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Abstract and keywords ________________ 3
Editorial: the economic context,
embeddedness and immigrant
entrepreneurs _________________________
6
The economic embeddedness of
immigrant enterprise in Britain
Giles Barrett, Trevor Jones, David McEvoy and
Chris McGoldrick _________________________________
11
Mixed embeddedness: does it really
explain immigrant enterprise in Western
Australia (WA)?
Nonja Peters _____________________________________ 32
Unbalanced embeddedness of ethnic
entrepreneurship: the Israeli Arab case
Izhak Schnell and Michael Sofer _____________________ 54
How innovative are Dutch immigrant
entrepreneurs? Constructing a
framework of assessment
Ewald Engelen____________________________________ 69
Economic associations of immigrant
self-employment in Canada
Daniel Hiebert ____________________________________ 93
Chinese entrepreneurs: the Chinese
Diaspora in Australia
Jock Collins ______________________________________ 113
From four-course Peking duck to
take-away Singapore rice: an inquiry into
the dynamics of the ethnic Chinese
catering business in Germany
Maggi W.H. Leung ________________________________ 134
The economic context, embeddedness and
immigrant entrepreneurs
Guest Editors
Jan Rath, Robert Kloosterman and Eran Razin
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ISSN 1355-2554
Volume 8
Number 1/2
2002
CONTENTS
Business opportunity or food
pornography? Chinese restaurant
ventures in Antwerp
Chin Ling Pang___________________________________ 148
Conclusion: the economic context,
embeddedness and immigrant
entrepreneurs
Eran Razin ______________________________________ 162
CONTENTS
continued
The economic embeddedness of
immigrant enterprise in Britain
Giles Barrett, Trevor Jones, David McEvoy
and Chris McGoldrick
Keywords United Kingdom, Ethnic groups,
Immigrants, Corporate culture
Immigrant-owned business in Britain is
reviewed in the light of both cultural and
structural economic perspectives. The latter
view is emphasised. Concentration in trades
which are in decline, or are labour intensive,
or both, creates acute competitive pressures
which are exacerbated by the growing
presence of corporate rivals in many
markets. Real and perceived bias on the part
of banks helps to limit diversification.
Attempts to move away from characteristic
activities, both geographically and sectorally,
have had only limited impact. Accumulation
of class resources holds the greatest promise
for entrepreneurial success.
Mixed embeddedness: does it really
explain immigrant enterprise in
Western Australia (WA)?
Nonja Peters
Keywords Enterprise economics,
Immigrants, Australia
Kloosterman, van der Leun and Rath assert
they conceptualised the ‘‘mixed
embeddedness’’ hypothesis to overcome the
shortcomings characteristic of earlier
theoretical models of immigrant business
enterprise. This article assesses the relevance
of this theoretical perspective to explaining
immigrant entrepreneurship in a specific host
setting with reference to research that spans a
number of economic periods and includes both
genders and a number of generations. It is
argued that, while the ‘‘mixed embeddedness’’
explanation gives a m ore comprehensive
explanation than previous models, it
nonetheless fails to explain the wide-ranging
inter-ethnic variation in entrepreneurial
concentration observed among immigrant
groups around the world. It contends that
the reasons for this are the model’s lack of
historical perspective and focus on the lower
end of the market. It also demonstrates how
the study of immigrant enterprise is advanced
by incorporating the agency of individuals
into the explanatory process.
Unbalanced embeddedness of ethnic
entrepreneurship: the Israeli Arab case
Izhak Schnell and Michael Sofer
Keywords Industry, Israel,
Entrepreneurialism, Ethnic groups
Ethnic entrepreneurs’ networks are analysed
on the basis of three complementary
dimensions: i ntensity and complexity of
networks; power relations; and entrepreneurs’
horizons of awareness. The analysis is based
on two theoretical propositions. First, firms
located in the periphery are weakly embedded
in national markets due to their external
depended relations. Second, local firms use
the tendency to embed themselves in their
home regions as a strategy to improve their
position in external power rela tions. The
inquiry of Arab industry in Israel suggests
that the form and degree of embeddedness of
any given firm is affected by the existence of
both separate economic milieus: Arab and
Jewish. The findings lead us to suggest two
concepts. First, over-embeddedness, which
characterises Arab firms that are highly
embedded in the local milieu, operate under
the influence of kinship structures and a
petrified supportive tissue that downgrades
networks into cohesive coalitions opposing
structural changes. Second, under-
embeddedness, which characterises firms
that manage to develop and maintain wide
inter-ethnic dependent sets of networks, but
due to lack of power fail to transform them
into more rewarding exchanges.
How innovative are Dutch immigrant
entrepreneurs? Constructing a
framework of assessment
Ewald Engelen
Keywords Innovation, Immigrants,
Entrepreneurialism, Start-ups, The Netherlands
Asks how innovative Dutch immigrant
entrepreneurs are. Since the mid-1980s the
number of immigrant firms has more than
tripled. This coincides with a huge increase in
the number of start-ups in the Dutch economy
as a whole. However, international
comparisons show that this increase has not
resulted in an equal rise in the number of fast
growing firms that add value and create
employment – the so-called gazelles – and are
hence the preferred ideal of policy makers.
Abstracts and
keywords
3
International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
Abstracts and keywords.
# MCB UP Limited, 1355-2544
This raises the question of how innovative the
Dutch economy might be. To address this
issue, constructs a framework of assessment,
derived from the divergent capitalisms
approach of Richard Whitley and associates,
as this approach offers a useful conceptual
instrument to do so. Concludes that, despite
appearances, the Dutch institutional setting is
not very conducive for value creating
innovations, but instead seduce s firms,
especially small and medium enterprises, to
follow reactive strategies. Offers some general
remarks on how the conditions for innovation
can be improved.
Economic associations of immigrant
self-employment in Canada
Daniel Hiebert
Keywords Canada, Immigrants,
Entrepreneurialism, Labour market,
Segmentation, Ethnic groups
In the last 30 years or so we have seen a
proliferation of research projects on
immigrants and non-white minorities in the
labour market (labour market segmentation)
and as entrepreneurs (ethnic entrepreneurialism).
Each of these literatures helps us understand
the nature of immigrant and minority
participation in the labour market, but each
only offers a partial view. In this paper, I
bring these topics together in an empirical
investigation of the relationship between
ethnic labour market segmentation and
ethnic entrepreneurialism in Canada, using
1996 census data. I show that there is a close
correspondence between the niches where
immigrants and minorities find work, and
those where they become entrepreneurs.
Immigrants who are drawn to niches that
offer few opportunities for self-employment
have low rates of entrepreneurship and,
conversely, those who are over-represented
in niches with considerable scope for self-
employment are inclined to establish their
own businesses. This shows that the
propensity for self-employment is, to an
important degree, determined in the regular
labour market. Therefore, entrepreneurship
should not be seen as an intrinsically cultural
phenomenon (i.e. that certain gr oups are
‘‘naturally’’ entrepreneurial), but instead as
arising out of the opportunity structure
associated with wage and salary labour.
Chinese entrepreneurs: the Chinese
Diaspora in Australia
Jock Collins
Keywords Labour market, Australia,
Ethnic groups, Entrepreneurialism
Recounts the history of the Chinese Diaspora
in Australia, which dates back to the Gold
Rush of the 1850s. In the past three decades,
following the end of the white Australia policy,
many ethnic Chinese immigrants have
immigrated to Australia. Although there are
only 300,000 people of Chinese ancestry living
in Australia, Chinese immigration is a critical
chapter of Australia’s immigration experience.
Chinese entrepreneurs have played a major
role in the history of the Chinese in Australia.
Explores the experience of Chinese
entrepreneurs in Australia from the earliest
days till the present and reviews historical
accounts of Chinese entrepreneurs in Australia,
before presenting the results of recent research.
Argues that it is necessary to investigate how
ethnicity, gender and class have intersected to
shape changing patterns of Chinese
entrepreneurship in the Australian Chinese
Diaspora. Suggests also that the dynamics of
Chinese immigration and Chinese
entrepreneurship in Australia have been
shaped by the chang ing dynamics of
globalisation, the state and the racialisation
of Chinese immigrants in the Australian labour
market and society as a whole.
From four-course Peking duck to
take-away Singapore rice: an inquiry
into the dynamics of the ethnic Chinese
catering business in Germany
Maggi W.H. Leung
Keywords Restaurants, Germany,
Ethnic groups, Immigrants
Draws on the concept of ‘‘mixed embeddedness’’
to challenge the popular culturalistic view
that Chinese migrants enter the catering
business simply because they are Chinese.
Based on qualitative interview results and
observations from fieldwork conducted in
German cities, illustrates first the dynamic
nature of the Chinese restaurant trade.
Proceeds to explore how important factors
such as Chinese migrants’ access to
alternative employment, the development of
in- and out-migration policies in Germany and
IJEBR
8,1/2
4
East Asia, the changing consumer demand
and market conditions, as well as availability
of set-up capital, shape the volume and forms
of Chinese restaurant trade, the kinds of food
served, hiring practices and other business
strategies.
Business opportunity or food
pornography? Chinese restaurant
ventures in Antwerp
Ching Lin Pang
Keywords Entrepreneurialism, Ethnic groups,
Immigrants, Restaurants, Belgium
Maps and analyzes the development of ethnic
Chinese food in the city of Antwerp through
the ethnography of both Chinese immigrant
entrepreneurs and their customers. Most
existing studies draw our attention to group
characteristics in explaining Chinese
immigrant small businesses, predominantly
clustered in the catering sector. Some studies
examining Chinese immigrants and the
development of the catering sector adopt a
mixed model of group characteristics and
opportunity structures in the broader society.
Looks into a hitherto unexplored terrain,
namely the relation b etween the white
customer and the immigrant entrepreneur.
Such an in-depth analysis ‘‘from within’’
instructsusaboutthedynamicsofthe
immigrant/ethnic restaurant business. From
the perspective of the immigrant
entrepreneur, immigrant/ethnic restaurants
provide in many instances an avenue to
social mobility, thereby overcoming the
general constraints facing immigrants such
as insufficient financial capital, low
educational levels, linguistic handicap, etc.
The economic advancement is the success
side, whereas the success has a series of social
costs. The social exchange is fraught with
ambivalence, which into its most extreme
manifestation may turn into what Frank Chin
calls ‘‘food pornography’’. The two dimensions
both present in Chinese immigrant restaurant
ventures for they provide opportunities with a
series of social costs.
Conclusion: the economic context,
embeddedness and immigrant
entrepreneurs
Eran Razin
Keywords Immigrants, Entrepreneurialism,
Ethnic groups, Economic conditions
Concludes that the impact of the economic
context on entrepreneurship among
immigrants is group specific. The concepts
of embeddedness, which acknowledges that
economic action is embedded in the structures
of social relations, and mixed embeddedness,
which incorporates both roles of co-ethnic
networks and linkages between immigrants
and the broader society, could have a major
role in explaining these variations. However,
these concepts could be criticized as being
fuzzy and hard to verify empirically, and as
presenting an idealistic image on the
favorable role of intra-ethnic networks. Case
studies demonstrate various aspects of the
economic milieu that influence immigrant
enterprise and provide some evidence for the
embeddedness and mixed embeddedness
concepts, although not fulfilling the need for
a broader and more formal verification of
arguments based on these concepts. An
imbalance between too intensive intra-ethnic
ties and lack of sufficient instrumental inter-
ethnic networks is revealed in some of the
studies.
Abstracts and
keywords
5
IJEBR
8,1/2
6
International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
pp. 6-10. # MCB UP Limited,
1355-2554
Editorial
The economic context, embeddedness
and immigrant entrepreneurs
About the Guest Editors Jan Rath is at the Institute for Migration and Ethnic Studies
(IMES), University of Amsterdam, The Netherlands. Robert Kloosterman is at the Amsterdam
Study Centre for the Metropolitan Environment (AME), University of Amsterdam, The
Netherlands. Eran Razin is in the Department of Geography, Hebrew University of Jerusalem,
Mount Scopus, Jerusalem.
Keywords Immigrants, Entrepreneurialism, Ethnic groups, Economic conditions
The last few decades have shown a remarkable reappraisal of the small
business sector. Since the 1970s, the gloomy orthodoxy notwithstanding, a
large number of people have set up shop and managed to survive in an
increasingly global economy. Their role in the economy has been publicly
acknowledged by now, as has been amply demonstrated by the drastic
liberalization of their regulatory environment. The dramatic shift from an
economy based on manufacturing to one based on services, the fragmentation
of markets, the rapidly declining costs of information technology as well as
changes in the political approaches regarding small businesses are key factors
that help explain the recent development of the small businesses sector.
Another factor contributing to that development – often overlooked in general
reports about the SME sector – is the cross-border mobility of people. Virtually
every advanced economy – the timing may differ from place to place – has
experienced mass immigration, especially from Third World countries, but
increasingly also from other, more developed countries. A significant number
of these immigrants possess specific skills and resources. Although the vast
majority gravitates to wage labor, quite a few of them – and this may vary from
group to group – enter self-employment. The latter evidently make a distinct
presence in many advanced economies. Some sectors such as garments,
restaurants and construction would, in many cases, barely stand a chance of
survival without the immigrants’ entrepreneurial drive. In the same vein, many
working-class neighborhoods would be impoverished if immigrant businesses
ceased to exist.
Sociologists, anthropologists and geographers rather than business
economists have acknowledged the significance of immigrant
entrepreneurship. Since the early 1970s, academic researchers from the USA
and Britain, but also from Canada, Australia and the European continent, have
built up a distinct body of literature. As is the case in any other branch of social
science, they have not reached consensus as to the factors and processes that
account for the emergence of immigrant entrepreneurship and the
This is part of a special issue of papers entitled ‘‘The economic context, embeddedness and
immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
Editorial
7
particularities – if any – of immigrant entrepreneurs’ daily business operations.
Some researchers, notably the British geographers David McEvoy and Trevor
Jones, emphasized structural factors, while others put more explanatory value
into cultural factors. Despite a collaborative attempt in the late 1980s to
accommodate these differences in one ‘‘integrative model’’ (Waldinger et al.,
1990), the focus of much research has been put on characteristics of the
entrepreneurs and the ethnic group they belong to. One immensely popular line
of theoretical thought in this respect revolves around issues of social
embeddedness. Following economic sociologists such as Granovetter,
researchers look for the entrepreneurs’ social connections to relevant (ethnic)
others and attribute the success of their business ventures, or lack of it, to
particularities of their embeddedness in social networks. While accepting that
social networks are important, a growing number of researchers strike a critical
note and argue that the adherents of this approach show a tendency to
overstate ethno-social features and understate matters of political economy.
Besides, this approach hardly lends itself to international comparative
research, as it does not fully appreciate the significance of the economic
environment and the politico-regulatory framework in which entrepreneurs
operate.
Mixed embeddedness was intended to incorporate just that and to enable
comparative research (Kloosterman et al., 1999). Although mixed
embeddedness was not defined very neatly at first, we now have a more
focused understanding of this concept. In our view, mixed embeddedness is an
attempt to combine factors that operate at a micro, meso and macro level in a
meaningful way that allows (cross-border) comparison. The current
embeddedness approaches, although very fruitful, tend to stick too much to the
micro and the meso level by focusing on actors and social networks. There is
nothing wrong with that but this has severe limitations, especially if you want
to engage in international comparative research. You have to go beyond this
and include not only actors and networks but broader socio-economic, political
and institutional structures as well. This is the room where an individual actor
makes his or her choices and where social networks may provide resources or
may hamper further advancement. Waldinger and his associates also wanted
to go down this road, but they never problematized or conceptualized the
opportunity structure in a way that would allow operationalization within a
(cross-border) research framework.
This implies that we have to link up with broader debates on how
employment and self-employment are structured along different trajectories
that emerge in post-Fordist/post-industrial regimes. Esping-Andersen made a
heroic attempt in 1990 with his Three Worlds, spelling out how ideal-typical
institutional (mainly social policies) conditions may impact on employment
structures. This framework can be used as an example of how different
post-Fordist/post-industrial (self-) employment trajectories may be understood
in a more abstract way. The quintessence of mixed embeddedness is to take on
board these notions and to position actors (and social networks) in broader
IJEBR
8,1/2
8
structures (similar to Giddens’ structuration theory). To be able to use mixed
embeddedness in empirical research, we advocate the construction of another
heroic typology that describes how different broader institutional frameworks
and related socio-economic processes of change generate opportunity
structures along path-dependent trajectories. This gives researchers a handle
on the shape of the three crucial variables of the opportunity structure (i.e. the
size of the market domain, accessibility of markets and growth potential of
markets). This, then, can be linked to, for instance, Engelen’s (2001)
contributions on breaking in and breaking out strategies, and subsequently on
various social network and actor theories.
Mixed embeddedness can now be elaborated in a middle-range theory that
can capture cross-country variations in a meaningful way. It is nevertheless
clear that the conceptualization and operationalization are still matters of
debate. Researchers in Europe and increasingly also from North America and
Australia have been spelling out the theoretical and practical implications of
mixed embeddedness in a series of international exchanges, sponsored by the
European Commission. One such exchange focused on the impact of the
economic context on entrepreneurship among immigrants. A number of papers
are presented in this special issue of the International Journal of
Entrepreneurial Behaviour & Research.
In their article, Giles Barrett, Trevor Jones, David McEvoy and Chris
McGoldrick ascertain that immigrant-owned businesses in Britain are
concentrated in trades that are in decline and/or labor intensive, and argue that
the accumulation of class resources rather than ethnic ones holds the greatest
promise for entrepreneurs who want to move away from these acute
competitive pressures and want to become more successful. Nonja Peters
assesses the relevance of the mixed embeddedness approach based on an
empirical study that spans a number of economic periods and includes both
genders and a number of generations. She argues that while the ‘‘mixed
embeddedness’’ approach gives a more comprehensive explanation than
previous models, it nonetheless fails to explain the wide-ranging inter-ethnic
variation in entrepreneurial concentration observed among immigrant groups
around the world. She attributes this to the approach’s lack of historical
perspective, focus on the lower end of the market and lack of appreciation of the
agency of individuals. Izhak Schnell and Michael Sofer present an inquiry into
the Arab industry in Israel and suggest that the form and degree of
embeddedness of any given firm is affected by the existence of both separate
economic milieus: Arab and Jewish. They suggest that Arab firms that are
over-embedded in the local milieu operate under the influence of kinship
structures and a petrified supportive tissue that downgrades networks into
cohesive coalitions opposing structural changes. They, moreover, argue that
firms that are under-embedded manage to develop and maintain a wide inter-
ethnic dependent set of networks, but fail to transform them into more
rewarding exchanges due to lack of power. Ewald Engelen, in a more
conceptual paper, explores the innovativeness of immigrant entrepreneurs in
Editorial
9
The Netherlands. He constructs a framework of assessment based on the
divergent capitalisms approach of Richard Whitley and associates, and
concludes that despite the rise of small businesses, the Dutch institutional
setting is not very conducive for value creating innovations. Instead, it seduces
firms, especially small and medium enterprises, to follow reactive strategies.
Daniel Hiebert presents an empirical investigation into the relationship
between ethnic labor market segmentation and ethnic entrepreneurialism in
Canada. He demonstrates that immigrants who are drawn to niches that offer
few opportunities for self-employment have low rates of entrepreneurship and,
conversely, those who are over-represented in niches with considerable scope
for self-employment are inclined to establish their own businesses. This shows
that the propensity for self-employment is, to an important degree, determined
in the regular labor market. He concludes that entrepreneurship should not be
seen as an intrinsically cultural phenomenon, but instead as arising out of the
opportunity structure associated with wage and salary labor.
Jock Collins explores the experience of Chinese entrepreneurs in Australia
from the earliest days till the present. He argues that it is necessary to
investigate how ethnicity, gender and class have intersected to shape changing
patterns of Chinese entrepreneurship in the Australian Chinese Diaspora. He
also suggests that the dynamics of Chinese immigration and Chinese
entrepreneurship in Australia have been shaped by the changing dynamics of
globalisation, the state and the racialization of Chinese immigrants in the
Australian labour market and society as a whole. In her contribution, Maggi
W.H. Leung challenges the popular culturalistic view that Chinese migrants
enter the catering business simply because they are Chinese. She explores how
important factors such as Chinese immigrants’ access to alternative
employment, the development of in- and out-migration policies in Germany and
East Asia, changing consumer demand and market conditions, as well as
availability of set-up capital, shape the volume and forms of Chinese restaurant
trade, the kinds of food served, hiring practices and other business strategies.
Ching Lin Pang also examines Chinese restaurateurs, albeit from a different
angle. She looks into the relation between white customers and immigrant
restaurant entrepreneurs in the city of Antwerp, Belgium. Immigrant/ethnic
restaurants provide, in many instances, an avenue for social mobility, thereby
overcoming the general constraints facing immigrants such as insufficient
financial capital, low educational levels, linguistic handicap, etc. This
entrepreneurial success is fraught with ambivalence, which in its most extreme
manifestation may turn into what cultural studies scientist Frank Chin called
‘‘food pornography’’. The two dimensions are both present in Chinese
immigrant restaurant ventures for they provide opportunities with a series of
social costs.
In the final contribution, Eran Razin wraps up the special issue. He argues
that the concepts of embeddedness, which acknowledges that economic action
is embedded in the structures of social relations, and mixed-embeddedness,
which incorporates both roles of co-ethnic networks and linkages between
IJEBR
8,1/2
10
immigrants and the broader society, could have a major role in explaining
entrepreneurial variations. On the one hand, he criticized these concepts as
being fuzzy and hard to verify empirically, and as presenting an idealistic
image on the favorable role of intra-ethnic networks. On the other hand, he
points to a number of aspects that help to flesh out the embeddedness and
mixed-embeddedness concepts.
Jan Rath and Robert Kloosterman
References
Engelen, E. (2001), ‘‘‘Breaking in’ and ‘breaking out’’’, Journal of Ethnic and Migration Studies,
Vol. 27 No. 2, pp. 203-23.
Kloosterman, R., van der Leun, J. and Rath, J. (1999), ‘‘Mixed embeddedness. Immigrant
businesses and informal economic opportunities’’, International Journal of Urban and
Regional Research, Vol. 23 No. 2, June, pp. 253-67.
Waldinger, R., Aldrich, R., Ward, R. and Associates (1990), Ethnic Entrepreneurs. Immigrant
Business in Industrial Societies, Sage, Newbury Park, CA.
Immigrant
enterprise in
Britain
11
International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
pp. 11-31. # MCB UP Limited,
1355-2554
DOI 10.1108/13552550210423697
The economic embeddedness
of immigrant enterprise in
Britain
Giles Barrett, Trevor Jones, David McEvoy and
Chris McGoldrick
Centre for Social Science, Liverpool John Moores University, UK
Keywords United Kingdom, Ethnic groups, Immigrants, Corporate culture
Abstract Immigrant-owned business in Britain is reviewed in the light of both cultural and
structural economic perspectives. The latter view is emphasised. Concentration in trades which
are in decline, or are labour intensive, or both, creates acute competitive pressures which are
exacerbated by the growing presence of corporate rivals in many markets. Real and perceived bias
on the part of banks helps to limit diversification. Attempts to move away from characteristic
activities, both geographically and sectorally, have had only limited impact. Accumulation of class
resources holds the greatest promise for entrepreneurial success.
Embeddedness
Throughout the comparatively short history of ethnic business studies,
attempts to make sense of immigrant-origin enterprise have been characterised
by an agency-versus-structure battle between those emphasising internal
communal resources as a unique business advantage and those who see the
external political-economic context as the ultimate shaper of ethnic
entrepreneurial outcomes. Recently, Kloosterman et al. (1999) have sought to
replace the discourse of ethnic resources versus opportunity structure with the
notion of mixed embeddedness. Here the spotlight is directed more explicitly on
the interaction between internal and external forces; ethnic enterprise is
certainly grounded in the cultural milieu of its own community but it is in no
way isolated from the surrounding environment. Rather, enterprise should also
be seen as grounded in mainstream resources, primarily market conditions
which set the outer parameters on how much and what kind of ethnic
enterprise can exist, which are themselves constrained by politico-legal
regulatory structures ranging from national immigration and citizenship
practices to local planning policy. The legal status of immigrant minorities is in
itself a key determinant of whether self-employment is viable or even possible
as a career choice. Similarly, the nature of the national economic regulatory
regime can be decisive in creating or blocking market space, with ethnic
entrepreneurs far more numerous in the relatively deregulated Anglo-Saxon
economies (Collins et al., 1995; Light and Rosenstein, 1995; Razin and Langlois,
1996; Ram and Jones, 1998; Barrett et al., 2001) than in most mainland
European states.
This article is part of a special issue of papers entitled ‘‘The economic context, embeddedness
and immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
IJEBR
8,1/2
12
Although the UK now has an extensive literature relating to its immigrant-
origin (ethnic minority) businesses, there has been little time for the application
of the mixed embeddedness perspective. This paper addresses this gap by
focusing on the socio-economic aspects of embeddedness, emphasising the
constraints as well as the opportunities created by post-Fordist restructuring
since the 1970s. We begin with an examination of the demographic and
economic framework of ethnic minority business in Britain which, given the
strong influence of demographic and labour market forces on the nature of
ethnic minority entry into self-employment, is a vital facet of embeddedness.
Turning the spotlight on market opportunities and constraints post-entry, we
then report on sectoral variations in the nature of ethnic minority business at
the local and regional level, as established by our own fieldwork. Here the
emphasis is on the sectoral underdevelopment of ethnic minority enterprise, its
confinement within some of the least rewarding markets in the economy as a
consequence of a complex of socio-economic barriers (some of which are racist
at root) to its development. Recognising also that this pattern is far from fixed,
and that increasing diversification is gradually occurring, we consider the
temporal dynamics of South Asian business in Britain, drawing on some of our
earlier publications, but also on some recent data collection and on the work of
authors engaged in parallel investigations. Among other issues, this will throw
light on shifting embeddedness, the question of how far diversification and
development entail a move away from ethnic resources to class resources.
The demongraphic and economic context of ethnic minority
business development
Table I, based on the most recently available census figures, presents a broad
outline of the size and employment status of Britain’s ethnic minorities. It
shows that, contrary to many popular perceptions of ‘‘swamping’’, ethnic
minorities, even when considered collectively, are still only a small fraction, 5.5
per cent, of the British population and of the more narrowly defined ethnic
communities, only Indians exceed 1 per cent of the total population. With
regard to unemployment rates, there is a wide gulf between whites and ethnic
minorities, with the latter consistently disadvantaged, except in the case of
Chinese men, the gulf being most pronounced for black, Pakistani and
Bangladeshi men, whose employment status continues to reflect their initial
incorporation into the British economy as replacement labour in low level
occupations (Ohri and Faruqi, 1988). In conjunction with the dependency ratios
and other indicators such as incomes (Leslie et al., 1998), the unemployment
figures confirm that, for the most part, Britain’s ethnic minorities remain
substantially marginalised economically (Barrett et al., 2001). Many scholars
believe that this results largely from a combination of deindustrialisation and
racism (Brah, 1996). Industries such as textiles and engineering, to which
immigrants had been recruited, dispensed with their services when competitive
pressures enforced downsizing.
Immigrant
enterprise in
Britain
13
Table I.
Ethnic groups in
Great Britain 1991
Population
(000s)
Percentage of
total
population
Self-employed as
percentage of all in
work
Self-employed with
employees as
percentage of all in
work
Child
dependency
ratio
Percentage unemployed
Men Women
White 51,873.8 94.5 9.4 4.5 12.8 4.3 31.7
Ethnic minority groups 3,015.1 5.5 16.2 8.8 15.1 6.3 52.1
Black 890.7 1.6 20.7 11.6 6.7 1.6 44.2
Black-Caribbean 500.0 0.9 20.7 10.1 6.0 1.3 30.8
Black-African 212.4 0.4 20.4 15.2 8.1 2.3 41.7
Black-other 178.4 0.3 21.4 12.0 8.2 2.1 103.0
South Asian 1,479.6 2.7 15.3 7.8 20.8 9.1 58.7
Indian 840.3 1.5 11.0 7.6 20.0 8.7 45.1
Pakistani 476.6 0.9 21.6 8.3 23.9 9.2 76.7
Bangladeshi 162.8 0.4 22.9 7.7 18.6 13.6 91.2
Chinese and others 644.7 1.2 11.9 6.9 16.2 7.8 49.2
Chinese 156.9 0.3 7.6 4.7 27.2 15.8 31.9
Other-Asians 197.5 0.4 11.1 6.9 9.8 4.3 33.5
Other-other 290.2 0.5 15.5 8.7 13.8 5.1 75.8
Entire population 54,888.8 100.0 9.8 4.7 12.9 4.4 32.8
IJEBR
8,1/2
14
Table I also shows distinctive self-employment rates, in which ethnic
minorities contrast strongly with whites, though this time in two directions,
with South Asians and Chinese strikingly over-represented in self-employment
and black groups equally under-represented. The self-employed with
employees category is thought by Owen (1997) to be the better indicator of
business activity because many of those without employees are only nominally
self-employed as a cost reduction tactic in relation to tax and social security
contributions. Whatever the truth of this judgement, and it probably differs
from sector to sector, the relative positions of the broad ethnic categories are
the same: South Asians highest; then Chinese and others; then whites; and
finally, the black group. Detailed rankings change, however, when the more
precise groups are considered. The Chinese and Bangladeshis rank higher in
the self-employed with employees category than they do among all self-
employed; this is probably due to their concentration in the restaurant trade,
which usually requires more labour than that from the immediate family (Ram
et al., 2000).
This entrepreneurial gap between whites, blacks and Asian groups brings
us to the battlefield contested by those who explain ethnic entrepreneurialism
in terms of socio-economic embeddedness and those who insist on an ethno-
cultural interpretation. The former viewpoint is encapsulated in the claim that
it ‘‘... was racism and economic decline, not cultural flair, that pushed many
Asians into self-employment’’ (Ram, 1992, p. 603). For most South Asians,
primary migration took them into low paid employment in industries like
textiles and engineering, destined to suffer widespread restructuring and job
loss, which provided a powerful incentive to self-employment ( Jones et al.,
1989), as did job losses in public services, another immigrant specialism, victim
of merciless Thatcherite cuts in the 1980s. This connection between rising
unemployment and rising self-employment has also been argued to apply
throughout the general population irrespective of ethnicity (Storey and
Johnson, 1987), suggesting that ethnic self-employment is perhaps an
aggravated, racialised variation on a universal theme.
When we consider the contrasts between Britain and its European
neighbours, the need for this contextual perspective becomes all the more
urgent. Ethnic minority entrepreneurial self-employment rates in Britain tend
to be significantly higher than those of immigrants in continental Europe, a
highly distinctive gap which surely cannot be explained purely as a product of
ethno-cultural disparities, such as between Moroccans in Austria and Indians
in Britain. It is much more likely to stem from decisive differences in politico-
legal regimes (Barrett et al., 2001) and economic structural conditions. Focusing
purely on the latter, we would need to draw attention to factors such as the
much greater socio-economic inequality which prevails in Britain, in itself a
racialised process in which ethnic minorities have been heavily over-
represented among the impoverished (Berthoud, 1997). For some groups, this
differential persists markedly, with mid-1990s family incomes for Pakistanis-
Bangladeshis estimated to be around 40 per cent less than their white
Immigrant
enterprise in
Britain
15
counterparts (ISEC, 1998). When we also take account of their predominantly
inner city residential location within the most deindustrialised, deprived and
socially excluded areas of the nation, we can appreciate that entrepreneurship
presents both an attractive and a daunting career prospect – attractive because
of the sheer paucity of viable livelihood opportunities, and daunting because of
the poverty of entrepreneurial resources. Historically, these inner urban ethnic
minority entrepreneurs have been compelled to battle against such barriers as
poor access to credit facilities, an impoverished customer base, out-dated, run-
down premises and, because they are often operating in insecure crime-ridden
environments, expensive insurance cover ( Jones et al., 1989). In a formal sense
too, these entrepreneurs might be considered among the least well equipped in
terms of personal resources and human capital to deal with such environmental
hazards; in the case of working age Bangladeshis, for example, 34 per cent are
classed as unskilled and 49 per cent are without a recognised qualification (Sly
et al., 1998). As we shall see in the next section, all this has serious
repercussions on the quality of ethnic enterprise, not least on the range of
possible activities. Conditions in Britain are conducive to producing quantity
but not quality of ethnic minority business.
Against this, however, it is claimed that South Asian entrepreneurialism
stems from culturally-specific entrepreneurial values combined with ‘‘privileged
access’’ (Watson et al., 2000, p. 72) to ethnic communal resources (Basu, 1998;
Metcalf et al., 1996; Srinivasan, 1995; Werbner, 1984), values and resources
presumed lacking among Caribbeans, Africans and the white majority. South
Asians have been seen as embodying the ‘‘enterprise culture’’ promoted during
the 1980s as part of the Thatcherite project to reinvent entrepreneurialism as
national economic salvation (Keat and Abercrombie, 1991). With regard to
ethnic resources, when we take into account the personal challenge of the shift
from employment to self-employment (Bogenhold and Staber, 1993; Granger et
al., 1995), family and community support networks are clearly advantageous.
Even so, it seems risky to attribute such endowments entirely to specific groups.
Yet, if anything, the chorus of voices arguing for this ethnic particularism
became even more deafening during the 1990s, with Modood (1998, p. 53)
insisting that ‘‘economic differences between migrants have become much more
pronounced’’ and Metcalf et al. (1996) claiming that Indians are decisively more
entrepreneurially progressive than other South Asian communities. East
African Indians continue to be singled out as the most over-achieving of all
immigrant groups, their economic prowess lauded as ‘‘rapid and impressive’’
(Mattausch, 1998, p. 135). Similarly, the Chinese are spotlighted (Cheng, 1996),
although their high self-employment rate is explicable by their concentration in
catering, with its proliferation of independent outlets. The ethnic-specific
perspective is contested by those who maintain that these inter-ethnic
differences are not only over-argued empirically but also socially divisive ( Jones
et al., 1997; Ram et al., 2000). As Merrifield (1996, p. 201) puts it, ‘‘the reification
of difference forecloses potential commonality and kinship’’. For all these
objections, the cultural approach continues to pop up in new guises, having
IJEBR
8,1/2
16
recently been extended to the examination of transnational linkages (Crang et
al., 2000) and the role of post-colonial multiculturalism in creating a local
competitive advantage in the global economy (Henry et al., 2000).
Sectoral concentrations and embeddedness
This emphasis on global activities is clearly glamorous but bears no relation to
the mass of ethnic minority enterprise in Britain, existing as it does in what
amounts to a parallel universe. It is crucial to note that the main minority
groups differ from the white business community not only in their degree of
business involvement but also in their concentrated sectoral profiles. From the
1970s, South Asians became widely established in low order retailing, catering
and consumer services, though from the 1980s onwards a limited break-out
(Ram and Hillin, 1994) occurred into wholesaling and manufacturing (Ram and
Jones, 1998; Rhodes and Nabi, 1992; Barrett et al., 1996). More recently there is
some evidence of penetration of the new ‘‘informational capitalism’’ (Castells,
2000) in sectors such as electronics and communications aiming at mainstream
markets, ‘‘pioneering activity in sectors ... that have seen no previous ethnic
minority firms’’ (Deakins et al., 1997, p. 335). Yet it is important not to become
over-excited about this since, as Deakins et al. (1997, p. 35), themselves remind
us, ‘‘breaking into new markets is particularly daunting’’ and, therefore, likely
to be restricted to a few exceptionally well-resourced individuals. Hence the
essential characteristic of South Asian business continues to be specialisation
in a relatively narrow range of low order activities. In the Chinese case,
business ownership is even more skewed, towards the restaurant and ‘‘take-
away’’ food sectors (Chan and Chan, 1997; Song, 1997a, b). Among the less
numerous African and Caribbean businesses, sectoral restriction is again the
keynote, with retailing, catering and consumer services dominant, the latter
being particularly prominent in comparison with other groups. It is worth
emphasising that these characteristic ethnic minority sectors are highly labour
intensive and usually provide only lean rewards. It is a moot point whether the
long working hours recorded by Asian owners result from an in-built work
ethic or from the nature of the sectors into which they are clustered ( Jones et al.,
1994a).
This powerful and seemingly persistent confinement of immigrant-origin
enterprise within a narrow range of generally poorly endowed markets is one of
the cardinal issues to be addressed, since it signals that ethnic enterprise is
embedded in a socio-economic context hostile to its unconstrained
development. In addition to the universal competitive disadvantages of the
small self-employed (Bogenhold and Staber, 1993), and the falling relative
earnings of self-employment in Britain (Robson, 1997), there are specific
constraints arising out of racist processes, truths that became apparent to some
of us two decades ago following the completion of an extensive interview
survey of owners or managers of 580 South Asian and white entrepreneurs in
Bradford, Leicester and Ealing (London), all major destinations for South Asian
immigration (Aldrich et al., 1981). There are significant ethnic variations
Immigrant
enterprise in
Britain
17
between these three localities: Bradford’s Asian population is predominantly
Pakistani Muslim; Leicester’s overwhelmingly Gujerati Hindu, many from East
Africa; and Ealing’s mostly Punjabi Sikh. There were, however, remarkably
few variations in entrepreneurial outcomes between the three cities, with
disadvantage the leitmotif in each, irrespective of ethnic identities: heavy
concentration in low order retailing; long entrepreneurial working hours
producing only poor returns; extensive use of uncosted family labour; and
overdependence on low income local Asian customers.
With regard to this ethnic minority customer base, we note that immigrant-
origin groups in Britain, with the exception of the Chinese, are geographically
concentrated in particular regions, with further clustering within the inner
urban areas of those regions (Barrett et al., 2001, p. 245). This tendency is most
pronounced for South Asians, and our three cities project was purposefully
directed at firms in areas with large South Asian populations, where we found
that most shops and services were tapping into a co-ethnic market, linked to
them by loyalty, proximity and a capacity to provide authentic ethno-cultural
specialisms (Aldrich et al., 1984). Despite the protection afforded by these
‘‘ethnic niche markets’’ against non-Asian competition, our verdict was that
their restricted market potential imposes a developmental barrier, and that a
sustainable future for South Asian enterprise lies in ethnic, spatial and sectoral
market re-orientation (Aldrich et al., 1984), a prognostication supported by
subsequent research findings ( Jones et al., 2000). Indeed, the situation of those
firms remaining in the ethnic enclave market is an eloquent commentary on the
way in which ethnic embeddedness ‘‘may limit their economic potential’’
(Watson et al., 2000, p. 72).
Consistent with a socio-economic embeddedness perspective, we see ethnic
minority market disadvantage compounded by a coalescence of various labour
market, capital and competitive pressures. The first generation South Asian
entrepreneurialism was rendered problematic by labour market push, with
heavy job loss creating a multitude of surplus workers to whom self-
employment offered a last resort survival strategy (Ram, 1992). This process
has both quantitative and qualitative aspects. Not only does it throw unfeasibly
large numbers of labour market refugees into entrepreneurial competition
( Jones et al., 1989) but it also ensures that many of them are ill-equipped and
inappropriately motivated. We concur with Bruderl et al. (1992, p. 229) that
‘‘people with few human capital resources are often forced into self-
employment’’, a comment that tallies well with work on the pitfalls facing
working class entrants to self-employment, lacking human and financial
capital. Business entrants driven by unemployment may need to rush in
without proper evaluation, whereas ‘‘well endowed founders are in a position to
select more promising projects’’ (Bruderl et al., 1992, p. 229). For the under-
endowed entrant, ‘‘force of circumstances pervades’’ (Granger et al. , 1995) and
any notion of strategic entrepreneurial focus is fanciful. Our three cities
businesses represented an aggravated, racialised version of this, placed as they
were at the very bottom of the working class by selective recruitment
IJEBR
8,1/2
18
procedures, and then disproportionately affected by the subsequent post-
Fordist disemployment (Ohri and Faruqi, 1988).
The acid test of any business enterprise is survival, and one of the most
rehearsed themes in the field of small business is the tendency for firms to fail
during their vulnerable infant phase when they are subject to ‘‘the liability of
newness’’ (Singh et al., 1986). To address this question, we introduced a
longitudinal element into the three cities project, following up the initial 1978
interviews with later visits in 1980, 1982 and 1984 to establish the survival of
the original business, or to identify basic details of successor firms (Aldrich et
al., 1989). From this, the following key points emerge (Table II). First, South
Asian firms overall survived better than whites, but not in Bradford, nor in the
central time period in all three cities (Table II). Second, 53 per cent of white
firms changing hands were transferred to other whites, but only 7 per cent of
Asian businesses became white. Third, as neighbourhoods became
demographically more Asian then the likelihood of a white firm becoming
Asian on transfer to a new owner increased.
Presumably an ethnic embeddedness perspective would interpret the inter-
city variation in survival in terms of Bradford’s Islamic business owners being
less ‘‘entrepreneurial’’ and less resource-endowed than the other two groups,
notably Leicester’s Gujeratis (Mattausch (1998) notes over 100 Gujerati
millionaires in Britain by the early 1990s). More obvious, however, were the
inter-city economic differences, with Bradford, once the self-proclaimed ‘‘wool
capital of the world’’, in the throes of an alarming collapse of its textile
mainstay. Although South Asians were entering generally unwanted (because
problematic) niches in the economy in all three cities, whites hung on even to
difficult businesses in places and times when there are few viable alternatives.
Unemployment in Bradford was substantially higher than in the other two
locales, and higher in 1980-1982 than the periods before and after. We
acknowledge, however, that ethnic embeddedness may play some part in
explaining the greater Asian capacity for survival in the other two cities,
notably the availability of family members to support ‘‘flexible’’ working
practices. Non-market family values can indeed support a remarkable degree of
commercial resilience ( Jones and Rose, 1994). Even so qualification is required.
In particular, the concept of flexibility, much lauded by neo-liberal
commentators, is now under increasing attack by those who see it as an
Table II.
Business survival rates
by city and ethnicity of
owner
Per cent surviving
South Asian White
Year Bradford Leicester Ealing All cities Bradford Leicester Ealing All cities
1978-1980 85 78 90 84 71 66 64 67
1980-1982 60 78 76 71 69 81 81 77
1982-1984 71 87 88 83 66 70 73 70
1978-1984 38 58 62 52 39 38 41 39
Note: The six-year rates are not the product of the three two-year rates
Immigrant
enterprise in
Britain
19
ideologically-loaded euphemism for sweated self-exploitation (Holliday, 1995).
We note the shrewd comment of Westergaard (1995) that in capitalist society
hard work is always promoted as a virtue, while the greatest rewards go to
those who do no work at all in the accepted sense. Consistent with this logic our
own findings suggest that the best performing Asian entrepreneurs are those
who work smart rather than hard ( Jones et al., 1994a). Moreover, much labour
intensiveness is based on traditionalist patriarchal practices, once glossed over
by many scholars in a spirit of multiculturalist deference, but now questioned
by writers aware of the tension between ‘‘the goal of gender equality and
greater accommodation for ethnic, religious and national minorities’’ (Deveaux,
2000, p. 522; see also Phizacklea and Wolkowitz, 1995).
By analogy, the process of inter-ethnic business transfer is aptly described
by the traditional urban concept of ecological succession, usually applied to
population transitions (Aldrich et al., 1989). Judging by Rafiq’s (1985) findings
in Bradford, ecological succession was proceeding at a rapid pace, with the
number of Asian-owned businesses in the city swelling by more than 10 per
cent per annum during most of the 1970s. This seemingly successful business
succession by Asian entrepreneurs was, however, largely confined to low order
retailing and consumer services, which is highly indicative of the inhospitality
of the socio-economic environment in which the ethnic entrepreneur is
embedded. Just as ethnic minority labour was originally imported to prop up
declining industries, so ethnic minority owners gravitate towards the next
generation of ‘‘sunset’’ sectors squeezed by restructuring: not so much a case of
upward mobility, more a horizontal shift from submerged working class to
submerged petty bourgeoisie. No sector can have been harder hit in this respect
than the ethnic minority specialism of small food retailers, victim of an
inexorable trend towards industrial concentration, which by 1992 had seen 66
per cent of national grocery sales accounted for by the five largest supermarket
chains (CIR, 1995). The effect of this on small grocery shops has been truly
calamitous, their numbers falling from 43,396 in 1980 to 18,557 in 1992 (CIR,
1995), the very period in which Asian entry into retailing was probably at its
height. Little imagination is required to picture the struggle for survival in this
imploding area of the economy and, when we revisited Bradford in 1988 to
reinterview over 100 South Asian retailers, we found them to be bearing an
average 73.5 hour working week for a gross return of just £1,106 ( Jones et al.,
1989). All this is a vivid example of market saturation, the inevitable outcome
of expanding numbers of business entrants converging on rapidly contracting
business opportunities, their entry encouraged by the alacrity of the white
shopkeeper exodus.
Diversification and break-out
The three cities’ findings are, of course, coloured by time and place, a snapshot
of Asian entrepreneurialism in the first generation of development in
unpromising, quasi-ghetto locations. Accordingly, in our 1990 nationwide
survey ( Jones et al., 1992), we assumed a priori that substantial evolution
IJEBR
8,1/2
20
would have taken place, that increasing numbers of ethnic minority firms
would have broken out of the market strait-jacket. In the South Asian case it
would be expected that, with the coming of a British-born generation, problems
like language barriers may have eased and that an accumulation of financial
and human capital would have allowed more firms to relocate in better
rewarded sectors serving mainstream markets. Moreover, market niches
arguably ideally suited to ethnic minority enterprise became greatly expanded
from the 1980s onwards (Sassen, 1991). In response to this and in order to
accommodate the range of market possibilities open to ethnic minority
business, we interviewed South Asian firms in 11 local government wards (ten
to 20,000 residents) located in the North, Midlands and South East of England.
Recognising the salient influence of geographical location on market potential,
we selected only three wards in the type of Asian residentially dominated areas
that had defined the three cities survey, the remainder being either in areas
adjacent to Asian residential concentrations or completely remote from them
(Table III). The objective was to pick up retail and service firms that had
relocated into mainly white suburban locations (Ward, 1985) or had moved into
activities like manufacturing, whose customer base is not place-specific. In this
way we spanned a range of market types extending from poor residentially
segregated wards like Batley East in deindustrialised West Yorkshire, to
prosperous growth centres such as Swindon in the dynamic M4 corridor, to
rural Shropshire on the Welsh border. Alongside this, we also recognised the
emergence of black-Caribbean enterprise, conducting interviews with 65 such
firms located in four regionally dispersed wards with substantial black-
Caribbean populations. As we had done in the three cities survey, we also
Table III.
The sectoral
distribution of ethnic
minority business in
England
Percentage of minority businesses in named sector
Black Caribbeans South Asians
Black Caribbean
areas
All
areas
South
Asian
areas
Nearby
white
areas
Distant
white
areas
Food retailers 23.5 23.6 21.8 28.1 20.0
Confectioners, tobacconists and
newsagents (CTNs) 2.9 11.3 4.9 25.2 13.3
Clothing retailers 1.5 16.1 21.5 5.0 6.7
Other retailers 16.2 18.2 21.1 13.7 0.0
Catering trade 19.1 14.5 14.7 9.4 60.0
Other consumer services 23.5 11.1 11.7 10.8 0.0
Wholesaling and manufacturing 2.9 3.5 1.6 7.9 0.0
Other 10.3 1.7 2.6 0.0 0.0
Total 99.9 100.0 99.9 100.1 100.0
Number of minority firms 65 461 307 139 15
Named minority share of all local
businesses 11.2 23.0 41.5 20.1 2.6
Source: Jones et al. (1992)
Immigrant
enterprise in
Britain
21
interviewed a white control sample in each of the 15 locations, a distinctive and
highly important research element, which guards against attributing ethnic
specificity to characteristics which are shared by entrepreneurs of all origins
including whites (Ram et al., 2000).
While our assumptions about increasing sectoral diversity are not altogether
without foundation (Table III), it must be said that penetration of sectors other
than low order retailing and consumer services remains strictly limited,
especially for black Caribbeans, most of whom are accounted for by the sectors
which have traditionally harboured the bulk of their businesses. Moreover,
black-Caribbean concentration is actually greater than the categories in the
table reveal. Within three of the four most common types of black-Caribbean
firm particular specialities have a prominent place, with recorded music stores
easily the most common sub-type of other retailer, cafe´s characteristic within
the catering trade, and hairdressers the most numerous category of other
consumer service. Each of these trades clearly relates to particular aspects of
black-Caribbean culture and we can characterise them as catering for a
protected market or ethnic niche. With few exceptions entrepreneurs of other
ethnicities are not credible purveyors of these culturally-specific needs of the
black-Caribbean population. It would not be unfair to describe the development
of business in this community as narrow and limited. This is partially
explicable in terms of recentness and immaturity, but undoubtedly also reflects
the unfair disabilities faced by many black Caribbeans in raising capital.
In contrast, the range of South Asian activities is fairly broad and extensive,
though still skewed towards a few activities which have become tried and
trusted Asian classics. Except for the two final categories in the table, there are
many instances of each type of firm, although with considerable variations
according to spatial category. One notable feature is the colonisation by food
shops and confectioners, tobacconists and newsagents (CTNs) of nearby white
areas, a fairly straightforward instance of what we have called ‘‘horizontal’’
break-out ( Jones et al., 2000), that is relocation in mainstream white markets,
but remaining within low order activities demanding ‘‘flexibility’’ in the form of
vast labour inputs for low returns ( Jones et al., 1994a). Indeed, it is probable
that this new white orientation exacts an extra toll, because, ‘‘We have to be
twice as good as white people to survive’’, in the words of one aggrieved
shopkeeper quoted in the national press. What we are witnessing in the food
sector is an extended proliferation of Asian outlets in a rapidly shrinking
sector, the take-up of abandoned opportunities rather than the penetration of an
advantageous niche. With regard to CTNs the picture differs only insofar as
this type of activity has actually enjoyed a very slight increase in the number of
independent firms (CIR, 1995), but this should not be allowed to obscure the
lengthy and unsocial working hours demanded.
Rather more promising is the revelation that more than a third of South
Asian firms are now engaged in higher order retailing activities. Particularly
intriguing is the catch-all category other retailers, which contains a few of the
most successful Asian firms in the sample, firms which show signs of
IJEBR
8,1/2
22
benefiting from factors of production other than sheer labour power. Here we
draw particular attention to pharmaceutical retailing (popularly ‘‘chemists’’),
which since the 1980s has become a new Asian specialism, so much so that the
immediate past president of the Royal Pharmaceutical Society is a Patel (Lewis,
2001), the most common Gujerati family name. Happily for its Asian owners,
pharmacy is a line in which rewards are largely derived from human capital (a
pharmacy degree) instead of long hours ( Jones et al., 1994a). Hakim (1998)
makes the point that, unlike many other well rewarded sectors, pharmacy is
remarkably open to newcomer groups, with a relatively short training period,
fairly quick returns importantly underwritten by National Health Service
dispensing and few entrenched professional barriers. In pharmacy there is also
an established practice of bank loans guaranteed by pharmaceutical
wholesalers, a vital contribution obviating the often insurmountable barrier of
raising start-up capital. Nevertheless, a question mark hovers over the long-
term prospects of independent pharmacies, with the number of firms in the
trade falling from 8,458 to 7,560 over the 1980-1992 period, mainly as a result of
increasing penetration by pharmacy chains and supermarkets, with CIR (1995)
identifying pharmacy as one of the retail branches in which corporate
penetration is most advanced. A recent news item claims, ‘‘The future of the
local chemist’s shop has never looked bleaker’’ (Lewis, 2001).
Also well represented among South Asians are clothing retailers; this is a
historically established Asian line dominated by outlets selling items of
traditional South Asian women’s dress. Equally traditional is its location,
concentrated in neighbourhoods of co-ethnic population (Table III). It thus
suffers from all the limitations of this market space. The main exceptions to
this tendency are certain shops in areas like Northcote ward (London Borough
of Ealing) which attract Asian customers from a wide hinterland and hence are
able to cash in on unbounded market potential. Northcote is the extreme UK
case of residential segregation, 90 per cent of residents being from ethnic
minorities, and 67 per cent being Indian. There is a proliferation of Asian firms
orientated to this local co-ethnic market, including firms renting videos or
selling books in South Asian languages. There are also non-culturally specific
general purpose shops trading on sheer proximity to communities with highly
protective attitudes to women, where shopping locally may be the only option
for many. Even with a captive market, however, the level of dissatisfaction
with profits and incomes was highest among owners tied to this local co-ethnic
clientele ( Jones et al., 1992, 2000). However, the very size and variety of this
retail agglomeration also attracts Asians wishing to purchase comparison
goods from a very wide area of South East England. In addition to clothing
retailers, other high order specialisms like jewellery also benefit from this
relationship and, as with firms of any ethnic identity, those operating at a non-
local scale thrive better than those tied to neighbourhood markets (Bruderl et
al., 1992), so this is essentially another Asian variation on a universal trend.
Clearly the changes generated by post-Fordist restructuring are at best
mixed in their impact on ethnic minority small retailers, an observation vividly
Immigrant
enterprise in
Britain
23
illustrated by changes in national food consumption patterns. While food
retailers have suffered, other entrepreneurs have benefited, as expenditure on
food consumed outside the home soared from 25 per cent to 40 per cent of total
household food spending in the decade 1986-1996. Most germane for us is the
powerful tendency for ‘‘ethnic’’ eating out to take an ever-increasing slice of this
burgeoning market, growing over 60 per cent faster than total eating out
1994-1998 (MAFF, 1998), with South Asian and Chinese restaurateurs in the
vanguard of this ‘‘exotic’’ catering trade. Ostensibly, the restaurant trade offers
one of the most promising market niches for ethnic minority enterprise, its
strength deriving in part from its peculiarly advantageous form of mixed
embeddedness. On the supply side, it is strongly ethnically-embedded, since its
purpose is to purvey food, indeed a whole leisure experience (Beardsworth and
Bryman, 1999), derived directly from its heritage culture. Hence, there is a
premium on highly specific communal resources such as ethnic chefs and food
suppliers in order to affirm the authenticity of the product (Liu and Fine, 1995).
On the demand side, however, the customer base is predominantly and
increasingly non-ethnic, as suggested in Table III by the prominence of South
Asian restaurants in non-Asian areas. This results partly from an orientation
towards new markets created by changes in British eating-out behaviour,
themselves the result of cultural and socio-economic changes common to most
advanced capitalist societies (Warde et al., 1999). Ethnic minority caterers thus
enjoy all the virtues of market protection without any of the vices of market
limitation. Moreover, despite creeping ‘‘McDonaldisation’’ (Beardsworth and
Bryman, 1999), the essential consumer requirements of variety and choice
demand a vast plethora of independently owned outlets, in itself a powerful
deterrent to penetration by monopoly capital.
In reality, however, as recent research on restaurants in Birmingham
demonstrates, catering is a highly problematic activity for many South Asians,
suffering from an advanced form of market saturation and hyper-competition
(Ram et al., forthcoming). Given the apparently insatiable growth in the public
appetite for ‘‘exotic’’ eating-out, this appears highly paradoxical, though a
closer look at the dynamics of entrepreneurial supply and consumer demand
can help resolve the contradiction. In the Birmingham case, it can be inferred
from extremely high and persistent rates of ethnic minority unemployment that
there is considerable labour market push towards self-employment, thus
contributing to excessive numbers of would-be restaurateurs, especially among
South Asians, drawn to ostensibly rich pickings in an easy-to-enter sector (Ram
et al., 2000). On the demand side, ethnic caterers are at the mercy of post-
modernism at its most ineffably vacuous, a world of ‘‘real virtuality ... in
which symbols are not just metaphors but comprise the actual experience’’
(Castells, 2000, p. 381) and ‘‘quasification’’ (Beardsworth and Bryman, 1999), in
which tangible values like high quality food and service and value for money
count for less than the imperatives of ‘‘cultural signification’’. Less an eating
house than an interactive theatre in which to participate in a dramatic
spectacle, the ethnic restaurant is at the mercy of what Warde et al. (1999) call
IJEBR
8,1/2
24
‘‘omnivorous diners’’, affluent and pretentious trend-setters relentlessly picking
and mixing the infinite variety of culinary themes on offer to ensure sending
the correct cultural signals to their social audience. The ethnic restaurant is
part of what amounts to a food tourist industry and, as such, reliant on a highly
unstable, fickle and constantly shifting customer base. In the Birmingham
sample the most successful operators were those who, by conscious attention to
theming and location, had managed to differentiate and distance themselves
from the competition (Ram et al., forthcoming). This finding relates directly to
the argument that there is a potent spatial dimension within socio-economic
embeddedness, a highly uneven pattern of market opportunities within the
urban space economy (Rekers and van Kempen, 2000). Essentially, the more
successful restaurateurs have advantageously repositioned themselves within
this opportunity space. We must, however, recognise that such proactive
marketing strategies are not open to all. Necessary though such entrepreneurial
vision may be, it is not sufficient, since it requires capital beyond the dreams of
all but a handful of ethnic minority businesses.
Capital and class resources
This last observation brings us to a theme frequently hinted at above, the
widespread lack of capital, which probably contributes more than any other
factor to denying most ethnic minority firms entry to less crowded market
opportunities. Access to finance is one of the most challenging problems in the
ethnic minority firm’s socio-economic environment. Two decades ago, Ward
and Reeves (1980) noted the operation of discriminatory barriers within the
banking industry. Subsequent authors (Barrett, 1999; Deakins et al., 1995; Jones
et al., 1989) have documented the persistence of widespread institutional racism
in the credit market ( Jones et al., 1994b), together with a common perception on
the part of alienated customers that British commercial banks are run by
whites for whites. Essentially the relationship between banks and ethnic
minority business customers is racialised on more than one level: in addition to
direct stereotyping which denies financial credibility to ‘‘non-white’’ applicants,
there is also the contextual consideration that ethnic minorities have been sifted
into disadvantageous class and geographical locations and so suffer from
‘‘limited equity in personal or business property’’ (Deakins et al., 1997, p. 95).
These authors find little more than a quarter of their interviewees expressing
satisfaction with their bank (Deakins et al., 1997).
Unable or unwilling to obtain mainstream finance, many firms are self-
financed and, despite the argument that ethnically-embedded groups can rely
on communal resources, these are usually sufficient to finance entry into only
low threshold sectors ( Jones et al., 1994b). We concur with Watson et al. (2000)
that over-reliance on informal ethnic resources can act as a brake on
development. This link between access to capital and access to markets is most
emphatic for black Caribbeans, who not only complain more frequently – and
bitterly – than any other group about bank racism (Barrett, 1999) but are also
the most sectorally restricted. We are not, however, dealing with a completely
Immigrant
enterprise in
Britain
25
static pattern and one of the most instructive findings from our national survey
was that South Asians were using bank finance, both for start-up and
subsequent development, more frequently even than white owners, tentatively
suggesting that their revised stereotype as a highly entrepreneurial group with
a positive collective track record had given them some credibility with the
banking community ( Jones et al., 1994b). From a shifting embeddedness
perspective, we might argue that this represents a relocation from ethnic to
external mainstream resources. Against this, however, we also found that bank
funding access was far easier for those in the kind of low order activities with
which Asian enterprise has become historically associated, so that those
pioneers who had dared to move into uncharted territory continued to
experience the same resistance as ever.
This was especially so for manufacturers and Table III confirms that,
whether Caribbean or Asian, these are extremely thin on the ground. Moreover,
in the Asian case, clothing manufacture accounted for the bulk of these, in itself
no surprise since garment manufacture has long been the classic immigrant
enterprise in Britain and elsewhere (Waldinger, 1996) on account of its ease of
entry in comparison with most other manufacturing sectors. According to
Watson et al. (1999), there is a universal under-representation of ethnic minority
enterprise in manufacturing, a pattern explicable almost entirely with reference
to problems of capitalisation: compared with most service businesses
manufacturing requires greater amounts of start-up funding with higher risk
involved. However, the clothing industry subverts these criteria, being
relatively low technology-based and having a tradition of supplier credit to
manufacturers which, given that in Britain many of the suppliers are
themselves Asian, represents a continuance of ethnic embeddedness by other
means ( Jones et al., 1989; Werbner, 1984). Furthermore, the nature of the
production process means that some costs can be unloaded onto the workforce,
especially co-ethnic female outworkers using their own machines in their own
workspace (Phizacklea and Wolkowitz, 1995). These authors indicate that, in
the light of factors such as racism in the labour market, lack of child care and
restrictions on Muslim women’s mobility, this amounts in some respects to a
virtually captive labour force.
Whatever the reasons, the handful of manufacturers in our sample tend,
along with high order retailers, wholesalers and exporters, to be among the
more successful firms. Operating in relatively unbounded markets, they earn
better returns than most, they are often growth oriented, they are more likely to
employ more than a handful of workers and their proprietors tend to be
genuine owner-managers working tolerable hours rather than self-employed
workers toiling round the clock for brute survival. Like many of the other high
order entrepreneurs, they also tend to be better endowed with human capital,
defined by Bruderl et al. (1992) not only as educational qualifications but also
business family background and relevant previous career experience. For us
this gradual accumulation of class resources by certain South Asian groups,
and by the Chinese (Cheng, 1996), holds perhaps more hope for future
IJEBR
8,1/2
26
entrepreneurial progress than any other development. As Bruderl et al. (1992)
remind us, it is those sectors requiring expertise, knowledge and the other
expressions of human capital which yield the highest returns. They also argue
that human capital may be a means of unlocking financial capital, in that those
with human capital may be able to earn and save more prior to business entry,
and are also more likely to possess the communications skills and confidence to
successfully present proposals to their bankers. Will such developments in
practice unlock the door to more spacious and sustainable markets?
A partial and rather mixed answer to this query is provided by our recent
study of business change in two adjacent but sharply contrasting wards in the
West Yorkshire district of Kirklees: Batley East, a deprived area which had
become 33 per cent Asian by 1991; and Birkenshaw and Birstall, a 98 per cent
white area of expanding suburban villages. As Table IV shows, Batley East
had already built up a sizeable Asian-owned sub-economy by 1989
(McGoldrick and Reeve, 1989), its sectoral profile absolutely archetypal in its
domination by food and other branches of retailing. Given the tendency
elsewhere for horizontal break-out, we would have expected to find a
subsequent spillover of retailing into the adjacent white area. The number of
Asian-owned businesses, predominantly retailers, has however remained
absolutely static in Birkenshaw and Birstall. Somewhat surprisingly, against
the prevailing local tide of deindustrialisation, the major change has been a
tripling of the number of Asian manufacturing firms in Batley East, almost all
in furniture manufacture, mostly making beds, bedding and related products, a
literal example of ‘‘embeddedness’’, we might mischievously suggest.
Ostensibly, this somewhat unexpected development is the very embodiment
of break-out as envisaged by Ram and Hillin (1994). This is a growing
manufacturing sector, which gives the Batley entrepreneurs access to national
scale markets, with deliveries as far afield as South-East England, Wales and
Scotland. Consequently, it presents the opportunity to operate at a greater scale
than most ethnic minority entrepreneurs, with considerable numbers of
employees mostly from the local Asian communities. We seem to be witnessing
here the emergence of a veritable South Asian industrial district, growing by
Table IV.
Selected wards 1989
and 1999: South Asian
businesses
1989 1999
Batley East
Birkenshaw and
Birstall Batley East
Birkenshaw and
Birstall
n (%) n (%) n (%) n (%)
Retail food 25 33.3 10 58.9 20 20.2 7 41.2
Retail non-food 18 24.0 3 17.6 21 21.2 5 29.4
Services 20 26.7 3 17.6 28 28.3 4 23.5
Manufacturing and
construction 9 12.0 1 5.9 26 26.3 1 5.9
Wholesale 2 2.7 0 0.0 3 3.0 0 0.0
Missing data 1 1.3 0 0.0 1 1.0 0 0.0
Total 75 100.0 17 100.0 99 100.0 17 100.0
Immigrant
enterprise in
Britain
27
repeated spin-offs from earlier firms, beginning with the local plant of a
national manufacturer. Informal contact with employees in the South Asian
bed-making industry suggests that its attraction for Asian enterprise is, once
again, its ease and cheapness of entry, and that it represents yet another case of
saturation and hyper-competition, with new entrants crowding into what is
ultimately a finite market – even at the national scale, the British need for new
beds must surely have some upper limit. As in so many other Asian
specialisms, survival here is only sustainable on the back of co-ethnic labour
working at or near the minimum wage.
Conclusion
We have seen that much ethnic minority business appears to have grown in
circumstances of urban and economic adversity. Indeed, a good deal of the
growth may actually be stimulated by the absence of opportunities for the
talents of potential entrepreneurs in the mainstream job market. The variety of
business activities varies both by ethnic group and, as far as South Asians are
concerned, by the proportion of the minority in the local population. In itself
this is a reflection of their ethnic embeddedness, a close dependence on
community linkages which is as much problematic as beneficial. In times and
places where economic circumstances are worst, business survival is lowest,
and since ethnic minorities typically reside in deprived areas the risk for their
firms is clear. On the other hand it is possible to find flowers blooming in the
desert of urban dereliction, as with manufacturing growth in Batley, although
as we have seen even this may be a mixed blessing. There are definite echoes of
this ambiguity in the case of Birmingham’s restaurants, where entrepreneurs
are undoubtedly taking advantage of opportunities created by social trends but
simultaneously subject to acute competitive stress. While at the level of the
sector as a whole growth may be impressive, at the level of the individual
enterprise the situation may be of unceasing effort in the face of grinding
competitive pressure from the multiplicity of similar firms, and/or from large
corporate enterprise, with restaurants suffering more from the former, retailers
and manufacturers more from the latter.
The demographic situation, the state of the local or regional economy, the
direct competitive environment and the relationship with financial institutions
are all factors in the socio-economic embeddedness of minority enterprise.
Scholars will find similarities, if not precise parallels, between the British
situation we have described and the situations they are familiar with in other
countries. Nevertheless, a full explanation of why the British situation differs
from that elsewhere lies outside the scope of the present paper. The size of
minorities is governed by the past and current control of immigration;
geographical variations in economic welfare depend on national and
governmental responses to trends of internationalisation and globalisation; the
extent of competitive pressures may be governed by the degree of
credentialism and regulation at work in the industry or place in question. In the
context of the European Union, the UK’s slowness to embrace convergence
IJEBR
8,1/2
28
with the practices and rules favoured by other member states may explain
much of any distinctiveness the British situation may display. Economic
embeddedness will be more fully explained when the politico-institutional side
of mixed embeddedness has been considered.
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International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
pp. 32-53. # MCB UP Limited,
1355-2554
DOI 10.1108/13552550210423705
Mixed embeddedness
Does it really explain immigrant
enterprise in Western Australia
(WA)?
Nonja Peters
Curtin University of Technology, Western Australia
Keywords Enterprise economics, Immigrants, Australia
Abstract Kloosterman, van der Leun and Rath assert they conceptualised the ‘‘mixed
embeddedness’’ hypothesis to overcome the shortcomings characteristic of earlier theoretical
models of immigrant business enterprise. This article assesses the relevance of this theoretical
perspective to explaining immigrant entrepreneurship in a specific host setting with reference to
research that spans a number of economic periods and includes both genders and a number of
generations. It is argued that, while the ‘‘mixed embeddedness’’ explanation gives a more
comprehensive explanation than previous models, it nonetheless fails to explain the wide-ranging
inter-ethnic variation in entrepreneurial concentration observed among immigrant groups
around the world. It contends that the reasons for this are the model’s lack of historical
perspective and focus on the lower end of the market. It also demonstrates how the study of
immigrant enterprise is advanced by incorporating the agency of individuals into the explanatory
process.
Introduction, aims and objectives
No single cultural phenomenon is intelligible in itself, since it always involves the union of a
natural phenomenon with some historically acquired or initiated modification brought about
through the agency of man (Bidney, 1957).
A desire to explain the distinctly cosmopolitan character of entrepreneurially
revitalized inner cities that accompanied the entry of successive waves of
immigrants into the small business sector[1] of host cities remains the draw
card that attracts researchers around the world (Waldinger et al., 1990; Light
1972; Bonacich, 1973; Wallman, 1979; Boissevain and Grotenbreg, 1987; Portes
and Stepick, 1986; Ward and Jenkins, 1984; Bovenkerk et al., 1983; Collins et al.,
1995; Peters, 1999). The conceptual approaches that originated to explain the
phenomenon variously attributed the emergent differentials to a group’s
culture, structural barriers, situational influences, ecological factors, global
economic factors, the opportunity structure, the need to be upwardly mobile or
combinations thereof. While such monocausal studies could readily isolate the
importance of being able to call on family and kin for the requisite labour and
capital needed to establish and sustain a business to the nascent entrepreneur,
the research spawned fails to appreciate how the economy and host society’s
institutions impact on immigrants’ self-employment patterns. Nor can current
This article is part of a special issue of papers entitled ‘‘The economic context, embeddedness
and immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
Immigrant
enterprise in
Western Australia
33
explanations account for the distinctive differences in entrepreneurial
concentration and style observed among immigrant groups in host settings.
Waldinger’s (1986) ‘‘interactive explanation’’ was the first explanatory model
to move away from the monocausal explanations that have dominated the field
since the early part of the twentieth century. Conceptualized in response to the
observation that ‘‘.. . ethnic businesses proliferate in industries where there is
congruence between the demand of the economic environment and the informal
resources of the ethnic population’’, it explains the increasingly high rate of
immigrant business growth by integrating ‘‘culture’’ and ‘‘structure’’ –
specifically ‘‘ethnic resources’’ with the ‘‘opportunity structures’’ (Bun and Hui,
1995, p. 524). Light and Bhachu (1993) rightfully claim that the focus of the
Waldinger (1986) model is too narrow as it ignores the influence the destination
economy has on immigrants’ entrepreneurial activities.
Kloosterman et al. (1999, p. 8) claim their ‘‘mixe d embeddedness’’
hypothesis overcomes these s hortcomings and p romotes a better
understanding of immigr ant en terprise be cause it takes into acco unt not
only the interplay between the ‘‘opportunity stru cture’’ and ‘‘immigrant
context’’ but also the complex way in which immigrant businesses are
inserted into the host environment, with impacts on the socio-cultural and
institutional sectors of a neighbourhood, city, national and international
economic levels (Kloosterman et al.,1998).Inthisview,theriseofimmigrant
entrepreneurship is, at least in theory, primarily located at the intersection
of changes, in socio-cultural frameworks, on the one side, and
transformation processes in (urban) economies and the institutional
framework on the other .
In th is paper I as sess the relevance of Rath and Kloosterman’s (2000;
Kloosterman et al., 1999) ‘‘mixed embeddedness’’ hyp othesis to explaining
Dutch, Italian, Greek and Vietnamese (ethnic Chinese and ethnic
Vietnamese) business enterpris e in Western Australia (WA)[2]. The WA
data se rve as a p articularly useful analytical tool because the study from
which they are deriv ed spans a numbe r of economic p eriods, and the
entrepreneurs under inve stigation include both gende rs and a number of
generations[3]. I argue t hat while the ‘‘mixed embeddedness’’ theoretical
model gives a more compre hensive explanation of immi grant enterprise,
because it examines th e impact of the host’s insti tutions on the
entrepreneurial process, it does not explain, anymore than previous models,
the wide-ranging, inter-ethnic variation in entrepr eneurial concentration
observed a mong immigrant groups in host environments around the world .
I contend that the r easons for this inc lude: the model’s lack of historical
perspective – it does not deal w ith the development of entrepreneurship
within a group over time, and its chief research foc us (in 1999) is on
businesses in the informal economy located at t he lower end o f the market.
Finally, I demonstrate ho w the s tudy of immigrant enterpr ise is advanced
by incorp orating a historical perspective and the agency of individuals into
the explanatory proces s (Peters, 1999).
IJEBR
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34
Why history counts – the view from Western Australia
Who is an immigrant entrepreneur and why is history important to an
understanding of the immigrant entrepreneurship? When the WA study
commenced in 1989, Light (1972), Bonacich (1973), Waldinger (1986), Wallman
(1979) and Ward and Jenkins (1984) were the most prominent scholars in the
field of immigrant enterprise. However, Vermeulen et al.’s (1985) study of post-
war Greek settlement in The Netherlands, Bovenkerk et al.’s (1983)[4] research
on Italians in the ice cream trade there, and articles on Surinamese
entrepreneurship by Boissevain and Grotenbreg (1985, 1986, 1987) provided far
more ideas relevant to the WA data. Instead of emphasizing only the ethno-
cultural characteristics and processes of incorporation of immigrant
entrepreneurs in the host environment, these authors also gave consideration to
entrepreneurs’ offspring. Specifically, their submission that growing up in a
business milieu inclines the offspring of immigrant entrepreneurs to pursue
self-employment and engage in risk-taking behaviour prompted the inclusion
of a ‘‘generations’’ dimension to the inquiry[5].
An analysis of the WA data from a generation perspective revealed that a
more comprehensive understanding of immigrant enterprise can be achieved
by viewing the immigrant entrepreneur from the following four conceptual
categories:
(1) the first generation (pioneer);
(2) the second wave (people sponsored to WA by the first category);
(3) the second generation; and
(4) the entrepreneur’s ethnicity (see Appendix) (Peters, 1999).
The investigation also revealed that while there were similarities in the types of
businesses established by the first generation and ‘‘second wave’’ entrepreneurs
– pre- and post-war – these entrepreneurs gave different reasons for being self-
employed. The second generation diverged completely from the other two
categories in business type, reasons for being self-employed and the resources
they utilize to establish and operate their firms. The ethnic component was the
most important indicator for understanding Vietnamese entrepreneurship.
Class, gender and the ‘‘individual agent’’, like ethnicity, often further modified
the conceptual groupings because these establish a particular vision of reality,
which included views on the symbolic value of work and knowledge. The
remainder of the paper is given to explicating the distinctions on which the
conceptual categories are based[6].
Generations and entrepreneurs
First generation pioneer entrepreneurs (as encompassed in the WA data) began
arriving in WA around 1890. These were typically sojourners: married or
single, poorly educated men from either the Greek islands of Castellorizo (who
dominated pre-war WA Greek numbers), Kythera or Ithaca, or rural villages in
Northern Italy, and less often from coastal or rural villages in Macedonian
Immigrant
enterprise in
Western Australia
35
Greece or Southern Italy (Price, 1963). Most had came to WA with the explicit
intention of staying only so long as it would take to accumulate enough money
to live out a life of comfort in the homeland village (Peters, 1999). The
Australian society they entered was 98 per cent Anglo-Celtic in origin and
highly xenophobic. To preserve ‘‘racial purity’’ and protect itself against
economic competition, it had developed the White Australia Policy – an
immigration restriction policy to stop primarily Chinese migrating to its shores.
Racial tensions emerging from the large-scale immigration of Chinese gold
miners to gold-fields in Victoria and New South Wales during the 1850s
provoked a backlash among Australia’s European settlers fearful of becoming
overwhelmed by Asian migration. Fearing an ‘‘olive’’ as much as the ‘‘yellow
peril’’, they had in addition imposed a landing fee and immigration quota on
southern Europeans, who they also viewed as racially undesirable and often
referred to as ‘‘blacks’’ (Yiannakis, 1996). Having found employment, in timber
mills, on farms, wood chopping on the Woodline, or construction sites, these
immigrant pioneers soon discovered that any attempt on their part to move out
of the ‘‘labourer’’ niche and into more lucrative jobs such as gold mining
attracted opposition from the locals. The newcomers’ lack of English language
ability further restricted their workplace options, eventually pushing many of
them into exploitation or self-employment (Peters, 1999)[7].
The effect entrepreneurs’ pre-migration skills held is also evidenced by their
subsequent choice of business in WA. For example, Italians from northern Italy
were more inclined to go into farming or fishing, whereas those from the South
established market gardens or orchards, or opened fruit and vegetable
stores[8]. A few became boot makers or set up construction firms specialising
in terrazzo work (Peters, 1992a, b). On the other hand, the Castellorizian Greeks,
who were responding to their island’s ancient trading cultures which had
spawned many families devoted to seafaring and entrepoˆt trade, established
retail or wholesale businesses or hawked merchandise door to door (Yiannakis,
1996)[9].
The experiences of padroni like Ezio Luisini and Athanasios Auguste, who
are considered the spearheads of Greek and Italian enterprise in WA, provide
good examples of the impact pioneers had on the entrepreneurial process.
Athanasios Auguste came to WA in 1891 via Egypt, where he had been
employed by the Suez Canal Company, having had to flee Castellorizo with his
cousins Dimitrios and Athanasios Manolas to avoid being caught by Turkish
authorities for trying to land tobacco illegally. This wheeling and dealing from
a young age, albeit unlawful, highlights the proclivity for enterprise that had
evolved in that community. In 1888, Auguste worked his passage to Singapore
and then travelled on another vessel to Broome. After some time working on
the pearl-fields he moved, in 1890 or 1891, first to Perth and soon afterwards to
Adelaide, where he was joined by his cousins. In South Australia he was
employed for some years as a seaman and fisherman. On his return to Perth in
1896, Auguste, with little education – he could only read and write in Greek –
turned the knowledge he had gained as an employee on the pearl beds in
IJEBR
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Broome and the fishing industry in South Australia to establishing oyster beds
in Fremantle and a fish and oyster saloon in the city. Characterised by Gilchrist
(1991, p. 240) as a tireless worker, Auguste and his wife (an educated Greek girl
whom he married on a return visit to Egypt) settled down to a hard-working
regime in the three story building they purchased, which consisted of an oyster-
bar and restaurant on the ground floor, and a wine and spirits shop on the floor
above. The third floor was a lodging-house, which was patronised largely by
the second wave immigrants – new Greek arrivals, including the many
relatives and friends Auguste sponsored[10] to come to WA via the migration
chain, and who were often employed by the Augustes in their business as
kitchen hands, cooks or waiters (Gilchrist, 1991).
Ezio Luisini’s story has similarities: like all sojourners he came to WA at the
beginning of the last century with a desire to save £400 to take back to Italy. To
this end he started work in the bush, in mines and in timber mills (Strano, 1986).
Thirteen years later he decided to settle in WA. Although he had accumulated
the requisite amount, his mother had died, leaving him little to go back for.
Instead he purchased a wine saloon, followed by a property on the outskirts of
the city where he started growing vines, then a clothing store next to the wine
saloon, and later another merchandising concern in Fremantle (the port) in
premises that had once been a restaurant, and where he had eaten his first meal
in Australia. Both shops became Meccas for non-English speaking Italians. Not
only did they purchase their clothing and wine from him, but also valued his
advice and sought his financial help (Gava, 1978, p. 1). Luisini eventually
became not only the largest Italian clothing merchant and vigneron, but also
the largest landowner in the district of Wanneroo
The economic activities and successes of pioneers like Luisini and Auguste
became the benchmark from which second wave emigrants came to determine
their labour market options and choices in WA. Return visits to the home
village by the pioneers were particularly powerful motivation, as the sojourner
was both a potent role model and a walking advertisement. He would arrive
from the ‘‘promised land’’, well dressed in the mandatory expensive new suit
and hat, looking well fed and happy (Yiannakis, 1996; Gilchrist, 1991, p. 190).
The second wave emigrants were thus motivated by the desire to emulate the
good fortune of these padroni. The ideology, revering self-employment, that
evolved from pioneer Greeks and Italians was transmitted from immigration
countries to the Greek islands and mainland Greece and Italy via the multi-
stranded transnational migration chains they had established (Peters, 1999).
The ideology was successful because it was an achievable goal. It entailed
employment in a padrone’s business, where the newcomer quickly acquired the
skills needed to start up their own business. In reality, however, the process is
bereft of glamour. Needing employment and shelter, second wave immigrants
started life in WA, in debt to their sponsor for the fare and, regardless of the
treatment to which many were subjected, had no option but to work out their
indebtedness. Spiro Barboutsis, who arrived in WA in 1937, spent the first year
washing the plates in his cousin’s restaurant:
Immigrant
enterprise in
Western Australia
37
I could only speak ten words of English at that time. I was working from 4.40 am till 8 pm at a
Greek’s restaurant in Williams Street. Food and a room was provided. But for that I had to
work seven days a week, no public holidays, nothing.
While employed as a kitchen hand, Spiro gained a working knowledge of
English, and moved up the job hierarchy to become a waiter, then cook and,
after an arduous apprenticeship, a partner in the business[11].
Luisini indirectly provided post-war arrival Umberto Scaffidi from Calabria
with the idea and some resources to become self-employed. Umberto, who came
to WA in 1952 aged 28, with only a primary school education, started a family
business when his job – selling drapery door to door for Luisini – came to an
end. He reflects: ‘‘Then I took hold of the idea, if I can sell for Luisini, I can sell
for myself. I can make some wages plus something for myself ... I organized it
with all the suppliers’’. His move was also made possible by the large pool of
Italian consumers who had moved into the inner city during the 1950s,
attracted there by sponsors, cheap housing, the proximity of industrial
employment and the fact that they could converse and do business in their own
tongue. However, the lack of local business knowledge and limited English
language ability that pushed Umberto into servicing the Italian community
also made him vulnerable to exploitation by co-ethnics. Too late, he discovered
that the first shop he rented from another Italian in the inner city did not have a
lease-hold and so he lost a lot of money. He later purchased a delicatessen in
another street.
Umberto’s business did well until the neighbourhood’s residential mix
changed – from Italian to Asian – following the disbandment of Australia’s
immigration policy in the late 1970s. Europe had almost dried up by then and
Australia needed to consider drawing emigrants from elsewhere to work and
people the country (Castles et al., 1988). To survive financially required Scaffidi
and his wife Maria to work double shifts:
I never saw the sun come down of a night. I start at 6 am, finish 9.30-10 pm ... If I was to put
in eight hours per day I can live, nothing else. But after the extra hours this is the money you
can save. You can save the money but you can’t enjoy the life. It’s a prison!
Maria claims her life became the shop, the family and the church. Why did the
Scaffidis continue in business when it had become borderline viable?
Australian theorists Lampugnani and Holton (1992, p. 21) note that: ‘‘Small
business proprietorship is not just a livelihood Italians pursue it is judged a
highly desirable career path by Italians. Therefore, despite the gruelling
routine, it is not uncommon to hear proprietors, driven by this socio-cultural
ideal, declare: ‘We work hard but we don’t mind because we are working for
ourselves (‘Lavoriamo per conto nostro’)’’ (Huber, 1977, p. 67). At the time
‘‘success’’, to these proprietor’s was more about ‘‘being self-employed’’, despite
the time it took to achieve a liveable income, rather than the monetary rewards
– that is not to deny their importance.
The experiences of the pioneers and second wave entrepreneurs also
provided abundant evidence that the innovative acts of individuals like
IJEBR
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38
Athanasios and Enzo initiated patterned behaviour. The battery of ethno-
specific stores that emerged to service inner city Italians, and the myriad Greek
cafe´s directed at mainstream consumers that were dotted around rural and
urban WA up until the 1960s, provide a good example of the style ethnic
entrepreneurship took on in Australia.
Coined a ‘‘culture of entrepreneurship’’, Werbner (1987) noted, from ongoing
similar behaviour among the Punjabis who owned the garment industry in
Manchester, that it begins when chain migration pioneers find and operate a
business niche, later they sponsor co-ethnics into this niche by providing
advice, employment, patronage, credit and/or skills training[12]. During the
process, the initiator-entrepreneur’s behaviour becomes a model for the actions,
dreams, attitudes and beliefs of increasing numbers of compatriots. Later
arrivals adopt similar strategies because the resources most available to
entrepreneurs are common to the whole group. Though uncoordinated, these
parallel decisions pushed ethnic groups into select niches just as if a master
plan were in effect (Werbner, 1987, p. 187).
Ethnic group size can also be a determinant of entrepreneurial activity. In
WA this is particularly relevant to the labour market patterns of the large inner
city Italian population. Evans points out that settling in neighbourhoods, such
as the Perth inner city, where most residents are of the same nationality
increases not only the regularity of employment but also co-ethnics’ exposure
to self-employment:
... even a relatively small number of entrepreneurs can offer employment opportunities to a
substantial portion of their co-ethnics. For example, in a group with only average levels of
entrepreneurship (6 per cent), if each business owner employs just one co-ethnic, then 12 per
cent of the groups’ work force is involved in the ethnic economy and if the employer hires
three co-ethnics then 24 per cent are in the ethnic economy ... the effects are even more
striking at higher levels of entrepreneurship (Evans, 1989, p. 959).
Men belonging to very large ethnic groups are, in fact, about one and a half
times more likely to be business owners with employees than are men
belonging to very small groups (Evans, 1989, p. 958). High levels of social
cohesiveness, such as that found among the Greeks, can have the same effect.
Despite the scattered nature of WA’s early Greek cafe´ culture it provided these
employees, on which it totally depended, with proportionately as many
opportunities for small business activities as did the Italian enclave, albeit in a
strictly limited area – food. Price (1975) confirmed this, noting that until the
Second World War, 73 per cent of the Greek immigrants around Australia had
entered the catering trade. This is because all that was needed to start a fish-
and-chip shop was some sort of premises, a basin of fat, a container to heat it, a
sharp knife to fillet fish and peel and cut potato chips, and the willpower to
work long, hard hours at tedious work (Yiannakis, 1996, p. 150). The image of
the immigrant entrepreneur – as a comparatively recent newcomer to the host
environment, arriving as an adult with little or no capital and relatively few
qualifications, and subsequently moving from unemployment into self-
employment in a business that requires little capital outlay, few qualifications
Immigrant
enterprise in
Western Australia
39
and minimal English language competency, implicit in the ‘‘mixed
embeddedness’’ model – fits the characteristics of the first generation
entrepreneur in the WA study.
Although Kloosterman et al. (1999) do not acknowledge the impact of
‘‘generations’’ on immigrants’ entrepreneurial process their ‘‘mixed
embeddedness’’ model, because of its focus on the impact of the host’s
institutions on immigrant enterprise, is well placed to appreciate the long-term
labour market outcomes of Dutch immigrants. The distinctive nature of Dutch
migration patterns was largely manipulated by the Department of
Immigration’s recruitment procedures, which in turn reflected the needs of a
marketplace hungry for tradesmen and semi-skilled operatives to restore
essential services to pre-war levels, and to expand the burgeoning
manufacturing, building, construction and heavy industry sectors (Peters, 2001).
Thus, 42.42 per cent of the Dutch males selected to come to Western Australia,
between December 1951 and February 1955, were classified craftsmen in
contrast to only 17.9 per cent of the local workforce is witness to the success of
the Commonwealth Government’s employment drive (Appleyard, 1956).
As a consequence, subcontracting to building and construction firms was
the most common form of self-employment pursued by the first generation
Dutch. During the 1950s and 1960s the move from employee to self-employed
was also facilitated by the ease with which one could enter the business sector.
Compared to The Netherlands, where a battery of diplomas is needed to open a
business, those required in Australia were negligible (Boissevain and
Grotenbreg, 1987)[13]. Even men like Hans van Look, a house painter by trade
who had been employed by the same boss for 25 years in Amsterdam, became
self-employed within weeks of arrival: ‘‘I started with the tins of paint hanging
off the handlebars of my bike’’ (Peters, 1999, p. 17). Some are still in business 50
years later. The philosophical basis for the Dutch’s ‘‘ambition’’ to be self-
employed was derived from traditional Netherlands’ ideology, which reveres
the entrepreneur and places business ownership high on the hierarchy of
acceptable career paths. Social theorists Beijer et al. (1961, p. 288) note that the
desire to be self-employed was mentioned as a principal motive for emigrating
by 17 per cent of the Dutch prior to leaving, and hoped for by another 60 per
cent. In reality, however, few post-war European immigrants entered the self-
employed sector during the three decades of post-war boom while there were an
abundance of well-paid trades jobs in the offing.
Fluctuations in business participation rate – in line with changes in the
Australian economy – are further evidenced by ABS figures which show high
self-employment rates were typical during the depression (Peters, 1999,
Appendix). Light (1979, p. 36) confirms that a similar growth in the number of
retail firms also occurred in the USA during the worst years of the depression
from 1929 to 1935. On the other hand, the reduction in the proportion of self-
employed and the corresponding increase in the employee group the immediate
post-war decades reflect the changes in the post-war global economy and the
structural changes in industry and commerce heralded in by the ensuing three
IJEBR
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40
decades of boom ( Jackson, 1979, p. 29). That Australian patterns replicate those
in overseas capitalist economies is well illustrated by the 30 per cent shift away
from self-employment that occurred in the Greek community in Victoria
between the years 1947 and 1981. At the 1947 census approximately 58 per cent
of Greek male migrants were self-employed or employers, compared with only
20 per cent of the Australian born. Yet in 1981, following three decades of
sustained economic growth, full employment and price stability, statistics
show 75 per cent of Greek males in Victoria had became employed as unskilled
wage and salary earners in Victoria’s manufacturing sector (Castles et al., 1988,
p. 5). Miller and Swanson (1958, p. 123) noted that a consequence of a similar
pattern in the USA was that the achievement imagery, which had previously
been directed at business success, had among the American middle-class
shifted away from self-employment toward bureaucratic careers in corporate
hierarchies (cited by Light, 1984, p. 197).
The economy was also a major force in explaining the choices and chances
in the WA labour market available to the Vietnamese ‘‘boat people’’ who started
coming to WA from 1978 onwards. Economic restructuring meant few
manufacturing sector jobs in the offing (a traditional area of employment for
newcomers) and massive unemployment, which is still high 25 years later
(Peters, 1996). Those who gained employment reported being paid below award
rates and being pressured to work excessively long hours without proper
overtime rates because they did not know their rights. Building sites, where
they were often employed, were singled out as particularly notorious for this
practice. Mr Fong recalls:
I worked as a builder’s labourer from 7 am until 7 pm for many weeks for only $20 per day.
There were no other jobs available and I was obligated to send money to help my relatives
who were still in Vietnam.
Counter-exploitation was also a common practice among the Vietnamese, many
worked while using the welfare benefits which they continued to accept to send
to relatives in Vietnam (Peters, 1996).
By 1982, many Vietnamese refugees were self-employed in home-based
concerns targeting co-ethnics (Portes and Stepick, 1986). However, although
high unemployment is often considered a trigger to a group’s move into self-
employment, research has also shows that disadvantage alone cannot produce
a propensity for self-employment as many migrant groups who encounter
similar disadvantages do not achieve a high business profile, research
demonstrates the process is also extensively culturally driven. Thus, although
outwardly it is possible to link the Vietnamese unemployment rates and self-
employment activities directly to economic restructuring and prejudice, such a
view does not account for the far greater number of ethnic Chinese to ethnic
Vietnamese self-employed. Anecdotal evidence shows 66 per cent of WA’s
Vietnamese entrepreneurs were of ethnic Chinese origin (Peters, 1999, p. 199).
This is particularly interesting, given that the Chinese are described as having
owned Cholon, Saigon’s business district, and that the Vietnamese arrivals,
Immigrant
enterprise in
Western Australia
41
since 1978, coincided with the predominantly ethnic Chinese refugee wave
which followed the clamp-down on private trade that year (Ungar, 1987;
Viviani, 1982)[14].
An additional advantage that the ethnic Chinese had over the ethnic
Vietnamese was being able to obtain employment and concomitantly
re-skilling. Chinese who had been ‘‘coffee or oil barons’’ in Vietnam established
eating outlets after they had acquired the necessary skills working in the
restaurants of Mandarin speaking Chinese from Malaysia, although this is not
surprising considering that a particular feature of Chinese adaptation in the
Asia-Pacific region is their extensive entrepreneurial presence (Knowles, 1988,
p. 61; Li, 1993)[15]. A consequence of this is that the Chinese are often cited as
an example of a ‘‘middleman trading minority’’, or described as the ‘‘Jews of the
Asia-Pacific region’’ (Inglis, 1988, p. 145). However, the Chinese Vietnamese
success may also have its roots in Australia’s welfare state, since the
unemployment benefits they received from the Australian government often
provided the income necessary to facilitate a Hui (a rotating credit association).
Many nascent entrepreneurs were able to raise enough finance to purchase a
market stall via a Hui (Knowles, 1988). This was not an option for the European
immigrants who arrived in the immediate post-war years, when welfare
benefits were minimal. Vietnamese business in WA affords an example of
‘‘ethnic succession’’/‘‘vacancy chain’’ since their first businesses were often
delicatessens they had purchased from ageing Italians who sold out when the
residential mix in the inner city changed from southern European to Asian
around 1980. The Vietnamese entered an area in transition due to the
gentrification movement that had, since the late 1970s, progressively taken
over more of the inner city (McDonald Hales, 1988; Zukin, 1987; Sassen-Koob,
1986)[16]. The rapidly rising cost of housing soon forced them out to cheaper
areas North of the city. However, whereas many Chinese Vietnamese continued
to trade in the area, which had in the meantime become a significant
entertainment and tourist attraction, the ethnic Vietnamese bought
delicatessens around the metropolitan area.
The Vietnamese findings for WA challenge Rath and Kloosterman’s (2000,
p. 15) claim that more rewarding research results are achieved by a move away
from ‘‘parochial research approaches’’ – meaning ethno-specific case studies –
which they argue would only re-ascertain essentialist conceptions of ethnicity.
Without this approach, the distinctive differences associated with the ethnic
Vietnamese as opposed to the ethnic Chinese from Vietnam would not have
become known (Peters, 1999). The validitiy of Rath and Kloosterman’s (2000,
p. 6) remark that ‘‘it cannot be denied that some immigrant entrepreneurs are
doing extremely well’’ can also be questioned, since at no time do they divulge,
who these entrepreneurs are and what it is that is making them more
successful. Among the WA entrepreneurs, the second generation stand out as
infinitely more financially successful than their predecessors[17].
Vermeulen et al. (1985, p. 120) note that, despite the difficulties associated
with prioritizing variables, if asked to predict who was more likely to go into
IJEBR
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42
business the decisive factor would have to be someone from an entrepreneurial
background. An overwhelming majority of the second generation generally,
and in fact over 90 per cent of the pre-war Greek, had grown up in a family
business background. The WA second generation are located in dynamic, low-
risk firms that rely on more class than ethnic resources to operate, and require
more start-up capital but are infinitely less labour intensive than the businesses
established by their ancestors (Peters, 1999)[18]. Their proprietors find
business less a source of economic survival than a source of economic
advancement. Their local education gives them access to the school/peer group
networks their parents relinquished when they emigrated. As a consequence,
they are better able than their parents to exploit two cultural milieus for
information, finance, labour and consumers.
Of striking interest within this WA group was the ardent desire to become
self-employed, which had been engendered by growing up in a business
background. One Italian, Elisabeth M., recalls:
After working in my brother’s business for a number of years I opened my own business ...
A business of our own was for us the ultimate goal. My father had often been in businesses
and we were used to starting something for ourselves.
This can be in part related to the ‘‘business talk’’ in which they were raised.
James Kannis recalls that everybody in the old days was in some form of
business or another and that the discourse at family or community gatherings
was important to the evolution of their business consciousness. The business
immigrant tradition and work ethic in which they were raised also made the
second generation accustomed to hard work and long hours. David Lekias, who
currently operates a large lighting business, reflects:
Dad opened up a fruit and milk bar in Barrack Street opposite the Town Hall from personal
savings. He was there for around 36 years. We kids all grew up through that shop. We all had
to work in the shop after school, and Saturdays and Sundays.
This expressed itself in the following attitude. Con, a Greek entrepreneur,
declared he would rather earn a quid self-employed than two as an employee,
and Dutch Gerard stated:
Wherever, whenever, I will always dedicate myself 150 per cent to whatever job I do.
Therefore, I reason that in waged labour this would still only give me the wage for which I
was contracted. However, if I were to put 150 per cent effort into my own business then the
rewards would be far greater and I get to reap the benefits – not my boss!
Members of the Greek and Italian second generation also associate their ‘‘drive
to achieve’’ with the bigotry many endured at school. Coffee shop owners Spiro
and George say fighting their way through lower school was a common
experience which made them ‘‘street wise’’ and the reason driving them ‘‘just a
little bit harder’’ so as to do better than the locals and to prove to Anglo-
Australians that they could maximise the limited opportunities they had.
A local and/or tertiary education is another important element in the
development of many flourishing second generation concerns. Walker (1988,
p. 131) notes that Greek boys from a successful business background tend to be
Immigrant
enterprise in
Western Australia
43
more motivated to do well in school than Greek boys whose parents were in
waged labour. Werbner (1990) similarly links the spurts in the fortunes and
expansion of the second generation Punjabi Muslims in the Manchester fashion
industry to the central role the university educated sons or younger educated
brothers play in the business. She states:
Seen in terms of their .. . sophistication, managerial ... [and] communicative skills and sheer
energy, I can only conclude that the fact that they are educated affects their performance in
the business ... It does seem that a university degree, however irrelevant it may be, has a
radical impact on the expansion of business (Werbner, 1987, p. 166, 1990, p. 21).
Walker (1988, p. 131) also noticed that the businesses owned by Greeks in his
inner city Sydney study sample underwent expansion when a university-
educated son joined the firm’s ranks. The Greek Kailis brothers attribute their
success as exporters of lobster and other seafood to their secondary/tertiary
qualifications which, they maintain, better equipped them to remain flexible
and open to market forces and opportunities. Not long after joining their father
in the business they began expanding the firm’s activities, moving into
wholesaling, retailing and even exporting. The brothers eventually created the
largest privately owned fishing company in Australia. Second generation
Dutch, who figure prominently among The Netherlands-born self-employed,
had little formal education. Most had left school early to help the family get on
its feet financially. With self-employment easy to achieve in Australia, Dutch
working-class parents tended to view a tertiary education as a luxury rather
than a necessity (Castles and Collins, 1989, p. 5). However, most of those who
became self-employed had completed further education at night school.
Another major difference between the generations is their perception of
ethnicity. Whereas the first generation’s association with ethnicity is best
described as primordial expressed in terms of social cohesion, the second
generation pre- and post-war is self-consciously aware of ethnicity as a
resource, which can be either commercially exploited or suppressed, depending
on the nature of the particular situation (Vermeulen and Govers, 1994, 1997).
For example, for Frank Cicerello, who runs a very successful inner city travel
agency, ethnicity is a marketable commodity, which he ignores in dealings with
the general public and invokes in business dealings with the Italian
community. Eddie Verhoeven, the owner of a second-hand car yard, suppresses
his ethnicity – he perceives it to be disadvantageous to acknowledge his
heritage in business because of the negative evaluation of the Dutch as frugal
and bombastic (know-alls) by the Australian business community[19]. The
choice to reject or utilise ethnicity in business dealings is made by individuals.
Rath and Kloosterman’s (2000) and Kloosterman et al.’s (1999) models
completely omit considering the impact the agency of individuals has on the
entrepreneurial process. Notwithstanding, statistics clearly demonstrate, aside
from during the depression, that relatively few members of an ethnic group and
even less persons in mainstream society decide to risk all for such ideals as
‘‘independence’’, ‘‘prestige’’ and/or spurious profit, and that in most instances
fewer are women (see Table III). Tables I and II show that the vast majority of
IJEBR
8,1/2
44
immigrants opt for waged labour despite having to deal with the same
discrimination and prejudice that some researchers argue compel employees to
become entrepreneurs.
Factoring human agency into the entrepreneurial dynamic
Although the image of the self-employed, self-sacrificing immigrant who
through hard work and risk taking ‘‘makes it’’ into the ranks of the
comfortably-off looms large in American, British and Australian culture, since
individuals rarely figure in theoretical explanations, their variability remains
Table I.
Birthplace by labour
market status, Western
Australia, 1991 – males
Country
Employer
(%)
Self-
employed
(%)
Employees
(%)
Unpaid
helper
(%)
Unemployed
(%)
Total
employed
Total
(%)
Australia 7.2 11.9 67.5 0.5 12.8 289,493 546,603
Vietnam 4.8 8.0 50.3 1.3 35.7 2,692 4,264
The Netherlands 10.5 18.4 60.2 0.3 10.9 4,128 6,222
Greece 14.2 17.2 55.8 0.8 12.1 1,151 1,858
Italy 15.1 18.8 56.1 0.7 9.3 9,161 14,570
Yugoslavia 6.5 13.8 64.5 0.4 14.7 4,213 6,828
Poland 4.0 15.6 55.1 0.3 24.9 1,712 3,594
Malaysia 8.3 7.7 68.5 0.4 15.2 4,167 7,642
Germany 7.3 15.7 62.4 0.6 14.1 3,580 4,945
The UK and Ireland 5.2 11.9 68.8 0.2 13.8 76,265 108,826
Other 6.3 10.2 67.5 0.3 15.8 47,383 71,976
Undefined 4.6 9.2 63.5 0.8 21.8 1,517 16,381
Total 7.8 11.1 67.2 0.4 13.5 445,424 793,709
Source: ABS 1991 Census for WA
Table II.
Birthplace by labour
market status, Western
Australia, 1991 –
females
Country
Employer
(%)
Self-
employed
(%)
Employees
(%)
Unpaid
helper
(%)
Unemployed
(%)
Total
employed
Total
(%)
Australia 4.7 7.8 75.8 1.4 10.2 211,540 550,896
Vietnam 5.3 9.2 40.2 2.2 42.9 1,907 3,951
The Netherlands 4.4 13.2 69.6 3.0 7.7 2,220 5,527
Greece 11.2 18.1 59.0 2.7 8.9 525 1,690
Italy 10.6 15.9 64.3 3.3 6.3 3,814 12,301
Yugoslavia 5.0 11.0 70.9 1.2 11.8 2,429 5,814
Poland 2.8 7.8 63.9 1.9 23.6 1,213 3,516
Malaysia 4.1 5.9 74.2 1.1 14.6 3,475 8,395
Germany 6.8 10.9 69.3 1.3 11.7 2,308 5,217
The UK and Ireland 3.8 7.6 64.8 1.0 10.1 51,540 108,490
Other 4.1 7.2 72.9 1.1 14.6 33,430 72,413
Undefined 4.0 6.4 71.9 1.2 16.5 951 14,906
Total 4.6 7.9 75.2 1.3 10.9 315,442 793,116
Source: ABS 1991 Census for WA
Immigrant
enterprise in
Western Australia
45
an enigma, and their motivations and actions far from clear (De Vries, 1977,
p. 36; Keesing, 1981, p. 286; Greenfield and Strickon, 1986, p. 333). This is a
major oversight, given that it is individuals who pursue self-employment;
recognise, discover and exploit opportunities; mobilise personal contacts,
devise new business behaviours, copy the behavioural choices of others around
them, or adopt alternatives to bring about the goals or ends they desire. This
fact is not overlooked by influential economist Joseph Schumpeter, who
postulated as early as 1934 that the ultimate explanation of economic conduct
was to be found in non-economic factors and that these were brought into play
by the actions of individuals operating in the market (Greenfield and Strickon,
1986, p. 14; Swedberg, 1991).
Palmer (1984) characterises the self-employed immigrant as a ‘‘self-made
culture entrepreneur’’ who acquires all his skills, experience and capital after
Table III.
Australia-wide,
birthplace by labour
market status
BP Year
Employer
(%)
Self-employed
(%)
Employee
(%)
Unemployed
(%)
Australia 1933 11.7 19.5 – 25.0
1947 7.9 14.1 76.8 2.6
1954 6.9 11.5 79.2 1.4
1961 6.6 10.4 78.9 3.5
1971 5.5 7.5 84.8 1.6
1976 5.8 9.7 84.0 4.0
1981 6.2 10.2 83.2 5.3
The Netherlands 1933 10.0 16.1 41.1 19.6
1947 8.7 13.1 78.0 3.5
1954 3.0 7.9 87.1 1.4
1961 5.2 8.7 80.0 5.5
1971 2.4 4.8 90.0 2.4
1976 7.9 14.5 77.3 3.6
1981 8.2 15.9 75.9 4.7
Greece and Cyprus 1933 17.7 22.7 37.5 15.7
1947 33.7 23.9 41.7 5.7
1954 19.4 15.3 60.1 3.6
1961 8.2 9.1 71.8 10.3
1971 5.8 8.4 83.1 2.1
1976 6.9 13.7 79.0 4.4
1981 9.1 16.8 73.8 6.8
Italy 1933 13.5 23.9 39.3 11.9
1947 15.0 36.8 47.3 3.0
1954 6.1 13.3 78.7 1.2
1961 5.8 11.5 75.2 6.8
1971 6.6 9.8 81.8 1.3
1976 7.8 14.5 77.3 3.1
1981 8.6 15.4 75.7 4.0
Note: Censuses 1933, 1947, 1954, 1961, 1971, 1976 and 1981 – males
Source: ABS Data for Australia
IJEBR
8,1/2
46
emigrating and invests them in an enterprise bearing the attributes of his
ethnic group. He illustrates his point with the story of Leoni, a ‘‘self-made
Britalian’’, described as:
... appearing to have been very conscious of his ethnicity, its drawbacks and its advantages,
and to have used it, in an occupation where it was already an advantage, to prepare himself
for independent entrepreneurship. Thus in 1926, at the age of 31 with ... years of
accumulated experience in restaurants and hotels and £800 in savings, he opened a small
restaurant in Soho with seven tables. His aim was to make Italian cuisine as ‘‘snob’’ as French
cuisine, and after 40 years as a restaurateur in expanding premises in the same street, he and
his Quo Vadis (for that is what he called his restaurant) had become institutions (Palmer,
1984, p. 98).
Palmer’s monograph of Leoni is also important because it reflects the extent to
which researchers and individuals associate immigrants’ entrepreneurial success
with the possession of specific character traits (ambition, strong work ethic,
commitment to long hours and hard work, determination and independence).
Described as a man of exceptional motivation and energy, Palmer adds that real
success only came when Leoni was well into his 50s, and at considerable cost to
his health. That Leoni’s notable success was not, as Palmer (1984, p. 98) points
out, within the reach of every peasant son who emigrated to London with dreams
of eventual independence and entrepreneurship emphasizes yet again that it is a
difficult goal to realise and often takes years to actualise.
It is notable that the overwhelming majority of WA entrepreneurs
interviewed attribute their commercial and/or financial success to the
‘‘entrepreneurial character traits’’ they acquired overseas, growing up in a
business background or working in a relative’s business. For example, Franco
Zamin, an Italian from Treviso, associates his industriousness, diligent,
hardworking, entrepreneurial bent with the ‘‘San Fiorese character’’ because the
San Fiorese idealise and consider ‘‘typical’’ hardworking and industriousness
(Baldassar, 1994, p. 95). ‘‘Being one’s own boss’’ is also considered a very
acceptable way for Italians to discharge sistemazione – the cultural expectation
to set up one’s children economically (Baldassar, 1994). Prestige is another
influential driving force. Silverman (1975, p. 193) noted that the Italians he
observed were admired as much for having workers under them as they were
for earning more money[20].
Castellorizians add determination to the qualities they admire and present
the entrepreneur as a person who succeeds despite having undergone
significant trials and tribulations. Second generation Castellorizians most often
hold the strong and self-confident child minder grandmother responsible for
having transmitted the cultural patterns of Greek workplace behaviour, and
indoctrinating them with the notion that they would make it in business[21].
Correspondingly, Dutch informants characterise themselves as driven by the
Calvinist and Stoical values of discipline, sobriety, frugality, self-denial (for
future gain), parsimony, industry, obedience, self-possession, a sense of duty
and responsibility, and as ‘‘workaholics’’ and proud of it (Bagley, 1973: Schama,
1988, p. 125; Huggett, 1971). Astuteness and being prepared to put in long and
Immigrant
enterprise in
Western Australia
47
arduous hours is also considered integral to Chinese Vietnamese business
success, for only then has their hard work and effort received its appropriate
reward (Inglis, 1988). It is the way individual Chinese can maximise ties in
extended family systems and pay homage to their ancestors. Gold (1988, p. 417)
notes that the Soviet Jews, in particular Ukrainians from the port city of
Odessa, link their considerable entrepreneurial achievements to their ‘‘hustling
mentality’’. Huber (1977), Silverman (1975), Baldassar (1994, p. 95), Pitt-Rivers
(1954) and Schneider and Schneider (1976) observe that being furbi, that is
cunning/clever, is a highly regarded quality in Italian culture, and is considered
the most powerful incentive driving entrepreneurship throughout that region.
Light cites the high value placed by Scots traders on personal thrift – a trait
they imported from Scotland as an example of the psycho-logistic resources
which individual’s uphold that foster immigrant entrepreneurship (1984, p. 21).
Individual immigrant entrepreneurs tend to measure their success as
entrepreneurs in terms of their achievement of these traits. As Hall (1996, p. 2)
has explained:
... identification is constructed on the back of a recognition of some common or shared
characteristics with another person or group, or with an ideal, and with the natural closure of
solidarity and allegiance established on this foundation.
Edgar (1980, p. 146) notes that the values that one strives for are transmitted
through the lessons learned in the family, at school, at work and in everyday
interaction with others: ‘‘we are told what is valued in a [our] society or group
[or family]; and what cultural norms, ideas, and attitudes are seen as desirable’’.
His views gain support from Barth (1969, pp. 35-6), who notes that:
... beliefs and strategies involved in the exercise of choice and the making of decisions all rest
on personal evaluations and these choices are the translation of general ends or values of
group range into terms which are significant for the individual.
At the level of the individual where these ideals become a desirable goal they
are incorporated into ‘‘a character building’’ process.
Campbell’s (1991, p. 94) concept of ‘‘character’’ best explains how individuals
acquire entrepreneurial ‘‘traits’’. For Campbell, in contrast to personality, a term
that usually covers the sum total of an individual’s psychological and
behavioural characteristics, ‘‘character’’ is the name given to the entity that
individuals consciously strive to create out of the raw material of their
personhood:
... character covers only that portion of the conduct of individuals for which they can be
expected to take responsibility and is the entity imputed to underlay and explain the willed
aspect of behaviour. As such it has an essentially ethical quality not possessed by the concept
of personality. Although in some cultures there is a stress on the giveness of certain qualities
of character ... there is usually, in addition, clear recognition of the fact that individuals
themselves are responsible for making their own character and hence should be rewarded or
blamed accordingly. Given that individuals themselves usually share this view, it becomes
possible to regard their behaviour as governed by character considerations and especially as
a concern to bring their own conduct into line with an ideal (Campbell, 1991, pp. 92-5).
IJEBR
8,1/2
48
It is on the basis of this process, of taking on desired traits to achieve highly
valued cultural ideals, that the need to incorporate a human agency dimension
into the study of immigrant entrepreneurship is established[22].
These findings further illustrate the point that any comprehensive account
of an immigrant group’s entrepreneurial behaviour must bring together not
only the determinants of Kloosterman et al.’s (1999) ‘‘mixed embededness
model’’ – ‘‘ethnic resources’’, the ‘‘opportunity structures’’ and the host country’s
socio-cultural, economic and institutional context – but also the various types
of human agents. In this instance first and second generation and second wave
entrepreneurs located in their historical, socio-economic, cultural and ethnic
context consolidate these with broader contextual influences including the
receiving economy, urban processes and institutions, as outlined by the
‘‘structures of relevance’’ above. Only then can the meaning of the differences in
entrepreneurial style between individuals, immigrant groups and generations
be determined, and the move from employment to entrepreneurship, which the
individuals in this study came to consider as important and worthwhile,
become comprehensible.
Notes
1. The Small Business Development Corporation Fact Sheet (1999) defines a small businesses
as independently owned and operated; managed personally by the major investor and, if
non-manufacturing, employing less than 20 people and, if manufacturing, less than 100
persons.
2. The quotes in this article are derived from the author’s PhD, which was based on 255 oral
history interviews she conducted with Greek, Italian, Dutch and Vietnamese immigrants
between 1992 and 1999. The European groups were chosen because they have self-
employed profiles above the national average of the Indochinese, because Asian
immigration to Australia is becoming more prominent and their business behaviour is
even less understood than that of Europeans.
3. WA immigrants currently (1996) own nearly 40 per cent of the enterprises in the state’s
small businesses sector. If we were to add the second generation to this figure, immigrant
entrepreneurs would comprise the majority of small businesses in WA (Collins, 1989, p. 18).
4. Written in Dutch, they are unfortunately not accessible to everyone.
5. Unfortunately, apart from Boissevain and Grotenbreg, the books are only available in the
Dutch language.
6. The paper does not deal with gender issues except to state that the WA data showed that
the majority of immigrant women in the WA sample were in partnership with their spouse
or another family member, and less than 7 per cent were sole traders (Peters, 1999).
7. One of the main forces motivating the anti-immigration debate in Australia at this time,
and during much of the twentieth century, was the paranoid attitude of the union
movement towards ‘‘cheap’’ foreign workers. Over the course of the nineteenth century
many land owners in WA (particularly during the 1840s to 1960s) sought to import cheap
labour from China and India. It was hoped to use them to offset the high cost of ‘‘white’’
labour. Aboriginal labour was cheap but considered less robust than Asians. Among the
cane sugar growers in Queensland this was expressed in ‘‘blackbirding’’ with knackers (use
of South Sea Islander labour).
8. By 1981, 30 per cent of all fruit and vegetable stores, Australia wide, were Italian owned
and operated (Collins, 1989).
Immigrant
enterprise in
Western Australia
49
9. Castellorizians had for centuries traversed the entire Mediterranean, exchanging
primary products from the nearby ports of Asia Minor for foods and texti les from
Egypt an d furt her afield. Being t he o nly s afe ha rbour between Beirut and Makri, t he
island had exploited its position to develo p considerable small-scale trade (Price, 1963,
pp. 33-4).
10. Sponsorship, by relatives or friends already in Australia was their most prevalent mode of
emigration. This trend continued into the post-war period when only 40 per cent of Greeks
and 20 per cent Italians received government assistance (Yiannakis, 1996).
11. He gained knowledge of the English language from his co-ethnic peers and Australian
consumers.
12. Werbner’s ‘‘culture of entrepreneurship’’ echoes Schumpeter’s ‘‘swarm of entrepreneurs’’
(Swedberg, 1991, p. 41).
13. Beijer et al. (1961) noted that the desire to be self-employed was strongest among those
45 years and older, among whom nearly 75 per cent desired to be self-employed.
Moreover, they claimed the desire to be self-employed was strongest in prospective
Dutch emigrants, among whom personal ambition was uppermost. Beijer et al. (1961)
noted that among those who cited self-employment as the principal motive for
emigrating that 7 per cent had achieved this within two years and 30 per cent of these
had been self-employed in The Netherlands – although not always in the same
occupation. Around 37 per cent were in the building trades (carpenters, plasterers, brick
layers, painters); the others range from rag-and-bone-man to bee keepers (the sample
contained no agrarians) ( Beijer et al., 1961, p. 288).
14. It was necessary to rely on anecdotal evidence because Australian Bureau of Statistics
(ABS) Census data do not make such a distinction.
15. Erstwhile refugees – Chinese who were often twice migrants, having first moved from
China to Vietnam and later to Australia – were nevertheless extremely grateful to be given
the opportunity to utilize their many significant skills.
16. Starting a new life in a host environment is much more precarious for refugees than
economic immigrants because refugees are rarely able to plan for life in a new setting.
After a period of time in a migration reception centre most Vietnamese moved into cheap
housing in the inner city as successive waves of the Greeks and Italians had done before
them.
17. However, not all proprietors defined success in the same way some measured it in financial
terms others from the perspective of social capital.
18. I follow Palmer (1984, p. 99) and define the second generation as the sons or daughters of
an immigrant, born in the host country, or born overseas and educated and socialised in
the host country. The Australian-born do not appear on the cross-cultural statistical tables.
19. Palmer (1984) describes such entrepreneurs as ‘‘culture suppressed’’.
20. The importance of the possession of these ‘‘character traits’’ to the business success of
pioneer/initiators Luisini and Auguste is also made evident by their biographers
(Yiannakis, 1996; Strano, 1986).
21. The grandmother’s reward, ‘‘... was having grandson who becomes an entrepreneur or
scholar; a man whose activities stood as a source of pride and moral value’’ (Yiannakis,
1996, p. 196).
22. In my PhD thesis (Peters, 1999) I develop this concept of human agency further with
reference to Schutz and Luckmann’s (1979) ‘‘Experienced structures of relevance’’ because
of the structure associates a ‘‘human agent’s’’ options and choices, with the perceptions,
experiences, thoughts and actions an individual acquires from residing in and negotiations
with the significant others in their specific socio-cultural, economic and historospatial life
world (cited by Eriksen, 1997, pp. 250-1).
IJEBR
8,1/2
50
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Appendix
Categories relevant to immigrant enterprise in Western Australia
(1) First generation
.
Pre-Second World War: Greek and Italian pioneer/sojourners who initiated chain
migration from their homeland to Australia.
.
Post-Second World War: Greek, Italian, Dutch and Vietnam-born self-employed.
(2) Second wave migrants
.
The Italians and Greeks sponsored to Australia by the pioneers or first generation.
(3) Second generation
.
Pre-Second World War: the children of pioneer Greeks and Italians – born overseas
or in Australia.
.
Post-Second World War: the overseas or Australia-born children of post-war
Greeks, Italians, Dutch and Vietnamese immigrants.
(4) Ethnicity
IJEBR
8,1/2
54
International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
pp. 54-68. # MCB UP Limited,
1355-2554
DOI 10.1108/13552550210423714
Unbalanced embeddedness of
ethnic entrepreneurship
The Israeli Arab case
Izhak Schnell
Department of Geography, Tel-Aviv University, Israel, and
Michael Sofer
Department of Geography, Bar-Ilan University, Israel
Keywords Industry, Israel, Entrepreneurialism, Ethnic groups
Abstract Ethnic entrepreneurs’ networks are analysed on the basis of three complementary
dimensions: intensity and complexity of networks; power relations; and entrepreneurs’ horizons
of awareness. The analysis is based on two theoretical propositions. First, firms located in the
periphery are weakly embedded in national markets due to their external depended relations.
Second, local firms use the tendency to embed themselves in their home regions as a strategy to
improve their position in external power relations. The inquiry of Arab industry in Israel suggests
that the form and degree of embeddedness of any given firm is affected by the existence of both
separate economic milieus: Arab and Jewish. The findings lead us to suggest two concepts. First,
over-embeddedness, which characterises Arab firms that are highly embedded in the local milieu,
operate under the influence of kinship structures and a petrified supportive tissue that
downgrades networks into cohesive coalitions opposing structural changes. Second, under-
embeddedness, which characterises firms that manage to develop and maintain wide inter-ethnic
dependent sets of networks, but due to lack of power fail to transform them into more rewarding
exchanges.
Introduction
Arab industry in Israel may be viewed as a peculiar form of peripheral
industrialisation. It is peripheral in a number of ways: it is located in what is
perceived as the national periphery; it specialises in old industries; it shows
high dependence on local markets; and it had been integrated into the national
economy under subordinating conditions. Nevertheless, industrial
entrepreneurship is highly appreciated as an important means for economic
mobility, and a significant share of Arab entrepreneurs managed to break
ethnic barriers and access Jewish markets. About half of them even succeeded
in expanding into markets in the national core (Schnell et al., 1999). However,
only a few entrepreneurs have succeeded in translating their social networks
into improved competitiveness in the market.
A key issue in the study of local economic development is the degree to
which firms and their networks are embedded in wider socially and politically
structured milieus (Curran and Blackburn, 1994). In this context, particular
attention should be devoted to minorities’ need to insert themselves in two
different separate milieus – intra- and inter-ethnic ones. Despite the challenges
This article is part of a special issue of papers entitled ‘‘The economic context, embeddedness
and immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
The
Israeli Arab
case
55
and barriers that each milieu may cause, entrepreneurs’ success in being
embedded in both milieus and developing wide business linkages and
networks is crucial for their integration into the economy as well as society
(Aldrich and Waldinger 1990; Barrett et al., 1996). Arab entrepreneurs in Israel
may demonstrate a typical case by facing both – the wider Israeli capitalist
economy, largely dominated by the Jewish sector, and their own socio-economic
system. This means that they have to face each sector’s value and norm
system, which underlies the business culture and power relations – the power
of firms to determine exchange relations.
This article aims to propose an analytical framework for the explication of
the degree and form of embeddedness of a marginal minority group operating in
the periphery. Based on the experience of Israeli Arab entrepreneurs, we discuss
some of the difficulties that minority entrepreneurs encounter in their attempts
to break barriers of peripherality and ethnicity and to participate in both
minority and majority business cultures, politics and information networks. We
thus offer the use of two new concepts concerning embeddedness. The first
concept, ‘‘over-embeddedness’’, characterises those entrepreneurs whose
commitments to the local community and to kinship groups prevent them from
exploiting opportunities in the external markets. The second concept, ‘‘under-
embeddedness’’, characterises those entrepreneurs who fail to exploit their
external complex networks into an economic advantage in the markets.
The data used here were collected from three primary sources: open
interviews with 70 Arab industrial entrepreneurs performed between 1993 and
1996; a questionnaire addressed to the heads or secretaries of Arab local
councils; and a questionnaire addressed to the owners and managers of 514
industrial plants in 35 Arab settlements performed in 1992. An industrial plant
was defined as a production unit with at least three workers. The
comprehensive questionnaire included items relating to all components of
production, sources of labour and capital, marketing and purchasing of inputs.
These sources enabled the gathering of information on industrial networks,
strategies of survival, estimated barriers for growth and views regarding the
future of their enterprises.
The paper is organised in five sections. It begins with a short description of
Arab industry in Israel, followed by a review of the theoretical issues concerning
the analysis of embeddedness within the framework of ethnic relations. The
third section focuses on the pattern of Arab enterprises’ networks. Sections four
and five demonstrate situations of over- and under-embeddedness.
Characteristics of Arab industrial production
It took 50 years and three restructuring stages for Arab industry to achieve its
current state of development. Three major mechanisms influenced these
restructuring phases: majority-minority relations, core-periphery relations, and
selective government policies (Sofer and Schnell, 2000). The result of the
integrated operation of these mechanisms has affected the form of Arab
industrialisation, including branch selection, plant formation and
IJEBR
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entrepreneurial style. On its development path, a strategy of growth from
below was adopted, expressed by a rapid rate of growth in the number of new
plants, particularly in the food, construction and textiles industry, coupled with
the adoption of new styles of entrepreneurship. In each stage entrepreneurs
expanded into new frontiers although they failed to expand into the privileged
sectors of the economy (Khamaisi, 1984; Falah, 1993; Schnell et al., 1999; Sofer
and Schnell, 2000).
Data gathered in the early 1990s have shown that industry has spread
among the 60 settlements that represent the majority of those Arab settlements
boasting a population of over 5,000. Compared with the 1980s, plants
employing three or more workers doubled in number, reaching more than 900
(Schnell et al., 1995), with the size of the industrial workforce employed in Arab
settlements growing to about 12,000 (Atrash, 1992). National figures indicate
that in the 1990s Arab-owned enterprises represented nearly 6 percent of all
Israeli plants employing five or more workers (Central Bureau of Statistics,
1992).
The pattern of branch specialisation by labour force appears in Table I. It
emphasises the dominance of old industries, which are labour intensive and
which show high profitability by unit of investment and by unit of production.
About 43 per cent of the enterprises are made of small household production
and subcontracting activities. In 1992, the average number of employees per
plant was about 15, a high percentage of whom were women, employed
primarily in sewing shops. Despite the increase in their mobility, most women
work in the settlement in which they reside (Atrash, 1992). Almost two-thirds
of the plants are located in residential areas, especially on the ground floor of
the owner’s home or in rented residential buildings. Where an industrial area is
available, it is of inferior quality and lacking an appropriate physical
infrastructure (Sofer et al., 1996). The labour force usually lack formal training,
Table I.
Branch specialisation
index of the labour
force in plants with
three employees or
more, 1992
Per cent
Specialised branches
Textiles and clothing 4.2
Construction materials 3.7
Woodworking 1.5
Marginal branches
Food and beverages 0.4
Metal products 0.2
Paper and printing 0.2
Rubber and plastics 0.2
Electronics and electricity 0.002
Notes: The figures for Israeli industry are from 1989, those for Arab industry from 1992.
Specialisation index is the rate of employee distribution by branch in the Arab sector, as
compared with the branch distribution in Israeli industry as a whole
Sources: Schnell et al. (1995)
The
Israeli Arab
case
57
and most of the workers’ training is done on the shop floor. For most
entrepreneurs, personal savings are the most common source of initial capital
investment, while other family members are also an important source. The
most common type of ownership is individual or family (83 per cent), where
several brothers own and manage a plant.
Firms and their embedded networks
The synthesis of material that has been published in recent years on the
complex relations between firms and their embedded networks shows that the
study of industrial geography is increasingly concerned with the socio-spatial
organisation of industrial firms and their networks (Barnes and Gertler, 1999;
Yeung, 2000). To wit, firms’ competitiveness and growth, and the resulting
regional growth, requires firms’ embeddedness in concrete ongoing (local,
regional and/or national) systems of social relations (Grabher, 1993). Networks
may be seen as both a governance mode and a process of socialisation through
which different actors and institutions perform exchange relations, which are
connected in a coherent manner for mutual benefit (Hakansson and Johanson,
1993; Yeung, 2000). In this context there exists a variety of networks of which
the major ones are marketing and suppliers, information and innovations
networks, and production networks based on labour and capital recruitment.
These networks can be formal as well as informal (Malecki and Tootle, 1996),
based on resource sharing (Perry and Goldfinch, 1996) as well as on
decentralised learning and knowledge (Maskell and Malmberg, 1999). They are,
however, often embedded in communities and localities with strong (formal
and informal) institutional legacies and linkages (Waldinger, 1995; Grabher
and Stark, 1997; Perry, 1999).
In several studies the intensity and the dynamic of inter-firm linkages and
networks are treated as indicators for economic growth (Grabher, 1993; Taylor,
1995; Oinas, 1999), while external networks have a particularly decisive impact
on small plants’ growth chances (Kay, 1993; Hardill et al., 1995). The key issue
in these investigations is the degree to which firms are embedded in various
markets through their relationships with competitors, suppliers, business
organisations and public decision-making forums, as well as with members of
their community (Best, 1990; Harrison, 1992; Lakshmanan and Okumura, 1995).
Generally speaking, embeddedness tends to refer to the three perspectives of
cultural, socially structured and institutional milieus in which entrepreneurs
perform as economic agents. From the cultural perspective, embeddedness may
be viewed as processes in which agents acquire customs, habits, or norms in an
unerring way that unintentionally determine their decisions and behaviours,
and structure of awareness to their relevant milieus. From the structural
perspective, embedded networks may be characterised by agents’
connectedness, reciprocity, interdependence, autonomy, and power relations in
terms of control over both economic and social relations (Grabher, 1993; Portes
and Sensenbrenner, 1993). Embeddedness, from the institutional perspective,
relates to agents’ accessibility to education and training institutions, incubation
IJEBR
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and innovation centres, market organisations, business associations, and
business practices which regulate particular markets (Todtling, 1994;
Kloosterman et al., 1999).
Networks of small firms, economic and non-economic linkages, may be
divided into two main types (Curran and Blackburn, 1994; Bennett, 1998): those
related to the firm such as membership of local chambers of commerce, trade
associations, and so on; and those not related to the business directly but which
reflect embedded relations such as owners’ social relations, political party
membership, leisure activities, and friendship and family relations. These
linkages are seen as indicators of the level of integration into the economy and
of the small firm’s embeddedness. Looking from another angle, Uzzi (1996, pp.
693-4) suggests that ‘‘the network acts as a social boundary of demarcation
around opportunities that are assembled from the embedded ties that define
membership and enrich the network’’. In this context the type of ties used by
the entrepreneur to be linked to the network’s partners dictate the firm level of
embeddedness.
Talmud and Yanovitzky (1998) offer a specific model for the analysis of a
firm’s embeddedness. In line with Grabher (1993) and Oinas (1999), they
analyse networks within cultural and power fields. Networks, according to
them, should be analysed less in terms of number of links and intersections and
more in terms of power relations and horizons of the players’ awareness.
Moreover, embeddedness is related to different sectors of society, such as
political and economic e´lite and institutions, and structure of market networks.
Politically, evidence shows that firms closely attached to political centres better
succeed in appropriating benefits for their operation and developing greater
autonomy in their relations with governments (Talmud and Mesch, 1997).
Market autonomy may be achieved by maximising information flow about
market opportunities and conditions, as well as by developing reciprocal
relations rather than dependency relations (Burt, 1992).
Regarding ethnic entrepreneurs, when they try to escape their limited ethnic
enclave economy they are forced to keep their links with their ethnic milieu and
at the same time establish links with the majority milieu. Only by
understanding entrepreneurs’ need to operate in and out of their own milieu
may embeddedness, encompass its original meaning, concerning the interplay
among economic, social and institutional contexts of ethnic entrepreneurship
(Kloosterman et al., 1999).
The case of Israeli Arab ethnic minority requires the recognition that there
are deep cultural, economic and political gaps between the Jewish and the Arab
milieus. Arabs are economically, politically and culturally marginalised (Falah,
1993; Haidar, 1993) in an economy that is highly politicised. Entrepreneurs may
frequently act as a Yanus goddess while turning their faces toward the two
different milieus. This form of mixed embeddedness means that in each milieu
they are required to link themselves to the market players as well as to the
economic and political e´lite and institutions (Figure 1). Entrepreneurs operating
in the Arab milieu are highly dependent on kinship relations in recruiting
The
Israeli Arab
case
59
resources and developing markets. They use personal contacts with local
political and economic e´lite to support their operations. Encapsulation in intra-
ethnic markets is used as a survival mechanism resulting in a situation where a
large number of small enterprises compete in the limited local markets.
Regarding the Jewish milieu, the challenge of overcoming political, social and
cultural barriers is crucial for Arab entrepreneurs. Breaking these barriers may
enable them to penetrate the larger markets, to get a long-standing grasp on
these markets and to avoid dependency relations. The most severe barrier is
the power exerted by large corporations which dominate the markets.
Entrepreneurs’ embeddedness within such milieus (Figure 1), may be
measured in terms of the complexity and intensity of networks, power relations
and horizons of awareness (or the ability to accommodate themselves) to the
codes of the two business cultures, opportunities and risks. This system has
experienced a number of restructuring processes by which types of
entrepreneurship and institutions were transformed. Within such a process the
Arab entrepreneur has been required to counterbalance his embeddedness in
each milieu. Our argument is than that well-balanced embeddedness means
mutual and integrated co-ordination of the three dimensions (networks
complexity and intensity, power relations and horizons of awareness), while
lagging behind in one of them may lead to an unbalanced embeddedness. The
Figure 1.
A general model of
mixed embeddedness
IJEBR
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60
dilemma is: what is the embeddedness level required by any firm in order to
survive?
Two concepts that may identify imbalances in entrepreneurs’ embeddedness
are offered here. First, ‘‘over-embeddedness’’, defined here as a case when
entrepreneurs manoeuvred their kinship and community systems to support
their entrepreneurship, and the resulting commitment, which impedes them
from participating in inter-ethnic markets. Second, ‘‘under-embeddedness’’,
defined as entrepreneurs’ success in developing intensive and complex inter-
ethnic networks, while failing to gain adequate evaluation capabilities of
relevant business opportunities and enough power to translate the complex
networks into economic growth and development. Not being able to find the
proper balance, entrepreneurs may be entangled and locked in the local ethnic
networks, thus being pushed to a state of over-embeddedness. Likewise, they
can be forced to compete in the inter-ethnic markets where they may face an
uneven status and be trapped in dependency relations, which means operating
in an environment of under-embeddedness.
Firms and networks in the Arab sector
The pattern of embeddedness of Arab enterprises is studied here through the
analysis of firms’ business networks, leaving the analysis of the other two
dimensions of embeddedness (power and horizon of awareness) to the following
sections. Arab industries demonstrate high dependency on inputs supplied by
firms based in the national core (Schnell et al., 1995). The Arab economy supplies
less than one-quarter of the raw materials, leaving most of the profit chain
derived from the production cycle to the Jewish sector. Regarding sales, although
close to two-thirds of the sales are directed mainly to the Arab regions, it seems
that for most regions 30 to 40 per cent of sales are aimed at Jewish markets.
Purchasing and sales links were subdivided into meaningful sub-markets,
based on major prevailing structural barriers in the Israeli space economy:
ethnicity; marginality and regional scale (Schnell et al., 1999). There are five
main sub-markets: intra-settlement; Arab home region; neighbouring Jewish
region; national core; and Arab inter-regional markets. Most enterprises tend to
sell to two or three markets, with 13 per cent selling to four and five markets
(Table II). All the textile enterprises, and close to one-third of all other plants
Table II.
Percentage of Arab
owned plants by
number of markets and
type of barriers
Percentage overcoming barrier
No. of markets Percentage plants Ethnicity Peripherality
1 17 33 (98) 0 (93)
2353424
3359248
4+ 13 100 48
All markets 100 71 48
Note: The table refers to all 514 Arab owned plants surveyed, the number in brackets is the
percentage for textiles enterprises only
The
Israeli Arab
case
61
which sell only to one market, chose the more rewarding but risky Jewish
market, and more than one-third of those that sell to two markets sell to at least
one Jewish market. Almost all enterprises that sell to more than two markets
sell also to Jewish markets. This means that ethnic barriers are frequently
overcome, as many of the entrepreneurs confirmed in the open interviews.
Another example of dependency on suppliers is the information network.
About 60 per cent of the entrepreneurs receive information about technological
innovations from suppliers. Professional journals and other publications are
the second most important source (Sharkia, 1996).
Recruiting employees is mainly based on the local network. The home
settlement is the main provider of labour force, with about one-third from the
employer’s clan (hamula). Members of the extended family may serve as
managers and clerks, while the majority of manual workers are from other local
families. Jewish employees form less than 1 per cent of the labour force in Arab
enterprises, mainly in specific and qualified jobs such as engineers and sales
managers.
Altogether, the sale linkages of Arab entrepreneurs are wide and complex,
while all other linkages with other aspects of the networking process are
relatively limited. Yet, particular main issues should be clarified. Do they
manage to achieve reciprocal power relations in the business milieu they
operate in? Do they manage to achieve better access to information flows,
evaluation capabilities and other aspects of both business cultures they operate
in? We now discuss entrepreneurs’ positions within their networks.
The Arab milieu and the over-embedded firm
Over-embeddedness characterises some Arab firms that are highly embedded
in the local milieu, and operate under the influence of kinship structures and a
petrified supportive tissue that downgrades networks into cohesive coalitions,
opposing radical innovations and even minor changes. The business culture
adopted by firms’ owners impedes possibilities for integration in the larger
market economy. Many Arab entrepreneurs have experienced the condition of
over-embeddedness within the Arab milieu. Since most of them opened their
businesses with intensive support of the extended family and the home
community, they feel indebted to their supporters once they have succeeded.
The story of the owner of a concrete block factory, who complained about his
two brothers, may demonstrate the dilemma:
It’s bad because I can’t give instructions to my brothers freely. I have to consult with them
and accept all their crazy ideas. I also can’t fire a brother or reprimand him. It’s a serious
problem for the work in the factory. I’d rather work with managers from outside the family. I
could demand from them what I think should be done and could fire them if they weren’t
good.
It seems that this example describes the situation of many Arab entrepreneurs
who feel obliged to support their relatives. It is a reciprocal support for
relatives’ contribution to the initial investment, for allocating space for the
IJEBR
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plant, and for moral support. Moreover, in some cases it is wider support as
entrepreneurs can rely on the clan as a guaranteed market.
The close embrace of the family and the community means less freedom for
a change in plant location. Being located in the residential area means
restriction on the possibility for business expansion due to the fact that space is
limited and the local infrastructure is inadequate. The will to move out to
industrial zones is very limited by the fact that these rarely exist in Arab
towns. The following example demonstrates the problem of over-
embeddedness:
In order to expand I had to move to an industrial area. My place was too small for the plant.
We have an industrial area, but with no infrastructure. There is no sewage, road, and
electricity, not mentioning a building. To build all of it on my own is too expensive for me. So
I decided to check the possibility of leaving to the industrial zone of the Jewish neighbouring
town. The extra expenses for renting the place, the permit and so on, were so high that paying
them would have forced me to sell at higher prices. This experience made me afraid that
another small enterprise could be established in the entrepreneur’s family home in our town,
stealing from me my local clients before I would gain even one new client outside my home
town.
The obligation and indebtedness to extended family and clan matters, and the
expense of recruiting professional skilled labour is a sort of limitation on the
firm efficiency. In other words, it is also a form of restriction on the horizons of
awareness of the entrepreneur and the economic potential. The next example
emphasises the role of the extended family in managing the enterprise and in
limiting access to other labour sources:
I am the eldest. Two brothers work with me and three sisters sew. I am the manager but much
of my time I search for customers. One brother manages the production line and the other the
books. My sister learns how to use the computer. Each of us can cover the responsibility of
the other brothers, a situation that gives us a lot of flexibility. As you see, the factory is a
family project and its success is the success of the whole family.
The limitation on the horizons of awareness is also related to the absence of
risk reducing mechanisms, which prompted the extended family to become the
main source of entrepreneurial support. At the same time the family made
demands on successful entrepreneurs that prohibit them from further economic
growth. The same complaints may be heard from an owner of an enterprise:
It turned [out] to be a big obstacle to work with my brothers. I have to consult them, to accept
ideas that I know are harmful for the business and I cannot fire them. I owe them so much and
any problem at work becomes immediately a family issue. From time to time one of my
brothers needs some money urgently for a wedding, school or any other purpose and it forces
us to hold further development. I feel that the partnership with my brothers enabled the
establishment of the enterprise in the beginning, but it prohibits further development today
when we are in a new era in which each family looks for itself.
Another aspect of over-embeddedness, which is related to entrepreneurs’
horizons of awareness, is concerned with the situation of a mixed milieu –
operating in both the Arab and the Jewish milieus. An older entrepreneur told us:
The
Israeli Arab
case
63
Jews refuse to buy concrete blocks from me because I am an Arab. They discriminate against
me because they prefer to provide work for Jews. My blocks are significantly cheaper and
their quality is higher than the regular standard. Still I don’t get any Jewish customers.
(Question: We do not see any quality control signature on your product, don’t you think that
this is necessary in order to attract Jewish customers?) Answer: Everybody in the town
knows me and knows the quality of my product. I don’t have to pay 10,000 Shekel for the
quality control approval seal and Jews will never trust me anyway because I am an Arab.
Entrepreneurs are establishing themselves as an Arab economic e´lite that gains
the support of the community at large, which capture the imagination of many
frustrated youngsters who view entrepreneurship as a major route for mobility
within Israeli society. Over-embeddedness then is articulated in the dominance
of an intra-ethnic pattern of business networks, the power that entrepreneurs
gain in their intra-ethnic milieu with respect to their weakness in inter-ethnic
milieus (as will be demonstrated in the next section), and barriers imposed on
entrepreneurs’ horizons of awareness. The advantages that Arab entrepreneurs
gain in their intra-ethnic milieu encourage them to play according to the
informal norms of conduct required in this specific reality, and to enjoy
entrepreneurs’ independence even when channelled to a state of low
profitability, typical of local markets. The preservation of this pattern reduces
their chances of competing in the more rewarding markets of the Jewish milieu,
where they should play according to different rules. Many of them prefer not to
take the necessary risks and retain only their intra-ethnic networks.
The over-embedded entrepreneur tends to remain contained in the safe and
supporting milieu of his intra-ethnic stronghold. The use of over-embedded
strategy may be initiated voluntarily by Arab entrepreneurs as a result of
various entrepreneurial motivations, like political motivation to develop an
autonomous economy. On the other hand, the use of over-embedded strategy
may be viewed as a survival strategy adopted when barriers of ethnicity and
peripherality are unbreakable. The persistence of such strategy may
strengthen traditional institutions, and may result in the enlargement of the
gap, in terms of economic behaviour, between both milieus. The repercussion of
this is the entrepreneur’s decreasing prospect of penetrating and merging into
inter-ethnic markets.
The larger Israeli milieu and the under-embedded firm
Under-embeddedness characterises some firms located in the periphery that
manage to develop and maintain a wide though externally dependent set of
networks. The owners of these firms are open to the erosion of the local
supportive tissue of social practices and institutions, but did not manage to
penetrate the highly rewarding markets. When they manage to get access into
the wider markets they locate themselves within the network under conditions
of dependency, where the firms and entrepreneurs on the other side of the
network dictate the terms of exchange, leaving them with low profitability.
Under-embeddedness is manifested in the context of inter-ethnic networks. It
was shown in Table II that a significant number of Arab enterprises have a
certain degree of access (in many cases only limited access) to Jewish markets,
IJEBR
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including the national core, through their sale linkages. These findings may
lead to the conclusion that some Arab enterprises have developed intensive and
complex networks with various segments of the national economy, including
the relatively more privileged sectors. Nevertheless, Arab entrepreneurs fail to
overcome their marginal position within the Israeli economic space. What thus
can explain the discrepancy between relatively complex networks and the lack
of economic growth? Our argument is that this failure is the results of the
subordinate position Arab entrepreneurs occupy in the (non-local) external
markets. Their power position within the business networks is weak, a
discrepancy which is the setting for the formation of conditions for under-
embedded entrepreneurship.
The type of linkages formed between Arab entrepreneurs and Jewish
markets can be illustrated by the food industry. This industry combines
modern technology with traditional methods of production. Traditional know-
how learnt from the ‘‘grandmother’’ is transformed into a modern production
line. Such entrepreneurs, as shown below, base themselves on local networks
and markets, but they search also inter-ethnic (relatively random and simple)
networks without taking great risks.
The idea to open a cheese factory crossed my mind when my grandfather told me how
grandma had made great cheese from sheep’s milk. I used her recipe and I started to sell to
people in the town. After a while I bought machines and I bought milk from other farmers in
the village in order to increase production. We sell in most of the Arab settlements in the
region and we have even Jewish customers. They come on Saturdays to buy in the shops in
our town and we sell to them directly from the plant. Once a week I go to Tel Aviv to buy
some raw materials so I sell cheese to some stores at the market. On my way home I also sell
to a store in Nataniya.
The issue of power relations inside the networks is exemplified by some
construction enterprises, which were able to take advantage of changes in the
Jewish market, but they are very much dependent on Jewish expertise and
know-how concerning access to markets. In the late 1970s and during the
1980s, the government promoted a self-construction housing policy, hoping to
enable the able segments of the ‘‘new towns’’ and rural population to build new
private houses and to remain in the peripheral regions of the country. Builders
were ready to hire Arab construction contractors and to purchase construction
material from Arab plants in their regions. Moreover, in the 1990s the large
expansion of the construction industry as a result of the massive immigration
from the former Soviet Union created shortages in construction materials.
These events opened opportunities for Arab construction plants in the Jewish
sector, which have been efficiently used for some time. The dependency
conditions are illustrated here:
Take the Sa’ida family from Peqi’in. They were small-scale producers of concrete blocks and
building materials. When they started to grow, they hired a Jewish economist. He helped
them, and today they deal in millions. All the settlements in the area work with them, even the
Jewish ones. You have no choice. If you want to grow, you have to be modern. Small family
businesses are okay, but you can’t drive a Mercedes 300 based on them. Among us there still
The
Israeli Arab
case
65
aren’t many with expertise in financing and banks, and we really feel the lack. So meanwhile,
anyone who starts to grow has to hire a Jew.
The dependency relations are mostly emphasised in the case of entrepreneurs
operating in the textiles industry as subcontractors for Jewish mother
corporations. A high level of dependency on the mother corporation and Jewish
customers means lack of power to create a degree of autonomy in the market.
The following example may demonstrate some of the problems that such
enterprises confront:
When our plant gained the trust of our mother corporation we received a loan from them to
buy sewing machines and we grew fast. I sent one brother to study machine engineering, my
other brother to study management. The rest of the family accumulated 50,000 Shekel to help
me. We received the support of workers from my extended family that manages women from
the occupied territories. We are highly reliable producers and we gained a very good
reputation everywhere. Now I plan to produce on my own and to sell to stores. I have to do it
because I have only extremely marginal profit as a sub-contractor. I need more income to be
able to help my family who have helped me.
It seems that entrepreneurs operating in the textiles and clothing branch were
not able to make it independently. Staying in their home settlements means
that they continue to be cut off from necessary information which could assist
in the evaluation of financial and market possibilities. Alternatively, locating in
Tel Aviv, searching for customers, attempting to follow leading enterprises and
new trends in fashion meant loosing control over their production lines and
even facing sanctions from their mother corporations. This dilemma stresses
difficulties in expanding Arab entrepreneurs’ horizons of awareness into the
Jewish milieu, which makes it extremely hard (to a certain degree) for them to
develop evaluation capabilities.
Earlier findings suggest that lack of developed industrial areas, investment
capital and government subsidies, equivalent to those given to neighbouring
development towns, are the three major barriers to enterprise development
(Schnell et al., 1995). Yet, the in-depth interviews with a sample group of
entrepreneurs shed light on the fact that Arab entrepreneurs have failed to
embed themselves in the inter-ethnic milieu. Those who were willing to make
any necessary effort to break these barriers even succeeded in exploiting
marginal niches in Jewish markets, but they fail to expand into the more
rewarding markets. Failure to determine sale conditions, inferior position in the
networks, dependency on mother plants and limited horizons of awareness
leave them with low profitability and a low rate of growth.
Final remarks
Our study demonstrates several examples of discrepancies among the three
complementary dimensions of ethnic entrepreneurs’ networks: intensity and
complexity of networks; power relations; and horizons of awareness. We
realised that vertical networks are kept under dependency relations. Moreover,
entrepreneurs are cutting down on the number of links as a compromise with
the larger corporations with which they want to trade. The most prominent
IJEBR
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66
examples show that inter-ethnic networks do not give ethnic entrepreneurs
instantaneous advantage unless they learn to operate outside their business
culture, and unless they develop some business autonomy that may enable
them to improve their bargaining position in the market. In addition, Arab
entrepreneurs are rarely members of business organisations and hardly make
use of support programs offered by government agencies. They do not have
faith in their ability to adapt to government program prerequisites. Moreover,
their experience shows a clear absence of links with the national economic and
political e´lite, as well as with Jewish competitors.
Competition with large corporations has been identified as the hardest
obstacle for embeddedness in the inter-ethnic milieu. Entrepreneurs are willing
to take risks and to expand into new markets, but they find it difficult to obtain
high profit and growth multipliers. The following example of a bakery from the
township of Daburya shows a form of compromise achieved between this
bakery and a larger, Jewish owned bakery.
In an attempt to grow I started to convince Jewish food stores in the region to buy from me the
Arab bread (pitta). I promised store owners to bring them fresh pittas twice a day and I sold
them a little bit cheaper. For a while my business grew rapidly and it was a great success. I
even started to plan the expansion of the bakery in an industrial zone, but than the problems
started. The bread bakery, which has a monopoly standing on standard bread, put pressure
on the stores not to buy the pitta from me. It was hard to compete with Oranim (owned by a
kibbutz near Nazareth) because the bakery forced its customers to buy its pitta if they wanted
to buy its bread. Since our pitta is better, we had to buy bread in Haifa and supply our
customers with both pitta and bread in order to fight Oranim’s monopoly. Then Oranim
proposed an agreement: they would supply the bread and we would supply the pitta. There’s
still competition and some hitting below the belt. Oranim gets tax exemptions and subsidies,
so they can give the buyers discounts. Here we don’t get subsidies; it’s not a development
area. I managed to compete because of my personal approach to the customers and because
my product is better than the others. I supply on time, in the amount required, and on credit.
However, I was forced to compromise with them and to distribute the pitta through them,
sharing with them part of my profit.
This bakery succeeded in overcoming barriers of ethnicity and peripherality,
and managed to use the proper tactic and find the appropriate conditions for an
acceptable mixed-embeddedness. This compromise may present a more even
form of embeddedness. However, the entrepreneur had to come to terms with
conditions of lower profitability, which may mean a failure to escape
marginality.
Our last remark is related to policies. It could be said that Arab
entrepreneurs may somewhat improve their awareness of opportunities in the
Jewish markets by adapting to Jewish business culture, but they have little
chance to improve their power relations with national corporations without
public support. Since the restructuring of an intra-ethnic informal business
culture is a response to powerlessness in inter-ethnic networks, it seems that
Arab entrepreneurs are caught in a vicious circle of marginalisation. Managers
of Jewish corporations who tried to initiate partnerships with Arab
entrepreneurs insisted that they have failed because of their inability to get
used to informal forms of management. It is therefore obvious that there is an
The
Israeli Arab
case
67
urgent need to initiate special programs for the integration of Arab enterprises
into the national economy, an integration that may also serve as an appropriate
mechanism for socio-political integration. The absence of such programs may
halt Arab entrepreneurs from a proper and balanced integration into the wider
Israeli economic milieu, and may lead them to a retreat into entrenched over-
embeddedness within their Arab intra-ethnic milieu.
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Dutch immigrant
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International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
pp. 69-92. # MCB UP Limited,
1355-2554
DOI 10.1108/13552550210423732
How innovative are Dutch
immigrant entrepreneurs?
Constructing a framework of assessment
Ewald Engelen
Department of Philosophy, Faculty of Humanities,
University of Amsterdam, The Netherlands
Keywords Innovation, Immigrants, Entrepreneurialism, Start-ups, The Netherlands
Abstract Asks how innovative Dutch immigrant entrepreneurs are. Since the mid-1980s the
number of immigrant firms has more than tripled. This coincides with a huge increase in the
number of start-ups in the Dutch economy as a whole. However, international comparisons show
that this increase has not resulted in an equal rise in the number of fast growing firms that add
value and create employment – the so-called gazelles – and are hence the preferred ideal of policy
makers. This raises the question of how innovative the Dutch economy might be. To address this
issue, constructs a framework of assessment, derived from the divergent capitalisms approach of
Richard Whitley and associates, as this approach offers a useful conceptual instrument to do so.
Concludes that, despite appearances, the Dutch institutional setting is not very conducive for value
creating innovations, but instead seduces firms, especially small and medium enterprises, to
follow reactive strategies. Offers some general remarks on how the conditions for innovation can
be improved.
Introduction
‘‘Creativity is the sine qua non for economic success, and becoming an
entrepreneur is the creative act par excellence’’, thus read the slogan of a
congress for aspiring entrepreneurs, that was held recently in the Amsterdam
Rai Conference centre, aiming to help them overcome the administrative,
mental, financial and institutional thresholds to economic success. As its title
‘‘Breaking out’’ suggests, its primary target group was the diverse and diffuse
category of starters who have, as yet, failed to turn themselves into those
innovative, fast-growing firms called gazelles that add value and create work –
and are the much-heralded heroes of the Organisation for Economic
Co-operation and Development (OECD) Jobs Strategy (OECD, 1998).
This is increasingly seen as the main weakness of the Dutch economy, as the
relative lack of new start-ups – which characterised not only the Dutch
economy but all advanced economies, even the North American (Piore and
Sabel, 1984; Sabel and Zeitlin, 1985; Bechhofer and Elliott, 1985; Steinmetz and
Wright, 1989) – has now been solved. Starting from a low of 30,000 start-ups in
the late 1980s, the number has doubled to well over 60,000 in the late 1990s
(OECD, 1998, pp. 170-1). However, this has not resulted in a comparable rise in
the number of gazelles. A recent benchmark study of the European employers’
Thanks are due to Robert Kloosterman for constructive comments.
This article is part of a special issue of papers entitled ‘‘The economic context, embeddedness
and immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
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federation, UNICE, shows that the number of fast-growing firms among
medium-sized enterprises (i.e. firms with less than 100 employees) in The
Netherlands is only 6 per cent, whereas in the USA it is 25 per cent. A
comparable small and open economy like the Danish one has more than twice
as many gazelles. Moreover, on the list of Europe’s fastest growing firms are
only 11 Dutch, against 16 Danish and 16 Swedish firms (EZ, 1999, p. 47). The
same pattern can be traced in the composition of immigrant firms. Here too, a
rapid increase in the number of start-ups from the early 1990s onward is
visible, especially among Turkish immigrants (see Table I).
Despite a declining failure rate – from 28 per cent in 1993 to 17 per cent in
2000 – and a hesitant but unmistakable tendency toward diversification,
especially in personal and producer services (see Kloosterman, 2001; Van der
Leun and Rusinovic, 2001; Van den Tillaart and Poutsma, 1998, 2001),
immigrant entrepreneurs are still overrepresented in the cleaning, retail and
restaurant trades, as they tend to copy the entrepreneurial strategies of their
compatriots. Consequently, immigrant entrepreneurs are overwhelmingly
active in markets that have a low or limited growth potential and are easily
accessible for newcomers (Kloosterman and Rath, 2000), implying that their
existence as entrepreneurs is relatively precarious due to crowding effects. This
is reflected in a failure rate that is still significantly higher than among non-
immigrant entrepreneurs – 17 to 14 per cent, respectively – low profitability,
long working days and weeks, and a high degree of informality, ranging from
the relatively innocent (e.g. dodging taxes, social premiums and workplace
regulations, for example), to down-and-out illegal activities (e.g. hiring illegal
workers, selling illegal goods). Hence, it is uncertain whether the quantitative
success of self-employment as an avenue of economic incorporation can
withstand the more adverse economic climate that appears to be on the horizon.
In other words, is the rise of immigrant firms conjunctural or structural? Is it
temporary or is it here to stay?
In this paper, I will address that question by first focusing on different
conceptions of innovation, and second by analysing the relationship between
different patterns of innovation and their institutional contexts. The aim is to
construct a framework of assessment. Finally, I end on a more practical tone,
asking how this relates to the Dutch case. How should one characterise and
assess the Dutch innovation system? Is there a tendency in Dutch policies to
Table I.
Immigrant
entrepreneurs
(percentage)
1986/1987 1992 1997
Turks 4.4 7.8 12.2
Moroccans 3.3 5 5.9
Surinamese 2 4.5 5.4
Antillians 2.9 4.6 6.3
Dutch 8 8.9 10.1
Source: Van den Tillaart and Poutsma (1998, p. 40)
Dutch immigrant
entrepreneurs
71
steer migrants into low value-added activities, as the figures seem to suggest?
Is this a bad or a good thing and, if the former, what can be done about it?
Innovation
In the classic second chapter of his Theory of Economic Development (1934),
headed: ‘‘Entrepreneurship and innovation’’, Schumpeter distinguished
between different innovative strategies. Entrepreneurs can either introduce ‘‘a
new good’’ or ‘‘a new method of production’’, they can open up ‘‘a new market’’,
they can exploit a ‘‘new source of supply of raw materials’’ or they can
reorganise industry ‘‘like the creation of a monopoly position or the breaking-
up of a monopoly position’’ (Schumpeter, 1934). According to the early
Schumpeter, innovation boils down to ‘‘new combinations [of] materials and
forces’’ and is equivalent to economic development. It is the maverick
entrepreneur who functions as the carrier of the process of ‘‘creative
destruction’’, setting new standards of efficiency and market success, forcing
competitors to ‘‘stand or deliver’’. In his later work, especially Capitalism,
Socialism, and Democracy (1942), Schumpeter bemoans the disappearance of
the classic entrepreneur and sketches the first outlines of a managerial
capitalism. This replaces entrepreneurial capitalism, where innovation has
become the exclusive prerogative of a quasi-autonomous research and
development department, populated by highly specialised scientists and
modelled on the academic research laboratory (Schumpeter, 1942; Swedberg,
1991).
Recently this linear conception of innovation has come under increasing
attack for being too cognitivistic, too hierarchical, too deterministic and too
technocratic, conceptualising innovation as an upstream specialty, slowly
drifting downstream, where production has to adapt according to plan. First, it
exaggerates the economic importance of fundamental research. Second, it is
based on an untenable and obsolete hierarchy of cognitive sources; pure
scientific knowledge or episte`me prevails over the practical and tacit
knowledge or techne´ of the user (Polanyi, 1969; Marglin, 1990, pp. 231-7; Scott,
1998, pp. 309-41). Third, it defines innovation too much in purely technological
terms, neglecting innovations in handling, packaging, factoring, distribution,
marketing and logistics, which generally can do without expensive
technological components and are hard to patent anyway. Fourth, it disregards
the importance of continuous interaction and feedback between laboratory and
users for incremental innovations, as is increasingly recognised by
technological front-runners, which have effectively ‘‘turned their factories into
laboratories’’ (Cooke and Morgan, 1998, pp. 41ff; Kline and Rosenberg, 1986;
Aoki and Rosenberg, 1987).
Instead, it is increasingly recognised that innovation is a learning process
that is both developmental or cumulative, organisational or collective, and
strategic or uncertain (Lazonick, 2000; Lazonick and O’Sullivan, 2000a, b;
O’Sullivan, 2000a, b). In such an interactive or integral conception of innovation,
the ability to break through narrow task definitions and rigid organisation
IJEBR
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boundaries to anticipate external changes is key. Central is the degree to which
the design of the production process allows for co-operation and the exchange of
information between workers, between work stations, between departments,
between the firm and its suppliers, between the firm and its customers, and
finally between competing firms (Roobeek, 1988, pp. 36-61; Freeman, 1994, p.
480; Dhondt and Vaas, 1996; Cooke and Morgan, 1998, pp. 41-7). Hence,
innovation is taken to be more a matter of diversity, interaction, and
experimentalism than of scale and concentration, and is thus more a question of
having the right organisation than having enough finance or brainpower (Cooke
and Morgan, 1998; Piore and Sabel, 1984; Sabel and Zeitlin, 1985; Weiss, 1988).
Institutional conditions
Although there is a growing awareness among students of innovation of its
nationally-based character, culminating in the key concept of national
innovation systems (Lundvall, 1992; Nelson, 1993; Edquist, 1997), the emphasis
on research and development spending, and the number of patents and hence,
on the national character of the interfaces between industry and academic
knowledge production, indicates that this literature still contains traces of the
late-Schumpeterian notion of innovation. This notion takes a cognitivistic,
hierarchical, deterministic and discursive view of knowledge production and an
upstream-downstream view of knowledge transmission. As it has increasingly
become clear that innovation is a matter of organisation, and as there are many
ways in which economic activities can be organised, this is increasingly seen to
be largely determined by the institutional framework, so there has arisen a
growing need to investigate the relationship between the institutional setting
and the innovative ability of firms.
Production regimes and innovative capacities
A promising attempt to elucidate the causal links between institutions and
innovative capacities is the one by Soskice and Hall (Soskice, 1994, 1999;
Soskice and Hall, 2001). With the concept of a production regime, Hall and
Soskice refer to the incentives and constraints (rules of the game) embedded in
the institutional framework, consisting of a financial system, an industrial
relations system, an education and training system and an intercompany
system. Using comparative data[1], Hall and Soskice distinguish between two
production systems, a co-ordinated market economy (CME) and a liberal
market economy (LME).
In CMEs there is considerable non-market co-ordination between firms,
either by the state or by voluntary associations, with the state playing an
important facilitating role in that case. More specifically, in CMEs capital
markets are small and inconsequential, while capital is provided by financial
institutions which generally have a long-term orientation; labour unions play
an important governing role in the system of industrial relations; there is large
business involvement in extensive systems of initial vocational training; and
Dutch immigrant
entrepreneurs
73
co-operative intercompany relations allow for the easy dispersal of information
and technology (Soskice, 1999, pp. 106-10).
In LMEs co-ordination between economic agents is mainly of the invisible
hand type, with the state in a residual role, merely guaranteeing contracts and
property rights. More precisely, in LMEs capital is provided by liquid capital
markets, while financial institutions have a more speculative, short-term
orientation; labour markets are deregulated with weak, syndicalist unions;
standardised, state-backed systems of vocational training are lacking; and
intercompany relations are generally adversarial. In short, LMEs, because of
the absence of extra-firm co-ordinating capacities, induce firms to integrate
juridically – rather than ally voluntarily – to create a more secure and
predictable entrepreneurial environment, whereas CMEs contain no such
incentive and allow for non-proprietary forms of alliance (Soskice, 1999,
pp. 110-13).
According to Soskice, LMEs and CMEs lead firms to different innovation
strategies. Firms that function in a co-ordinated setting tend to produce
relatively complex products, involving complex production processes, for well-
established markets that allow for extensive and close customer links. The
dominance of German and Japanese firms in the markets for production
machineries is a case in point. These types of firms tend to be good at
incremental innovation. The explanation is that patient capital, co-operative
industrial relations and a high level of training force firms to enter quality
markets and pursue qualitative flexibilisation strategies[2], not only because
price strategies are blocked but also because the extra costs involved can only
be recouped on quality markets (Soskice, 1999, p. 113).
For LMEs the reverse is true. Here a high incidence of new activities can be
observed, especially in services, be they services based on the individual skills
of highly trained professionals (advertising, investment banking, corporate
law, consultancy, etc.) or services requiring large and complex systems of
networks, as is the case in the airline, the entertainment and the software
industries; activities in which American firms play a leading role. Here the
explanation is impatient, highly mobile capital, allowing for a rapid
recombination of productive resources, an unegalitarian education system with
high summits and deep troughs, and weak and adversarial labour unions,
allowing managers a high degree of unilateral action. Hence, LMEs are
particularly good at radical innovations, requiring the ability to relocate and
recombine capital and labour swiftly and easily (Soskice, 1999, pp. 117ff).
Weaknesses
Despite heuristic strengths, there are clear explanatory weaknesses in the
production regime approach of Hall and Soskice. First of all, their dichotomous
conceptualisation of institutional frameworks does not allow for the large
institutional differences between and within countries. Financial institutions,
for example, do not neatly fall in either of the two categories of a market-based
environment or a bank-based environment, as there are many different bank/
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market mixes and many different ownership structures, ranging from highly
dispersed ownership to highly concentrated ownership (Scott, 1997). At the
same time, banking institutions within countries appear to be much more
diverse than is presupposed in these two world models. The organised
capitalism thesis, according to which the big commercial banks exercise
co-ordinating powers over large German firms, disregards the importance of
self-financing and ignores the importance of saving banks and co-operative
banks for the famous German Mittelstand (Herrigel, 1996; Deeg, 1999, Ch. 3).
Moreover, the tendency towards hybridisation over time, in effect creating new
types of institutions, cannot be grasped with dichotomous approaches like that
of Hall and Soskice (Whitley, 1999; Lane, 2000; Beyer and Hassell, 2001).
This is true for all models, of course, as they all represent a specific balance
between theoretical abstraction on the one hand and empirical adequacy on the
other, to reduce complexity as much as needed but no further; the well-known
tale of the ‘‘model versus the muddle’’ (Bader and Engelen, 2001). However, in
this case it is particularly damning, as the stated objective is to identify
different innovative trajectories and their institutional linkages. In view of this
aim, it appears to be rather arbitrary to restrict the search for diversity offhand
to given national economies – skipping regional diversity – and to limit their
number a priori to two-skipping national diversity. A less restrictive
alternative would have been to use a continuum along which different
empirical referents could have been arranged. However, such a continuum is
based on salient individual properties whereas ‘‘models’’ represent different
mixes of theoretically relevant properties or idealised ‘‘syndromes’’. Properties
come in degrees or levels and allow for variability, whereas models do not. The
degree to which an empirical referent conforms to a model is in itself not very
informative if the ‘‘syndrome’’ that the model in question is presumed to
represent is sufficiently complex, as is the case here. Of course, Hall and
Soskice could have taken the degree of factor mobility as the main explanatory
variable, as they implicitly seem to have done anyway, but that would have
loaded the dice against CMEs (in the sense that factor mobility is good and
rigidity bad) and would have burdened them with the difficult task of
determining whether factor mobility is indeed the decisive variable and, if it is,
which factor is the most important: capital, labour, knowledge, relations
(vitamin ‘‘R’’) or some other production factor? As it stands, the somewhat loose
description of the two production regimes, addressing, as we will see, only one
dimension of the complex way in which real institutions are linked to actual
innovation trajectories, does not allow for a more clear-cut, empirically testable
linkage of specific innovation strategies to specific institutional clusters. To do
so, more detailed descriptions of institutions, innovation strategies and their
causal linkages are needed.
Business systems
More promising in this regard is the attempt by Whitley and collaborators to
describe and explain how institutions determine firm behaviour (Whitley, 1992,
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1999; Whitley and Kristensen, 1996, 1997). The causal links are as follows,
according to Whitley. The way firms behave is an effect of their organisational
capabilities together with their strategic priorities or dominant market
orientations. These in turn are largely determined by their governance
structures, which depend on the ruling system of economic co-ordination and
control and their institutional contexts (see Figure 1).
The key concept in Whitley’s framework is that of the business system, whose
orientations and observable market behaviour are determined by the firms
relationships with: providers and users of capital; customers and suppliers;
competitors; firms in different sectors; employers and different kinds of
employees (Whitley, 1999, p. 33). Whitley (1999, p. 33) defines business systems
as:
Distinctive patterns of economic organisation that vary in their degree and mode of authoritative
coordination of economic activities, and in the organization of, and interconnections between,
owners, managers, experts, and other employees.
As the institutional context is unpacked in financial systems (form of
ownership co-ordination, level of managerial control), training and education
systems (the mode of skill development, degree of task fragmentation and
specialisation, degree of worker discretion), labour relations and employment
relations (degree of employer-employee interdependence, degree of managerial
delegation), and the organisation of civil society (extent of private interest
mediation, scope of represented interests, degree of mobilisation, mode of
competition), Whitley is able to transcend the stereotypical universe of the two
worlds model. There is an allowance for both functional and geographical
divergence within countries as for divergences between countries, as well as for
changes over time. Using well-tested, middle-range generalisations of meso and
micro-level causal linkages between specific institutional clusters and firm
behaviour, Whitley has constructed a six-fold typology of business systems
which tend to predominate in specific national institutional contexts but can, in
principle, also be found in others, albeit in modified form.
Figure 1.
Causal linkages between
institutions and
innovation strategies
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Business systems can be either fragmented, can take the form of co-ordinated
industrial districts, can be compartmentalised, state-organised, collaborative or
highly co-ordinated (Whitley, 1999, pp. 59-64) (see Table II).
Which business system will predominate where depends on the institutional
features of its environment. If the state is strong, interventionist or even
dirigiste, either state-organised or highly co-ordinated business systems will
dominate, depending on the strength of the unions in question and the extent of
neo-corporatist intermediation, inducing firms to follow growth rather than
profit strategies. However, if ownership is widely dispersed and management
control constrained by capital markets, as is the case in the USA, the firm will
be profit oriented. More precisely, the predominant performance measure in
that case is portfolio investor returns, rather than, say, family wealth
accumulation, asset growth, market share or technical excellence (Whitley,
1999, pp. 70-2). Moreover, such an orientation tends to be combined with a high
level of juridical integration between competitors (horizontal) and within
product chains with suppliers and customers (vertical) as a means of external
co-ordination – the famous ‘‘islands of order’’ and discipline in an ‘‘ocean of
chaos and anarchy’’ (Lipietz, 1986). Internal co-ordination, however, is brought
about by hierarchical command and control systems, resulting in a low level of
employer-employee interdependence and a low degree of managerial
delegation. Thus, the adversarial market environment of the USA results in
compartmentalised business systems, consisting of isolated hierarchies and
overwhelmingly Taylorist work systems, punctuated by co-ordinated
industrial districts such as Silicon Valley, Route 128 and other skill-based
environments (Saxenian, 1995; Kenney, 2000, 2001), and interspersed with
highly co-ordinated business systems in state-guided sectors like the dairy
industry or the defence industry (Young, 1991; Campbell et al., 1991).
The much more collaborative environment of the German economy, on the
other hand, results in collaborative business systems which are characterised
by functional alliances rather than juridical integration, both horizontally and
vertically. However, as there are two industrial orders in Germany, an
autarchic industrial order dominated by large, publicly quoted corporations on
the one hand, and a decentralised one, dominated by small and medium-sized
firms on the other (Herrigel, 1996; Deeg, 1999), we clearly must distinguish
between large and small and medium-sized firms.
In Germany, the typical large firm is a co-operative hierarchy with an
intermediate level of managerial autonomy, constrained by credit controllers
(banks) as well as employee interests (works councils, co-determination via the
supervisory board), inducing a growth orientation in which market share and
technical excellence are the main performance indicators. Moreover, the large
German firm is characterised by a high degree of interdependence between
employer and employee as well as a high degree of managerial delegation,
hence Whitley’s label of negotiated delegated responsibility for the dominant
work system in large German firms.
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Table II.
Institutional features
and business systems
Types of business system
Institutional features Fragmented
Coordinated
industrial district Compartmentalised
State
organised Collaborative
Highly
co-ordinated
The state
Strength Low Local Low High Considerable High
Incorporation of intermediaries Low Local Low Low High High
Degree of market regulation Low Local Low High High High
Financial system
Capital market or credit based Limited bank
financing
Local bank
financing
Capital market Credit Credit Credit
Skill development
Strength of public training system Weak Strong Weak Limited Strong Limited
Union strength Weak Strong Weak + Weak Strong Limited
Organising principle of unions Varies Skill/sector Skill Firm Sector Firm
Centralisation of bargaining Low Low Low Low High Low
Trust and authority
Trust in institutions Low Some High Limited High Some
Paternalist authority Some Varies Low High Low High
Communitarian authority Low Limited Low Low High Some
Contractarian authority Limited Varies High Low Low Low
Business environment Particularistic Collaborative Arm’s length Dirigiste Collaborative State guided
Source: Whitley (1999, p. 60)
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Small and medium-sized enterprises – the famous Mittelstand – operate in
co-ordinated industrial districts that are populated by firms with a distinct
artisanal orientation. These are characterised by a high degree of
organisational integration, a high degree of worker involvement and a strong
orientation towards growth goals instead of profit goals. Co-ordination between
firms is relational, of the non-ownership alliance type, and takes place only
within production chains (vertical) or between competitors (horizontal), in
contrast to the diagonal ownership relations between unrelated activities that
can be found in adversarial market environments where firms act more as
portfolio holders. These alliances are underpinned and stabilised by a complex
web of public, semi-public and private institutions, ranging from legally
mandated work councils, mandatory participation in regional vocational
training centres, obligatory membership of chambers of commerce and
industry to private interest associations, co-operative and savings banks and
voluntary standard setting (Whitley, 1999, pp. 31-116).
Innovation patterns
Until recently the causal links ran from institutional setting to market
orientation only, distinguishing between growth and profit orientations
generally and between family wealth accumulation, portfolio investors’ return,
market share and technical excellence in particular. In a recent paper, Whitley
has extended his framework to cover innovation, linking innovation patterns
via market orientation and organisational capabilities to the governance
structures of different business systems, and ultimately their institutional
contexts (see Figure 1) (Whitley, 2000).
Innovation patterns are understood by Whitley (2000) as:
Combinations of firms’ preferences and capabilities for generating and diffusing varied
innovations.
They are related to:
The level of technical uncertainty about the nature of an innovation and about how it could be
used by different groups of users; the degree to which product qualities are dedicated and
differentiated between user groups; the degree to which innovations are continuous with or
disruptive of ‘‘established organisational resources’’; the reliance on formal knowledge; and
the degree of complexity, both cognitive and organisational, of the innovation in question
(Whitley, 2000, pp. 869-70).
In other words, the mode and level of innovativeness of business systems is
determined by uncertainty, complexity, level of specialisation and available
knowledge sources, as well as mobility, whereas Hall and Soskice stress
mobility, or the capacity to recombine productive resources rapidly, only.
These variables make for five ideal types of innovation: dependent; craft-based
responsive; generic; complex; and transformative (see Table III).
Dependent innovation patterns refer to customer-driven adaptations in
existing production processes, using well-known resources such as industry
specific skills and mainly simple, tacit knowledge, to serve highly
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differentiated niche markets. As a result the technical and market uncertainties
involved are limited, restricting the need for complex forms of inside and
outside co-ordination.
Craft-based, responsive innovation patterns are higher impact innovations
of a continuous character, implying high customer involvement, differentiated
markets, a quality orientation, skill-based innovation and hence a higher degree
of technical and organisational uncertainty.
Generic innovation patterns aim at the development of standardised mass-
market products using formal codified knowledge that is embodied in
routinised production processes, specialised machinery, and simple tasks.
Because of high sunk costs in the form of capital investments in dedicated
machinery and hierarchical organisations, the reduction of technical and
market uncertainty takes place via the well proved road of input and output
standardisation.
Complex, risky innovation patterns refer to the development of new
products that have a high market restructuring potential. Hence technical and
market uncertainty is high, implying a high level of cognitive complexity, i.e.
mixes of tacit and formal knowledge, and of organisational complexity to
ensure adequate co-ordination between different agents, inside as well as
outside the firm. However, innovations of this type build on ‘‘current
organisational competences’’ and are thus ‘‘competence enhancing rather than
competence destroying’’ (Whitley, 2000, p. 873).
Transformative innovation patterns do imply radical ruptures with the
existing structure of markets, networks of distribution, modalities of marketing
as well as systems of production. As a result, they do destroy existing
competences, implying high technical and market uncertainties, forcing
innovators to use many different cognitive sources and to create a diverse
organisational setting for the integration and implementation of these different
cognitive sources.
Combining Tables II and III gives the following results. Dependent
innovation tends to be the preferred strategy of small, opportunistic and owner-
controlled firms that are embedded in fragmented business systems, which
Table III.
Characteristics of
different type of
innovation strategies
Characteristics Dependent
Craft based
responsive Generic
Complex,
risky Transformative
Technical and user uncertainty – + ++ +++ ++++
Dedicated and differentiated
product qualities +++ +++ – +++ +/–
Based on current
organisational competences – +++ ++ +++ –
Reliance on formal knowledge – ++ +++ +++ ++++
Reliance on complex and
varied knowledge base – + ++ +++ ++++
Source: Whitley (2000, p. 872)
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operate in particularistic environments that are characterised by a low level of
institutional trust, a weak state with limited regulatory capacities and an
underdeveloped civil society. The highly flexible, family-based Hong Kong
firm, found throughout Southeast-Asia and increasingly Canada (Froschauer,
1997, 2001), is the main example.
Craft-based, responsive innovation patterns, on the other hand, are mainly
followed by artisan firms, operating in co-ordinated industrial districts which
are based on local collaborative networks, providing firms with the
co-ordinating abilities that allow them to cater to the needs of sophisticated
customers, setting in motion a process of incremental mutual discovery of new
products, processes and uses. Here, the third Italy districts serve as an
illustration.
Third, generic innovation is to be found primarily in the large, mass-market
oriented firms – or isolated hierarchies – that are the products of either arm’s
length or dirigiste environments. As these firms generally lack the
collaborative milieu that would allow them to reduce uncertainty, spread risks
and organise cognitive complexity adequately, they are forced to internalise
risks. In these environments the preferred way of doing this is via
standardisation and Taylorisation. As a result, economies of scale dominate
over economies of scope, and price competition dominates over quality
competition. Hence, only those innovations tend to be implemented which fit
this mould. This type of innovation is characteristic of the large American
corporation as well as the Korean chaebol.
Complex, risky innovation patterns predominate in economic environments
that allow both for multifarious collaboration, inside as well as outside firms,
and for large-scale organisations that are able to combine standardisation of
(parts of) the production process with a highly skilled workforce. Although
these types of innovation share important characteristics with craft-based
innovations – both are incremental, collaborative and reciprocal – because of
their much larger scale the technical and market uncertainties involved are also
much larger, necessitating firms to spread risks across a larger number of – but
especially more resourceful – collaborators. Hence, the span of collaboration is
much wider than the locally-based industrial district and is conditional on a
much higher level of market regulation, both by federal and state level
governments and public, semi-public and private agencies. As different mixes
of these regulatory agents can be functionally equivalent, firms in both
collaborative and highly co-ordinated business systems, operating in both
collaborative and state-guided economic environments, tend to be predisposed
towards complex innovations, albeit that collaborative business systems,
because of the strength of their public training systems and their industry-
based unions, disallow unilateral managerial action. Examples are the German
regional economies – Bavaria and Baden-Wu¨rttemberg spring to mind – and
the Japanese keiretsu.
Transformative innovation patterns, finally, represent radical ruptures with
established ways of producing, distributing and marketing goods and services
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– often in a highly interrelated fashion – demanding the use and
implementation of new inputs as well as outputs. In effect, the transformative
firm is actually building a new industry or even industries and new markets,
implying the usage of many different cognitive sources, often transcending
established sectoral boundaries. The degree of uncertainty and the cognitive
and organisational complexity involved are so great that direct or indirect state
support appears critical. Critical too is the ability to transcend organisational
boundaries and overcome the resistance of those groups that loose out. This is
easier done in arm’s length environments and compartmentalised business
systems that allow both for a rapid relocation of societal resources via large,
liquid capital markets and, in the absence of strong countervailing powers
(read: unions), for managerial unilateralism. The availability of state support
depends on state priorities, as general neoliberal states tend to follow a policy
of non-interference in economic activities. In the USA, the prime example of
such an environment, the exception has been defence-related activities, to
which both massive fundamental research spending and state procurement
policies have been geared. Where state support is lacking, however, generic
innovations prevail because of the standardised, mass-market oriented nature
of compartmentalised business systems and their environment.
Dutch institutional conditions
Do we now possess an adequate framework to describe and assess the Dutch
institutional setting? At first sight, the Dutch institutions appear to be of the
collaborative kind, giving rise to collaborative business systems and
co-ordinated hierarchies. The Dutch state has considerable co-ordinating and
developing powers, Dutch markets are well-regulated and societal corpora-
labour unions, employer organisations, serve as effective co-producers of
governance in most policy fields (Visser and Hemerijck, 1997). As in Germany,
unions are organised sectorally, as is the system of collective bargaining, while
interest representation within the firm too is legally formalised in co-
determination and Works Council Acts, ensuring a high degree of employer-
employee interdependence and a high level of managerial delegation, thus
limiting managerial unilateralism (Visser, 1992, 1995; Visser and Ebbinghaus,
1996; Engelen, 2000). Moreover, the Dutch educational system – again like the
German system – contains a theoretical trajectory as well as a practical one,
both of which are publicly funded and deliver portable qualifications that are
recognised throughout the economy (Lieshout, 1996; CPB, 1997, pp. 319-29).
Finally, institutional and communal or social trust appear to be high[3].
Paternalist and contractual authority relations are declining (albeit to a
somewhat lesser degree than in Germany), as is evident from the stronger role
of employees in German firms and from paternalist residues in the Dutch
Works Council Act (Engelen, 2001a).
This is argued by Van Iterson, the Dutch member of Whitley’s international
team of collaborators. In a number of articles (Van Iterson, 1997a, b, c, 2001;
Van Iterson and Olie, 1992), Van Iterson has elaborated the claim that the
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Dutch business system is characterised by a high degree of managerial
autonomy from owners, a relatively high level of employer-employee
interdependence, a negotiated work system and a consensus oriented
management style. According to Van Iterson, these traits are induced by a set
of national governance principles which have a long historical pedigree, in fact
reaching back to the middle ages when the physical-geographical conditions of
The Netherlands forced their inhabitants to organise collective bodies for
drainage and land reclamation, the so-called waterschappen en
heemraadschappen (Van Iterson, 1997a, pp. 53ff). Van Iterson summarizes
these principles as a ‘‘strong preference for compromise and consensus among
peers’’ (1997a, p. 49).
It might be argued that Van Iterson overplays the continuity of Dutch
institutional history and hence the durability of Dutch institutions.
Contemporary Dutch historiography stresses the rather radical institutional
rupture that occurred in the aftermath of the so-called ‘‘patriotic revolution’’ of
1781-1787 and the ensuing French occupation (Prak, 1999; De Haan, 2001). The
institutional pluralism of the Dutch republic was replaced by the institutional
monism of the constitutional monarchy that was installed in 1813. The
authoritative Dutch economic historian Van Zanden, for example, states that
the lingering remains of the decentralised corporatist institutions of the Dutch
Republic have long halted economic modernisation (Van Zanden and Van Riel,
2000). The core of his argument is that institutional renewal preceded economic
modernisation, by allowing markets to integrate and firms to reap economies of
scale[4].
In this regard, it is telling that Van Iterson fails to note the wider significance
of the abolishment of the Dutch guilds during the French occupation vis-a`-vis
their survival and key role in present-day Germany, resulting in a much more
centralised, neo-corporatist governance regime than can be found in
Germany[5]. Although many German La¨ nder are larger than The Netherlands
in toto, the German federal state allows local governments a much larger
degree of discretionary powers than are available to Dutch local governments.
As a result, in The Netherlands societal corpora have replicated the centralised
organisation structure of the state, focusing their financial, economic, political
and intellectual resources on the centre of government and the macro-economic
issues that are decided there.
A second observation has to do with the ensuing pluralism of the Dutch
economy. Whereas the German economy can be adequately analysed as
consisting of two ‘‘industrial orders’’ (Herrigel, 1996), such an analysis is much
harder to conduct for The Netherlands. For instance, compared to Germany the
capital market has played a much more prominent role in the Dutch economy.
This is indicated by the relatively large number of Dutch based multinationals,
both in manufacturing (process industries) and in services (Shell, Unilever,
Philips, Heineken, DSM, Akzo, ABN Amro, ING, Aegon to name but a few),
implying a hybridisation of compartmentalised and collaborative business
systems, at least in the large firm sector of the Dutch economy.
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A second qualification has to do with the societal embeddedness of small
and medium-sized firms. Even though several industrial clusters in The
Netherlands have been identified, it appears that they generally lack the kind of
collaborative networks that are available to German firms of equal size,
hindering the development of the cognitive and organisational complexity that
is needed for complex, risky innovations. Moreover, as the experience of Baden-
Wu¨rttemberg shows, complex innovation patterns require some scale or, to put
it another way, a complex mix of firm sizes (Cooke and Morgan, 1998, pp. 83-
113; Semlinger, 1995).
Large Dutch firms show increasing signs of hybridisation. This is partly
induced by the growing influence of international capital markets and partly
by the attempt of the central government to empower the shareholder in the
Dutch system of corporate governance, the already high degree of
compartmentalisation of the Dutch economy is only strengthened, resulting in
a further bifurcation of the economy. In short, Van Iterson fails to take into
account the differences between the Dutch and German neo-corporatist
governance structure and their differential effects on the economic landscape.
This makes the nature of the Dutch economy more challenging to analyse than
the German one, and severely reduces the innovative abilities of small and
middle-sized enterprises in The Netherlands.
The entrepreneurial society
The pluralism of the Dutch economy is also reflected in its policy toward
business start-ups. As is well known from international comparisons, there
appears to be a trade-off between collaborativeness and openness, especially
when these collaborative relations are legally formalised, as they are in
Germany (Reynolds et al., 2000). This insight lay at the root of a concerted
attempt by the Dutch Ministry of Economic Affairs from the early 1990s
onward to make the Dutch economy more flexible and more mobile in reaction
to high unemployment and low labour participation, aiming to turn the former
cartel-paradise into a veritable entrepreneurial society (EZ, 1999). To do so, a
two-pronged approach was adopted. First, deregulating the labour market, so
allowing for a much larger degree of contractual and functional flexibility (SCP,
1998, pp. 360ff), and second, by lowering the thresholds for a large number of
markets, especially in retail, personal services and the restaurant trade.
To be more specific, since the early 1990s the Dutch government has
provided subsidies, initiated fiscal cuts and set up a number of business parks,
some near universities, in an attempt to imitate the success of Silicon Valley
and Cambridge. All in all, these measures have been rather limited in scale and
scope. The subsidies, for instance, remained well below $350 million (less than
0.5 per cent of total public spending), and the number of business parks
amounts to 300, of which only a limited number are publicly funded.
More substantial has been the interdepartmental program set up under the
supervision of the Dutch Ministry of Economic Affairs, called ‘‘market forces,
deregulation and legal upgrading’’, to invigorate the Dutch economy under the
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slogan: ‘‘more markets, less regulation, and better laws’’. It focused in particular
on the large number of cartels that gave The Netherlands the name of being a
cartel paradise (De Jong, 1990, 1992). To enhance the degree of competition and
to lower consumer prices, since 1994 a number of projects have been initiated to
create new markets, diminish entry barriers to existing markets, and cut back
red tape. These range from deregulating the market for legal advice, leveling
the playing field in the cab market and the creation of a new market of child
care, to a new bankruptcy law, the harmonisation of the legal categories of self-
employed and entrepreneurs, the outsourcing of public tasks like garbage
collection and public transportation, and the extension of retail opening
hours[6].
To be more specific, the number of licences which entrepreneurs must
possess to start a new firm has been cut radically while the application
processes have been shortened and simplified. Moreover, a number of trades
have been exempted from official approval completely. Since January 2001 all
retailers, wholesalers, barkeepers, innkeepers, restaurant owners, hairdressers,
painters, travel agents, manpower agents, etc. can start up without notice.
Other types of regulations too have been either cut or simplified. As of 1998
most of the above-mentioned trades are exempted from the duty to get
pollution permissions from local governments. The corresponding duties to
report on environmental issues too have been either lowered or abolished. The
same holds for regulations on occupational safety and working conditions.
Here too, costs have been lowered as of 1998, and reporting obligations have
been simplified.
Exit is also an object of deregulation in The Netherlands, as already
mentioned. The unlimited liability of self-employed and general partnerships
has been circumscribed since December 1998, and the status of first class
debtor, which tax office and social insurers could claim in the case of
bankruptcy of limited liability corporations, has been cancelled as of 2000.
Moreover, the period of cooling down, meant to provide firms with the
opportunity to avert an imminent failure, is in the process of being extended
from two to four months, as the number of re-starts is considered too low.
With regard to specific target groups, such as women and immigrants, no
targeted measures have been undertaken by the central government. No
sermons, sticks or carrots (Bemelmans-Videc et al., 1998) have been earmarked
for immigrants to stimulate the use of self-employment as an avenue of socio-
economic incorporation (Engelen, 2001b). At the local level, though, a large
number of highly diverse programs targeting immigrants have been set up
(NCB, 2000). Most of these, however, have not very successful. As their
financial basis is small and their status project based, implying limited means
and a short-lived existence, most local programs suffer from a lack of clients on
the one hand, and a lack of resources to give the few clients they do have any
substantial help on the other. Outreach programs cover part of the first issue,
but the second remains as of yet unsolved, partly because influential agents
such as the Ministry of Economic Affairs, Chambers of Commerce and Trade
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and most employer organisation are either of the opinion that entrepreneurs
cannot be made but are born, or that soft budget constraints in the form of
subsidies and loan guarantees result in market interferences, an inefficient
allocation of scarce societal resources and artificially keep soft and weak
entrepreneurs afloat.
The costs of deregulation
Administrative burdens for entrepreneurs have been lowered considerably and
the flexibility of the labour market, as well as some other markets, has been
increased enormously, in part explaining the high ranking of the Dutch
economy in many reports on world competitiveness and the frequent references
to Dutch practices in EC and OECD benchmarking reports[7]. However, it is
controversial whether the gains in terms of employment as well as start-ups
compensate the costs in loss of innovative capabilities. Deregulation and
quantitative flexibilisation appear to be bad for innovation, as is indicated by
the low and declining position of the Dutch economy on Porter and Stern’s
innovation index from the 1980s onwards, the low research and development
spending of Dutch firms and the small amount of innovative products in total
turnover. Moreover, the Dutch growth of labour productivity has been
remarkably low during the 1990s, internationally as well as historically
(Kleinknecht, 1998; Kleinknecht and Naastepad, 2001a, b). There is sufficient
case evidence to support the view that, after a decade of wage restraint and
market regulation, the Dutch industrial base is in a sorry state, using obsolete
machinery, Taylorised work systems and cheap labour, and aiming at price
competition on standardised markets mainly (Vaas, 2001).
However, as is stressed by Whitley’s typology of innovation patterns,
innovation is more than a matter of money and/or brains generating
technologically fancy hardware, but must also cover innovations in logistics,
transportation, marketing, financial services, etc. Hence, what is key in
Whitley’s typology is the ability to organise cognitive complexity and to
redistribute uncertainty, implying dense collaborative networks of firms, and
public and para-public organisations. Despite a high level of corporatist
intermediation in The Netherlands, such dense networks are not readily
available to small- and medium-sized firms. As the Dutch economy, and hence
Dutch economic policy making, is dominated by a small number of
internationally-oriented multinationals, the institutional framework has
traditionally been geared to their needs and interests, turning large parts of the
Dutch economy into compartmentalised business systems. The current
emphasis on labour costs, labour market flexibility, fiscal competitiveness, and
shareholder value clearly indicate that that is not over yet.
Moreover, compared to Germany, the Dutch attempts to help firms to
restructure their organisations upwards have been marginal. Programs to
enhance the quality of labour, itself an important precondition for innovation,
have been short-lived. The Working Conditions and Safety Regulations Act of
1983, although entailing an agenda for the enrichment of tasks, turned rapidly
IJEBR
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86
into a safety act, focusing on working conditions rather than work content
(Engelen, 2001a). Whereas, in Germany, Sweden, Denmark, Norway, Finland,
France and even Ireland successful programs are available to stimulate firms to
experiment with new production technologies and new organisational forms,
no such programs are currently present in The Netherlands. In the mid-1990s,
the Dutch Commission on the enhancement of productivity, which was set up
shortly after the Second World War to advise the government on issues of
economic rationalisation, was actually dissolved, indicating the low priority of
labour quality and organisational reform in Dutch policy making.
Competition policy too obstructs the development of the interfirm networks
that are required to organise cognitive complexity and spread technological
and market uncertainty. As is evident from the projects taken up under the
marketisation program of the Ministry of Economic Affairs summarised above,
the focus is on cartel-like agreements in many-agent markets, implying a low
level of economic concentration and thus relatively easy targets[8].
Oligopolistic markets, such as the banking market, the insurance market or the
petrol market, have been more or less left alone, illustrating the still enormous
political clout Dutch multinationals have over economic policy making.
On the other hand, the current interpretation of competition policy in The
Netherlands does not allow for the distinction between positive and negative
forms of interfirm co-operation that is needed to organise cognitive complexity
and to diversify risks. If every form of co-operation between firms is a priori
seen as a potential price cartel, competition policies preclude constructive forms
of co-operation that allow smaller firms to reap economies of scale on tasks
such as factoring, distribution, handling and packaging, etc. This type of
competition policy has been an American invention, resulting in the wave of
mergers and acquisitions of the late nineteenth and early twentieth century and
ultimately in the compartmentalised business systems we know from modern
day America (Chandler, 1966, 1979, 1990). Moreover, it has come to dominate
European policy making too, via influential benchmarking institutes like the
OECD, EC, World Bank and IMF.
However, historical research has shown that in nineteenth century USA
price cartels predominated only in sectors that were characterised by high
capital intensity, high levels of standardisation, and a high export orientation,
and consisted of only a handful of firms, whereas the cartels in many-agent
markets served cost cutting rather than price lifting goals (Dick, 1997).
Analogous to this distinction, Herrigel points out that in Germany large
producers resort to price cartels to dampen economic turbulence, whereas
small, decentralised producers resort to so-called term-fixing cartels and
specialisation cartels to preclude cut-throat competition (Herrigel, 1996). Only
the former fall under the Smithian heading of ‘‘conspiracies against the
consumer’’. Term-fixing cartels merely aim to set delivery and payment
standards among a large group of small specialists, whereas specialisation
cartels are meant to carve up producer markets in several niches and to
Dutch immigrant
entrepreneurs
87
distribute these niches exclusively among their members, thus enabling them
to become economically viable in the first place.
To summarise, the conditions for innovation appear to be anything but
optimal in The Netherlands, particularly not for small and medium-sized firms
since they are prohibited from co-operating in the name of a utopian ideal of
market competition and lack the resources to integrate juridically as do large
Dutch multinationals, and are pushed towards price competition on
standardised markets by a policy mix of wage restraint and labour market
deregulation. This is clearly recognised by the Dutch interest organisation of
small and medium-sized firms (MKB Nederland), which has recently pressed
for a more intelligent competition policy to allow small and medium-sized firms
to collaborate. On the other hand, the spur of higher labour costs will not be
sought voluntarily, but instead demands a radical break with the current
neoliberal policy ideology.
As it stands, immigrant firms can be expected to follow dependent
innovation patterns at best, as they generally lack extensive and resourceful
collaborative networks, do not have access to high-skilled workers and, hence,
have to use their ability to react quickly to changing market demands to gain
competitive advantage. This ability is especially rewarding in markets where
consumer preferences change quickly such as the retail, fashion and restaurant
trades, not unexpectedly the trades where most immigrant entrepreneurs are
active at present. However, if the Dutch government aims to enhance the
number of innovation strategies available to immigrants – for good social and
economic reasons – then it will have to help migrants to create the extensive
collaborative networks that allow for more cognitive complexity and a less
burdensome sharing of risks and uncertainties, even if that would imply a
radical break with neoliberal orthodoxy.
Notes
1. Derived from Porter (1990).
2. Following Lane and others, I distinguish ‘‘quantitative’’ or ‘‘numerical’’ forms of
flexibilisation from ‘‘qualitative’’ or ‘‘functional’’ forms of flexibilisation. ‘‘Qualitative
flexibilisation’’ denotes micro- as well as macro-economic strategies that centre on
recombining production factors as quickly and as cheaply as possible. This implies a high
trust environment in which skills and knowledge are seen as public goods. Innovation is
the core aim of this form of flexibilisation. ‘‘Quantitative flexibilisation’’, on the other hand,
is primarily a strategy of cost reduction. Its macro-economic pendant follows neoclassical
premises in that it tries to decrease factor costs by reducing labour market regulation and
by linking national capital markets to global capital flows (Lane, 1988).
3. Meaning the degree to which the rules of the game are considered legitimate and relative
strangers are considered to be fair counterparts in negotiations, bargaining of exchanges
respectively (Whitley, 1999, pp. 51-4; Barber, 1983). Communal trust is also referred to as
social trust.
4. Here, Van Zanden and Van Riel’s story follows the main tenets of ‘‘theories of
modernisation’’, according to which there is only ‘‘one best way’’ to modernity,
consisting of market integration, task specialisation, dedicated machinery and
economies of scale. In this Smithian conception of economic growth – ‘‘the division of
IJEBR
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88
labour is limited by the extent of market’’, as the Wealth of Nations states – the
institutional framework of the ancien re´gime is, by definition, seen as a brake on economic
modernisation. As Brenner has famously shown this proposition has liberal as well as
Marxist followers (Brenner, 1977). In the case of Van Zanden and Van Riel, the origin is
North’s new institutional economics (North, 1990; North and Thomas, 1973), whose
theoretical claims underlie their analysis (Van Zanden and Van Riel, 2000, pp. 20-1).
However, recent economic historiography has done away with this unilinear perspective
on economic development. As Herrigel’s study of the construction of the German industrial
orders shows, there are numerous ways to economic modernisation, with or without guilds
(Herrigel, 1996) (see also Piore and Sabel (1984) and Weiss (1988) for a more open textured
perspective on economic history). Not only can economies of scale be organised in many
different ways, ranging form voluntary alliances to proprietary integration, economies of
scope appear to be just as important for economic growth, even though the latter pose
completely different institutional and organisational demands.
5. After quoting, approvingly, Lewis’ proposition that the predominance of ‘‘bourgeois
civility’’ in Dutch culture is due to the fact that Dutch prosperity was based on merchants
and guilds, rather than aristocrats and militants, Van Iterson and Olie dedicate a footnote
(!) to the observation that ‘‘Dutch guilds [...] were already abolished in the early nineteenth
century, in contrast to, for example, Germany’’ (Van Iterson and Olie, 1992, p. 115), without
addressing the possible effects of this institutional divergence.
6. See for an overview www.ez.nl/mdw
7. However, the latest World Competitiveness Report of the World Economic Forum ranked
The Netherlands only eighth, down from third place in 2000. The main reason for this drop
given by the forum is the relative lack of investment in capital goods, resulting in a
comparative lag in technological innovation.
8. Which, as is evident from the difficulties to liberalise the Amsterdam cab market, proved
to be hard enough in some cases.
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Immigrant self-
employment in
Canada
93
International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
pp. 93-112. # MCB UP Limited,
1355-2554
DOI 10.1108/13552550210423741
Economic associations of
immigrant self-employment in
Canada
Daniel Hiebert
Department of Geography, University of British Columbia,
Vancouver, Canada
Keywords Canada, Immigrants, Entrepreneursialism, Labour market, Segmentation,
Ethnic groups
Abstract In the last 30 years or so we have seen a proliferation of research projects on
immigrants and non-white minorities in the labour market (labour market segmentation) and as
entrepreneurs (ethnic entrepreneurialism). Each of these literatures helps us understand the
nature of immigrant and minority participation in the labour market, but each only offers a
partial view. In this paper, I bring these topics together in an empirical investigation of the
relationship between ethnic labour market segmentation and ethnic entrepreneurialism in
Canada, using 1996 census data. I show that there is a close correspondence between the niches
where immigrants and minorities find work, and those where they become entrepreneurs.
Immigrants who are drawn to niches that offer few opportunities for self-employment have low
rates of entrepreneurship and, conversely, those who are over-represented in niches with
considerable scope for self-employment are inclined to establish their own businesses. This shows
that the propensity for self-employment is, to an important degree, determined in the regular
labour market. Therefore, entrepreneurship should not be seen as an intrinsically cultural
phenomenon (i.e. that certain groups are ‘‘naturally’’ entrepreneurial), but instead as arising out
of the opportunity structure associated with wage and salary labour.
As immigration re-emerged as a popular topic in the social sciences during the
1980s (after several decades of declining interest), researchers began to pay
particular attention to the role of immigrants in the economy. Although the
subject of immigrant entrepreneurialism emerged around 1970, it really ‘‘took
off’’ in the 1980s, when American analysts began to document the fact that
immigrants were more prone to self-employment than the native-born
population. It helped, of course, that a major shift was underway in the North
American economy: after nearly half a century of falling self-employment rates,
after 1970 these began to rebound, a fact that caused both researchers and
policy makers to re-evaluate the role of entrepreneurship and small enterprises
in the emerging regime of more flexible production. Meanwhile, another group
of researchers, concerned with the apparent lack of economic progress of
marginalized groups, touched off a different trajectory of scholarship that has
come to be known as labour market segmentation theory (Peck, 1996). This
work examines the division between jobs that reward workers for their human
The author would like to thank the Department of Canadian Heritage for its support for this
research and, especially, for access to the data explored in this paper.
This article is part of a special issue of papers entitled ‘‘The economic context, embeddedness
and immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
IJEBR
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capital and those that do not, the so-called primary and secondary segments of
the labour market. Through theoretical effort and empirical study, researchers
have begun to uncover the widespread, though often covert, processes that
channel immigrants, women, and non-white individuals into secondary jobs.
Generally speaking, with important exceptions (see below), there has been
an upbeat tone in the work published on immigrant entrepreneurship, which
has tended to portray the small-scale businesses established by immigrants
both as a positive contribution to the larger economy and also to the wellbeing
of minority communities. In contrast, work conducted under the rubric of
labour market segmentation theory has been pessimistic, concluding that
deeply-set forces in western societies reproduce disadvantage. While writers
from both of these traditions have, from time to time, noted and incorporated
ideas from the ‘‘other side’’, the two literatures have largely developed in
isolation. In particular, there have been few detailed studies that bring the
processes of labour market segmentation and ethnic entrepreneurialism into
the same analytical framework, that, in effect, create a dialogue between these
different views of immigrant economic participation.
This type of research is particularly lacking in Canada, where the volume of
research on both segmentation and immigrant/minority entrepreneurship is
much less than in the USA despite the fact that, in per capita terms, immigrants
are a more significant component of the Canadian population and, therefore,
economy. In this paper, I survey a complex custom tabulation of census data
that allows for simultaneous analysis of labour market segmentation by ethnic
origin and immigration status on the one hand, and sectoral patterns of
entrepreneurship on the other. I concentrate on two basic questions: what are
the patterns of ethnic and immigrant labour market segmentation in Canada
and how do these patterns intersect with self-employment?
Theories of immigrant/ethnic self-employment
I do not have the scope to provide a detailed discussion of the large body of
scholarship on immigrant entrepreneurship, but highlight those aspects that
address the relationship between the paid labour market and self-employment.
Much of this literature seeks to explain why some groups are more
entrepreneurially inclined, and more successful at operating businesses, than
others. Initially, researchers looked toward cultural factors to understand these
differences, but this emphasis has given way to a more complex approach that
acknowledges multiple causes. In their attempt to theorize the entrepreneurial
behaviour of immigrant and minority groups, Waldinger et al. (1990) argue that
each cultural group has a unique mix of pre-migration, migration, and post-
migration characteristics, and that this mix sets the parameters of its economic
participation. For example, some groups are able to rely on extensive, already-
existing business networks that may even be transnational in scope (Wilson
and Portes, 1980; Zhou, 2000), while others, notably African Americans and
Hispanics, do not have a history of entrepreneurial success (Waldinger, 1996).
Immigrant self-
employment in
Canada
95
Put another way, the particular mix of class and ethnic resources varies
significantly between groups (Uneke, 1994; Light, 1999).
These debates about varying rates of entrepreneurship have been connected
with differences of opinion over the causes and consequences of self-
employment among immigrants and minorities. Some researchers, such as
Feagin and Imani (1994), believe that self-employment arises out of blocked
mobility in the labour market while others emphasize the opportunity structure
available to immigrants in their adopted settings (e.g. Dijst and Van Kempen,
1991; Zhou, 1995; Kloosterman, 2000). The former group represents the major
exception to the trend mentioned earlier (that researchers portray ethnic/
immigrant entrepreneurship in positive terms), and highlights the low rate of
profit for most entrepreneurs and the exploitative conditions of labour that
often emerge in immigrant businesses (Borjas, 1986; Bonacich, 1993; Barrett et
al., 1996). For them, self-employment solves few economic problems faced by
immigrants and minorities, and may in fact exacerbate the poor wages and
working conditions faced by marginalized workers.
In some ways, the ‘‘negative’’ and ‘‘positive’’ schools of immigrant
entrepreneurialism are irreconcilable; basically, they reflect differences in the
understanding of, and appreciation for, capitalism (Bun and Hui, 1995). Thus, as
Portes and Zhou (1996) have shown, the assumptions embedded in empirical
studies of the economic return to immigrant entrepreneurship have a profound
influence on the outcome of this type of research. These assumptions, as might
be expected, are associated with particular ideological positions. While
acknowledging these significant differences, Waldinger et al. (1990) have
attempted to bring these dichotomous views together in an interactive model.
According to this approach, the nature and degree of entrepreneurial behaviour
is set by a dynamic relationship between group characteristics (including the
extent of racism experienced in the labour market and the density of social
networks with a group, among other factors) and the opportunity structure
(especially market conditions and access to ownership roles) within which
groups are situated (also see Rath, 2000). Waldinger et al. (1990) postulate that
immigrant and minority groups develop strategies that build on the
opportunities available to them through collective action. In so doing, they
become concentrated into specific sectors of the economy and develop market
niches. In a later reformulation of these ideas, Waldinger (1996) notes that this
process of economic concentration is often associated with ethnic closure, which
excludes individuals from outside particular groups from entering certain jobs.
Labour market processes are treated obliquely in this literature. This is true
even in the original statement of the interactive model, which offers only a
cursory discussion of blocked mobility. Light and Bonacich (1988), in their
study of the Los Angeles Korean community, provide one potential way to link
labour market and entrepreneurial issues. They note that minority
entrepreneurs typically hire workers from within their cultural group; the
training received by these workers enables them to establish their own
businesses, often competing against their former employers. Light and
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Bonacich label this process ‘‘ethnic facilitation’’. Bailey and Waldinger (1991)
base their concept of ‘‘training systems’’ on much the same reasoning. While I
see the salience of these ideas, they raise a question: how did the original
immigrant/minority entrepreneurs gain their skills? To answer this, I believe
we must turn to labour market segmentation theory, and combine it with the
views surveyed so far in the following way:
.
Immigrants and racialized minority groups face barriers in the labour
market. They are less likely to be hired and therefore face more frequent
periods of unemployment, and are channeled into secondary positions in
the labour market. While these processes are never complete (e.g. there
is, after all, a minority managerial and professional class in almost every
western society), they are pervasive.
.
Some (though not all) of these secondary jobs are associated with
opportunities for self-employment. Workers in these jobs acquire
necessary skills as well as market knowledge. When it is possible, self-
employment provides an attractive option for those who face
unemployment, or who wish to earn higher incomes. While many of the
micro-businesses established by these individuals fail, some succeed.
.
Those who succeed rely on a combination of factors that include their
human capital (class resources), the strength and depth of the networks
they are able to draw on (ethnic resources), and a host of economic
factors, such as the availability of capital and labour, demand for their
product, and so on (context)[1].
.
Once set in motion, this micro-entrepreneurship is perpetuated through
the process of ethnic facilitation. As this occurs, opportunities in the
niche are closed to individuals who do not belong to the group. This
means that we should expect different minority groups to occupy
different economic niches, both as employees and entrepreneurs.
All of these points are emphasized, in one way or another, in the existing literature,
but they have not been brought together in this particular configuration. My
general argument is that immigrant and minority entrepreneurship arises out of
the experience of immigrants and members of minority groups as employees. That
is, the forces that channel certain groups into particular occupations have a
secondary effect, in that they also shape the opportunity structure and scope of
entrepreneurial activities. Therefore, the disadvantages faced by groups that are
poorly placed in the labour market are replicated in the experience of self-
employment. I believe this point helps us understand why minority
entrepreneurship is often associated with poor economic returns, and suggests
modifications to the positive view of minority entrepreneurship discussed earlier.
Labour market segmentation and self-employment in Canada
As I have shown in a previous study, the relatively small number of
publications on labour market segmentation in Canada have been
Immigrant self-
employment in
Canada
97
methodologically varied and have yielded mixed results (Hiebert, 1999). Some
have chosen to work with industrial sectors, others occupations; some have
disaggregated the labour market into as few as six categories, others have used
several hundred; some have reported descriptive statistics, others the result of
multivariate inferential tests. Mainly, researchers have examined census
tabulations (although Satzewich and Li (1987) use questionnaire-based
information), and most of the material published so far investigates data
gathered between 1971 and 1991. While all studies, regardless of methodology,
have documented high levels of sex-typing in the labour market, results on
ethnic groups and immigrant populations have been ambiguous. Predictably,
writers using aggregated categories have found low rates of ethnic
segmentation (Basavarajappa and Verma, 1990) while studies with more
elaborate classification systems have been able to identify ethnic clusters more
readily (Preston and Giles, 1997; Hiebert, 1999). Although more detailed studies
have found a tendency for women, visible minorities and immigrants to be
employed in secondary occupations, they have also found a lot of variation
around this basic pattern (Preston and Giles, 1997; Reitz, 1998; Hiebert, 1999).
Most interpret this as a direct reflection of Canadian immigration policy, which
in recent years has prioritized the entry of skilled immigrants who have
generally been able to enter primary-level occupations. Still, the predominant
pattern is one of immigrants being over-represented in secondary-segment
occupations such as agricultural labourers, in garment production, as taxi
drivers, and so on.
Studies of immigrant entrepreneurship in Canada are equally inconsistent.
According to Lo et al. (1999), there is little dialogue between the many
interview-based projects, which usually survey a non-representative sample of
entrepreneurs from a single group, and statistical analyses of census data. As
in other countries where this type of research is common[2], in Canada
researchers have identified wide variations in the degree of self-employment of
different immigrant groups (Maxim, 1992; Beaujot et al., 1994; Razin and
Langlois, 1995; Li, 1997; Mata and Pendakur, 1997). Canadian writers, as
elsewhere, have invoked a combination of class and ethnic resources, and the
opportunity structures of urban labour markets, to explain these differences. A
consensus appears to have emerged among those studying the Toronto
situation that class resources are critical for the transition from wage labour to
self-employment, but that entrepreneurs in groups with substantial ethnic
resources are more likely to be successful (Marger, 1989; Oneke, 1994; Lo et al.,
1999).
There is also a basic dispute about the economic benefits received by
immigrants and members of Canadian minority groups when they become self-
employed. In an intricate quantitative examination of 1986 census data,
focusing on men only, Maxim (1992) demonstrates that immigrants and people
of non-European origin both face income penalties in the paid labour force
(holding a large array of other variables constant), but that these vanish when
they become self-employed. However, Reitz (1990) argues that returns to self-
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employment vary sharply between groups, ranging from those who earn more
through self-employment than when employed in the regular labour market, to
others who have less to gain from self-employment. Li (1994, 1997) has
elaborated this point by investigating the returns to self-employment for
workers of European versus visible minority origin. Based on 1986 data, he
found that nearly half of the visible minority immigrants who become self-
employed do so in the retailing and accommodation/food services sectors. In
these two sectors, entrepreneurs – whatever their immigration status or ethnic
origin – earn low average incomes regardless of their human capital. Visible
minority immigrants are under-represented as entrepreneurs in other sectors of
the economy, where returns to human capital for the self-employed are higher,
but where start-up costs are also more significant. Visible minority immigrants
therefore, on average, gain modest rewards from self-employment because of
the particular characteristics of the sectors in which they specialize.
Two groups of researchers have attempted – as I am trying to do here – to
better understand the links between these niche economies and labour market
segmentation. Beaujot et al. (1994) try to determine whether the blocked
mobility hypothesis – that individuals turn to self-employment when they have
no means of upward mobility in the paid labour market – can be used to
explain rates of self-employment in Canada in 1986. They reveal a high level of
self-employment in non-professional services among immigrants with low
educational attainment, and speculate that this is because these individuals
would otherwise be relegated to the secondary segment of the labour market.
Further, immigrants with high educational qualifications obtained outside
Canada are also over-represented in non-professional, self-employed
occupations. They see this latter result as strongly suggestive of blocked
mobility, in that these immigrants probably experienced difficulty in gaining
recognition for their human capital in the paid labour market. Finally, in
contrast to Li, Beaujot et al. (1994) find that both these groups of entrepreneurs
are significantly better off than their employed counterparts.
Broadly similar results are obtained in a remarkable study by Mata and
Pendakur (1997), where they use the main base of the Canadian census to trace,
through four census periods, the changing economic participation of the cohort
of male immigrants who arrived in Canada between 1946-1960. These men
began their careers in Canada at a time when well-paid work was available for
individuals with little formal education in construction and manufacturing.
Mata and Pendakur find that the initial entry into the labour market was
decisive in determining their future; that is, once they found work in a
particular sector, they stayed there. Given the apparent barriers inhibiting
movement between industrial sectors, most of the men who attained upward
mobility did so by becoming self-employed. In the process, they formed ethnic
niches (e.g. Italians in masonry, Germans in carpentry). The outcome for well-
educated immigrants was quite different: while many also became self-
employed, they typically did so in the service sector and did not tend to form
ethnic business concentrations.
Immigrant self-
employment in
Canada
99
I am also interested in the relationship between labour market segmentation
and self-employment, and replicate some aspects of Mata and Pendakur’s
study, though with less elaborate statistical procedures, a focus on
occupational concentrations rather than industrial sectors, and more attention
to the different experiences of European-origin and visible minority groups
(which were far less numerous in the 1946-1960 cohort that they explore).
Data
The data for this paper are derived from a special tabulation of the 1996
Canadian census. The particular table explored here is based on a sample of
roughly 1.6 million individuals[3]. The criteria for selection, and the variables
included in the analysis, were[4]:
.
Only individuals 15 years of age and older, who were not living in an
institution, and who were part of the labour force at some point between
1 January 1995 and the census date of 4 May 1996 are included. Note that
the period of actual employment during this 16-month period could have
been as little as one week and, unfortunately, employed and unemployed
workers are indistinguishable in the data analyzed in this study.
.
Ethnic origin: only those specifying a single ethnic origin in a large group
(minimum 35,000 given the above criteria) were included (Table I). By
removing those declaring multiple ethnic origins and a number of
smaller groups, approximately one-third of the total population was
dropped from the study.
.
Immigration status: in addition to the total population, two categories of
immigrants were defined: all immigrants; and those who became landed
immigrants between 1981 and the end of April 1996.
.
Occupation: the type of job done either in the week before the census or, if
the individual was unemployed at that time, the job of longest duration in
the 16 months prior to the census. Individuals with more than one job
were classified according to the job at which they worked the largest
number of hours. The Canadian labour market was classified into ten
broad categories, based on the Standard Industrial Classification system
(Table II). For analysis of labour market segmentation, these categories
were further subdivided into 52 detailed occupations.
.
Class of worker: as in the occupation variable, respondents were asked
to describe the job they held in the week before the census or, if
unemployed at that time, the job they had for the longest period during
the previous 16 months. Anyone who spent the largest number of hours
working, with or without pay, for someone else is classified as an
employee. Those who were primarily self-employed, whether in an
incorporated or unincorporated company, are classified as self-
employed.
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While there is no perfect measure of labour market segmentation, I have
chosen to use a statistic (the Index of S egregatio n) that summarizes the
extent to which members of a particular ethnic group have a widely
distributed vs. distin ct l abour market pro file. Groups tha t have the sa me
labour ma rket profile a s the rest of the population, across the
occupational cat egories defined for thi s analysis, are assigne d an index
value of zero, while those who are completely distinct (who work in
occupations that they alone hol d, an d ar e empl oyed in no o ther
occupations – i.e. they are completely ghettoized in the labour market)
would be assigned a value of 100.
The Index of Segregation is a descriptive statistic and there is no test to
determine its statistical significance. Generally speaking, values greater than
25 are considered noteworthy although, as we will see, the precise nature of
labour market segmentation matters a great deal in determining whether it is a
problem.
Table I.
Population by ethnic
origin, immigration
status, and
employment type,
Canada, 1996
Total Immigrants Class of worker
population Total 1981-1996 Employed Self-employed
Total, single ethnic origin 8,221,015 2,133,820 848,750 7,091,095 1,129,920
British 1,553,195 290,870 48,810 1,332,200 220,990
French 1,283,145 34,115 11,550 1,133,525 149,615
Dutch 172,600 66,830 6,720 133,080 39,520
German 382,440 98,525 15,015 297,550 84,890
Greek 73,850 44,160 3,825 58,110 15,740
Italian 364,195 165,980 7,420 313,405 50,790
Portuguese 124,955 100,200 26,065 114,435 10,515
Scandinavian 69,140 16,920 2,245 53,145 15,995
Hungarian 47,980 23,345 5,915 38,740 9,240
Polish 123,770 75,910 53,820 105,595 18,170
Ukrainian 168,005 13,035 4,220 137,145 30,855
Balkan 77,065 54,360 18,110 66,015 11,050
Jewish 87,760 33,175 11,070 62,580 25,175
Arab 65,295 56,375 35,665 51,335 13,960
West Asian 36,965 34,815 24,475 28,560 8,405
South Asian 248,250 234,850 132,830 219,875 28,375
East Asian 369,515 318,725 192,080 303,380 66,130
Chinese 321,675 287,255 176,430 269,935 51,740
Filipino 100,545 97,655 63,405 96,590 3,950
Vietnamese 40,240 39,755 26,650 36,745 3,485
African (black) 40,835 35,585 25,765 37,265 3,570
Caribbean 129,865 116,495 47,305 121,945 7,920
Jamaican 57,095 51,380 20,270 53,515 3,580
Latin American 42,105 40,710 27,985 38,465 3,645
Canadian 2,272,595 15,690 3,920 2,012,050 260,550
Aboriginal 132,765 1,235 455 123,900 8,860
Source: Special tabulation of 1996 Census of Canada
Immigrant self-
employment in
Canada
101
Broad national patterns
As might be expected, there is a clear relationship between the amount of time
people have spent in Canada and their position in the labour market. Groups
with the fewest recent immigrants are, generally, spread evenly across the
Canadian labour market. This is particularly true of what we might call the
‘‘charter groups’’ of Canada: people who indicated North-western European or
Canadian ethnic origins in the census (Table III). Groups with higher ratios of
immigrants, particularly those of non-European origin, tend to be concentrated
in specific occupations. Filipinos, Latin Americans, and Vietnamese Canadians
occupy the extreme position, with around two-thirds of their populations
having arrived in the 15 years prior to the census, and segmentation indices
above 30. Significantly, the only group with a relatively high proportion of
immigrants and relatively little labour market segmentation are those of Polish
ancestry, who also happen to be white. There are a few other groups that do not
follow the general relationship between immigrant status and segmentation,
notably those of Jewish, Portuguese, and Aboriginal descent. I will return to
these cases below, since each reveals a significant aspect of labour market
segmentation.
The relationship between immigrant status and degree of self-employment
in Canada is fairly predictable, given the results of studies elsewhere: recent
immigrants are relatively less likely to be self-employed than the total
population, but the rate of self-employment is higher for more established
cohorts (Table IV). Those immigrants who have been in Canada for between
five and 15 years have achieved almost the same level of self-employment as
the total working population, while those who have been here longer than 15
years have higher rates. Disaggregating the data by ethnic group, we see a
Table II.
Occupational structure,
by employment type,
Canada, 1996
Total Employed Self-employed
Total – all occupations 8,221,015 7,091,095 1,129,920
Management occupations 778,195 545,035 233,155
Business, finance and administrative occupations 1,548,225 1,438,225 109,995
Natural and applied sciences and related
occupations 410,880 368,960 41,920
Health occupations 413,265 361,155 52,110
Occupations in social science, education, government
service and religion 499,715 463,470 36,245
Occupations in art, culture, recreation and sport 174,325 119,895 54,425
Sales and service occupations 1,954,905 1,744,335 210,575
Trades, transport and equipment operators and
related occupations 1,289,985 1,098,705 191,275
Occupations unique to primary industry 401,225 225,945 175,275
Occupations unique to processing, manufacturing
and utilities 750,295 725,365 24,935
Note: Only those declaring a single ethnic origin are included
Source: Special tabulation
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Table III.
Self-employment and
LMS statistics,
Canadian labour force,
1996
Total labour force
Immigrants, landing 1981-
1996
Total
number
Im 1981+
(%)
LMS
index
Self-
employed
(%)
Total
number
LMS
index
Self-
employed
(%)
Total, single origin 8,221,015 10.3 13.7 848,750 12.9
British 1,553,195 3.1 8.6 14.2 48,810 15.9 14.8
French 1,283,145 0.9 8.7 11.7 11,550 26.4 16.6
Dutch 172,600 3.9 15.4 22.9 6,720 35.1 34.7
German 382,440 3.9 12.8 22.2 15,015 23.9 25.1
Greek 73,850 5.2 25.8 21.3 3,825 32.8 22.5
Italian 364,195 2.0 13.6 13.9 7,420 19.8 15.6
Portuguese 124,955 20.9 31.2 8.4 26,065 51.6 6.5
Scandinavian 69,140 3.2 13.4 23.1 2,245 22.6 21.8
Hungarian 47,980 12.3 9.5 19.3 5,915 28.1 15.3
Polish 123,770 43.5 11.6 14.7 53,820 29.2 13.0
Ukrainian 168,005 2.5 10.8 18.4 4,220 30.6 10.5
Balkan 77,065 23.5 16.6 14.3 18,110 30.1 11.5
Jewish 87,760 12.6 41.1 28.7 11,070 30.1 25.0
Arab 65,295 54.6 23.4 21.4 35,665 25.8 19.5
West Asian 36,965 66.2 22.8 22.7 24,475 25.8 22.1
South Asian 248,250 53.5 19.1 11.4 132,830 25.0 8.9
East Asian 369,515 52.0 24.3 17.9 192,080 25.3 18.1
Chinese 321,675 54.8 24.6 16.1 176,430 25.0 16.0
Filipino 100,545 63.1 41.8 3.9 63,405 50.9 3.2
Vietnamese 40,240 66.2 40.2 8.7 26,650 45.8 6.6
African (black) 40,835 63.1 21.8 8.7 25,765 28.3 8.2
Caribbean 129,865 36.4 24.3 6.1 47,305 35.0 4.0
Jamaican 57,095 35.5 26.0 6.3 20,270 35.7 4.5
Latin American 42,105 66.5 30.7 8.7 27,985 37.0 7.3
Canadian 2,272,595 0.2 8.6 11.5 3,920 14.2 12.5
(continued)
Table IV.
Self-employment by
immigrant status,
Canada
Total Self-employed labour force
labour force No. Per cent
Total population 8,221,015 1,129,920 13.7
Non-immigrants 6,087,190 788,215 12.9
Total immigrant population 2,133,820 341,700 16.0
Landed before 1961 318,055 76,810 24.1
Landed 1961-1970 414,040 72,165 17.4
Landed 1971-1980 552,975 83,555 15.1
Landed 1981-1996 848,750 109,170 12.9
1981-1990 494,130 66,610 13.5
1991-1996 354,620 42,560 12.0
Immigrant self-
employment in
Canada
103
weak tendency for groups with high numbers of recent immigrants to have
relatively low self-employment rates, but there is a great deal of variability at
both ends of the scale (Table III). Groups with less than 20 per cent immigrants
have a wide range of entrepreneurship ratios, from Aboriginals (just over 5 per
cent self-employment), to Jewish individuals (nearly 30 per cent). Note also that
several of the most advantaged groups in Canada, especially those of British
origin, have only average rates of self-employment, while other privileged
groups, such as Germans, Scandinavians, and the Dutch, are more
entrepreneurially inclined. Jewish men and women have a particularly distinct
profile, with the highest level of self-employment of any group. Groups with
more than 50 per cent immigrants are similarly varied in terms of self-
employment, ranging from Filipinos, at 4 per cent, to people from the western
part of Asia (mainly from Iran in the Canadian case), at over 20 per cent. As in
the USA, Latin Americans in Canada are rarely self-employed. Surprisingly,
given the literature on the UK, South Asians are also below average in this
respect. As we will see later, the level of immigrant and minority self-
employment is closely associated with their degree and – crucially – kind of
labour market segmentation.
With one exception, the relationship between self-employment and labour
market segmentation is relatively clear, although it defies the general
expectation in much of the literature on minority entrepreneurship that groups
which face barriers in the labour market have the most to gain by becoming
entrepreneurs[5]. Looking at the total working population (Table III), we see
that European-origin groups, generally, are widely distributed across
occupations but have the highest average rate of self-employment (though with
much variability). At the opposite end of the scale, aside from those of Jewish
origin, ethnic groups that are segmented into particular portions of the labour
market have the lowest level of self-employment. Clearly, there is much to be
gained here by reflecting on the particular mix of class and ethnic resources of
these groups in order to understand why they do not fit the standard stereotype
that blocked mobility leads to self-employment. Finally, there is substantial
variation in rates of self-employment among groups that have middle-level
indices of segmentation. South Asians and Afro-Caribbeans share below-
average rates of self-employment, while groups from the Middle East, East
Asia, and Greece are more entrepreneurial. Note that these general patterns are
replicated – with a few exceptions – when we explore the relationship between
labour market segmentation and self-employment for recent immigrants
(Table III).
Detailed patterns of labour market segmentation and self-
employment
To build a portrait of the relationship between labour market segmentation and
self-employment, I computed an index of representation for each ethnic group
and occupation[6]. The index compares the actual number of individuals in a
particular group and job with the number that would be expected if ethnicity
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and occupational structure were completely independent variables. The index
of representation is unity when the group has an ‘‘expected’’ number of
individuals in a particular occupation, two when there are twice the number
than would be expected, and 0.5 when there are half as many as expected.
Indices were computed separately for individuals who are employed and those
who are self-employed, and the two values were compared to ascertain the
extent to which entrepreneurship in a group coincides with labour market
specialization.
As seen in Table V, and previously in Table III, visible minorities are the
most concentrated in specific segments of the labour market. Moreover, in most
cases labour market segmentation is synonymous with disadvantage.
Generally, Northwestern European-origin groups (which includes the
‘‘Canadian’’ category) are the most well positioned in the labour market, in
terms of both status and remuneration. Southern and eastern European groups
tend to be drawn to (mainly unionized) jobs in manufacturing and construction,
and the natural sciences. Several European-origin groups deviate from these
patterns: Greeks, who have a relatively secure niche in retail and the restaurant
trade; Ukrainians, who continue to have a strong presence in agricultural
occupations and have also gravitated toward the teaching professions; and the
Table V.
Areas of greatest
occupational over-
representation, Canada,
1996 (employed
workers)
British Senior management, finance, protection
French Teaching, the arts, management
Dutch
b
Agriculture, finance, nursing
German
b
Agriculture, contracting, machining
Greek
ab
Cooks, retail managers, garment sewing
Italian Garment sewing, construction trades, salespersons
Portuguese
a
Manufacturing workers, janitors, labourers
Scandinavian
b
Agriculture, other primary, finance
Hungarian
b
Machinists, mechanics, the arts
Polish
b
Manufacturing workers, machinists, natural sciences
Ukrainian
b
Agriculture, contractors, teachers
Balkan
b
Machinists, manufacturing workers, natural sciences
Jewish
ab
Medical professionals, senior management, professionals (law)
Arab
ab
Drivers, health professionals, salespersons
West Asian
ab
Drivers, natural sciences, construction trades
South Asian Drivers, manufacturing workers, agriculture
East Asian
ab
Garment sewing, cooks, natural sciences
Chinese
ab
Garment sewing, cooks, natural sciences
Filipino
a
Domestics/childcare, nurses/orderlies, garment sewing
Vietnamese
a
Garment sewing, manufacturing workers, natural sciences
African Drivers, manufacturing workers, janitorial
Caribbean
a
Nurses/orderlies, garment sewing, domestics
Jamaican
a
Nurses/orderlies, manufacturing workers, domestics
Latin American
a
Janitors, manufacturing workers, service workers
Canadian Equipment operators, agriculture, engineers
Aboriginal
a
Resource industries, social services, senior management
Notes:
a
Groups with above-average (median) segmentation indices
b
Groups with above-average (median) rates of self-employment
Immigrant self-
employment in
Canada
105
Portuguese who, of all the European groups, have the lowest average education
attainment. As seen in other studies of the Canadian labour market, Jewish men
and women have achieved remarkable success in entering professional and
managerial occupations.
The occupational profile of visible minority groups reflects the selection
criteria of Canada’s recent immigration system. Some of these groups –
particularly of Arab, West Asian, Chinese and Vietnamese origin – occupy
polarized positions in the labour market. The highest indices of representation
for Arabs, for example, are in the transportation sector and the health
professions, occupations that could hardly be more different in terms of
educational requirements and social status. Similarly, Chinese-Canadians are
over-represented in both the declining garment sector and in engineering and
other natural science-based occupations[7]. Other minority groups, however,
appear to be more uniformly channeled into poorly-paid work. Latin
Americans, Africans, West Asians, and people from the Philippines – groups
that have all arrived relatively recently (at least in significant numbers) in
Canada – tend to be clustered in janitorial work, truck and taxi transportation,
garment production, domestic service, and in helping roles in health care. South
Asians and Caribbeans, who have lived in Canada for much longer than the
aforementioned groups, have similar profiles in the labour market.
Canada’s Aboriginal population also has a highly distinct position in the
labour market. As might be expected, given the traditional focus of indigenous
peoples on the land, Aboriginals are highly concentrated in primary activities,
especially forestry, fishing, and hunting occupations. Interestingly, the other
two areas of particularly high indices of representation are in social services
and senior management. Both of these types of occupations reflect the growing
participation of Aboriginals in the management of their own communities.
While the group-by-group patterns of labour market segmentation are
complex, as we have seen, the relationship between labour market participation
and self-employment is actually quite straightforward. For each ethnic group
surveyed here, there is a close correspondence between the occupations
employed and self-employed individuals perform (Table VI). This relationship
is closest for Arab-Canadians, who are concentrated in the transportation
sector, retail sales, and as professionals in the health sector (Table VII). All
three of these portions of the labour market lend themselves to entrepreneurial
behaviour, and it stands to reason that Arab-Canadians have a relatively high
rate of self-employment. In contrast, Canadians of South Asian and African
descent have been channeled into transportation as well, but also
manufacturing, janitorial work (Africans), and other poorly-paid jobs. Aside
from transportation, these occupations do not readily lend themselves to the
transition from paid labour to self-employment, which helps explain why both
groups have low levels of entrepreneurial behaviour.
This situation is even more pronounced for men and women from the
Philippines, who frequently come to Canada under the Domestic Caregiver
program (i.e. their entry into Canada is related to acquiring a job as a childcare/
IJEBR
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106
domestic worker in a Canadian home) and are strongly concentrated in
childcare, personal services, assisting occupations in health care, and garment
production. The transition from domestic work to self-employment is difficult
and rare, and there is little scope for entrepreneurial activity in supporting roles
in the Canadian health care system. While garment production is a sector in
which many immigrants establish small firms, this is not generally the case for
women, and it is mainly Filipinas who are employed in this niche. The
particular forms of labour market segmentation experienced by men and
women from the Philippines, therefore, inhibits their potential for
entrepreneurship (and helps explain why less than 4 per cent of the group is
self-employed). Chinese- and Vietnamese-Canadians have broadly similar
labour market and entrepreneurial profiles – specializing in a few specific
professional occupations, food and beverage trades, and manufacturing.
Chinese-Canadians, with a longer history of settlement in Canada and a far
more elaborate transnational business network, have been more successful at
generating small businesses out of this position than their Vietnamese
counterparts.
Table VI.
Correspondence
between sectors of
occupational
concentration and
self-employment
specialization
Ranked by r r
Self-
employed
(%)
Ranked by %
self-employment r
Self-
employed
(%)
Arab 0.90 21.4 Jewish 0.87 28.7
African (black) 0.90 8.7 Scandinavian 0.50 23.1
Greek 0.89 21.3 Dutch 0.74 22.9
Jewish 0.87 28.7 West Asian 0.81 22.7
West Asian 0.81 22.7 German 0.81 22.2
German 0.81 22.2 Arab 0.90 21.4
Filipino 0.80 3.9 Greek 0.89 21.3
Vietnamese 0.79 8.7 Hungarian 0.69 19.3
South Asian 0.76 11.4 Ukrainian 0.50 18.4
Caribbean 0.74 6.1 East Asian 0.55 17.9
Dutch 0.74 22.9 Chinese 0.65 16.1
Balkan 0.71 14.3 Polish 0.57 14.7
Portuguese 0.71 8.4 Balkan 0.71 14.3
Hungarian 0.69 19.3 British 0.59 14.2
Italian 0.69 13.9 Italian 0.69 13.9
Aboriginal 0.68 6.7 French 0.64 11.7
Chinese 0.65 16.1 Canadian 0.60 11.5
Latin American 0.65 8.7 South Asian 0.76 11.4
French 0.64 11.7 African (black) 0.90 8.7
Jamaican 0.62 6.3 Vietnamese 0.79 8.7
Canadian 0.60 11.5 Latin American 0.65 8.7
British 0.59 14.2 Portuguese 0.71 8.4
Polish 0.57 14.7 Aboriginal 0.68 6.7
East Asian 0.55 17.9 Jamaican 0.62 6.3
Ukrainian 0.50 18.4 Caribbean 0.74 6.1
Scandinavian 0.50 23.1 Filipino 0.80 3.9
Immigrant self-
employment in
Canada
107
Table VII.
Indices of
representation in the
paid vs. self-employed
labour force, selected
groups, Canada, 1996
Greek Portuguese Jewish Arab South Asian Chinese Filipino Vietnamese
E SE E SE E SE E SE E SE E SE E SE E SE
Number 58,110 15,740 114,435 10,515 62,580 25,175 51,335 13,960 219,875 28,375 269,935 51,740 96,590 3,950 36,745 3,485
Index of segmentation 23.4 37.4 31.4 28.0 38.9 42.8 20.6 37.1 19.5 32.1 23.9 34.3 39.9 40.7 41.1 39.2
Per cent SE 21.3 8.4 28.7 21.4 11.4 16.1 3.9 8.7
Correlation (E/SE) 0.895 0.708 0.870 0.900 0.758 0.650 0.801 0.789
Senior management 1.1 0.8 0.3 0.6 3.6 2.0 1.4 1.5 0.6 1.0 0.8 1.3 0.2 0.3 0.2 0.3
Specialist managers 0.9 1.1 0.6 1.1 2.5 2.0 1.2 1.5 0.8 1.2 1.2 2.1 0.4 0.5 0.4 0.6
Managers in retail, etc. 2.6 2.8 0.8 1.0 1.4 0.8 2.4 2.3 0.9 1.6 1.1 1.7 0.4 1.1 0.6 1.6
Other managers n.e.c. 0.7 0.8 0.6 1.3 1.6 1.1 1.0 0.8 0.7 0.9 0.9 1.2 0.3 0.8 0.3 0.5
Bus/finance professionals 1.1 0.6 0.5 0.4 2.4 2.9 1.2 0.8 1.5 1.4 2.0 1.6 0.9 1.0 0.7 0.3
Bus/finance administrative 0.9 0.3 0.7 0.5 1.7 1.1 0.8 0.3 0.9 0.8 1.2 0.8 0.9 1.0 0.5 0.5
Bus/finance secretaries 0.7 0.4 0.6 1.2 1.2 0.5 0.6 0.5 0.6 0.6 0.8 1.1 0.4 0.4 0.2 0.6
Bus/finance regulatory 0.9 0.9 0.7 0.9 2.1 1.9 0.9 1.3 0.8 1.3 1.0 1.7 0.6 0.7 0.3 0.8
Bus/Finance clerical sup. 0.9 0.4 1.0 0.0 1.0 2.2 0.9 0.0 1.1 1.1 0.9 1.1 0.8 0.0 0.3 0.0
Bus/finance clerical 0.9 0.6 0.9 0.8 1.0 1.0 0.8 0.9 1.2 1.2 1.1 1.2 1.2 1.3 0.6 0.5
Nat/science professionals 0.9 0.6 0.5 0.6 1.5 1.4 2.5 1.5 1.5 1.2 2.9 1.8 0.8 1.8 2.4 1.1
Nat/science technical 0.6 0.7 0.5 1.1 0.5 0.6 1.0 0.8 0.8 0.8 1.2 1.1 0.9 2.4 1.2 1.6
Health professionals 0.7 0.5 0.2 0.4 4.8 3.2 2.4 1.7 1.6 2.3 2.4 1.8 0.5 0.8 2.1 3.3
Health nurses 0.2 0.0 0.3 0.0 0.4 0.9 0.4 0.6 0.6 1.0 0.7 0.4 2.8 3.9 0.2 0.0
Health technical 0.6 0.7 0.4 0.2 1.0 1.1 0.7 1.0 0.7 0.9 0.9 1.7 2.1 1.1 0.9 1.7
Health assisting 0.5 0.6 0.7 0.6 0.4 0.5 0.4 0.7 0.8 0.7 0.4 0.8 3.7 4.7 0.6 0.0
Soc. sciences professional 0.8 0.3 0.3 0.2 3.5 4.6 0.9 0.7 0.7 0.7 0.8 0.6 0.3 0.5 0.4 0.4
Teachers and professors 0.7 0.4 0.3 0.3 2.6 2.0 1.3 0.3 0.6 1.1 0.6 1.3 0.2 1.4 0.2 0.0
Social services workers 0.7 1.3 0.5 1.0 1.7 1.8 0.6 0.9 0.5 1.7 0.6 2.1 0.5 3.4 0.3 0.0
Art/culture professionals 0.9 0.3 0.4 0.4 3.1 1.8 1.0 0.4 0.6 0.5 1.0 0.9 0.5 1.4 0.5 0.5
Art/culture technical 1.0 0.7 0.6 0.7 1.6 1.2 0.7 0.5 0.6 0.4 1.0 0.9 0.7 1.3 0.8 1.4
Sales/service supervisors 1.4 2.7 1.3 3.2 0.9 1.3 1.4 1.4 1.0 1.7 0.9 1.3 1.3 1.5 0.3 1.0
Sales/service specialists 0.9 0.7 0.6 0.8 2.6 1.9 1.1 1.2 0.8 1.3 1.2 1.9 0.4 1.0 0.3 0.9
Sales/service salespersons 1.1 0.9 0.8 1.1 1.5 1.6 1.6 1.7 0.9 1.6 0.9 1.2 0.7 0.9 0.5 1.2
Sales/service cashiers 1.2 1.8 0.9 1.0 0.3 0.2 2.1 4.1 1.2 2.3 1.0 3.0 1.4 0.0 0.6 4.2
Sales/service cooks, etc. 4.1 7.9 0.8 0.8 0.3 0.4 2.1 2.6 1.3 0.9 3.1 4.8 0.9 0.6 2.2 4.5
Sales/service food and
beverages 3.2 6.0 0.9 2.0 0.5 0.3 1.3 1.9 0.4 0.7 1.7 4.0 0.8 1.2 0.9 2.3
(continued)
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Table VII.
Greek Portuguese Jewish Arab South Asian Chinese Filipino Vietnamese
E SE E SE E SE E SE E SE E SE E SE E SE
Sales/service protection 0.4 0.0 0.3 0.6 0.2 1.2 0.6 0.0 0.7 1.0 0.2 0.7 0.3 0.0 0.2 0.0
Sales/service, travel, etc. 1.3 1.8 1.1 1.7 1.7 1.1 1.6 0.9 0.8 1.5 1.2 1.1 1.0 2.3 0.8 1.3
Sales/service childcare 0.6 0.3 0.6 1.3 0.8 0.3 0.8 0.6 0.8 1.2 0.6 0.6 5.0 4.5 0.5 0.8
Sales/service domestics 0.4 0.3 0.6 1.2 0.4 0.2 0.5 0.6 0.7 1.2 0.8 0.7 8.7 5.4 0.6 1.0
Sales/service other 1.6 1.5 1.9 1.9 0.4 0.4 1.1 0.9 1.2 0.7 1.0 0.7 1.8 2.2 1.3 1.6
Sales/service janitorial 1.4 1.6 2.8 3.0 0.2 0.1 0.7 0.4 1.0 0.8 0.6 0.4 2.1 3.5 1.3 1.7
Trades contractors 0.5 1.1 1.6 2.1 0.4 0.5 0.5 0.3 0.5 0.6 0.3 0.3 0.2 0.1 0.5 0.2
Trades construction 0.8 0.9 2.7 2.2 0.2 0.1 0.4 0.4 0.4 0.3 0.3 0.3 0.1 0.3 0.8 0.3
Trades engineers 0.8 1.4 0.6 1.2 0.2 0.5 0.4 0.7 0.5 0.5 0.4 0.4 0.5 0.0 0.5 0.7
Trades machinists 0.5 0.2 1.4 1.3 0.2 0.3 1.0 0.4 1.3 1.2 0.6 0.4 1.1 2.0 1.7 0.0
Trades mechanics 0.7 0.9 0.9 1.1 0.2 0.2 0.8 0.9 0.7 1.0 0.5 0.4 0.6 0.8 0.8 0.7
Trades other 1.3 1.2 1.2 1.5 0.5 0.6 1.1 1.5 0.8 0.6 1.1 0.8 0.8 0.8 2.4 1.8
Trans heavy eq. ops. 0.2 0.1 1.1 0.4 0.1 0.0 0.2 0.2 0.1 0.0 0.0 0.0 0.1 0.0 0.0 0.0
Trans light eq. ops 0.6 0.8 0.6 1.0 0.3 0.4 0.8 2.3 0.9 2.9 0.3 0.3 0.2 0.6 0.3 0.6
Trans drivers 2.2 1.9 0.4 1.3 1.5 1.0 6.1 8.6 4.7 7.9 0.4 0.3 0.2 0.6 0.6 1.4
Trades/trans helpers 0.5 0.7 2.8 3.3 0.2 0.3 0.5 0.5 0.9 0.7 0.4 0.3 0.6 0.7 0.9 0.6
Primary agric. non-labour 0.1 0.1 0.7 0.4 0.1 0.0 0.1 0.0 1.3 0.1 0.2 0.1 0.1 0.1 0.6 0.2
Primary agric. workers 0.1 0.0 0.8 0.4 0.1 0.0 0.1 0.0 1.8 0.3 0.3 0.2 0.1 0.0 0.9 0.2
Primary non-agric. 0.0 0.0 0.3 0.1 0.0 0.0 0.1 0.0 0.1 0.0 0.1 0.1 0.0 0.0 0.6 3.1
Primary non-agric.
workers 0.2 0.3 1.3 2.2 0.1 0.0 0.3 0.2 1.8 0.6 0.2 0.2 0.3 1.4 1.0 0.8
Manuf. supervisors 0.8 1.6 1.4 1.4 0.5 0.9 0.9 0.9 1.2 0.7 0.7 0.8 0.7 0.0 1.3 0.9
Manuf. machine ops. 1.3 1.4 2.1 1.4 0.2 0.5 0.8 0.7 1.8 0.9 1.5 1.0 1.4 1.8 3.6 2.7
Manuf. sewing ops. 4.1 3.8 3.2 1.8 0.2 0.4 1.0 1.4 2.1 1.4 4.7 2.2 2.3 3.3 8.8 8.3
Manuf. assemblers 1.0 0.7 1.8 0.4 0.2 0.2 1.0 0.8 2.0 1.2 1.4 0.7 2.2 1.5 5.0 3.8
Manuf. labourers 0.8 1.0 1.9 1.9 0.2 0.5 0.6 0.5 2.2 2.6 1.1 1.2 1.1 1.7 2.6 6.4
Notes: E = employed; SE = self-employed
Immigrant self-
employment in
Canada
109
There are equally stark contrasts in the labour market and self-employment
profiles of non-visible minority groups. Polish-Canadians (not included in
Table VII), for example, have yet to develop any particular niche, either in paid
employment or entrepreneurship (their index values are close to unity across all
occupations). At the Canadian scale, people of Dutch ancestry have developed
just one strong niche economy: farming. Greeks, on the other hand, have built a
large ethnic economy out of entrepreneurship in the restaurant sector,
providing substantial jobs within the group. As in the case of Filipinos and
African-Canadians, individuals of Portuguese descent rarely become self-
employed. When they do engage in entrepreneurship, however, it is usually in
the relatively marginal janitorial and low-level construction sectors – exactly
the occupations where Portuguese-origin men are most likely to find work.
Jewish-Canadians provide a counterpoint example. They are one of the most
entrepreneurially-oriented groups in Canada but, in contrast to all of the other
groups, have done so through the professions, particularly health care and
jurisprudence.
Conclusion
Despite the generalized scale of this analysis and, as always, the caveats that
need to be made when using census statistics, there are clear patterns in the
data surveyed here. Using the ideas and methodologies of labour market
segmentation theory, we see that ethnic groups are differentially positioned in
the labour market. Extending this framework to survey the nature and degree
of self-employment, we see that, once in place, the occupational profile of a
group has a direct bearing on the entrepreneurial behaviour of its members.
This is a key aspect of economic embeddedness in terms of entrepreneurship:
for the most part, prospective entrepreneurs can only establish businesses in
the sectors of the economy they know and the potential for self-employment is
largely defined in the paid labour market[8]. Groups embedded (as employees)
in sectors where entrepreneurship is an option – such as agriculture,
transportation, construction, the restaurant industry and, in the case of Jewish-
Canadians, law and medicine – have the highest rates of self-employment.
Conversely, with some exceptions, groups with relatively few entrepreneurs
occupy jobs in the public sector, senior management, personal service, and in
(non-garment) manufacturing. Although the data explored here provide a
single snapshot, and causality can only be speculated, I believe this provides
evidence for the ethnic facilitation cycle described earlier: once there is an
entrepreneurially-based niche economy in place, incoming immigrants
gravitate toward job opportunities in the niche. The important point, of course,
is that other opportunities are restricted once this cycle takes hold.
Equally significant is the fact that programs designed to encourage
immigrants and minorities to start businesses are most likely to succeed for
those groups appropriately positioned in the paid labour force. It is probably of
little use, under these circumstances, to expect individuals from the Philippines,
for example, to increase their rate of self-employment without first dealing with
IJEBR
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the forces that lead them to concentrate in domestic care, helping occupations
in health services, and so on. Finally, the symbiotic relations between paid
labour and self-employment help us understand why so few immigrants and
minorities use the programs created by the government to support small
businesses. Those with the scope to become self-employed do so as part of the
employment/self-employment cycle described here, while those outside this
cycle are unlikely to participate in programs since the work they know does not
lend itself to entrepreneurship.
Notes
1. See Light and Rosenstein (1995) for a useful statement of this adaptation of the interactive
model of immigrant entrepreneurship reviewed earlier.
2. Variations between birthplace groups in the USA are reviewed in Razin and Light (1998);
for figures on Australia, see Collins et al. (1995).
3. Statistics Canada sampled every fifth household with a detailed questionnaire in the 1996
census. In each household, one particular person filled out the form, answering a set of
questions for each individual member of the household. Data used here were acquired from
Statistics Canada by Canadian Heritage and are reported as population estimates; therefore
the total in Table I is 8.2 million.
4. Note that sex was included as a variable but gender differences – which are highly
significant in terms of the nature and degree of self-employment – will not be addressed in
this paper. I presented preliminary findings on this issue at the ‘‘Self-employment, gender
and migration’’ conference, held in San Feliu de Guixols, Spain, in October 2000, in a paper
entitled ‘‘Gender and immigrant self-employment: presences and absences in official
statistics’’.
5. The correlation coefficient between these variables is –0.32, but this figure rises to –0.57
when the Jewish group is removed from the calculation.
6. The expected frequency for a particular ethnic group/occupation combination is calculated
in the same way as a cell in a chi-squared contingency table, by dividing the product of the
row (occupation) and column (ethnic group) totals by the grand total (total population). The
index is computed by dividing this expected frequency by the actual number in the cell.
7. At least some of this polarization is related to gender. In all ethnic groups, but particularly
those that are the most marginalized in the labour market, women are much more likely to
be found in the personal services and non-unionized manufacturing jobs than men.
8. Of course, in countries where there are more elaborate welfare states, and especially where
training is more widely available and targeted to the needs of immigrants, the link between
the labour market and self-employment should be less direct. I thank Ewald Engelen for
this helpful point.
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International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
pp. 113-133. # MCB UP Limited,
1355-2554
DOI 10.1108/13552550210423750
Chinese entrepreneurs
The Chinese Diaspora in Australia
Jock Collins
School of Finance and Economics, University of Technology Sydney,
Australia
Keywords Labour market, Australia, Ethnic groups, Entrepreneurialism
Abstract Recounts the history of the Chinese Diaspora in Australia, which dates back to the
Gold Rush of the 1850s. In the past three decades, following the end of the white Australia policy,
many ethnic Chinese immigrants have immigrated to Australia. Although there are only 300,000
people of Chinese ancestry living in Australia, Chinese immigration is a critical chapter of
Australia’s immigration experience. Chinese entrepreneurs have played a major role in the
history of the Chinese in Australia. Explores the experience of Chinese entrepreneurs in Australia
from the earliest days till the present and reviews historical accounts of Chinese entrepreneurs in
Australia, before presenting the results of recent research. Argues that it is necessary to
investigate how ethnicity, gender and class have intersected to shape changing patterns of Chinese
entrepreneurship in the Australian Chinese Diaspora. Suggests also that the dynamics of Chinese
immigration and Chinese entrepreneurship in Australia have been shaped by the changing
dynamics of globalisation, the state and the racialisation of Chinese immigrants in the Australian
labour market and society as a whole.
Introduction
The history of the Chinese Diaspora in Australia dates back to the Gold Rush of
the 1850s. In the past three decades, following the end of the white Australia
policy, many ethnic Chinese immigrants have immigrated to Australia. The
number of people of Chinese ancestry living in Australia is estimated to be
300,000 by the mid-1990s (Pe-Pua et al., 1996, p. 49). This is a very small part –
Chin (1988, p. 318) suggests less than 0.5 per cent – of the overseas Chinese
population of some 30 million people. Despite their relatively small numbers,
Chinese immigration is a critical part of Australia’s immigration history. Chinese
entrepreneurs have played a major role in the history of the Chinese in Australia.
This paper explores the experience of Chinese entrepreneurs in Australia from
the earliest days till the present. It reviews historical accounts of Chinese
entrepreneurs in Australia before presenting the results of recent research. The
paper argues that it is necessary to investigate how ethnicity, gender and class
have intersected to shape changing patterns of Chinese entrepreneurship in the
Australian Chinese Diaspora. It also suggests that the dynamics of Chinese
immigration and Chinese entrepreneurship in Australia have been shaped by the
changing dynamics of globalisation, the state and the racialisation (Miles, 1982)
of Chinese immigrants in the Australian labour market and society as a whole.
The paper first looks at the early history of Chinese immigration in the
nineteenth century and the role of Chinese entrepreneurs in that period. It then
This article is part of a special issue of papers entitled ‘‘The economic context, embeddedness
and immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
IJEBR
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presents an overview of the recent history of Chinese immigration in Australia,
before presenting data on the rate of Chinese entrepreneurship from the past
three Australian censuses. During this period, many Chinese entered Australia
under the business migration programme. This is discussed in the next section.
The paper then reviews recent Australian research into Chinese entrepreneurs
before an attempt to explain different rates of entrepreneurship among different
birthplace groups of Australian Chinese and some concluding remarks.
Chinese entrepreneurs in Australia: the early years
The racialisation of the Chinese Diaspora in Australia
Early Australian immigration was predominantly British, with few non-
Europeans until the Australian gold rush of the mid-nineteenth century that was
the stimulus to attract large numbers of Chinese male sojourners to the Colonies
of Eastern Australia. Prior to the discovery of gold in the 1850s, Price estimated
that there were less than 3,000 Chinese in Australia (Price, 1966, p. 27). A decade
later, there were over 38,000 Chinese in Australia (Choi, 1975, p. 22). While the
Chinese population peaked at less than 5 per cent of the population of New South
Wales (NSW) and Victoria in 1861, there were times and places when the Chinese
were in a majority: in the Queensland town of Cooktown the Chinese
‘‘outnumbered whites by at least two or three to one’’ (Cronin, 1975, p. 258), while
in the 1880s McQueen (1970, p. 49) notes that ‘‘every second man in town was
Chinese’’. The response to the Chinese by the ‘‘host’’ society was mainly one of
prejudice, hatred and hostility. Anti-Chinese riots occurred on many goldfields,
resulting in incidents where Chinese were killed and injured (McQueen, 1970,
p. 44-5; Markus, 1979, p. 137). Newspapers of the day were full of racist references
to – and caricatured depiction of – the Chinese for their dress, eating habits,
health, religion, culture, opium smoking and sexual predilections (Cronin, 1975).
This racism directed towards Chinese immigrants had its roots in the earlier
racist ideologies and practises against the Aboriginal peoples (de Lepervanche
and Bottomley, 1988), just as late twentieth century racism against Asians in
Australia had its roots in these events more than 100 years ago. ‘‘Colour’’ was a
key signifier of racial difference. A hierarchy of racial stereotypes emerged in
the nineteenth century Australian labour market. In Queensland, Chinese were
paid about 20 pounds per year, which was 22 pounds less than Europeans were
paid but more than the 4 pounds paid to Melanesians. Aboriginals did not even
get a wage: they were paid in rations of flour, sugar and tobacco (Cronin, 1975,
pp. 241-5). The first immigration legislation in Australia was an explicitly
racist response to Chinese immigrants. Widespread mobilisation of anti-
Chinese groups – including the trade unions (Collins, 1988b) – successfully
agitated for legislation to restrict Chinese immigration. With outright exclusion
not possible, due to British opposition, authorities in Victoria, NSW and later
Queensland introduced legislation to restrict Chinese entry (Markus, 1979,
1994; Price, 1974).
The trade union movement joined in anti-Chinese actions, with the
Melbourne Trades Hall Council refusing to grant affiliation to the Chinese
Chinese
entrepreneurs in
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Workers Union (McQueen, 1970, p. 50). As a consequence, many avenues of
work were denied Chinese immigrants, who had switched from mining to
agricultural and pastoral pursuits as general labourers or station hands. Others
took the road to self-employment as market gardeners or shop owners. In these
circumstances, Chinese immigrants found it difficult to find work, and self-
employment or a small business were the only available avenues for a
reasonable (or any) income. As Wang (1988, p. 300) put it: ‘‘As gold became
exhausted, more Chinese moved to country towns and capital cities to set up
small businesses as grocers, hawkers of vegetables, fruit and other goods’’.
At Federation in 1901 the new Australian nation had, as its strongest
foundation, a racist immigration policy built on entrenched anti-Asian and anti-
Aboriginal attitudes and practises. The ‘‘white Australia policy’’, as the 1901
Immigration Restriction Bill was popularly called, was introduced with an
unusual degree of unanimity across the spectrum of politics and among all
classes (Yarwood, 1968, p. 73). Debate at the time centred not on the
appropriateness of the white Australia policy but on the methods by which
non-white exclusion was to be achieved. The infamous ‘‘dictation test’’ was
introduced as a method of exclusion: any person who failed to pass a dictation
test in any European language could be declared a prohibited immigrant. The
intention of the Act was clear: non-whites would be excluded.
The white Australia policy lived up to the expectations of its supporters.
The number of ‘‘full Chinese’’ fell from just under 30,000 in 1901 to 9,000
Chinese in 1947 (Choi, 1975, p. 27). Those Chinese who stayed in Australia
faced racial discrimination and thus found it hard to get jobs as wage
labourers. Many moved into entrepreneurship, particularly market gardens,
food and furniture niche markets. This move was critical not only to the
survival of the families of Chinese entrepreneurs themselves, but also to the
economic survival of those Chinese who remained.
Chinese entrepreneurship in early Australia
By 1901 there were 799 Chinese shopkeepers and grocers in New South Wales.
Half of these were in the Sydney area, many as greengrocers: one-third of the
Chinese in Victoria and NSW worked in market gardens (Choi, 1975, p. 29).
Market gardens became the base for later expansion into independent
employment in fruit and vegetable distribution, in grocer shops and cafe´s, as
general dealers, hawkers and importers (Choi, 1975, p. 33). Other Chinese
moved into the laundry business or opened small furniture shops. Chinese
furniture factory ownership reached a peak in 1912 when the Chinese owned
168 factories (31 per cent of the total number) and employed 818 workers (28
per cent of the furniture trade’s workforce) (Yuan, 1988, p. 305).
‘‘Chinatown’’ areas developed in the Haymarket-Dixon Street area of Sydney
(Collins and Castillo, 1998, pp. 278-89; Fitzgerald, 1997) and the east end of
Little Bourke Street in Melbourne (Collins et al., forthcoming). Today these
areas are the nucleus of modern Chinatowns, with Australia’s other major cities
such as Adelaide, Perth and Brisbane also boasting a ‘‘Chinatown’’. Chinese
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entrepreneurs are also prominent in suburban business precincts such as
Cabramatta in Sydney and Richmond in Melbourne (Burnley, 1986, 1995). In
1901 one half of the occupied Chinese in Victoria were primary producers,
although this was already dropping by 1911 with a movement into commerce
and industry. Chinese immigrants in Melbourne also established a niche in the
laundry business: by 1913 the Chinese made up a third of all laundries in
Melbourne.
Despite official and popular anti-Chinese racism there were some Chinese
who worked and prospered in Melbourne in the first decades of the twentieth
century. Louis Ah Muoy was a successful gold miner, merchant and
entrepreneur, as was Long Kong Meng. Ah Muoy was also a founding director
of the Commercial Bank of Australia and an early spokesperson for the Chinese
community. Prominent Chinese Melbournian barrister William Ah Ket was
sent by the Melbourne Chinese Chamber of Commerce to represent the
Australian Chinese at the opening of the first Chinese Parliament in Beijing in
December 1912. Businessman John Egge plied the trade routes of the Murray-
Darling-Murrumbidgee Rivers, engaging in business in New South Wales,
South Australia and Victoria. Members of his family prospered in Mildura and
Echuca, as did farmer Thomas Coto, who fought for fair wages for his
agricultural workers in the Maffra/Sale areas of Gippsland in Victoria’s East. It
was reported that Coto ran a cheese factory during the 1880s at a loss just to
provide employment for locals. The Tim Young, Louey Pang, Hock Yick and
Wing Young families were prominent successful banana and tomato
distributors in Melbourne (Collins et al., forthcoming).
But the Chinese immigrants in Australia were not just workers or
businessmen: there were 40 Chinese doctors in Victoria, for example, in these
pre-1945 decades. Others were prominent in the church. Reverend Cheong
Cheok Hong, for example, was initially director of the Presbyterian Chinese
Mission in Melbourne and later directed the Chinese Mission of the Church of
England where he raised funds to build the Church of England Hall in Little
Bourke Street (Collins et al., forthcoming).
The racialisation of Chinese entrepreneurs
While Chinese entrepreneurs might have moved into entrepreneurship because
racial discrimination blocked their opportunities elsewhere, they did not escape
racial discrimination when they became entrepreneurs. These Chinese
entrepreneurs in NSW, Victoria and the other colonies/states were hampered
by discriminatory legislation. For example, Chinese furniture makers and
laundry keepers were not permitted to sponsor Chinese migrants to help in
their business, so that they had trouble in finding sufficient labour. In addition,
the Factories and Shops Act (NSW 1896, Victoria 1896) defined any workshop
employing one or more Chinese person as a factory, whereas four Europeans
were required for a ‘‘factory’’ to exist. This meant that all small Chinese
workshops fell under industrial regulations concerning wages, conditions of
work and limited hours of opening. Moreover, all Chinese-made furniture was
Chinese
entrepreneurs in
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to be stamped with the words ‘‘Chinese labour’’ (Yuan, 1988, p. 305). This was
the beginning of the end of the Chinese cabinet and laundry businesses.
Employment of Chinese-born immigrants in the NSW and Victorian cabinet
making industry peaked in 1912 and had fallen another half by the year 1920
(Markus, 1994). The Chinese laundry is a common entrepreneurial experience
of the Chinese Diaspora in the USA, Canada and other places of Chinese
immigration (Li, 1988). While Chinese immigrants in Australia also established
laundries they were almost non-existent in Australia by the Second World War
(Choi, 1975).
The literature on ethnic entrepreneurship gives great significance to ethnic
niche markets as a seedbed of ethnic entrepreneurship (Waldinger et al., 1990;
Bonacich and Modell, 1980; Light and Gold, 2000, pp. 9-15). Unlike the furniture
and laundry businesses, which competed strongly with other businesses, the
Chinese market gardeners found a niche that did not threaten others and did
not attract discriminatory legislation. Chinese market gardens thrived as
immigration regulations allowed assistants and ‘‘substitutes’’ to enter and work
in the gardens. Large wholesale fruit and vegetable distributing firms were
established in NSW and Victoria between the years 1910-1920 and, according
to Choi (1975, p. 53), ‘‘almost monopolised the business at that time’’. Similarly,
Chinese small-scale fruit and vegetable stalls became a major part of fruit and
vegetable distribution, acting as a link between the Chinese wholesalers and
the public. Chinese market gardens and vegetable and fruit businesses
continued into the post-war period, although the number of Chinese in
Australia fell to 10,000 in 1947, nearly half of whom had been born in Australia,
the result of a ‘‘successful’’ white Australia policy.
Chinese immigrants also had an impact as landowners, banana farmers and
gardeners in rural areas, including Cairns in Northern Queensland. Reviewing
the relationship between immigration, business and commerce, Glezer (1988,
p. 860) argues that all immigrants were not equally welcomed by the
established business community, noting the existence of:
... institutional measures designed to dissuade unwanted outsiders from penetrating the
positions of the entrenched business groups ... One consequence of such arrangements was
to largely confine non-Anglo-Celtic business people to the periphery of the business system.
Hence Irish Catholics, Chinese, Lebanese and Jews were restricted in their
access to business opportunities (Collins et al., 1995). This demonstrates the
pivotal role of racialisation in shaping the ethnic entrepreneurship experience
in Australia
Glezer’s views support the notion that immigrants faced ‘‘blocked mobility’’
as employees and, when they made the shift, as business-owners. The
movement of the Chinese and many other immigrants such as Italians, Greeks
and Lebanese into restaurants, Glezer (1988, p. 861) argues:
... was not usually a preferred choice, but a consequence of limited options ... The tendency
of some ethnic groups to have a proportionately larger presence in small business than
British migrants and the majority population has often been as much the product of
constraints and limitations as of their preferences, skills and cultural assets.
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Chinese entrepreneurs in Australia: the past 25 years
The Chinese Diaspora in Australia today
It is difficult to conduct research into the ethnic Chinese Diaspora in Australia
because national census data are based on birthplace rather than ethnicity. The
1986 Australian census, the only to include a question on ancestry, reported
that 196,310 people, or 1.21 per cent of the Australian population, were of
Chinese ethnic origin (Price, 1988, p. 124). For the first 50 years of Chinese
settlement in Australia, almost all Chinese who were born overseas were born
in China. But the Chinese Diaspora in Australia today includes many ethnic
Chinese who were born in Vietnam, Malaysia, Hong Kong, Singapore and
Taiwan as well as those born in China (Ho and Coughlan, 1997, p. 120). For
example, one-third (34.1 per cent) of the Vietnamese-born in Australia in 1986
reported that they were of Chinese ancestry (Thomas, 1997, p. 284). Moreover,
only three-quarters (76.2 per cent) of those who were born in the People’s
Republic of China were of Chinese ancestry. The 1986 census also showed that
93.3 per cent of those born in Taiwan were ethnic Chinese, as were 84.6 per cent
of those born in Hong Kong and Macau, 61 per cent of those born in East-
Timor, and 60.6 per cent of those born in Malaysia and Brunei. In addition, 42.7
per cent of those born in Singapore, 40.7 per cent of those born in Cambodia and
27.4 per cent of those born in Indonesia claimed Chinese ancestry (Ho and
Coughlan, 1997, p. 123).
The key feature, then, of the Chinese Diaspora in Australia is its diversity:
Australia’s ethnic Chinese come from a range of regional, religious and social
class backgrounds. Today’s Chinese Diaspora in Australia includes the
undocumented Chinese dishwasher from the PRC to a millionaire ethnic
Chinese businessman from Hong Kong, Malaysia or Indonesia. In between,
Australia’s ethnic Chinese community exhibits a diversity of religious, cultural
and socio-economic profiles. They also have very different immigration
experiences. Ethnic Chinese from Indo-China generally arrived as refugees or
family migrants in the 1970s and early 1980s (Collins, 1991, pp. 60-72; Vivianni,
1984). Many of those born in South East Asian countries arrived in Australia
under family migrant categories, while those from North East Asia are more
recent migrants and are more likely to arrive under skilled/professional or
business categories.
In the 15 years since the 1986 census, the immigration of ethnic Chinese to
Australia has increased dramatically. The main source countries of Australia’s
ethnic Chinese people have regularly featured among the ‘‘top ten’’ countries of
Australian immigration (Coughlan and McNamara, 1997; Castles et al., 1998;
Collins, 2000). But the absence of an ethnicity or ancestry question in
Australian census data means that it is difficult to measure accurately how big
Australia’s Chinese Diaspora is today or to assess precisely their changing
socio-economic characteristics. The 2001 census, just completed, will also
include an ethnicity/ancestry question.
Chinese
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119
Chinese entrepreneurs in Australia in the 1990s
Immediately after the Second World War, Chinese immigrants continued their
earlier presence in the vegetable and fruit retailing business. However, new
immigrants, particularly Italians, also moved into this area of business (Collins
et al., 1995). The Chinese responded to this challenge with flexibility: many
turned their business activities to running cafe´s and restaurants all over the
metropolitan and rural areas across the nation. By the mid-1980s, Chinese cafe´s
were a feature of the Australian suburban and country town landscape. There
were 7,000 cafe´s operated by Chinese in NSW. In the nation’s capital, Canberra,
there were 6,080 Chinese cafe´s, 200 in Melbourne and 300 in Sydney. In
Adelaide one-eighth of the Chinese population were employed in Chinese cafe´s
(Chin, 1988).
Census data allow an investigation int o different rates of entrepreneurship
among different birthplace group s in Aus tralia. Table I lists the
entrepreneurship rates for males in the 1986, 1991 and 1996 census for the
main countries of origin of Australia’s Chinese immigrants. Table II lists the
same data for females. These data show that immigrants born in Taiwan have
by far the highest rate of entrepreneurship in Australia, while those born in
Hong Kong also have a higher rate of entrep reneurship c ompared to those
born in Australia. But other source countries of Australia’s Chinese
immigrants – such as Vietnam, PRC, Indonesia, Malaysia, Singapore – have
similar or lower rates of entrepreneurship compared to those born in Australia
(Col lins et al., 1995).
Table I.
Male entrepreneurs
a
in
Australia, by birthplace
of the main countries
of origin of Australia’s
Chinese immigrants,
1991 national census
(% of those in the
labour force)
Category Hong Kong
Malaysia
and
Brunei
People’s
Republic of
China Singapore Taiwan
Self-employed 9.2 7.4 8.8 9.4 22.4
Employer 11.0 9.1 9.0 8.6 17.6
Percentage of entrepreneurs
a
20.2 16.5 17.8 18.0 40.0
Notes:
a
Entrepreneurs determined by adding proportion in labour force that are self-
employed to those that are employers
Source: Ho and Coughlan (1997, p. 151, Table 6.16)
Table II.
Female entrepreneurs in
Australia, by birthplace
of the main countries of
origin of Australia’s
Chinese immigrants,
1991 national census
(% of those in the
labour force)
Category Hong Kong
Malaysia
and
Brunei
People’s
Republic of
China Singapore Taiwan
Self-employed 7.2 5.0 8.6 6.7 19.0
Employer 7.6 4.0 6.4 4.3 9.3
Percentage of entrepreneurs 14.8 9.0 15 11 28.3
Source: Ho and Coughlan (1997, p. 151, Table 6.16)
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The important point to note is that rates of entrepreneurship for ethnic Chinese
immigrants vary considerably, casting doubt on culturalist explanations (the
Chinese are good at business) of ethnic entrepreneurship. Moreover, Table II
reminds us of the importance of female ethnic entrepreneurship among ethnic
Chinese and other immigrant groups. Females comprise about one in four of
Australia’s entrepreneurs, and are growing at a faster rate than male
entrepreneurs (Roofey et al., 1996).
Business migration and Chinese entrepreneurs in Australia
A new path for wealthy ethnic Chinese immigrants to Australia and other
western countries like Canada (Wong, 1993; Wong and Netting, 1992) and the
USA in recent decades has emerged in the last two decades, following the
introduction of a business migration category (Collins et al., 1995, p. 37).
Business migrants to Australia arrive as experienced entrepreneurs with large
amounts of capital ready to make their mark on the national and international
markets. Their trajectory to ethnic enterprise is therefore much different from
that of the traditional path of ethnic Chinese from wage labourer to
entrepreneur.
Introduced in 1976 by the conservative Fraser Government (1975-1983), the
Business Migration Program (BMP) aimed to ‘‘provide for the admission of
people with expertise and capital to establish worthwhile enterprises in
Australia’’ (DIEA, 1980, p. 45). In order to qualify, business migrant applicants
had to demonstrate a successful business record, have substantial assets that
could be transferred to Australia and intend to settle permanently in Australia.
The amount of capital required for business purposes varied from $350,000 for
an applicant under 40 years of age to $850,000 for someone aged 58 and over.
They had to satisfy immigration officials that they would be able to establish a
business in Australia (Borowski, 1992, p. 2).
In the decade following the introduction of the BMP over 11,000 business
migrants and about 50,000 of their dependent family members arrived in
Australia. After 1986, the numbers entering under the BMP increased
markedly. The business migration intake grew steadily over this decade,
peaking in 1988-1989, when 2,637 principal applicants were granted visas.
Intakes then fell dramatically in the 1990s.
During the 1980s, Asian countries became increasingly important among
Australia’s business migrants. In 1982-1983, 25 per cent of business migrants
were Asian; but by 1991-1992 Asians accounted for 93 per cent of the business
migrant entrants. Over the period 1982 to 1990, the major source countries for
business migrant entrants were Hong Kong (32 per cent), Taiwan (15 per cent),
Malaysia (12 per cent), the UK (8 per cent), Indonesia (6 per cent) and Singapore
(5 per cent) (The Parliament of the Commonwealth of Australia, 1991, p. 30). In
1990-1991, Hong Kong, China and Taiwan accounted for more than two-thirds
of the total business migrant intake (Kee et al., 1993, p. 7). In August 1991 a
report found that 45 per cent of business migrants had established businesses
by one year after arrival and that 61 per cent had done so after two years, with
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121
less than one-third of these businesses claiming that they were export oriented.
The average employment generated was six persons per business, while half of
the businesses were established in the services industry (DILGEA, 1991a, b).
These ethnic Chinese business migrants have been tagged with the term
‘‘astronauts’’ because they spend most of their time in the air flying between
their homes in Australia and Asia on business matters (Pe Pua et al., 1996).
Some have questioned the authenticity of these business migrants, accusing
them of abusing the system and never intending to settle permanently in
Australia in the first place (Ellingsen, 1990). Skeldon (1992) has argued that
business migrants from Hong Kong saw the Australian business migration
programme as some sort of ‘‘insurance’’ or alternative before or after Hong
Kong returned to Chinese control in 1997.
A longitudinal survey of Australian immigrants, conducted by the
Australian Bureau of Population and Immigration Research (BIPR) in 1992,
included a sample of 798 visaed arrivals who were interviewed within six
months of their arrival in Australia. Of these, 13.7 per cent had returned to their
home temporarily. The bulk of these were ethnic Chinese business migrants
from Hong Kong, Taiwan and Malaysia (Hugo, 1994, p. 70). Another study (Pe
Pua et al., 1996) found that Hong Kong business migrants mainly operated
businesses involving trading (import-export) across a range of goods. For
example, one Hong Kong astronaut exported seafood to Hong Kong, while
others imported garments and textiles and toys made in China. Other Hong
Kong astronauts ran retail outlets, restaurants, manufacturing firms (textiles,
clothing, leather, jewellery, toys, electronic parts, electrical appliances) and
travel agencies. All of these business migrants were continuing to run their
business activities in Hong Kong, China and Taiwan. Most had returned to
Hong Kong to run their businesses (Pe-Pua et al., 1996, pp. 43, 47).
Recent surveys of Chinese entrepreneurs in Australia
There have been a number of important Australian studies that provide insight
into Chinese entrepreneurs in Australia. Lever-Tracy et al. (1991) surveyed 104
Chinese and 40 Indian entrepreneurs with businesses in retail trade (including
take-away food shops), restaurants, wholesale trade, property and business
services and health in Brisbane and Sydney in the late 1980s. Collins and
various colleagues conducted three surveys of ethnic entrepreneurs – including
Chinese entrepreneurs – in Australia. The Sydney survey of 280 (mainly
immigrant) entrepreneurs, including 32 Chinese males and ten Chinese females,
in Sydney was conducted in two stages: 1988-1989 and 1991-1992 (Collins et al.,
1995). A second survey by Collins et al. – called the 1996 National Survey –
covered 307 entrepreneurs (114 self-employed and 193 employers) in Sydney,
Melbourne and Perth (Collins et al., 1997). The survey included 37 Chinese
entrepreneurs.
These surveys of Chinese entrepreneurs in Australia provide a wealth of
comparative data about Chinese entrepreneurs from Australia. They enable an
insight into the background of these entrepreneurs and the role of the family
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and co-ethnic custom in Chinese enterprises. They also provide information
into financial and employment dynamics, an insight into international trading
activities and other global Diasporic links. In this section I summarise some of
the key features of contemporary Chinese entrepreneurs in Australia that
emerge from this Australian research.
The family plays a major role in most Chinese business enterprises in Australia
The 1996 national survey found that the majority of Chinese entrepreneurs –
like most entrepreneurs – in Australia are married (80 per cent in immigrant
businesses; 68 per cent in non-immigrant businesses). The family was found to
be a critical resource for Chinese entrepreneurs in Australia (Collins et al., 1997).
In 60 per cent of businesses owned by Chinese women more than three-quarters
of employees in the business were family members (Collins, 1998a, pp. 404-5),
while family members were prominent in businesses run by Chinese male
entrepreneurs. Data from the national survey found that two in three Chinese
entrepreneurs reported that they used the family or community networks as
sources of employment recruitment, a rate exceeded only by entrepreneurs
born in the Middle East (Collins, 1998a, p. 390). This is, of course, linked to
trust. The research by Lever-Tracy et al. (1991) also highlighted the importance
of the family to Chinese entrepreneurs in Australia. They found that 80 per cent
of the Brisbane entrepreneurs surveyed used family labour, including spouses,
children and other extended family members. Family members were regarded
as being trustworthy and committed to the business.
Another aspect of the role of family and community networks for Chinese
entrepreneurs in Australia relates to finance. Raising start-up capital is a
critical barrier to ethnic entrepreneurship. The family is an important source of
finance and business advice. In the Sydney survey, two-thirds of male Chinese
entrepreneurs relied mainly on family and friends as a source of finance, as did
80 per cent of female Chinese entrepreneurs. Among Vietnamese-born
entrepreneurs community networks played a major role in finance through the
rotating credit system or hui, a feature also observed among Chinese and other
immigrants in other countries (Collins et al., 1995, pp. 31-2, 159-60). In the
national survey, about one in five Chinese male and female entrepreneurs used
the family as the main source of finance (Collins, 1998a, p. 351).
The Chinese Diaporic community in Australia and overseas is an important
source of support for Chinese entrepreneurs in Australia
The social networks of ethnic entrepreneurs – in this case the overseas Chinese
networks – have been seen by researchers in many countries as a critical part
of the entrepreneurial activities of immigrants (Waldinger et al., 1990; Light
and Ros enstein, 1995; L ight and Gold, 2000). One dimension of the insertion of
Chinese entrepreneurs in Australia into Chinese netwo rks relates to the
importance of the co-ethnic market – a proxy for the importance of the ethnic
enclave. Lever-Tracy et al. (1991, p. 113) found that the extent of co-ethnic
custom varied across both cities and ethnic groups. The Chinese small
Chinese
entrepreneurs in
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123
business community, especi ally in S ydney, was found to rely more on Chinese
customers than did the Indian small businesses surveyed. The Sydney survey
also inquired i n to the importance of the co-ethnic market. It found that one in
three of the immigrant entrepreneurs surveyed stated that more than half of
their cu stomers were co-ethnic, but another 40 per cent replied that co-ethnic
custom accounted for only 10 p er cent of custom. Clearly while some ethnic
entrepreneurs in Australia are dependent on the e thnic niche, many others
have broken out to serve mainly the mainstream market (Collins et al., 1995,
pp. 153- 5). In this way, Chinese entrepreneurs in Australia – like many other
ethnic entrepreneurs (Collins et al., 1995) – are minimising what L ight and
Rosenstein (1995, pp. 21-2) call tra nsactions co st, giving ethnic enterprises an
economic advan tage over firms without such social networks of employees to
draw on.
Chinese entrepreneurs appear to be successful in Australia
Business success is difficult to measure, with profitability one important
dimension. All of the Chinese entrepren eurs in the Sydne y s urve y (Coll ins et
al., 1995, pp. 184 -8 ) reported that their business was profi tabl e. No other
group of ethnic entrepreneurs made this claim. Business survival is another
measure of business success. Chinese-born entrepreneurs were the least likely
of a ll groups of eth ni c entrepreneurs surveyed in the na tiona l survey to h ave
been in the ir current business for more than ten year s (Coll ins, 1998a, p. 377).
This is because the majority of Chinese in Australia have arrived in the past
ten years . Lever-Tracy et al. (1 991, p. 113) als o concluded tha t the businesses
studied were ‘‘succe ssf ul, inn ovati ve and expo rt orie nted’’ . The surv ey found
that many had prior busine ss experience and came to Aust ralia with
substantial resources. Half had expec ted to set up a bus iness when they
arrived. The study reported that both the Chinese and Indian business owners
surveyed had to confront ‘‘a resi due of prejudice and discrimination and a
battery of obstacles to the recognition of o verseas qualifications’’ during the
process of applying to emigrate to Australia (Lever-Tracy et al., 1 991, p. ix).
Another dimension of business activity is new business formation. Two out
of every three Chinese entrepreneurs in the national survey had established
new business rather than taken over an existing one. This was far greater than
other birthplace groups of ethnic entrepreneurs (Collins, 1998a, pp. 385-7).
About 90 per cent of Chinese entrepreneurs responded in the national survey
that they thought that they were better off as entrepreneurs than working for
wages, a figure comparable to other groups of ethnic entrepreneurs surveyed
(Collins, 1998a, pp. 362-7). On the other hand, when asked ‘‘If you had your time
over again would you migrate to Australia’’, more Chinese male and female
entrepreneurs answered in the negative than any other groups of ethnic
entrepreneurs (Collins, 1998a, pp. 385-7).
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Import and export activities linked to Diasporic networks appear to be more
significant among Chinese entrepreneurs than other immigrant entrepreneurs
in Australia today
There is evidence of Chinese entrepreneurs engaging in trading activities at a
greater rate than other ethnic entrepreneurs in Australia. Stromback and
Malhotra (1994) highlighted the entrepreneurial advantages of Asian (mainly
Chinese) immigrants because of their ‘‘cultural baggage’’ and motivation. They
emphasised the importance of these overseas networks of ethnic entrepreneurs
in Australia: ‘‘links with relatives or friends in the country of origin were often
used to provide a reliable source of supply, access to a marker, advice about
market prospects and to secure credit. In some cases the links had developed
into formal arrangements, such as a partnership with a relative’’.
Similarly, Lever-Tracey et al. (1991, p. 113) concluded that Chinese and
Indian entrepreneurs were on the whole ‘‘successful, innovative and export
orientated’’ entrepreneurs who had considerable overseas resources, including
financial resources and business networks, which provided an advantage when
establishing import/export activities because they provided ‘‘personalised,
trust-based networks which extended into the community and beyond, into
mainstream society and overseas’’ (Lever-Tracey et al., 1991, p. xi). Two-fifths
of Chinese and Indian exporters were primarily go-betweens for Australian
sellers and overseas.
While such international or global ethnic networks are not confined to ethnic
Chinese entrepreneurs, more has been written about Chinese networks than
any other ethnic group. Writing about global Chinese networks, Kraar (1994,
p. 2) stresses the business advantages of the co-operative overseas Chinese
network:
Spurred by distinctive business culture that relies on constant scanning for opportunities and
an incomparable co-operative Web, they are fast establishing themselves as nothing less than
the worlds most vigorous capitalists ... the best way to get something done [in Asia] is to
plug into the overseas Chinese network.
But as Kee (1994, p. 12) argued, the recognition in Australia of the importance
of Chinese business networks has only recently been recognised. Kao (quoted in
Kee, 1994, p. 11) calls this network the ‘‘Chinese commonwealth’’ and outlines
the economic advantages that such a network confers on ethnic Chinese
entrepreneurs in countries like Australia:
Access to local resources such as information, business and political networks, raw materials,
low-cost labour, information, and knowledge about business practices and markets in a
variety of environments. This emerging Chinese network is an interconnected yet potentially
open system. It provides a new market mechanism for conducting global business. Key
elements of this successful network include the blending of Chinese values and Western
practices that encourage flexibility, innovation and assimilation of outsiders.
Class mobility
For many immigrant entrepreneurs, including the ethnic Chinese, business
ownership was a leap in a new direction in Australia – a transformation of class
Chinese
entrepreneurs in
Australia
125
location – rather than continuity of the class location that they experienced in
their family. As Table III shows, only about one in ten of the Asian (including
South Asian entrepreneurs) reported in the 1996 national survey that they had
come from a family business (middle class or petit bourgeoisie) background,
while others were from a working class or peasant background. Business
migrants, the new strain of immigrant entrepreneurs, are multi-millionaires
before emigration.
Paths to entrepreneurship
Globalisation impacts on formal and informal immigration processes to shape
the many paths to entrepreneurship for ethnic Chinese and other immigrant
entrepreneurs in Australia. There are many paths to immigrant
entrepreneurship for ethnic Chinese immigrants in Australia today. Some came
as refugees, some as family migrants from peasant or unskilled backgrounds,
others as educated professionals, others as business migrant millionaires, while
others are undocumented immigrants who live in a shadow world. Some come
to entrepreneurship through unemployment or retrenchment (Collins, 1998b),
while others are escaping the constraints of the glass or accent ceiling (Collins,
1996a). The diversity in paths to entrepreneurship is confirmed from data in the
1996 national survey which showed that nearly one-third of Asian
entrepreneurs (mainly ethnic Chinese) surveyed were refugees, while a similar
number – about one in three of the entrepreneurs surveyed – arrived under the
family reunion programme (see Table IV). These refugee entrepreneurs would
have different ethnic and class resources (Light and Rosenstein, 1995; Light
Table IV.
NESB entrepreneurs
who came to Australia
under the family
reunion category
European Asian
Latin
American Middle East
Family Males 42.9 28.8 45.5 79.3
Reunion Females 53.8 36.6 25.0 84.6
Refugee Males 14.3 22.5 9.1 0
Refugee Females 7.7 29.3 37.5 0
Source: National Survey
Table III.
Proportion of
entrepreneurs who had
reported a family
business background
Region of birthplace n Male Female
Latin America 19 12.5 5.9
Europe 68 6.9 4.4
Middle East 42 3.6 0
Asia 19 9.6 12.0
ESB/Australia 121 2.4 3.8
Source: National Survey
IJEBR
8,1/2
126
and Gold, 2000, pp. 105-29) than, say, Chinese professionals from Hong Kong,
Taiwan, Malaysia or Singapore who arrive in Australia today.
Entrepreneurial strategies
It is difficult to support the notion that there is an ethnic Chinese business
strategy (Waldinger et al., 1990) evident from the Australian experience. There
is great diversity between Chinese entrepreneurs of different birthplace, class,
religion and cultural group. Class, ethnicity and gender intersect in different
ways to shape patterns of Chinese entrepreneurship in Australia, just as they
do for other ethnic groups (Collins et al., 1995). One expression of these
differences is that different groups of ethnic Chinese in Australia have different
kinds of class and ethnic resources. But these resources do not happen in a
vacuum. In all cases, ethnic Chinese experiences in Australia are filtered
through the (changing) lens of racialisation. But even here the emphasis is on
the differences – on racisms, not racism, singular, homogenous,
undifferentiated – and on changes to, and contradictions of, the processes of
racialisation (Castles, 1996). In all cases, ethnicity, class and gender interact in
complex ways to shape the lives of Chinese entrepreneurs in Australia (Collins,
1996a).
Gender and entrepreneurship
Ethnic Chinese women are becoming increasingly important as entrepreneurs
in their own right. This is part of a wider trend evident in Australia: females
run one in three Australian business enterprises, while between 40 and 50 per
cent of female entrepreneurs in Australia are first or second generation
immigrants. Ethnic Chinese women are at the vanguard of the relatively large
growth of female entrepreneurship in Australia. Moreover, women play a
critical role in the business and family life of most male immigrant
entrepreneurs. Chinese female entrepreneurs in Australia require further study
and attention. Moreover, most businesses run by male entrepreneurs are in fact
family businesses where the wife plays a very important role in the business as
well as the family (Collins et al., 1995). To understand Chinese immigrants’
entrepreneurship in Australia we must therefore emphasise the importance of
gender and the family.
Explaining diverse rates of entrepreneurship among different
birthplace groupings of Chinese in Australia
Theories of immigrant entrepreneurship must explain diverse, uneven and
changing patterns of Chinese entrepreneurship such as those evident in
Australia (Collins et al., 1995). In order to do this, it is necessary to inquire much
deeper than so-called common ‘‘pro-business’’ cultural traits. A more complex
process is required. Following Waldinger et al. (1990) we need to investigate the
changing group characteristics of different cohorts of Chinese immigrants over
time and how the opportunity structures have changed for different cohorts of
Chinese immigrants. We also need to investigate what ethnic resources and
Chinese
entrepreneurs in
Australia
127
what class resources they have at their disposal in Australia (Light and
Rosenstein, 1995).
The Australia data presented above suggest that rates of entrepreneurship
vary considerably among different groups within the Australian Chinese
Diaspora. Some birthplaces with a high ethnic Chinese content have low rates
of entrepreneurship (those born in Singapore, Malaysia, Hong Kong), others
have rates similar to those born in Australia (those born in the PRC and
Vietnam), while still others demonstrate high rates of entrepreneurship (those
born in Taiwan). This finding undermines any theory of ethnic
entrepreneurship that reduces such a complex phenomenon to some common
homogenous Chinese cultural trait of entrepreneurship (Collins et al., 1995,
pp. 19-23). Clearly other factors are involved.
Different cohorts of ethnic Chinese immigrants in Australia have different
pre-migration histories and have possessed different class (including
education) and ethnic resources. The 1970s saw the end of the white Australia
policy and the beginning of large-scale immigration of ethnic Chinese refugees.
They arrived at a time of global restructuring and the demise of the Australian
manufacturing industry, particularly the clothing, footwear and textiles
industry (Fagan and Webber, 1994). Their class resources were minimal and
generally not recognised in Australia. The jobs that they would be expected to
take were shrinking. They had the will to move into entrepreneurship, but not
the means. The Vietnamese-born have had unemployment rates three to five
times the Australian average for over two decades (Collins, 1998b). In other
words, the opportunity structures for these unskilled and semi-skilled ethnic
Chinese with poor English language skills were not favourably disposed to
allowing sufficient start-up capital for a business to be raised. Their problem is
not so much one of being trapped in the secondary labour market as it is of
getting a job in the shrinking secondary labour market. Blocked mobility plays
a role in their relative (lack of) entrepreneurship.
On the other hand, those ethnic Chinese who were also under-represented as
entrepreneurs – those born in Singapore, Malaysia, Hong Kong – come from
immigration cohorts of highly skilled and educated professionals (BIPR, 1994a,
b, c). For this cohort of the 1980s and 1990s, the barriers to their entry into the
high paid jobs in the primary labour market in Australia have been broken
down. In the absence of blocked mobility, these ethnic Chinese entrepreneurs
get good corporate jobs and do not need to consider the entrepreneurial
alternative – at least not until the glass/accent ceiling (Collins, 1996a) stops
their progress up the professional job ladder. Of course, at the same time many
ethnic Chinese from these countries have entered Australia as entrepreneurs
under the business migration programme. But these ethnic Chinese
entrepreneurs in the Australian Diaspora are very different from the marginal
entrepreneur in the Chinese/Vietnamese restaurant or small grocery shop.
They come with cash, business experience and, at least formally, a commitment
to set up a business in Australia and create jobs. Many ethnic Chinese
professionals – particularly those who get Australian medical, dentistry, law
IJEBR
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128
and pharmacy degrees – are also entrepreneurs in the sense that they hire
employees for their professional business. But this is a very different path to
entrepreneurship than Indo-Chinese refugees took in the mid-1970s.
In other words, ethnicity, class and gender combine in different ways for
different cohorts of ethnic Chinese arriving in Australia, sometimes blocking
wage-labour advancement, sometimes opening up good wage-labour jobs.
Group characteristics of ethnic Chinese change over time as Australian
immigration policy changes. Moreover, changing patterns of racialisation
shape the opportunities for Chinese immigrants once in Australia. This then
changes the class and ethnic resources that they could draw on if a move to
establish a business enterprise were considered. In other words, changing
patterns of globalisation and radicalisation and changing decisions by the
Australian state shape just who among the world’s large ethnic Chinese
population gets accepted into Australia, and what happens to them when the
do get selected. These factors explain more about the characteristics of the
ethnic Chinese entrepreneurial experience in the Australian Diaspora than any
reified notion of Chinese ‘‘culture’’ does, although ethnic resources continue to
be a significant part of the story of Chinese entrepreneurship in contemporary
Australian society.
Conclusion
It is clear that the experience of the Chinese entrepreneur in Australia is a
(changing) racialised experience. The history of Australian Chinese immigrant
entrepreneurs is shaped by racist immigration policies and racist policies and
practices at all levels of Australian society. In this respect, the Australian story
of Chinese entrepreneurs in the Australian Diaspora is very similar to that of
Chinese entrepreneurs in Canada (Li, 1988, 1992; Collins and Henry, 1994) and
the USA (Li, 1976; Zhou, 1992). It is also evident that the state has also played a
critical role in shaping the factors that lay behind Chinese entrepreneurship in
many ways. Changes to Australian immigration policy, citizenship policy and
settlement policy over the past century have influenced the size and character
of Chinese immigration to Australia over the past century. The racist
immigration policy of exclusion and the discriminatory laws and practices
shaped the character of Chinese immigration to Australia in the first three-
quarters of the twentieth century. But the contradictions of this racist policy
began to emerge, principally because such a policy constrained the
internationalisation of the Australian economy in general and its enmeshment
with the Asian region in particular (Collins, 1996b). For the last quarter of the
twentieth century Australia turned to a non-discriminatory immigration policy
and to a settlement policy of multiculturalism. This in turn has impacted on the
size and character of new Chinese immigration to Australia, and on the
opportunity structures they face in the labour market and in the Australian
community.
But the state shapes the contours impacting on Chinese entrepreneurship in
more indirect ways. Australian governments of both Labour and Conservative
Chinese
entrepreneurs in
Australia
129
persuasions in the past two decades have enthusiastically embraced economic
rationalism and globalisation. Deregulation of the financial system, the
exchange rate and many sections of the economy resulted. These policies have
led to fundamental changes to the Australian economy, particularly the decline
of manufacturing and the growth of finance, telecommunications and media,
expecially in global cities such as Sydney (Collins, 2001). This in turn has led to
changes in immigration policy, which has been fine-tuned to reap economic
benefits. As a result today’s Chinese immigrants in Australia are very different
from those of a century ago, or even two decades ago. A number of ethnic
Chinese in Australia, as in other countries like the USA (Saxenian, 1999), are
moving into professional and managerial jobs, including those in the
telecommunication, personal computer, finance, business services and Internet
industries. These new Chinese immigrants are very different from the male
sojourners of a century and a half ago. These new Chinese immigrants have
class resources that enable them to access well-paid jobs in the primary labour
market. They do not face the overt discrimination of their forebears. If they do
set up businesses, they are likely to be in professional areas such as finance and
IT and unlikely to be in restaurants. Their ethnic resources may help them to
find a job, but are relatively less important. At the same time an increasing
minority of Chinese immigrants have arrived in Australia as business migrants
selected because of their entrepreneurial ability. Clearly the capital inflow, jobs
and export potential that are associated with Chinese business migrants are
sufficient economic benefit to outweigh older concerns of racial exclusion.
But not all ethnic Chinese in Australia today are highly qualified
professionals. Some ethic Chinese still arrive as refugees, others enter as
undocumented workers. For these Chinese immigrants in Australia today a
business enterprise drawing heavily on ethnic rather than class resources in
areas such as restaurants or retailing is still an attractive alternative. These
ethnic Chinese entrepreneurs in Australia experience many of the features
common to immigrant entrepreneurship universally, particularly the
importance of family and friendship networks for finance, employment and
trading contacts.
It is clear that the paths of ethnic Chinese immigrants into entrepreneurship
in Australia are much more diverse today than in the past. Some still attempt
the (increasingly difficult) path from unskilled wage labourer to small shop or
restaurant owner. Other Chinese immigrants are accessing new business
opportunities opening up for entrepreneurs to serve the needs of the time-poor/
cash-rich high flyers in our global cities (Sassen, 1994). Ethnic resources and
family resources will be critical to any such entrepreneurial success. Other
Chinese immigrants find more attractive opportunities in corporate offices,
while others do the long years of university apprenticeship before becoming a
self-employed doctor, dentist, lawyer or accountant. Chineseness is still an
important factor in understanding Chinese entrepreneurs in Australia, but in
an uneven and changing way.
IJEBR
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130
There is of course a spatial dimension to Chinese entrepreneurship, particularly
in retailing. Chinatowns, a feature of most of Australia’s capital cities, are
important to the social life of the Chinese community. Chinese gather for social
gatherings, weddings and birthdays, visit regularly to buy Chinese newspapers,
videos, food and books, and visit medical services and the cinema. Sydney’s
Chinatown, for example, dates from over a century ago, when most Chinese lived
there. In the 1980s, Sydney’s Chinatown was redeveloped to include large
shopping malls and landscaping. It was linked to the new Darling Harbour
development via the Chinese Gardens. Hong Kong Chinese capital financed much
of this development. Today Chinatowns are centres of Chinese commerce and
retailing, but not Chinese settlement. Sydney’s Chinese immigrants settle in
different urban precincts correlated more with social class than ethnicity.
Refugees and poorer Chinese settle in Sydney’s western suburbs where new
Chinatowns have emerged, such as the one in Cabramatta with three large
shopping malls and numerous small businesses, many of them owned by Chinese.
Chinese entrepreneurs in Australia have contributed considerably to the
making of multicultural Australia. This contribution dates back more than a
century and a half. Chinese entrepreneurs have created considerable financial
and social capital in the Chinatowns of the big Australian metropolises and in
the main streets of Australian suburbs and rural towns. They have had to
move into entrepreneurship in the face of, and often because of, racist hostility
at the institutional and personal level while living in Australian cities and
towns. Despite these difficult odds, many Chinese entrepreneurs succeeded
admirably to create examples, jobs and family and community leadership.
They were also the vanguard of encroaching Australian cultural diversity as
Chinese restaurants sprang up through the suburbs and country towns to
provide a culinary diversity in food that did not exist at that time. Many
Chinese entrepreneurs have subsequently become community leaders in
Australia, working hard for the rights of their people and becoming a
welcoming conduit for those ethnic Chinese newly arrived in the Australian
Diaspora. A few have become very wealthy owners of transglobal businesses,
others astronauts, but most have remained in the small business sector,
creating jobs and exploring business opportunities within the overseas Chinese
networks and wider afield.
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International Journal of
Entrepreneurial Behaviour &
Research,
Vol. 8 No. 1/2, 2002, pp. 134-147.
# MCB UP Limited, 1355-2554
DOI 10.1108/13552550210423769
From four-course Peking duck
to take-away Singapore rice
An inquiry into the dynamics of the
ethnic Chinese catering business in
Germany
Maggi W.H. Leung
Department of Geography, University of Bremen, Germany
Keywords Restaurants, Germany, Ethnic groups, Immigrants
Abstract Draws on the concept of ‘‘mixed embeddedness’’ to challenge the popular culturalistic
view that Chinese migrants enter the catering business simply because they are Chinese. Based on
qualitative interview results and observations from fieldwork conducted in German cities,
illustrates first the dynamic nature of the Chinese restaurant trade. Proceeds to explore how
important factors such as Chinese migrants’ access to alternative employment, the development
of in- and out-migration policies in Germany and East Asia, the changing consumer demand and
market conditions, as well as availability of set-up capital, shape the volume and forms of Chinese
restaurant trade, the kinds of food served, hiring practices and other business strategies.
Introduction
As I began my dissertation fieldwork on the ethnic Chinese migrants in
Germany, I contacted the Federal Statistical Office (Statistisches Bundesamt)
for available data on this relatively small migrant group. My request was
promptly answered with a few tables of very basic demographic data on
migrants from the People’s Republic of China (hereafter, China) and Taiwan.
Much more interesting was what was printed on the covering letter – sincere
advice from the officer that I should inquire for further information from the
German Hotel and Restaurant Association (Deutscher Hotel- und
Gaststa¨ ttenverband), as most of the Chinese migrants are, as he perceived, self-
employed in the catering sector. This experience underlines how Chinese
migrants are commonly identified in Germany and in many other places in the
world. Chinese restaurants, Imbiß (fast food and take-away) or grocery stores
are immediate mental associations that come not only to German minds when
the word ‘‘Chinese’’ is heard. Many Chinese also share this assumption. Some
researchers (e.g. Yao, 1988) and more often community representatives (e.g. the
Chairman of the Federation of Chinese Organisation in Europe and
representatives of ethnic Chinese associations in different German cities)
This paper presents findings from the author’s ongoing doctoral research funded by the
German Academic Exchange Service. The author is also indebted to informants for sharing
their valuable time, experiences and opinions with her. She also appreciates the helpful
comments from the editors of this special issue on earlier drafts of this paper.
This article is part of a special issue of papers entitled ‘‘The economic context, embeddedness
and immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
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estimate the number and distribution of ethnic Chinese living in Germany
based on the number of Chinese restaurants established in different regions.
Owing to definition and registration complexity, the exact number of Chinese
catering businesses is not available. While the Chairman of the Federation of
Chinese Organisation in Europe estimates that there are 13,000 to 14,000 such
businesses in Germany, about 3,000 were listed in a business directory Schober
Firmenadressen in 2001. This number is somewhat in line with the
approximately 4,300 restaurants indexed in the Chinese business directory,
China-Branchenbuch (2001). These establishments can be categorised into three
main types: restaurants, bistro as well as fast food and takeaways (Imbiß).
Chinese restaurant businesses are found in all parts of Germany but
concentrations are located in larger urban centres such as Berlin, Hamburg,
Frankfurt am Main, Mu¨nchen, Bonn, Ko¨ln and Du¨sseldorf.
In this paper, I aim to take a more critical and comprehensive look into the
dynamics of this Chinese migrant business sector. By ‘‘critical’’ I mean to
challenge a common theme in the Anglo-American as well as German academic
discourse and public impression that seemingly distinctive internal
characteristics of an ethnic group determine the type of businesses in which
they are engaged and the way in which these businesses are performed.
Drawing on insights from the ‘‘mixed embeddedness’’ concept (Kloosterman et
al., 1999) which emphasises the crucial interplay between the social, economic
and institutional contexts in the analysis of migrant entrepreneurship, I hope to
depart from such a deterministic view of migrant business as merely an ethnic
product. Rather than focusing only on the cultural aspect, this paper draws
attention to the importance of other relevant structural factors. To this end, I
shall proceed first with an overview of the changing demographics of the
Chinese restaurant business sector. This sets the stage for my analysis of four
important factors that shape the characteristics of the catering businesses.
Aspects considered here are:
(1) Chinese migrants’ access to better employment alternatives;
(2) the in- and out-migration policies in Germany and China;
(3) the changing economic and market conditions; and
(4) the availability of capital to potential entrepreneurs.
My analysis here does not intend to provide a complete list of factors that
interact to condition the nature of the Chinese catering trade. By pointing out a
few of them, I attempt to illustrate how culturalistic assumptions fail to
consider some other crucial aspects of the complex phenomenon.
This work is based on my current doctoral research, a broader study of the
ethnic Chinese migrant communities in Germany. Here, I shall present
observations and analyses drawing on my communication – mainly through
semi-structured interviews (conducted in Cantonese or Mandarin Chinese, on
average lasting one to two hours per meeting) – with owners or workers of
ethnic Chinese restaurants in a number of urban centres. Qualitative, semi-
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structured interviews supported with participant observations, in contrast with
conventional close-ended surveys, allowed me to learn about factors and
concerns of importance to my informants’ business decisions which were not
obvious to me as we commenced our dialogue. By letting my informants
co-steer the conversation, I can better contexualise and make sense of their
seemingly ‘‘pure economic’’ or ‘‘just ethnic’’ decisions.
Is running a restaurant really a Chinese thing to do?
In Germany, the catering trade is quantitatively and historically the most
important sector among the various businesses in which Chinese migrants are
engaged, like the case in many other overseas communities[1]. The strong
presence of the Chinese in the restaurant and take-away food sectors might let
observers slip into the belief that a certain predisposition of the Chinese culture
determines their participation in such economic sectors. As a matter of fact,
such a cultural approach has long been a well-subscribed theoretical basis in
studies of ethnic or migrant businesses. Watson (1977), for instance, in his
research on the Chinese catering trade in Britain, underlines that the Chinese
are in some ways unique or at least advantaged because of their cultural values
and family structures that are conducive to successful entrepreneurship.
Light’s (1972) earlier work is another example that at times over-emphasises
the significance of Chinese culture in explaining the performance of their
business. According to such cultural-determinist views, Chinese people are
endowed with certain ethnic-specific resources and the Chinese entrepreneurs
are able to mobilise such cultural resources. While it could be argued that
Chinese people are armed with certain advantages (e.g. being expected to be
able to sell good, ‘‘authentic’’ Chinese food) in businesses like the restaurant
trade, a mere focus on the cultural aspect that ignores other important political-
economic factors is much less than comprehensive.
Is there something in the Chinese blood that explains their engagement in
the catering business? That running a restaurant is hard work is a well-known
fact. If the Chinese were somehow culturally suited to enter this field, they
would have to be determined to prefer hard work at least – a thought that
sounds rather absurd. To go beyond thinking that the Chinese were culturally
moulded to become restaurateurs, it is fruitful to investigate the alternatives
available to these migrants in the formal labour market. That is, if they have a
chance, would they enter this business that is infamous for much hard work?
Another often stated ‘‘ethnic resource’’ among Chinese business people is the
common co-operation and participation of family members in ethnic enterprises
(Waldinger et al., 1990). Indeed many youngsters of restaurant family
background ‘‘help out’’ over weekends and during school holidays. The
‘‘helping out’’ by retired cooks and housekeepers is essential to the survival of
some, particularly small-scale, establishments. Instead of simply calling this
‘‘readiness to help’’ among family members and friends an ‘‘ethnic’’ resource, it
is as important to understand it taking other determinants into account. While
Chinese people often feel culturally compelled to agree when asked for help
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from family and close friends, it is also necessary to situate this kind of ‘‘help’’
in the personnel management of these restaurants, which in turn reflects
market conditions. Another issue that I shall look into in this paper is the
practice of capital pooling among co-ethnics, again one of the well-known
‘‘ethnic resources’’ among migrant entrepreneurs. I suggest, however, that the
practice should be contextualised in the wider political-economic context, that
is, beyond being characterised as an ethnic benevolence.
In order to demonstrate the need to take into account factors that shape an
entrepreneurship beyond the ethnic-cultural ones, I shall draw insights from
the ‘‘mixed embeddedness’’ perspective first advocated by Kloosterman et al.
(1999). This broader framework emphasises the need to pay attention to the
social, economic and institutional contexts in understanding migrant
businesses. The authors argue that the rate of participation in entrepreneurship
of a particular migrant group is a result of the interplay between socio-
economic and ethno-social characteristics of the particular group and the
opportunity structure – a function of the state of technology, costs of
production, nature of the demand for the products or service as well as the
institutional framework (Kloosterman et al., 1999, p. 253). A careful
consideration of the different aspects helps make sense of the complex
phenomenon studied. Before I move on to provide more detailed analyses, a
brief overview of the historical development of the restaurant trade is in order.
The changing demographics of the Chinese restaurant community
Officially, by the end of 1999 almost 43,000 Chinese from China and over 5,300
from Taiwan lived in Germany (Statistisches Bundesamt, 2000). Scholars have
estimated that there are about 100,000 ethnic Chinese living, including Chinese
people from national origins other than China and Taiwan, such as Hong Kong,
Singapore, Malaysia, Vietnam, Indonesia, as well as undocumented migrants
(Ma, forthcoming; Pang, 2001; Pieke, 2000). The Federation of Chinese
Organisations in Europe estimates that there are about 150,000 ethnic Chinese
living in Germany (telephone interview, 31 October 1999).
Chinese restaurant business emerged in the late nineteenth and early
twentieth century when Chinese, mainly former seamen on European shipping
lines from the Hong Kong and Guangdong province, settled down and
established small businesses in cities such as Hamburg, Bremen and Berlin. In
addition to the seafarers, peddlers and street performers accounted for some of
the early Chinese restaurateurs.
After the Second World War, a larger number of migrants from the New
Territories[2] in Hong Kong and to a lesser extent from Malaysia and
Singapore arrived in Germany, mostly by way of Britain. The increase of
migrants from Hong Kong served as a source of labour for the booming
restaurant trade in Britain, The Netherlands, Germany, France, Belgium, and to
lesser extent the Scandinavian countries and Switzerland. It is perhaps
important to note that most of these men who made up the backbone of the
Chinese catering trade in Europe had not been involved in the sector before
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migration. Most of them were farmers who had received little formal education
or occupational training.
In the 1970s, a larger flow of ethnic Chines migrants from Southeast Asian
countries such as Indonesia, Malaysia and Vietnam arrived in Germany and
Europe at large, mainly due to the anti-Chinese sentiments in their home
countries. While those who were given refugee status, such as the boat people
from Vietnam, were allocated work and residence, others had to depend on
themselves to gain a living. Entering the restaurant business was one of the
obvious career paths among many of them.
Rapid economic growth in East Asian economies, especially those of Hong
Kong, Taiwan, Singapore and Malaysia in the 1970s and 1980s, and the long-
term economic downturn in western Europe since the late 1980s have changed
the wage differential that used to exist between the two regions. This accounts
to a large extent for the reduction of migration from these ‘‘Asian tigers’’ to
Europe, while more and more migrants from China try their fortune overseas as
the Chinese political-economy shares increasingly intense linkages to the global
economy. Ever since the late 1970s, there has been an increase in migration
among Chinese nationals, both internally and internationally. Mainland
Chinese make up nowadays the bulk of new ethnic Chinese migrants in
Germany. This change has also been reflected in the make-up of the workers as
well as restaurant owners in the catering sector. An increasing number of these
new Chinese immigrants leave China as students and settle down overseas
after their education. On the other hand, many of them depart as labour
migrants, among whom many come from the northern Fujian and southern
Zhejiang provinces. While many of these workers, with an increasing number
of females, came to Germany through official temporary labour contracts[3],
some of my interviewees have suggested that many of them have left China to
Europe via channels organised by human traffickers – a sign that reflects the
increasing internationalisation of the Chinese migration system (Pieke, 2000;
interviews with various restaurateurs)[4].
The changes in the social demographic profile of the restaurateurs reflect the
development of broader political and economic conditions both in the Asian
and European contexts. Consequently, the social background of the migrants
has an impact on, among other things, the hiring practices, management
strategies and kinds of food served in various restaurants. After having
provided the background of the development of the Chinese catering trade, I
shall turn to focus on the nature of the business in the present. First, let us
revisit the question ‘‘Is running a restaurant really Chinese?’’ by exploring why
many Chinese migrants ended up being restaurateurs.
Limited access to better employment alternatives
Similar to the previous findings on migrants’ motivations to become self-
employed, my informants have generally set up their businesses for two
reasons. On the one hand, some consider the autonomy and independence of
being one’s own boss as important incentives, while others cited the lack of
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opportunities in getting a satisfactory job that offers prospects in the German
labour market as the main factor. Even though, as I have earlier mentioned, it is
common to see children helping out in family businesses, my personal
communication with older generation migrants and their children, as well as
more educated young migrants, reveals that as long as better alternatives exist,
the catering business is not considered as a desirable occupation. Mr and Mrs
Liu who migrated from Hong Kong in the 1960s, like many parents, are content
that all their children have obtained university degrees and do not feel sorry
that they finally had to pass their last restaurant on to non-family members[5].
Mrs Liu further commented that ‘‘only those kids who are not motivated do not
make it to university’’ and might have to then stay in the catering sector
(interview in Hamburg, 11 January 2000).
A university degree is, however, not always a ticket to leave or not to enter
the catering business. During our interview (3 December 1999 in Hamburg) Li
Kai (in his 40s), the owner of a travel agency in Hamburg, points out that as the
economic connections between China and Europe intensify, the demand for
educated Chinese people, especially those who have studied in Germany, has
increased. Nonetheless, the number of jobs open to the many Chinese students
is limited due to the generally high unemployment rate. Running one’s own
business, as he does, is an exit. While Chinese migrant business has diversified
over the past decades, opening a Chinese restaurant continues to be one of the
few obvious ways to earn a living among many of the young Chinese who
prefer to stay in Germany. As compared to second generation Chinese
migrants, newcomers more often face difficulty in finding a satisfying job.
Generally, fluency in the German language and knowledge of the ‘‘German way
of doing things’’ are key factors that distinguish newcomers from second
generation Chinese migrants in the labour market. For many newcomers in the
business, a restaurant business is the key to livelihood and economic
independence, but not necessarily the dream, especially among those who have
received other kinds of occupational training.
Impact of migration policies on Chinese catering business
In the world of increasing inter-connections, the presence of migrants and
migrant businesses has become something that is taken for granted. The
development of migrant businesses is, as a matter of fact, contingent to a whole
array of economic, political and social conditions. To state the obvious,
perhaps, the common appearance of Turkish kebab shops, Italian ice cream
parlours and pizzerias or Chinese Imbiß and restaurants would not have taken
place if Germany never opened its gate for these de facto migrants or did not
allow them to set up these shops. The policies regulating self-employment
among non-nationals in Austria, for example, are even more restrictive than in
Germany, which accounts for the very low level of migrant entrepreneurship as
compared to other western European countries (Haberfellner, 2000).
Like many other countries in Europe and North America, Germany has also
modified its immigration policies in order to motivate or avoid in-migration.
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These efforts include the well-known West German ‘‘guest-worker’’ recruitment
programme running from the 1950s to the 1970s, the East German contract
worker system carried out in the 1970s and 1980s, as well as the recent green
card initiative to attract the highly demanded information technology experts.
The case of a short-term state action to recruit Taiwanese cooks a few decades
ago is, however, a smaller scale and less remembered case, mainly motivated
by political rather than economic interests. In the mid-1960s, the West German
state expressed its alliance with non-communist Taiwan in the form of a skilled
worker recruitment scheme. Under the policy, 5,000 cooks from Taiwan were
invited to work in West Germany as a friendship gesture[6]. According to the
agreement, every one of these 5,000 cooks was allowed to set up a restaurant
and invite five other cooks in the subsequent five years after their arrival. This
modification of the immigration policies during the Cold War period greatly
affected the pattern of Chinese restaurant trade in West Germany. In the course
of a few years, the number of Taiwanese migrants who came through this
recruitment scheme rose to tens of thousands (Kaminer, 2000). This particular
organised effort of the West German state to invite Chinese culinary experts, in
addition to the relatively high number of Hong Kong Chinese arriving,
established the presence of the Chinese restaurant trade in the 1960s and 1970s.
Favourable conditions for non-EU foreign labour and entrepreneurs to enter
Germany have ceased since the 1980s when the economy started to slow down
and unemployment worsened. Current regulations for labour recruitment in
restaurants are restrictive. In 1997, the Chinese and German states reached an
agreement to control the recruitment of cooks from overseas – a unique
bi-lateral arrangement met in this economic sector. Depending on its size, each
restaurant is eligible to engage one or two cook(s) with proof of qualification,
including German language proficiency. In order to prevent these cooks from
staying long term in Germany, the work permit is limited to three years with no
possibility of extension. After they leave Germany, they have to first wait for
three years before they are eligible to apply for the work permit again. Many of
my interviewees have expressed their frustration about this labour recruitment
regulation. Instead of the preferred practice, which was legal and common
before 1997, that restaurants recruit cooks through their own social networks in
China, hiring has to be conducted now through one of the 25 state agencies in
China which are supposed to provide training and perform assessment. Many
of my informants considered these agencies as de facto licenses for the officials
to make profits. Cooks who participate have to pay a relatively large sum to
these agencies – a monthly fee of 150DM social insurance contributions (for the
provision of or participation in training programmes, and the administrative
fees of the Chinese authorities) during their contract period in Germany. In a
major Chinese community newspaper, journalist Peng (2001) recently reported
that in one case a cook was requested to pay RMB 30,000 (approximately
8,500DM) for an appointment. In addition, extra fees are levied for the issue of a
passport, visa, language course and skill assessment. Before the advent of this
recruitment system, employers in Germany were able to hire a cook in 25 days.
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Now the process takes at least three to five months and sometimes as long as
one year. Some employers also have disappointing experiences, in that the
‘‘cooks’’ sent to Germany apparently had bought their certificates from corrupt
officials and arrived without any cooking experience. The serious difficulty in
finding qualified cooks was cited as the major problem among all of my
informants.
Chris Lam, a restaurant owner from Hong Kong, changed to employing
Chinese workers who are already in Germany, especially those who are
refugees with work permits. This hiring practice is also not always practicable,
at least not legally, as the German state has stopped issuing work permits to
asylum seekers who arrived after May 1997. The restrictive employment
regulation and state reluctance in issuing work permits to asylum seekers,
coupled with its stringent enforcement mechanism (in addition to, of course, the
entrepreneurs’ all-time goal of cutting costs) imposes much stress on restaurant
owners. William Chen (in his 40s), a restaurant owner from Taiwan, said
bitterly (interview in Frankfurt, 15 May 2001):
I think it is a conspiracy of the government here. They do not issue working permits to new
asylum seekers, and at the same time, they make it so difficult to hire someone from overseas.
For example, the cooks are only allowed to stay here for three years. Of course the cooks
would choose to go elsewhere [like to the United States] if they have the option. So we are in a
vicious cycle. No one has permits to work and so you have to hire those without papers. And
then the police come and check and if they find out, you have to pay a fine. No worries, just
pay your fine and you can re-open your restaurants. They only want your money. We also
pay tax, right? So they earn double from us.
Facing the difficulty in hiring trained employees, some of the older generation
have closed their other restaurants, kept one with mere family workforce and
prepare for retirement. Mr and Mrs Liu are an example. Mr Liu recalls how the
nature of his business has evolved over the last decades (interview in Hamburg,
11 January 2000):
When we first came [in the 1960s], there were so few Chinese restaurants. No competition. We
hired ten people and did not have to work. And we could, you might not believe it, choose our
customers. If they came in and ordered just two soups, we would not even do their business.
Now it’s very hard. Towards the end, we kept one shop. I had to cook and my wife had to
serve. Just two of us. We could not hire anyone. Competition had become really bad. Some
people would sell their stuff so cheaply, sometimes below cost. Bad business. So we retired.
Mr Liu’s quote highlights the importance of family labour in these small-scale
migrant businesses. Children are expected to ‘‘help out’’ over weekends and
during holidays. Retired cooks are asked often to ‘‘help out’’ when there is a
shortage of labour. Many women also call their work in family restaurants
‘‘helping out’’ as many of them, especially mothers, could ‘‘only’’ work part time
due to their family responsibilities, their labour is usually considered less than
formal. (The Chinese catering sector remains a highly gendered economic
arena. Almost all cooks are men. Women usually work at the bars or as
waitresses, earning about two-thirds of what a male cook would earn for the
same working hours.) My interviews with ‘‘helpers’’ of these restaurants
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reflected that such informal work, which is usually exchanged for low
remuneration, monetary or otherwise, is often considered as ‘‘a moral burden’’.
True, one might argue that there is something ‘‘Chinese’’ about the sense of
duty to help. But as important for consideration is, I maintain, the impact of the
wider economic context, such as the increasingly stiff competition which
encourages cutting costs and the scarce availability of qualified cooks in calling
for such practice of informal employment.
Impact of changing market conditions and consumer preferences
In addition to the complication and high cost in hiring qualified workers, the
changing market conditions and consumer preferences have also encouraged
entrepreneurs to modify their business strategies. Wong Tai Ming (in his 40s)
decided a few years ago to open an Imbiß instead of a restaurant which he used
to manage as an employee. He told me his rationale (interview in Frankfurt, 16
April 2000):
We sell a lunch box for 7-8DM, and from that maybe 1 DM would be the ingredient cost, plus
rent and work force. But after deducting everything, you can still make a good profit. And for
this kind of guai-lo (foreigner)-cheating Chinese food you don’t need to hire a cook. Anybody
can do that. Some rice, some veges, some meat and a bit of soy sauce. If you compare the net
profit one gets from an Imbiß and a restaurant, the difference is small. And for Imbiß, you can
always find someone to take over the business if you make a loss and want to quit. But a big
restaurant would be more difficult. It is not easy to find somebody to take over.
Characteristics of the business have changed to a large extent in the last few
decades. The number of Chinese catering businesses has bloomed. Owing to
the increasing number of Chinese migrants, scarce availability of and high cost
in hiring professional cooks, high competitiveness in the market and the
altering idea of what Chinese food should look and taste like in customers’
minds, new ventures mostly take the form of small-scale fast food stores with
simple menus, serving what Wong calls ‘‘guai-lo (foreigner)-cheating Chinese
food’’. This ‘‘down grading’’ of normal Chinese food from a menu with multiple
courses in fancy decorated restaurants to take-away Singapore rice in a box
should be understood in the context of the general ‘‘McDonaldsisation’’ of the
food sector. Ever since the arrival of the first McDonald’s in Germany in the
early 1970s, the idea of fast food has developed rapidly. The increasing
popularity of the image of and taste for fast food, together with the higher
female participation in the paid labour market, the general extension of
working hours and the rising number of migrants (mainly the ‘‘guest workers’’)
being laid off from their factory work (and thus being motivated or forced to be
self-employed) all contribute to the burgeoning of the fast food sector in
Germany. Do¨ ner shops and Chinese Imbiß have become expected items of any
urban landscape. I am by no means suggesting that all Chinese restaurants
have no choice but to sell the chop suey kind of fast food. There are certainly
new and old ventures which serve menus with ‘‘authentic’’ and gourmet
Chinese cuisine. The trend of making quick money with quick-to-make food is,
however, noticeable.
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The need to re-create Chinese food is more apparent in areas where a large
Chinese clientele is absent. In Germany, while a higher concentration of Chinese
population is found in big urban areas like Berlin, Hamburg, Frankfurt and
Mu¨nchen, a compact spatial concentration in the form of a Chinatown similar to
the ones in London or Amsterdam is not found. Under such economic-
geographical conditions, many entrepreneurs register a great need to adjust
their food to the taste and imagination of non-Chinese clients. Chop suey,
fortune cookies and serving dishes with thick sauces are just a few common
examples of how Chinese cooking has been modified to suit the taste buds of
non-Chinese customers. Not all restaurateurs are content to only serve such
Germanised Chinese food. In fact, as the interest for things ‘‘Oriental’’ – ranging
from sushi, spring rolls to Buddha pearls and feng shui – attracts more
attention in the consumer world, there has also been a call for more ‘‘genuine’’
Chinese food, especially in more cosmopolitan areas like Frankfurt and Berlin.
Nonetheless, this trend has not transformed the market to be acceptable to all
things ‘‘exotically’’ Chinese. Efforts to go beyond serving chop suey sometimes
prove not to be worthwhile. Chris Lam narrates one of his disappointing
experiences (interview in Frankfurt, 27 March 2000):
I remember once I added some Chinese mushrooms [a delicacy compared to what is normally
served] in a dish and the customers asked us to take them out. They would rather stick to
their sweet and sour chicken or chop suey. You have to make what they want to eat.
In order to satisfy the general clientele and guarantee a level of profit, serving
‘‘authentic’’ Chinese food ceases to be a first priority in some circumstances. To
a certain degree, the Chinese catering business should less be understood as
something wholly belonging to the Chinese culture (as if a Chinese culture
indeed existed). Rather, it ought to be seen as a cultural co-production between
those who serve and those who consume.
Availability of capital and nature of catering business
In addition to the relative ease of hiring suitable workers and reduced risk in
the turbulent market, Imbiß and bistro restaurants are increasingly popular
among Chinese entrepreneurs also because of the difficulty in raising a large
sum of start-up capital. Obtaining bank loans for a small- to medium-scale food
venture is very difficult in Germany, thus leaving family savings and private
loans from friends as the main and most reliable source for venture capital.
Capital pooling among co-ethnics for business set-ups, another ‘‘ethnic
resource’’ often mentioned in the literature now has become less important now.
A few of my informants confirmed that such money pools among co-ethincs
exist, but not to such an extent as in the 1970s and 1980s. The lending of money
to co-ethnics, however, should not be interpreted only as a special ethnic
benevolent quality. In addition to helping out co-ethnics, some of the money
cycled in the community in the heyday of these ‘‘credit systems’’ was, according
to a few of my informants, ‘‘black money’’ earned from smuggling and drug
dealing which was then more common. While some established restaurants or
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other businesses themselves for money laundering purposes, lending money to
co-ethnics was also another common way to ‘‘get rid of the money’’. Repeatedly,
I have been told by different restaurant owners that the business has been
‘‘cleaned up’’ by more stringent control since the 1990s. The drastic decrease in
vice activities performed under the cover of catering business as well as the
general economic downturn in the European economy have together led to a
fall of the ‘‘free floating money’’ available in the community. Money pools have
consequently become less important as a source of capital for newcomers into
the business sector. The difficulty of raising a large amount of capital, coupled
with the increasingly competitive business environment, favour small Imbiß or
bistros among newcomers to test out the market while taking minimal risk.
According to my informants, setting up an Imbiß would cost around 20,000 to
30,000DM, and opening up a fancy dim sum restaurant business in Frankfurt
would cost about 300,000DM. Working hard with little or no entertainment and
saving up money is the way most of the newcomers manage to become their
own boss. Some of them manage quite quickly, Chris Lam calculated for me
quickly:
If you work in a restaurant, earning about 3,000DM per month[7]. In a year or so, if you only
work and sleep [as a rule, employers provide room and board to their workers], then you can
save up for am Imbiß already! All those who have worked for me now have their own
business. That is how it goes.
Becoming one’s boss is the goal of many of the new migrants, and opening a
small-scale Imbiß restaurant remains the highway to realise their plans.
Conclusion
Drawing on insights from the mixed embeddedness approach, this paper
examines the dynamics of the restaurant trade in Germany, challenging the
static image shared in many outsiders’ eyes. Arguing against the
conventionally popular culturalistic view, I have illustrated that entering the
catering business is not simply a ‘‘Chinese thing to do’’. Similarly, there is also
no intrinsic way of running a restaurant as a Chinese person. Any
entrepreneurship is mediated by an array of factors, of which the owner’s
ethnicity is but one. Affected by changing immigration policies, economic
development processes in different parts of Asia, various groups of ethnic
Chinese have arrived in Germany and ventured into the restaurant business.
While some have arrived in Germany aiming to establish a new life through the
food business, some have entered and stayed in the sector semi-reluctantly.
With diverse migration histories, these entrepreneurs are armed with different
combinations of social and economic capital which in turn shapes their
business plans and experiences.
The presence of Chinese migrants in Germany is not a historical coincidence.
As I have illustrated, the dynamic migration flow of ethnic Chinese from
different Asian countries and neighbouring European countries ought to be
understood as part and parcel of an international migration system. The social
demographics of the migrants and their movements are shaped by the
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changing in- and out-migration policies as well as political-economy
environments in Europe and Asia. Once in Germany, their access to alternative
employment, set-up capital, suitable labour and, last but not least, the
customers’ imaginations of what Chinese food is like all play a role
interactively to mould the development of a migrant business in general and
the business decisions of any particular entrepreneur. A serious understanding
of the nature of Chinese catering requires putting these pieces of the puzzle
together and rejects essentialist assumptions which only focus on a particular
aspect like the cultural deterministic arguments. In other words, only by
considering the mixed embeddedness of each particular business in a particular
context can we pursue a more critical and comprehensive analysis of the
dynamic phenomenon of migrant entrepreneurship.
Notes
1. As the economic and social capital (language ability, network capacity in the increasingly
connected global economy) of more Chinese migrants improves, the range of Chinese
enterprises has also diversified. I have written elsewhere about the less typical and newer
Chinese ethnic businesses in the German context; for example, the computer wholesale and
retail business (Leung, 2001a), as well as the rising number of Chinese travel agencies
(Leung, 2001b).
2. The naming of the area North of Kowloon as the ‘‘New Territories’’ reflects only the
process of colonisation. The region was by no means newly discovered. As the third stage
of the colonisation, the New Territories were leased to the British in 1898 for 99 years
under the Convention of Peking.
3. China continues to be a source of contract workers both through official and unofficial
channels. From Anxi county in Fujian province, for instance, 1,000 contract workers went
to the United States, Singapore and elsewhere between 1985 and 1990 (Pan, 1999). In 1986,
a work-study training programme, which was never fully implemented due to the
reunification of the German states, was also negotiated between the German Democratic
Republic and China through which 90,000 Chinese workers were to go to East Germany for
training (Gu¨tinger, 1998).
4. The above sections draw on the narration and discussion of Bowles (1992), Eberstein
(1988), Gu¨tinger (1998), Kno¨del (1995), Pan (1999), Pang (2001), Parker (1998), Pieke and
Benton (1998), Ru¨bner (1997), Thunø (1999), Yao (1988) and Yu¨-Dembski (1987).
5. All informants are given pseudonyms.
6. In addition, there was also another scheme which invited a number of Taiwanese nurses to
work in German hospitals (Yao, 1988).
7. A monthly salary of 3,000DM seems to be above average. According to other informants, a
cook in a small restaurant or bistro generally earns between 2,000DM to 2,500DM a month.
A recent advertisement in the community newspaper even claims to arrange cooks from
China for a monthly salary as little as 800 to 1,000DM.
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International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
pp. 148-161. # MCB UP Limited,
1355-2554
DOI 10.1108/13552550210423778
Business opportunity or food
pornography?
Chinese restaurant ventures in Antwerp
Ching Lin Pang
Raxen Network Centre for Equal Opportunities and Opposition to Racism,
Wetstraat, Brussels, Belgium
Keywords Entrepreneurialism, Ethnic groups, Immigrants, Restaurants, Belgium
Abstract Maps and analyzes the development of ethnic Chinese food in the city of Antwerp
through the ethnography of both Chinese immigrant entrepreneurs and their customers. Most
existing studies draw our attention to group characteristics in explaining Chinese immigrant
small businesses, predominantly clustered in the catering sector. Some studies examining Chinese
immigrants and the development of the catering sector adopt a mixed model of group
characteristics and opportunity structures in the broader society. Looks into a hitherto unexplored
terrain, namely the relation between the white customer and the immigrant entrepreneur. Such
an in-depth analysis ‘‘from within’’ instructs us about the dynamics of the immigrant/ethnic
restaurant business. From the perspective of the immigrant entrepreneur, immigrant/ethnic
restaurants provide in many instances an avenue to social mobility, thereby overcoming the
general constraints facing immigrants such as insufficient financial capital, low educational
levels, linguistic handicap, etc. The economic advancement is the success side, whereas the success
has a series of social costs. The social exchange is fraught with ambivalence, which in its most
extreme manifestation may turn into what Frank Chin calls ‘‘food pornography’’. The two
dimensions both present in Chinese immigrant restaurant ventures for they provide opportunities
with a series of social costs.
Introduction
Chinese immigrant/ethnic restaurants are ubiquitous in most western cities and
indeed even in developing countries. The scope of this article is, however, limited
to the emergence of the Chinese restaurants in Belgium and more specifically in
Antwerp. In contrast to other disadvantaged immigrant groups in western
advanced economies, the Chinese remain a silent and invisible community, while
engaging successfully in the catering sector. In the same breath one needs to
bring into the picture the precarious image of Chinese immigrant food and the
unequal power relationship with their customers, casting a shadow on this
‘‘success story’’. So far, studies on the Chinese catering business seem to be an
exception rather than a rule. The paucity of studies might be attributed to a
latent disdain for the localized Chinese immigrant food, which developed out of
serving primarily non-Chinese clients (Smart et al., 1999).
In the general literature on Chinese culture and Chinese entrepreneurship, of
which catering business constitutes one of the more salient activities, group
characteristics such as solidarity (Portes and Zhou, 1991), ‘‘utilitarianistic
This article is part of a special issue of papers entitled ‘‘The econmic context, embeddedness
and immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
Chinese restaurant
ventures in
Antwerp
149
familism’’ (Lau, 1981), and family and lineage ties (Watson, 1975) have been
thoroughly discussed. Studies exclusively focusing on Chinese restaurants and
takeaways in Europe seek to analyze the growth and decline of the sector (Van
der sijde, 1983; Pieke, 1988; Rijkschroeff, 1998; Zhang, 1999), combining an
explanatory model of group characteristics and opportunities in the host
society, followed by a discussion on the social position of the Chinese as an
immigrant group in the broader, multi-ethnic society. Other studies alert us to
racist attitudes of white customers towards Chinese restaurateurs (Parker,
1994; Song, 1997a, b).
This article aspires to explore the paradoxical relationship between the
immigrant entrepreneur and his/her white customer, oscillating between
conflict/mutual misunderstanding and opportunity/mutual respect. Such an
analysis ‘‘from within’’ allows us to understand better the development of the
Chinese catering trade much more than looking at the number of restaurants
and other quantifiable data would allow, if available and reliable. Since
statistical data on Chinese restaurants in Belgium are not readily available, the
analysis of the development is largely based on interviews with Chinese
restaurateurs and their customers. In total, 22 Chinese and 20 Belgians were
interviewed. A total of eight respondents belong to the first, 11 to the
intermediate and three to the second generation.
Through their voices more insights can be gained concerning the emergence,
success and the main issues at stake of the catering sector. In order to do so, it is
first important to contextualize Chinese migration to Belgium in the larger
European setting. Among the Chinese in Diaspora the share of overseas
Chinese residing in Europe is relatively small. According to recent estimates
(Li, 2000) 2.8 million Chinese or 2.8 per cent of the total live in Europe. Their
concentration in the catering sector seems to be the prevalent professional
activity in most European countries, especially in the post-Second World War
period. At present, they are still clustered in this sector. Then, the development
of the Chinese restaurants will be discussed, leading to the social mobility of a
large number of Chinese restaurateurs. This part analyzes the business
strategies of the Chinese and the changes they adopt in response to changing
lifestyles and tastes of the white customer. This endeavour has been to a large
extent successful. This rather optimistic account is complemented with a more
critical analysis of the ambivalent power relationship between the Chinese
restaurateur and his white customer, where both are engaged in mutual
sterotyping, or to borrow Frank Chin’s (Wong, 1993, p. 55) phrase, ‘‘Does she/he
have to engage in ‘food pornography’?’’ Frank Chin, a cultural studies scientist
highly critical of the essentialization of ‘‘Asianness’’ in western society, coined
this term to underline the inferior position of immigrants, who are only
accepted in the white society if they provide the white majority with ‘‘exotic’’
food and pleasure. What seems at first sight to be a social mobility through the
ethnic food business is in fact, for him, a hidden form of oppression and
intolerance to accept immigrants as full citizens. The core question of whether
the Chinese restaurant sector represents a genuine business opportunity,
IJEBR
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generating social mobility for the immigrant group or rather a hidden form of
racial discrimination, where an entire immigrant community is condemned to
the ungrateful task of filling the insatiable cosmopolitan belly of the
(post)modern urbanite, will be discussed below
Mitigation background
The number of Chinese in Europe is negligible within the Chinese Diaspora
population worldwide. It accounts only for 2.9 per cent of the total. In Europe,
the countries with significant Chinese groups are the UK (250,000), France
(228,500), The Netherlands (132,000), Germany (100,000), Austria (41,000),
Spain (35,000), Belgium (23,000) and Switzerland (13,900) (Li, 2000). From the
perspective of the host society, the ethnic Chinese in Europe account for only
0.21 per cent of the total European population. Generally speaking, Chinese
migration to Europe set off in the second half of the nineteenth century and at
the onset of the twentieth century. The first wave consisted of young Chinese
males from the coastal provinces of China, who worked aboard ocean steamers.
The ship owners were enthusiastic about their industry and docility. European
sailors loathed them because of the menace they posed to their own position.
This hostility was reinforced since ship owners brought the Chinese in as strike
breakers, as in the case of The Netherlands (Wubben, 1986). Many jumped ship
in different European port cities including East London, Liverpool, Hamburg,
Bremen, Rotterdam, Amsterdam, Antwerp, etc. and set up restaurants and
laundries. The first Chinese in Antwerp and other cities were sailors. They
originated mostly from the coastal provinces of Guangdong and Zhejiang.
Thus prior to the Second World War, most Chinese were seamen, contract
workers and ambulant peddlers, cooks, laborers and laundry workers. These
temporary workers in fact replicated the pattern of the Chinese coolie trade or
indentured labor migration in Southeast Asia and North America in the second
half of the nineteenth century.
Very few traces of this period have remained intact. However, they did pave
the way for the chain migration in the post-Second World War period. The new
migrants, members of the corporation lineages in the New Territories (Goody,
1990, p. 60), who claimed to have lived on the ancestral grounds for many
centuries, found their way to Great Britain (Watson, 1975; Baker, 1994), The
Netherlands (Pieke and Benton, 1998), Germany, France and Belgium (Pang,
1993) and, to a lesser extent, to the Scandinavian countries and Switzerland.
Traditionally, this rural region was divided in mono-lineage villages, holding
corporate property (Wesley-Smith, 1980, p. 65). The push factors in the home
country, namely the New Territories in Hong Kong, center on economic and
political issues. In the host society immigration policy was relaxed. Until 1974,
foreigners could enter Belgium on a tourist passport, after which a medical
examination was required to obtain the necessary documents (Kesteloot and
Cortie, 1998). Chinese men, taking advantage of this situation, mostly started as
kitchen help on arrival. After having worked for a few years, his wife and
children joined him. When they had saved enough money they opened their
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own restaurant, often with the financial and moral help of family or fellow
lineage members. The concentration of the Chinese in Belgium in the catering
business is by no means an isolated phenomenon. The group of Taiwanese and
the twice migrants, including the Chinese from Indonesia, the ethnic Chinese
who arrive as the first Indo Chinese refugees in the mid-1980s, is relatively
small (Pang, 1993, 1999). In 1981 the total number of Taiwanese was 609, and
decreased to 575 in 1990. They, too demonstrate an outspoken preference for
the catering business. In the late 1970s and 1980s many settled Chinese from
other European countries – from Great Britain and The Netherlands – decided
to move on and some chose Belgium as a second immigration haven in their
continuous search for good fortune. In the second half of the 1980s and the
1990s, many Mainland Chinese have remained in Belgium after the completion
of their university studies. Owing to the tight labor market and their
fragmented knowledge of the local language, quite a few sought their refuge in
this sector. In recent years, undocumented migration from Fujian has also
produced Chinese migrants in Belgium, working illegally in Chinese
restaurants. The number is relatively insignificant in comparison to Great
Britain and The Netherlands, where a sharp increase of Chinese asylum seekers
has been registered in recent years. Moreover, most of the illegal Chinese who
are being arrested in Belgium are in fact transit migrants (IOM, 2001).
The success side: development of ethnic restaurants and economic
advancement
General
Figures of the number of Chinese restaurants are not available. Unlike in The
Netherlands, where every restaurant needs to register at the Chamber of
Commerce, this is not the case in Belgium. The Netherlands counted almost
2,000 Chinese restaurants in 1995, whereas there were only 225 establishments
in 1965 (Rijkschroeff, 1998). In 1994 I counted 235 restaurants in Antwerp,
which makes up 28 per cent of the total 829 counted Chinese restaurants across
the country. These figures are crude estimates, based on the listings in the
Yellow Pages of the different provinces in 1994.
First generation and small-scale restaurants
Owing to the lack of schooling and access to sufficient capital, most immigrant
business people tend to concentrate their activities in market segments with
small-scale production, low in added value and labor intensive. These
characteristics seem to fit the first generation of Chinese restaurant owners
very well. Most first generation Chinese set up a modest restaurant with the
assistance of fellow Chinese or fellow lineage members. The capital for starting
a business was relatively low. In the beginning of the 1970s it amounted to
about 500,000 Belgian francs (E12.500). Apart from the financial side, they
could also count on the transfer of skills in how to run a restaurant within their
own social network. Prior to the opening of a restaurant, Chinese male
immigrants underwent an apprenticeship with fellow Chinese restaurateurs.
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Second, his former boss, family or fellow lineage members provided him with a
menu card. A historical reading of these menu cards reveals the particularities
of Chinese immigrant cuisine in Belgium and in The Netherlands. Menus
dating from this period are marked by their exhaustiveness. This is to say that
many dishes with minimal differences were offered. Third, all dishes were
numbered since the Chinese cooks could not read Dutch or English and the
waiters, mostly native Belgians, could not write Chinese. The particular link
between Chinese food in The Netherlands and Belgium was mediated through
the import of the Indonesian-Chinese restaurants’ menus from The Netherlands
to Belgium. In The Netherlands a fusion between Chinese and Indian
(Indonesian) food took place (Rijkschroeff, 1998, pp. 61-2). This explains why,
on the menus we can find Indonesian terms denoting Chinese dishes. Moreover,
the concept of ‘‘rice table’’ (rijsttafel) is of Indonesian origin, which itself is a
creolisation of Indonesian, Portuguese and Dutch elements (Cwiertka, 1999).
Rijkschroeff (1998, p. 62) informs us that:
... the arrival of Indian (Indonesian) Dutch and repatriates resulted in the fusion of the two
mentioned cuisines. Therefore dishes like sate´, gado gado, kroepoek or nasi goreng are
included in the menu card of many Chinese restaurants. For instance the word ‘‘nasi’’ is
originally an Indonesian word meaning cooked white rice. In the Chinese-Indonesian cuisine,
it has assumed the meaning of fried rice.
The decoration of these restaurants was intended to underline the Chinese
character of these restaurants, including Chinese black-lacquered lanterns, the
ubiquitous dragon/phoenix representation, Chinese vases, etc. The names of
these restaurants also had a distinctive Chinese character like Wah Kel
(Huaqiao), China West (Zhongxi), Hong Kong (Xianggang). From the onset,
wine and beer were served. This is perhaps a distinctive feature of Chinese
restaurants in Belgium and in France, although more study is needed in order
to support this view. Kitchen personnel were limited to a handful of cooks,
while the remainder of the work was carried out by the parents, their children
and other family members. The performance of family labor by children, or
‘‘helping out’’ (bangshou) (Song, 1997a, b), was essential to the development of
Chinese immigrant entrepreneurship. This is not an isolated Chinese
phenomenon. Literature on ethnic businesses, run by immigrant families, has
marked out family labor as one of the ‘‘ethnic resources’’ (Waldinger et al., 1990;
Light and Gold, 2000) within the political and institutional context
(Kloosterman and Rath, 2000; Rath, 2000). Engagement in family labor might
benefit the family business but it affects, among other things, the school
performance of the children. Many of the older siblings discontinued schooling
because they had to work in the family business. Many intermediate generation
youngsters dropped out of school. The practice of the implicit ‘‘family work
contract’’ (Song, 1997b) generates an intra-generational divide between older
and younger siblings within one family in terms of identity and affiliation
(Pang, 1998; Song, 1997a). The reason behind the success of the Chinese
restaurants has often been all too easily attributed to ‘‘hard working Chinese’’
and their children, who offered food at very affordable prices; a fast and
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no-nonsense service, characterized by a depersonalized but efficient ‘‘digitized’’
ordering system.
The restaurant owners involved like to stress these points of relative
advantage vis-a`-vis other competitors in the catering business. However,
changes in the larger society need to be taken into account, too. As Hooghe
(1995) argued, radical and irreversible changes in Belgium have taken place in
the post-war period. Class differences have become blurred. A man in his mid-
30s, a cook by profession, started to eat Chinese food with his parents at the age
of nine. His parents were working-class people. They were not rich enough to
dine out in fancy restaurants. However, the Chinese restaurants offered an
attractive alternative:
We went to W.K. I believe it was one of the first Chinese restaurants in Antwerp. My parents
took me along ... Chinese restaurants were affordable for my parents. These rapid social and
cultural changes in the host society seem to be reflected in the steep growth of the number of
the Chinese restaurants and the solid position of Chinese immigrant cuisine in the general
catering business and in the daily diet of the dominant group.
The intermediate generation, the upgrading process and
proliferation of Chinese restaurants and Chinese food
Changes in the Chinese food sector took place in the mid-1980s. Whereas
business took off in the decade of the 1970s, stagnation marked the first half of
the 1980s until the latter part of the decade. In order to reverse the recession, the
Chinese adopted different strategies: first, new dishes like dim sum (dianxin),
new ingredients including scallions, ginger, black beans, etc. and new ways of
cooking like steaming in order to prove the ‘‘authenticity’’ of their food. As for
beverage, expensive wines were added to the wine list. Some of the new
generation Chinese restaurant owners, often the older siblings of the
intermediate generation, started to consume more wine themselves while
visiting other restaurants serving French, Italian, Thai and Japanese food.
Renovation of the interior in terms of upgrading and expansion was another
option to remain in business. For instance, the capital for setting up a successful
Chinese restaurant in a suburb in 1987 amounted to around 5 million Belgian
francs (E125.000), excluding the property price. This figure includes the
decoration, the installment of equipment and other objects in the kitchen and the
restaurant. These restaurant owners are generally sons, and rarely daughters of
immigrant Chinese, who inherited the restaurant from their parents or who
started a new one with the financial, moral and/or practical support of their
parents. Since they were more integrated in the host society than their parents,
they have easier access to information, management skills, market demands and
changes in lifestyle than the first generation. They tend to use more automated
equipment such as professional dishwashers, refrigerators, and computers for
accounting, ordering, and other purposes. There was also a tendency to give
friendly but formal service to customers in similar ways as in some highbrow
French and Italian restaurants. The upgrading tendency has also affected the
prices of Chinese food, which have risen. In other words, Chinese food did no
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longer stand for cheap food and huge portions. In the period 1987-1992 business
figures in this sector have increased significantly.
Parallel to the upgrading process, the number of Chinese take-aways has
taken off. This formula was introduced by the British Chinese, who began to
arrive in the late 1970s and the 1980s, and aptly adopted by late entrants in the
Chinese catering business. It requires less investment in terms of human
resources and financial means. These take-aways did not only emerge in the
major cities but also in small towns and more remote areas. The proliferation,
the increasing popularity of Chinese immigrant food and its incorporation into
the daily diet of the average Belgian explain why mainstream supermarkets
and Belgian restaurants, cafe´s and pubs offer Chinese immigrant food as ‘‘plat
du jour’’.
In recent years, the interest for the ‘‘Orient’’ or all things ‘‘Asian’’ has been
very prominent in all realms of life, including lifestyle, and not merely in the
food sector. In the global culinary world cooks of Chinese descent but living in
the West, like Ken Hom and Nancy Lam, have reached celebrity status. Ken
Hom is Asian American and a prominent food and restaurant consultant. His
BBC television series (including Ken Hom’s Hot Wok) has made him one of the
best-known authorities on Chinese food. Recently, he has moved on to Thai
food. Nancy Lam is host of an Asian cooking program on UK’s Channel 5, also
called The First Oriental Spice on television. The hype around Asian food does
not only revolve around eating Asian food, but also implies the usage of the
right utensils needed for the preparation of Asian dishes. Asian utensils are
now readily available in trendy kitchen shops, including the wok, bamboo
steamers, chopsticks, bowls (for rice, soup and all kinds of noodles), Japanese
knives, etc., and increasingly so in mass market chain stores. This ‘‘exotic’’
image of the East has been nurtured by popular Asian movies dwelling on
food, identity and family relations such as Ang Lee’s movie Man, Woman, Eat,
Drink. Recently, restaurants offering Asian food have emerged in different city
centers across the country. Owners of these restaurants are native Belgians,
while the staff consists of Asians such as Cantonese Chinese cooks or adopted
Belgians of Korean origin. Through the Asian food, the staff of Asian ethnic
background and the interior, these restaurants succeed in evoking an Asian
mood. Very few Chinese restaurants are active in this new opportunity
presented by newly emerged post-industrial symbolic economy. When I asked
intermediate generation Chinese about these new opportunities in the newly
emerging segment of fusion food, voices range from skepticism to uncertainty:
I don’t believe in this new formula. It’s a fashion. This will pass. These young people, who go
to these new places, they don’t have much money to consume. They eat a bowl of noodle and
have a beer. They don’t drink ape´ritif, wine and liquor like in a restaurant. We make the most
money out of the drinks. No, my husband wants to make the restaurant bigger with more
window seats (LH).
My sommelier advises me to make my menu shorter in bistro style. Next year my old waiter
will retire. My son will then work full-time. Then he has to come up with new ideas. After all
he has studied in a hotel school and he’s young so he should know what people want (TP).
Chinese restaurant
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155
Some believe in the new concept but hesitate to take action for a variety of
reasons:
I think this new style is good and I can do it. But then we have to move to the center of the
city. In that case we don’t know what to do with our restaurant. The property and the
business are ours. Of course we can sell everything. But who would want to buy a Chinese
restaurant now? (YY).
A small restaurant with a limited menu choice in a trendy neighborhood must work (NW).
Others think that through the ubiquity of Chinese restaurants and the acquired
position of Chinese immigrant cuisine in the mainstream food culture, business
will remain relatively stable. The recent fusion food hype is a novelty, which
will not lead to the extinction of Chinese immigrant cuisine, given the
entrenchment in the daily diet habits of the dominant group.
Overall, Chinese immigrant cuisine was accepted by a wide group of white
people after a hesitant start. The fact that a very large share of the total Chinese
population, including both first and intermediate generation, is engaged in this
sector testifies the success of ‘‘exotic immigrant’’ food. When the first Chinese
restaurants emerged, set up by immigrant Chinese, the cultural stereotypes of
the Chinese and more generally the ‘‘Orient’’ were hyperbolically enlarged. The
restaurant business offers the Chinese, both first and succeeding generations, a
means of survival and in most cases a means of social mobility. Some are, of
course, more successful than others, but the general picture is that of financial
advancement for the Chinese as a group.
Social exchange: ambivalence and ‘‘food pornography’’
Ambivalent relationship
In order to nuance the success side of the Chinese restaurant sector, the
negative stereotyping and ‘‘food pornography’’ will be discussed in this part.
When I interviewed the first native Belgians eating Chinese food, they often
raised the point of the ‘‘foreign, but not too foreign’’ aspect of Chinese food. The
high level of adaptation of ethnic food is to a high degree determined by the
consumers. A retired electrician, Mr A, clearly stated this reason for starting to
eat Chinese since 1949:
My father is Dutch and my mother is Walloon (southern part of Belgium). As for me, I’m born
and raised in Antwerp. My parents always ate the same things like meatballs with tomato
sauce. It was not bad but I wanted a change. I don’t only eat Chinese but I also like Mexican,
Indonesian, and other ethnic food.
The man, whose parents were of working class background, also remembered
the concern his mother had when the family started to dine at Chinese
restaurants:
They didn’t know much of Chinese food. I still remember my mother asking the waiter
whether it was OK for a small boy like me to eat Chinese food so often?
Despite the apparent success, the relation between the Chinese entrepreneur
and his customer was to say the least shallow and fickle, if not ambivalent.
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This period is marked by a high degree of distrust between the Chinese and
their customers. For instance, the degree of acceptance of certain Chinese
foodstuffs, however, has been a slow process. A Chinese female restaurant
owner (36 years old) still recalls vividly how certain foodstuffs have been
gradually integrated in the menu of Chinese restaurants:
When I was 12 or 13 years old, I remember still very well that I was carrying a dish with black
fermented soybeans in the restaurant. The dish was part of our evening dinner and not a dish
prepared for clients. But one of the customers complained about the bad smell of that dish. So
I was ordered by my parents to go back to the kitchen immediately ... In thinking back this is
funny. I have a restaurant now. Most customers, especially the high middle class ones, love
black soybeans. Yes, things have changed a lot (YY).
As Miller (1997) instructs us, disgust is a shifting emotion, often associated
with boundaries between us and them. In eating culture practices these
boundaries are highly dynamic. With the growing mobility and the rapid
dissemination of cultural goods and services, including foodways, the taste of
people living in post-industrial western societies has become more
cosmopolitan, always in search of novelties.
Apart from offensive odors and general stereotypes about the Chinese,
suspicion towards Chinese food remains strong. A middle-aged woman M (45
years old), one of the oldest second generation Chinese, recalled the skeptical
attitude of Belgian customers towards the meat served in Chinese restaurants:
Sometimes the newspapers write very wild things about Chinese restaurants. There was once
this newspaper article that Chinese restaurants were serving cat meat. That’s complete
nonsense. Why would we serve cat meat? I don’t understand how they can write these things.
Perhaps because we Chinese, we cut up the chicken meat into small pieces and they don’t
recognize it? And they think we’re serving them cat???
In a reverse way the Chinese also harbor prejudices towards their customers.
Some have a rather stereotypical view of their customers. For instance, the
main character in the novel Sweet Sour by Timothy Mo refers to the food
served to English customers ‘‘as lupsup (Cantonese for rubbish), fit for ‘foreign
devils’’’.
Despite the misunderstanding between the two parties and the resistance of
the white customer to extremely foreign tastes and odors, the first Chinese
restaurants serving highly adapted Chinese meals seem to meet a demand in
the market. The highly adapted or ‘‘bastardized’’ form of Chinese immigrant
food is a strategy Chinese immigrants adopted to suit the palate of the native
customer in order to survive. In a similar vein despite the different location,
Hom’s reflection on the divided menu in his uncle’s restaurant in Chicago
clarifies my point:
In my uncle’s restaurant, we had two menus. In those days, we knew that Americans would
not savor braised sea cucumber, bird’s nest soup with egg white, or braised shark’s fin. These
were delicacies enjoyed by our knowledgeable Chinese patrons but would most certainly
have driven our American customers away. So we had a menu for them (Hom, 1997).
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This explains why Chinese restaurant owners prefer to play safe by
incorporating Belgian dishes such as steak with fries in the menu. An
important point to note is the choice of rice or fries with meals. It seems that
Belgians are not bothered by the combination of Chinese food with fries.
At any rate, many first generation Chinese could live well from their
business and could support their children (sons) in schooling and in
professional life, mostly in the same sector. The democratic prices definitely
played a role. Furthermore, the convenience and the relaxed mood in Chinese
restaurants are other factors accounting for success in the catering business.
Eating lunch in a Chinese restaurant has become a weekly routine for an
elderly woman, R:
When we were still working in our business (wholesale bakers) I insisted on having a day off
on Sunday so that I don’t have to cook. So on Sundays we always go to a Chinese restaurant.
For us Sunday means Chinese food (R).
Sundays attract a specific group of clients, mostly elderly couples, who after
church eat at their customary Chinese restaurant. As customers they display a
high degree of loyalty. Some of them order the same drinks and meals week
after week. Over time they have developed close ties with the Chinese owners.
Personal and family events such as birthdays, graduation and promotion, but
also problems such as illness, accident or death, are shared with the Chinese
owners.
These quasi-friendship relations are also fostered with other customers.
When I interviewed a middle-class couple, a bank director and an
administration officer in the diamond sector within the 40-45 age bracket, they
sketched their dining experience as follows:
We have been eating here for almost 23 years. (The husband:) At the beginning I always ate
chicken with curry. Now I’ve switched to chicken with Madras curry ... The wine is very
good here. (The wife:) What I like here very much is the finishing touch. There are always
fresh flowers on the table. The table cloths are clean and crisp. The background music is
soothing ... The service is attentive. They are always there to pour wine in our glass. We
know the waiter very well and he us. So when we come here, we feel at home. People know
who we are.
Tastes change gradually over time, but some eating patterns seem resistant to
change. In the context of Chinese immigrant cuisine, fries are still on the menu
despite the increasing sophistication of the customer, all the more since fries
( frites) are considered to be indigenous and deeply ingrained in the local food
folklore. Other dishes such as steak seem to have disappeared in most Chinese
restaurants. One restaurant owner gave me this account of why he dropped
that item from the menu:
When my father was running this restaurant, people could order steak with fries. When I took
over the restaurant about 11 years ago, I also took over the menu. But I’ve had complaints
from different clients that the steak was not cooked the right way. I got a bit frustrated and I
decided not to put steak on the menu anymore since this is a Chinese restaurant.
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Food pornography
Frank Chin’s concept of ‘‘food pornography’’ implies in the strict sense that
Chinese immigrants or any other ethnic group are only accepted when they
provide the majority exotic and spicy pleasures. Interpreted in a broader social
way, the only option for immigrant groups to get a foothold in a white
dominated society is through the activities of reifying perceived differences and
aggrandizing one’s other-ness against their will. Unlike sexual pornography,
which implies the straightforward exchange of sex for money, ‘‘food
pornography’’ functions more indirectly, exhibiting a subtler dynamic. At first
sight those engaging in ‘‘food pornography’’ appear to make promotion and
advancement, whereas in reality they are forced to fulfill the crave of the
majority group for ‘‘exotic’’ food. It should be noted that the notion of
‘‘exoticness’’ or the degree of ‘‘other-ness’’ is a construction, and thus highly
variable, fluid and temporary. To illustrate: the first generation Chinese
restaurants are clearly ‘‘exotic’’ for the native customers since eating in such an
environment is an entirely new event, despite the fact that the food is highly
adapted to local taste. It is temporary as the notions of ‘‘exoticness’’ change over
time.
This incisive critical analysis calls for urgent reflection and actions to
broaden the opportunities and to improve the skills of immigrants. Do Chinese
entrepreneurs, first and some of the intermediate generation, engage in ‘‘food
pornography’’? The answer might be affirmative from an outsider’s point of
view. Indeed, given the precarious social economic position, the generally low
educational background and the lack of financial means – especially among the
immigrant group – they had no other professional choice than opening a
restaurant. There is a manifest inequality in terms of power between the
Chinese and the majority group. While the white customer had the choice of
eating or not eating Chinese food and demanded ‘‘foreign, but not too foreign’’
food, the Chinese had to meet their demands and stick to their job for sheer
economic survival. In that sense, one can speak of ‘‘food pornography’’,
especially when misunderstanding, racism and hostility arise between the
owner and the customer. Many intermediate generation Chinese restaurateurs
were pushed into the catering sector by being ‘‘victimized’’ as children of small
business people. Owing to the informal family work contract and often
discrimination in school, they drop out of school with the only professional
option of working in their father’s or another relative’s restaurant. Some
restaurateurs often feel imprisoned in the small community of Chinese
restaurateurs. In general, despite their financial success, they seem to suffer
from an inferiority complex for running a Chinese restaurant. The term ‘‘a chop
chuey joint’’, which is widely used within the Chinese community, supports the
negative outcome of the apparent success of the restaurant sector. Running a
small business does not render them much social prestige within the Chinese
cultural system, privileging scholarship and academic degrees (Li, M.H., 2000).
The metaphor of ‘‘chop chuey’’ representing the fragmented and the
‘‘unwholesome’’ character of Chinese immigrant food has been used by many:
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Of course, this style of cooking did not produce genuine (let alone gourmet) Chinese food – it
was much more like the makeshift dishes popularly believed to have been invented during the
Californian gold rush and known by the generic term chop chuey (a corruption of the
Cantonese jaap sui, bits and pieces) but it found ready favor with unsophisticated British
palates (Baker, 1994, p. 295).
Having made this observation, I hasten to add that this low self-esteem is
particularly prominent among the less successful business people. More
successful ones seem to harbor a milder view of being a Chinese restaurateur.
Moreover, over time they have developed a network of business acquaintances
and personal friendships through their business. In these cases, ‘‘food
pornography’’ is out of the question. A second point contesting the idea of ‘‘food
pornography’’ is the family business strategy of calculated utilitarianism. One
can do a job for instrumental reasons, such as earning enough money to invest
in the education of the children, which is the ultimate goal of this family
business strategy. Their perseverance lies in the family strategy to make a
living for all members, creating educational opportunities for the children and
enough savings for their own old age. In other words, in sticking to an
unpleasant job, if that is effectively the case, they would refer to
instrumentalism as part of the general family business strategy. Third, in the
post-industrial symbolic economy (Sorkin, 1994; Hall, 2000; Rifkin, 2000; Pang,
2001), market forces have entered many realms of social life such as the
commodification of emotions, family values, children, youth, refugees,
relationships, etc. After all the so-called fusion food invented by whites and
colored cosmopolitans to seduce the postmodern urbanite captures into this
crave for difference, the ‘‘out of the ordinary’’, which is basically the definition
of exoticism. Evidently the owners of fusion food restaurants do not feel
exploited nor looked down on by their customers.
Concluding remarks
The main question in this article revolves around the outcome of the apparent
success of the Chinese restaurant business in Antwerp through interviews and
participant observation. Does the restaurant business offer an opportunity for
the Chinese immigrants or is it a form of ‘‘food pornography’’? Although the
location is limited to one city, the findings might be transferable to other
European cities with the same group of Chinese immigrants, equally engaging
in the catering sector. First, the emergence, development and difficulty of the
catering sector are discussed, layered with the voices of the restaurateurs and
their customers. In this development, the immigrant Chinese seem to lose out
on the latest trend of fusion food in the postmodern symbolic urban economy.
However, Chinese restaurants and take-aways are still popular among large
segments of the general population. Some of the immigrant Chinese dishes
have gone mainstream since they are readily available in major supermarkets,
mainstream pubs and other places. Second, the notion of ‘‘food pornography’’,
coined by Frank Chin, is brought into the picture. Are Chinese restaurateurs
forced to do the ‘‘lousy’’ job of satisfying the spoiled taste of the white majority?
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Instead of replying to this question, it is more useful to underline the
instrumentalist family business strategy, privileging the instrumental
accumulation of financial resources for investment in education and other
areas. Given the strong undertone of repression and denial of identity in the
notion of ‘‘food pornography’’, it seems apt to conclude that food pornography
in its extreme form is not applicable in the Belgian case. However, the
ambivalent social relations with the customers and the impact on a possible
negative self-identity are realities which need to be accounted for. To conclude,
one can argue that the Chinese immigrants have seized the opportunity of a
market for ‘‘exotic’’ food and continue – or at least some of them – to do so by
adapting to new market trends. As an immigrant group they have certainly
gained social mobility in Belgium.
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International Journal of
Entrepreneurial Behaviour &
Research, Vol. 8 No. 1/2, 2002,
pp. 162-167. # MCB UP Limited,
1355-2554
DOI 10.1108/13552550210428061
Conclusion
The economic context, embeddedness
and immigrant entrepreneurs
Eran Razin
Department of Geography, Hebrew University, Jerusalem, Israel
Keywords Immigrants, Entrepreneurialism, Ethnic groups, Economic conditions
Abstract Concludes that the impact of the economic context on entrepreneurship among
immigrants is group specific. The concepts of embeddedness, which acknowledges that economic
action is embedded in the structures of social relations, and mixed embeddedness, which
incorporates both roles of co-ethnic networks and linkages between immigrants and the broader
society, could have a major role in explaining these variations. However, these concepts could be
criticized as being fuzzy and hard to verify empirically, and as presenting an idealistic image on the
favorable role of intra-ethnic networks. Case studies demonstrate various aspects of the economic
milieu that influence immigrant enterprise and provide some evidence for the embeddedness and
mixed embeddedness concepts, although not fulfilling the need for a broader and more formal
verification of arguments based on these concepts. An imbalance between too intensive intra-ethnic
ties and lack of sufficient instrumental inter-ethnic networks is revealed in some of the studies.
The economic context of economic embeddedness
The propensity of immigrants to turn to self-employment as a route of
absorption and upward mobility in their host society is influenced
substantially by opportunities offered by the economic environment at the
national and local contexts. Such opportunities are an outcome of the structure
of the local economy and of legal-institutional factors that influence the position
of the small-business economy in general and the access of immigrants into
small-business in particular. These influences of the external environment are
nevertheless group specific, at least to some degree. Different immigrant
groups could be influenced in different ways by the same economic milieu.
This interaction effect of location and ethnicity on immigrant enterprise was
emphasized by Razin and Light (1998), who provided evidence for unique spatial
variations in self-employment among specific immigrant groups. This approach
emphasized that the influence of the local economy on immigrant enterprise depends
not only on the local economic structure, but also on traits of the local immigrant
community, such as location-specific ethnic networks. Discri mination against
specific groups is another attribute of both the community and the absorbing
environment that creates group-specific spatial variations in self-employment. In
particular, local variations in self-employment among groups that differ from the
mainstream population in race, religion or appearance could differ markedly from
local variations among the rest of the population (Razin and Langlois, 1996). These
groups could have more developed location-specific ethnic networks and have
This article is part of a special issue of papers entitled ‘‘The economic context, embeddedness
and immigrant entrepreneurs’’ edited by Jan Rath, Robert Kloosterman and Eran Razin.
Conclusion:
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particularly inferior access to prestige and power position s occupied by the
mainstream population in smaller and ethnically homogeneous localities.
The complex influence of opportunity structures and ethnic traits on
immigrant enterprise is associated with the introduction of the concept of
embeddedness into the study of immigrant entrepreneurs. The notion of
embeddedness acknowledges that economic action is embedded in structures of
social relations. Granovetter (1985) notes a tendency to overemphasize the
embeddedness of economic activity in social relations (particularly kinship
obligations) in traditional societies and to under-emphasize this role of social
relations, leading to trust or to malfeasance, in modern societies. Kloosterman
et al. (1999) argue that the focus of the embeddedness concept on socio-cultural
traits of the ethnic community itself is too narrow. They thus introduce the
concept of mixed-embeddedness that incorporates both the co-ethnic social
networks and the nature of linkages between migrant entrepreneurs and the
economic and institutional context of the host society.
The concepts of embeddedness and mixed-embeddedness add an important
explanatory framework to the unique impact of the specific urban economic
milieu on immigrant entrepreneurship. It is not only the opportunity structure
that counts, but also location-specific traits of the immigrant community and
the complex ways in which immigrant businesses are inserted into the socio-
cultural and institutional context of the host society.
Embeddedness – a fuzzy concept?
Adding the concept of embeddedness to the more straightforward concepts of
opportunity structure, class and ethnic resources presents a challenge. Simply
taken, one can refer to economic embeddedness as the economic context for
immigrant entrepreneurship, at the national and local levels, and how it
interacts with traits of the immigrants themselves, as individuals and groups.
However, embeddedness could fall into the category defined by Markusen
(1999) as fuzzy concepts. These are characterizations lacking conceptual clarity
which are difficult to operationalize. Specifically, Markusen discusses the
concept of flexible specialization and its re-agglomeration hypothesis, the
concept of world cities and, most relevant to embeddedness, the literature on
networking and co-operative competition in industrial districts such as the
Third Italy, Baden Wurttemberg and Silicon Valley. She criticizes much of the
literature that uses these concepts extensively without bothering to define and
validate them beyond anecdotes or case studies.
Critique of the concept of economic embeddedness is twofold:
(1) The fuzziness of the concept and the difficulty defining and validating
the phenomenon beyond descriptive case studies.
(2) The idealization of the embeddedness model, concerning the conducive
impact of social networks.
Critique of the first type is part of a broader critique that concerns the cultural
post-modern turn that took place in human geography and other social sciences
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in the 1990s. This turn has been associated with a rejection of the notions of
science, objectivity and abstract generalizations in favor of subjective
approaches that focus on a complex linguistic, conceptual and terminological
web that treat theory and concepts as a sort of intellectual game, increasingly
detached from real world problems (Hamnett, 2001). It has been argued that these
approaches have retreated from rigorous empirical research of practical social
issues into ‘‘sexy’’ philosophical, linguistic debates (Martin, 2001). While
emphasizing notions of liberation, empowerment and giving voice to the weak
and excluded, these approaches are e´litist in practice, reinforce privileges of the
intellectual e´lite, are irrelevant to the unprivileged, and do not influence
politicians and big business. Hamnett (2001) thus emphasizes the need to explain,
and possibly even help to change, the world we live in not as an intellectual word
game for the privileged but disenfranchised few. Similarly, Martin (2001) calls us
to refocus on concepts such as class, inequality and conflict, rather than
excessively emphasizing cultural, economic geography that downplays the
significance of economic theory. Storper (2001), who also criticizes the poverty of
the cultural turn in radical theory, calls for a need to add macro-level descriptions
of society to the micro-level common in the cultural discourse.
The concept of embeddedness is not at the heart of the cultural post-modern
turn. However, one could seek to examine whether it contributes to innovative
theoretical debates on immigrant enterprise and provides a new perspective for
empirical examinations, or whether it merely introduces fuzziness to the study
of the phenomenon and makes these studies less accessible to broader
audiences of policy makers and the immigrant entrepreneurs themselves.
Critique of the second type does not challenge the legitimacy of using the
concept of embeddedness, but specifically challenges the ideal model that it often
represents. Taylor (2001), for example, criticizes the ideal view of embedded local
economic growth based on trust, reciprocity and loyalty among small business
enterprises, which lead to cooperation, collaboration and the creation of social
capital and ‘‘institutional thickness’’. This view conceals significant exclusionary
tendencies of entrepreneurs from inter-local, inter-ethnic networks, especially
those orchestrated by transnational corporations. In a way, this critique is linked
to the mixed embeddedness concept that criticizes focusing on co-ethnic linkages
while ignoring external ones. The mixed embeddedness notion could also be
viewed as providing a macro-level perspective that is missing in the ‘‘pure’’
embeddedness concept, and as adding reference to broad socio-economic,
political and institutional structures with their ‘‘real-world’’ policy relevance.
The contributions in this special issue provide insights on the above issues:
the impact of the economic milieu on entrepreneurship among immigrants, the
validity of the embeddedness and mixed-embeddedness hypotheses and their
empirical measurement.
The evidence
The case studies presented in this special issue demonstrate the influence of
various aspects of the economic milieu on immigrant enterprise. These include
Conclusion:
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the impact of economic fluctuations (Peters) and of structural changes, some of
them associated with globalization processes. These economic factors interact
with institutional ones; for example, globalization could influence deregulation
and immigration policies, which in turn influence immigrant enterprise
(Collins). The role of the institutional milieu is particularly emphasized in the
case of The Netherlands (Engelen), where the Dutch consensus-oriented
management style has created a non-conducive environment for innovation,
despite deregulation trends.
Barrett et al. portray an economic milieu in Britain that is more favorable for
the entry of immigrants into small business than in continental Europe, but to
niches that do not create opportunities for upward economic mobility. This
economic milieu leads to the concentration of immigrant entrepreneurs in
trades that are in decline, labor intensive or both. Businesses in these niches
face acute competitive pressures that are exacerbated by the growing presence
of corporate rivals in many markets. The economic and institutional milieu
limits diversification and makes it difficult for immigrant entrepreneurs to
break out from their traditional niches both sectorially and geographically.
Hiebert emphasizes a particular trait of niches in which immigrants
concentrate on their prospects to turn to self-employment: rates of self-
employment in each niche. Thus, immigrants that are drawn to niches that
offer few opportunities for self-employment have low rates of self-employment.
The penetration of immigrants into particular niches is partly a result of
qualifications possessed by members of the group and partly a result of the
opportunity structure at a particular moment when the early wave of
immigrants arrived.
The role of the economic context on Chinese immigrants in the restaurant
business is emphasized in two of the papers. Pang notes that immigrants are
driven by local markets into their stereotypical niches, while having to adjust
their product to local taste rather than provide the ‘‘real thing’’. Leung notes
that the concentration of Chinese in the restaurant niche is not only a product of
unique ethnic resources, but is influenced also by the external environment:
limited access to alternative employment, changing consumer demands and
market conditions. The first factor explains why Chinese are driven into the
restaurant niche, whereas the later factors explain how they adjust within their
niche in response to changes in the economic milieu, such as the increasing
demand and proliferation of fast food outlets.
The case studies also provide insights on the embeddedness and mixed
embeddedness concepts. The continued concentration of immigrants of specific
groups in specific niches (Hiebert) is largely explained by the role of ethnic
networks in channeling new entrants into the labor market – in line with the
embeddedness framework. This role of ethnic networks in influencing the fate
of immigrants in the labor market is also emphasized by Peters, who
distinguishes first generation pioneers, first generation immigrants who arrive
into an ethnic community that had already developed ethnic niches, and second
generation children of immigrants. Each of these groups faces a different
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environment in terms of the existence and nature of ethnic networks that
channel into specific segments of the labor market.
Peters also argues that an historical perspective and the study of various
types of human agents are needed to expand the perspective of the mixed-
embeddedness concept. Nevertheless, two of the studies in the present issue
provide clear evidence supporting the concept of mixed-embeddedness, both
arguing for imbalance between too intensive intra-ethnic networks and lack of
sufficient inter-ethnic networks. Barrett et al. argue that co-ethnic ties form an
important role in immigrant enterprise, but a close dependence on community
linkages is as problematic as it is beneficial. These ties contribute to the entry
of immigrants into small business in Britain, but the lack of instrumental inter-
ethnic networks limits immigrants within the small business economy.
The examination of Arab entrepreneurs in Israel by Schnell and Sofer
provides perhaps the clearest example for the mixed-embeddedness concept.
Arabs face the problem of over-embeddedness when it comes to intra-ethnic
networks and under-embededness when it comes to contacts with the broader
society. Over-embeddedness refers to too ‘‘pressing’’ ethnic networks of mutual
aid that could drain the entrepreneur from his profits and lead to the
employment of unnecessary or unqualified relatives, thus preventing ethnic
entrepreneurs from exploiting opportunities and expanding. Obligations and
indebtedness to extended family and clan can form formidable obstacles for
efficient functioning and capital accumulation by ethnic entrepreneurs. Under-
embeddedness refers to the failure to exploit external networks as an economic
advantage: lack of instrumental inter-ethnic networks that are needed, for
example, to break out of traditional ethnic niches.
In summary, insights provided by the case studies in this issue on the role of
the economic context of immigrant enterprise do contribute to the clarification
of the concepts of economic embeddedness and mixed embeddedness, making
them less fuzzy in their definition and more useful in both theoretical and
practical respects. However, the case study approach that is largely based on
qualitative evaluations still leaves unanswered the challenge of a broader and
more formal empirical verification of these concepts and the arguments based
on them.
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