the influence of informal structures on EMBs. ,ndeedformal networ(s such as agencies or usiness organiDation are not the only resources availa les for the new immigrant Entrepreneur. Li(ewise- the culturalist approach or the explanations through the entrepreneurNs personality 8Mc3lelland .?2.; are not sufficient to understand the immigrants reasons to ecome an Entrepreneur. Many authors have insisted on the role of the social and institutional environment to provide resources (or constrains) to individual EMEs 8&ard .?G.- &aldinger et al. .??0$loosterman et al. .???- @ath .???;. ,n other words- we have to identify the social structures and the social and institutional framewor( of an individual to understand its economic action. )he push and pull factors (see a ove)- the tra=ectories of EMEs- the *motivation* to enter self'employment are influenced y the social structures and networ(s of the individual. )he economic action is embedded in a structure of social relations 84ranovetter .?G<.1- 3oleman .?GG- 5ortes and "ensen renner .??7;. Aollowing 3oleman- *social- material and human capitals 8acts; as resources availa le to individuals to attain their ends* 83oleman .?GG.<;. 1. ,oreignness and embeddedness+ the !thnic %inorit& !ntre"reneurs and the o""ortunit& structure in the host countr&
'ocial ca"ital.

)he notion of social capital developed y Bourdieu- 3oleman and 5utnam ta(es into account the importance of social structure and framewor(. )he individual is thus *em edded* in a we of social networ(s- providing resources or constrains to start up a usiness. "ocial capital is the process that allows the individual Oto draw on resources from social networ(s* 89ea(ins et al. /00:;. Fetwor(s are I for instance ' family- community- usiness clu s- etc. 8i id.;. Cn the other hand- we can define social capital as the social structures and networ(s that affect the economic goals and goal'see(ing ehavior of its mem ers 84ranovetter .?G<- 5ortes and "ensen renner .??7;. )his definition emphasises the impact (positive or negative) of social structures on economic action and differs from 3olemans definition where social capital facilitates individual rational goal'see(ing actions. Many authors in the EMBs field have underlined that strong social capital may thus have a negative impact especially in the case of EMEs 89ea(ins et al. /00:- see also Aorment .?G?- Fee and Fee .?:7$im .?G. for case studies in the !"#;.

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Most economic ehaviours are closely em edded in networ(s of interpersonal relations that influence economic action. .< "ocial capital is the most intangi le form of capital. ,t inheres in the structure of relations etween individuals within which purposive action ta(es place 83oleman .?GG- 5ortes and "ensen renner .??7;.

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)he immigrant lives in the context of Oforeignness* 85ortes- "ensen renner .??7; and is a le to raise differents types of social capital from its own ethnic community. )he case of EMEs is strongly lin(ed to the Huestion of access to the resources of the community 8"ong .??:- &er ner .??0;- solidarity and faithfulness with co'ethnics and the situation of the immigrant in the host country- including institutionaleconomical and social framewor(. Many authors stress the importance of contextual or environmental factors such as sector- localisation and regulation 8$loosterman .???; in the specific case of immigrants 84ranovetter .?G<- 3oleman .?GG- 5ortes and "ensen renner .??7;. ,n other words- the situation of immigration leads to specific forms of social capital availa le for the new entrepreneur 8i id.;. )hus- the immigrant is em edded in different social networ(s and interacts with the environment and the structures of opportunities of the host country. )hese social structures and more specifically- the co'ethnicsN communities provide resources to the EMEs to start'up a usiness. However- strong social capital can act as a negative factor for diversification or rea('out strategies.
%i-ed(embeddedness and o""ortunit& structure+ the individual and its environment.

)he academic de ate has attempted to explain the specificity of EMBs compared to other "MEs and etween the different communities and especially in the Entrepreneurs a ility to draw resources from formal sources of finance. Airstly- the cultural approach attaches considera le explanatory importance to the mo ilisation of specific ethnic resources 8&er ner .??0;. "econdly- the *material'structural+ approach focuses upon the socio'economic context in which the EMEs are socially disadvantaged 8Eones et al. .??/- 5hiDac(lea .??0;. )hirdly- more interactionist approaches stress the mutual I or *dou le loop+ I relation etween the internal group resource dynamics and the external opportunity structure 8@am and "mall one /00.;. )he notion of opportunity structure in the neo'classical model tends to neglect the accessi ility issue. ,ndeed- entry to the mar(et for newcomers may e loc(ed directly y legislation- y tacit norms or y language issues- access to finance- discriminationetc..2. &e have to understand the socio'economic position of EMEs y ta(ing into account their em eddedness in the socio'economic and politico'institutional environment in the host country 8$loosterman et al. .???;. )hus- mixed em eddedness is the em eddedness of the EME in social networ(s 84ranovetter .?G<.??0- .??<- 5ortes and "ensen renner .??7- &aldinger .??2; such as communityfamily- usiness clu s 89ea(ins et al. /00:; plus its relation with the opportunity structure in which the EME is loo(ing for opportunities to start'up a usiness 8$loosterman and @ath /00.;. Mixed em eddedness refers to the relation etween actors and environment (or opportunity structure.: or system) 8$loosterman and @ath /00.- 3roDier and Aried erg .?::). )he opportunity structure refers to the specific mar(et conditions- the access to ownership- etc. )he immigrant tends to have a different pool of resources (social.2 .:

#s presented in 5art ,. "ee also &illiamson- Cuchi- .?G. and the issue of trust and malfeasance. )he individual is engaged in he pursuit of self'interest ut also in opportunism. Here- the malfeasance is averted ecause clever institutional arrangements ma(e it costly to engage it. "ee the commentary of 4ranovetter .?G<.

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human- financial and cultural capital) than the native (see a ove). )he relations (innovative or passive ehaviour of the EME.G) etween actors and opportunity structure allow us to see if the EMEs have survival strategies ( ecause they are facing significant arriers on the regular la our mar(et) or emerging strategies 8$loosterman and @ath .???- 3lar(e .??G;. )hus- there are two dimensions of the opportunity structure to understand the processes of insertion and social mo ility of EMEB accessi ility to mar(et and growth potential of this mar(et.?. Ainally- the enclave economy is a special case of ethnic economy- ounded y coethnicity and location 8Jhou /001;. ,t is similar to dual mar(et theory 8&ilson and 5ortes .?G0- 5ortes and Bach- .?G<;. )he Enclave economy allows the development of structures of opportunities as an alternative path to social mo ility 8Jhou /001;. Bounded solidarity and social capital. )he opportunity structure is situational and is itself em edded in wider social contexts that may differ according to time or place 8"cott .??G- "torper .??:;. )he comparative approach/0 is thus really useful in the mixed'em eddedness study. Em edded in social relations and structures of opportunities- the newcomer is often facing strong arriers in the la our Mar(et and in access to finance (see a ove- 5art ,). )he ties with co'ethnic networ(s and the resources they can provide to their mem ers are useful to start a usiness 8"ee for instance 9ea(ins et al. /00:- 5ortes and "ensen renner .??7- etc.;. )his is *social capital*. )he literature a out EMBs has underlined the use of resources drawn from the co'ethnics such as la our- advice or capital- especially at the early stage of the usiness 8@am et al. /000;. Aurthermore"outh #sian firms have een categoriDed as *family usiness*- i.e. usiness managed y the family 8&er ner .?G1- Eones .??.- @am et al. /00.;. ,n the latter case- the family is involved in the restaurants management and provides support to the ownerhus and- wife- or any mem er of the family 8@am et al. /00.;. 3onsidering the ,ndian community- the support of the wifes in the usiness- i.e full unpaid employment is more important than the one of 5a(istanis wives (four'fifths compare to two'fifhts) 8Metclaf et al. .??2;. Ainally- the confrontation with the host society has created solidarity community ties among immigrants 8Fee .?:7- Jhou .??/;. ,mmigrants have to accept definitions of their identity ased on host society stereotypes. ,n the case of 5oles in the !"#- poor immigrants considered themselves as peasants efore arriving in #merica ut learned to e *5oles+ as they clustered 84laDer .?<1;. Fonetheless- it is important to underline the fact that social capital raised through ounded solidarity is a response to a specific situation- that is to say- a specific environment and context ounded in time. )hus- the immigrant Entrepreneur elongs to a communal solidarity networ( in an alien new society. He is a group'insider y virtue of shared identity/. 8@ams- Eones /00:;. Him and the fellow'mem ers of this social networ( share ethnic resources 8LightBonacich .?GG;.
.G

&e can compare these ehaviours to push and pull factors to enter self'employment 8see for instance 9ea(ins and @am .??<;. .? Aurthermore- the mar(et is a social construction of the interaction etween actors. ,t is a continuous process 84ranovetter .?G<- 3roDier and Aried erg .?::;. /0 #t a national- regional>ur an and neigh ourhood level 8$loosterman and @ath .???- "torper .??:;. /. Moreover- *ethnicity is much more contingent than formerly recognised+ 8@am and Eones /00<;.

.1

'ocial ca"ital as a negative factor.

#s a resource- social capital can only have positive effects on the individual. )he Entrepreneur is em edded into several networ(s providing him with social capital. Fevertheless- this em eddedness has negative effects 89ea(ins et al. /00:;. ,ndeedstrong social capital may act as a constraint to the individual- or- in other words- social capital can have a cost. 3ase studies a out Latinos and #sian communities in the !"# insist on the importance of negative effects of social em eddedness (and therefore of its associated social capital). )he social networ(s that give rise to resources for the individual can also constrain its action. #ctually- the sentiments of o ligations 84eertD .?:7; can constrain freedom for the individual 8"immel .?0/;. )he role of social capital can reveal surprising effects- for example with the choice of the sector of activity to start'up a usiness or in the difficulty to diversify the activity 89ea(ins et al. /00:- 5ortes and "ensen renner .??7;. 3ommunity control is another one of the negative effects of social ties 8Aorment .?G? for Latinos in "outh Alorida9idion .?G: for the 3u an community- Fee and Fee .?:7 for the 3hinese enclave$im .?G. a out the $orean;. Li(ewise- the levelling pressures of the community to (eep mem ers at the same situation as their peers exists in the second generation 8Bourgeois .??.; constraining rea('out strategies for young people and entrepreneurs 8&acHuant and &ilson .?G?- 5ortes and @am aut .??2- &aldinger et al. .??G%;. Bonding and ridging social capital. )he notions of bonding and bridging social capital reveal that social capital can play different roles in the decision to starting a usiness. 3ase studies a out the Latino immigrants in the !"# stress the limit for immigrant individuals economic success while having strong ties with their community. "ocial capital raised y the individual in a ounded community can e considered as onding capital. Bonding capital can explain the decision of an immigrant to start'up a usiness 89avidsson and Honig- /00.;. Fevertheless- we can also ta(e into account the proposition of 4ranovetter and the importance of wea( ties. )he em eddedness of the individual in social networ(s insists on the importance of concrete personal relations and structure in generating trust and discouraging malfeasance. )he experience of the relation with someone (even a wea( tie) generates trust 84ranovetter .?G<;. Cne can differentiate various types of ties considering the relation with the EMEs and their community 8Birch and &hittam- forthcoming;. Cnce more the issue of reputation is crucial since it appears during the interaction etween individuals. Aollowing 4ranovetter- more intimate relations ma(e ehaviour more predicta le and reduce transaction costs. )he role of social capital is really complex ut we can hypotheses thatB on the one hand onding social capital is often a crucial resource for the immigrant to start'up a usiness- on the other hand- rea('out or diversification strategies could reHuire ridging social capital and extra'community networ(s to =oin the mainstream and institutional we . 4ridging social capital allows rea(ing'out strategies into the

.<

mainstream mar(et while bonding social capital may act as a constraint to usiness development. &ea(er ties- and extra'community social networ(s can provide ridging social capital 84ranovetter .?G<- "vendsen and "vendsen /001- 9ea(ins et al. /00:;. Extra' community and extra'family ties provide bridging capital- which happens to e more helpful for diversification and rea(ing'out strategies.

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Part III: Strategies pursued by Ethnic Minority Entrepreneurs

1. 'ectors of "resence of !%.s and survival strategies "ectors. ,n the !nited $ingdom- the EMBs have a tendency to e concentrated in particular sectors. ,t is of interest to underline that different communities are usually represented in different sectors of the economy. Aor exemple- numerous "outh #sians are represented in the catering- wholesaling- clothing and food retailing sectors 83urran and Burrows- .?GG- Eones et al. .??/;- 3hinese in the ta(eaway trade 8"ong- .??:;. #frican'3arri eans- despite a lower rate of self'employment than the other groups- are strongly represented in the construction sector 83urran and Blac( run- .??7;. EMBs situated in la our'intensive traditionnal sectors such as retailing- cateringwholesaling- and clothing face greater difficulties 8Fetto et al. /00.;. )he demand is decreasing in these sectors- and- in the meantime- the competition etween small usinesses is increasing 8"cottish Executive /00<;. )hey may yet not have access to advice or resources that might help them to achieve diversification. Aurthermoreconcerning the EMBs located in rural areas- the limited mar(ets reduce the chance to secure resources for achieving growth or diversification. )he via ility of the EMBs in these mar(et can e wea( 8see #ldrich .?G2- Eones .?G.- 5ortes and Jhou .??7; and may lead to survival strategies 8@am and Eones- 3urran and Blac( urn .??7; (see also dead'end thesis 8Metcalf et al. .??<;). Fevertheless- the clichP of *corner shop* is now challenged y diversification of EMBs 89ea(ins et al. /00<- Jhou /001; to etter rewarded sectors and break"out strategies to the mainstream mar(et 85ortes and @um ault .??2- @am and Eones .??G@am and "mall one /007; and etter rewarded sectors. Aor instance- in "cotlandEMBs are well representd in emergent new and developping sectors of the economy such as ,)- telecom- software- media or mo ile phone tehnology 89ea(ins and Areel /007;. EMBs in "cotland are resourceful- have innovated in traditional sectors 89ea(ins et al. .??<- /00<; and achieve similar growth to mainstream "mall Businesses. 9espite the generational change and the ermergence of new areas of EMBs activity- concentration in traditional sectors remain for the moment eing the (ey element of EMBs population 8@am and "mall one /00.;. 4eographical location and breaking"out. ,n the case of rural areas or inner'cities- where the growth potential is often already limited y the structure of the mar(et- the EMBs face isolation- crime or security issues and have to cope with racism or discrimination. )his affects growth and diversification strategies 89ea(ins et al. /00<- /00:;. Aor instance- crime or security was also considered to e an issue in rural environments where some EMBs or private property of EMEs have een targeted and attac(ed. "uch usinesses are coping with strong discrimination. )his situation drains on resources- thus ma(ing usiness growth more difficult.

.:

Ainally- it is important to underline the importance of geographical location on the opportunity structures. ,ndeed- EMEs are willing to exploit niches in la our intensive sectors such as restaurant trade 8#ldrich et al. .?G.- 5hiDac(lea .??0;. Aurthermorethere are geographical niches exploited y EMEs. Aor instance- EMEs spot opportunities to start'up in inner'cities and su ur an locations 8&ard .??.;. ,n terms of mo ility- research has underlined that the colonisation of new territory in the city represents a break"out from the former dependence on the ethnic enclave as well as an entry to the mainstream mar(et 8Barret et al. .??2;.
'trategies "ursued b& !thnic %inorit& !ntre"reneurs.

)here are different *ethnic+ entrepreneurs or *immigrant+ entrepreneurs. )he immigrant entrepreneur elongs to a communal solidarity networ( in an alien new society. He is a group'insider y virtue of shared identity 8@ams- Eones /00:; //. )hey and the fellow'mem ers of this social networ( share ethnic resources 8LightBonacich .?GG;. )here are 1 ideal'typical of ethnic entrepreneurs. )he two first types have een largely documented. ' )he Ethnic'mar(et Entrepreneur. )he principal mar(et for ethnic mar(et entrepreneur is his own community 8Eones- Barret- McEvoy /000- Light .?:/#ldrich et al. .?G<- &aldinger- #ldrich and &ard .??0; ' )he middleman'mar(et Entrepreneur. Historically- they were so=ournersinterested in ma(ing Huic( profit 8Bonacich .?:7- Jhou /001;. 3haracterise self'employed immigrants who serve non co'ethnics. "ee also $im- .???#ldrich and &ard- .??0. ,t also involves Entrepreneurs who sell ethnic products to a mainstream pu lic 8Barret- McEvoy /000;. "ee also &aldinger /000 and @am et al. /00/ for a case study in Birmingham restaurant trade. ' )he niche'mar(et Entrepreneur. Entrepreneurs who sell non'ethnic products such as financial services- or legal aid to their own immigrant group. #lthough they sell non'ethnic products- they have the cultural competence to enter this niche mar(et 85utD /000- Engelen /00.;. ' )he mainstream'mar(et Entrepreneur. Entrepreneurs who sell non'ethnic products into the mainstream mar(et 8Barret- Eones- McEvoy- .??2;. )hese Entrepreneurs are in direct competition with native entrepreneurs 8Moro(vasic .???;. )his category is interesting when studying the second generation for example. )he a ility of EME to ea('out depends on successful integration of a holistic strategy involving mar(eting- finance- human resources and (ey contact with the mainstream mar(et. )ransnationalism and entrepreneurship. )he glo alisation of capital and la our and the common mar(et of the E! have encouraged transnational entrepreneurship 8Jhou /001;. #s o served in the !" 85ortes and 4uarniDo .??.- 5ortes et al. /00/; the first type of transnational entrepreneurship is related with financial services and investment institutions- the second with import>export. )he third concerns cultural enterprises and the fourth manufacturing firms. Ainally- the fifth type- identified y Jhou is the *return migrant
//

Moreover- *ethnicity is much more contingent than formerly recognised 8@am and Eones /00<;.

.G

micro enterprise* 8Landolt et al. .???;. )hat stresses the importance of transnational networ(s and social capital. )ransnational Entrepreneurs maximise their human capital and recognition status in their country of origin 84old /00.- 4uarDino et al.???- Light et al- /00/;. "o=ourner strategies. # so=ourner is an immigrant that sees himself as a transient rather than a settler 8Bonacich .?:7;. Aor example- are the 5olish Entrepreneurs willing to go ac( to 5oland after a few years% # recent 5nstitute for Policy ,esearchs "urvey suggests that half of the immigrant wor(ers from the new E!'country have already gone ac( to 5oland. Questions are left open for the researcher a out the will to come ac( to the home country. #re the so1ourners EMEs trapped in dead'end strategies- stuc( in traditional sectors and inner'cities%

.?

/onclusions+ !%!s and mobilities )he tra=ectoires of EMEs are y nature lin(ed to the notion of mo ility- or more precisely- to different mo ilities. ,ndeed- the =ourney of an EME starts with migrationemigration from the home country and immigration in the host country. Feverthelessthis phenomenon is not uniHue or permanent. Airstly- the EMEs can start to use their (nowledge of oth countries and their networ(s to ecome transnational Entrepreneurs. )he other form of mo ility in space is when the EME decides to come ac( to their home country- to start a usiness or not. )here is still a gap in academic (nowledge to explain the reasons to come ac( and the careers pursued y the former EMEs ac( in their country. )o ta(e the recent example of 5oles going ac(B 9o they go ac( ecause they were trapped in survival strategies% 9id they except more from their stay% 9id they expect from the eginning to stay only for a few years% But one can also as( whether the changing economic situation in 5oland and the appreciation of the Jloty against the British pound are sufficient explanation for this movement. ,n addition- the mo ility of wor(ers (and indeed Entrepreneur) is encouraged y the E!. 6o1ourner strategies and transnational entrepreneurship has een made easier. "econdly- the mo ility in space goes hand in hand with mo ility in time. #s mentioned a ove- the EMEs are su =ect to the acculturation lag. Cn the one hand- the immigrant faces o stacles to assimilate in the host countrys la our mar(et ecause of language issues and lac( of (nowledge of the institutions. Li(ewise- the immigrant Entrepreneur has a lower propensity to access to formal source of finance and advice partly ecause of the lac( of (nowledge of the institutions (and also ecause of a lac( of trust). Cn the other hand- the acculturation lag may act as a positive factor for the immigrant willing to start'up if the immigrant comes from a lowerer'wage country. )he acculturation lag in this situation allows the immigrant to spot opportunities to exploit in the new usiness environment. )hirdly- there is a socio'economic mo ility from the status of immigrant and EMEs to the one of a mainstream mar(et Entrepreneur. )he issue of integration- especially amongst second generation- is lin(ed to the one of social mo ility. #s mentioned earlier- the diversification strategies seem to e a etter chance of success for an EMB when demand is decreasing and competition is increasing in traditional sectors of presence for EMBs. )he breaking"out strategies to =oin the mainstream la our mar(et are a crucial element of dynamic and mo ility in the EMBs research agenda. )hese strategies are facilitated y bridging social capital- which is another factor of mo ility. ,t is important to underline that rea(ing'out strategies may e o served in the geography of EMBs. ,ndeed- many second generation EMEs rea('out from the ethnic enclave and inner'cities to =oin mainstream mar(ets in more central or mainstream locations. 9rawing on these assumptions- the policy'ma(ers consider the issue of integration and success of EMBs in term of geographical localisation (revitalisation of inner'cities or rural areas) and integration (sustaina ility of EMBsdiversification strategies).

/0

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#NN!1!+ 'trategies "ursued b& !%!s

Serving co-ethnics

Middleman Entrepreneur
Characterize self employe! immigrants who ser"e non co ethnics. #t also in"ol"es Entrepreneurs who sells ethnic pro!ucts an! ser"ices to a mainstream .public.

The principal market for ethnic market entrepreneur is his own community.

Niche-Entrepreneur
Entrepreneurs who sells non ethnics pro!ucts such as financial ser"ices, legal ai! to their own immigrant group. Although they sell non ethnic pro!ucts, they ha"e the cultural competence to enter this niche market.
4 ideal-types of ethnic entrepreneurs.

Mainstream Market Entrepreneur

The mainstream market entrepreneur. Entrepreneur who sells non ethnic pro!ucts or ser"ices into mainstream market. These entrepreneurs are in !irect competition with nati"e entrepreneurs.

Adapted from Rusinovic 2007.

Breaking-out strategy to the mainstream market

/?