Transcript 11th Lecture File - e

Economics of International
Migration11
Jan Brzozowski, PhD
Cracow University of Economics
Immigrant and ethnic entrepreneurship: from
marginalisation to mainstream
• Ethnic entrepreneurship
• Immigrant entrepreneurship: types and
perspectives for development
• Transnational immigrant entrepreneurship
• Case studies: Latino entrepreneurship in the US,
ICT sector in Italy
Ethnic entrepreneurship
• entrepreneurs who are members of the group that has
‘a common origin and culture’ (Aldrich and Waldinger
1990, 112) and ‘is known to outgroup members as
having such traits’ (Zhou 2004, 1040)
• often the individuals who are both owners and
operators of their own businesses
• operate mostly in their ethnic enclave, serving coethnic population in a certain location, or act as
middleman minorities, using their ethnic resources to
trade between the host society, their ethnic group and
the country of origin
• survival strategy used by the individuals who –
having no viable economic alternatives – have to
rely on the social capital of the ones’ ethnic group
• businesses run by immigrants that have to accept
fierce competition, small profit margins and
limited growth perspectives (Rath and
Kloosterman 2000), while the more successful
immigrant enterprises lose their ethnic mark and
get incorporated into the mainstream economy
(Zhou 2004).
Immigrant entrepreneurship
• superior performance hypothesis: immigrant
businesses fare better than the firms owned
by non-immigrants
• underperformance hypothesis - IEs have
worse economic perspectives than the nonimmigrant businessmen
superior performance of IE
• Immigrants - positively self-selected from the homecountry population, highly endowed with human capital
and entrepreneurial capacities.
• They are eager to take risks and to take the advantage of
the possibilities that native entrepreneurs do not see or are
afraid to make use of.
• They exploit some underserved markets such as ethnic
market, or are able to expand internationally, opening
branches in the home country.
• Access to ethnic and migration networks places IEs in the
advantageous position and facilitates import/export
activities, which, in turn, enables the further enterprise
growth
underperformance hypothesis
• pushed to self-employment and survival-oriented
entrepreneurship by the unfavourable employment and
labour market conditions in host country.
• They lack country-specific human capital (esp. language
skills)
• They also lack social capital (social networks, including
business networks)
• Their access to external financing is limited and they often
face discrimination from the native customers (Neville et al.
2014).
• These deficiencies are visible even among second
generation IEs and have a negative impact on their
economic performance
Classification of IE (Curci&Mackoy 2010)
• highly segmented firms - offer ethnic goods and services
and are targeted at their co-ethnic customers. These are
mostly ethnic restaurants and shops: the development of
such enterprises is hindered by the size of ethnic market
and the pace of growth of ethnic community [ethnic
enterprises operating in the ethnic enclave]
• product-integrated businesses - provide mainstream
products to the ethnic customers (medical and real estate
services, used cars). The growth of those companies
depends on the size and growth of ethnic market. Still,
those companies have to compete against the mainstream
businesses that also target the ethnic market [ethnic
enterprises acting as middleman minorities]
• Market-integrated firms - oriented towards non-ethnic
customers by offering them the products and services
linked to their ethnic culture. They compete within the
mainstream market against other companies that provide
ethnic products and services. Their growth potential
depends on the preferences and the level of demand of
non-ethnic customers for ethnic products and services
• highly integrated businesses - operating on the mainstream
markets, providing non-ethnic products and services to the
general customers. Those IEs are the most integrated into
the economy in host country, but have to compete with the
domestic and international producers. Therefore, their
development potential depends on the creativity of the
entrepreneur and one’s ability to provide high-quality
products or services
Transnational IE
• implies immigrant business engagement not only in the
host country, but also in the country of origin
• ‘social actors who generate networks, ideas,
information, and practices for the purpose of seeking
business opportunities or maintaining businesses
within dual social fields’ (Drori, Honig, and Wright
2009, 1001).
• Focus on the individual actor, who is able to exploit the
opportunities that are either missed or unavailable for
entrepreneurs active in one geographical location only
Latino entrepreneurs
In the US
TE better educated and
more experienced
They have longer US
residence than other
Immigrant entrepreneurs
and experience upward
mobility
Transnational entrepreneurs: An alternative form of immigrant economic adaptation, Alejandro Portes; Luis
Eduardo Guarnizo; William J Haller, American Sociological Review; Apr 2002; 67, 2
What is the growth potential of such
enterprises?
So far, the evidence is limited
Landolt, Autler, and Baires (1999) –
classification of TEs
• the circuit enterprises – offering courier services
between host and home countries;
• cultural enterprises – offering ethnic food and
cultural products (music, newspapers, books);
• ethnic enterprises – which have been maintaining
transnational supply networks;
• return migrant micro-enterprises.
• The first three types of transnational enterprises
were operating in the ethnic enclave, while the
fourth type were unstable businesses in the early
phase of development.
But TE are becoming more visible in
the mainstream economy
• Saxenian (2006) – TEs highly visible and successful in the ICT sector
in the US
• Most of the ICT firms in Silicon Valley are ‘born global’,
subcontracting manufacturing or software development and selling
their products and services beyond American market almost
immediately from the beginning of their existence.
• immigrant transnational networks - source of unique advantage. In
the ICT business nowadays the ability to quickly find a foreign
partner is crucial; moreover, building international working teams
and managing them successfully requires cultural embeddedness in
dual social fields, language skills and mutual trust.
• This, in turn, is helped by the access to transnational networks. TEs,
who have ties with their country of origin, are able to hire skilled
workers at lower cost and have an easier access to knowledge and
technology and cheaper ways to finance their new projects.
How transnationalism affects the performance of
immigrant enterprises?
The answer is not straightforward
Firm Sales Growth Equation: Panel Fixed Effect Regression— Home-country’s
demographic and institutional characteristics affecting entrepreneurship
SIZE
AGE
(1)
–0.422***
(–6.19)
0.204
(0.73)
HUB (dummy Yes=1)
Gender (dummy male=1)
Years from the first tie
CEO education (University =1)
ICT activities (number)
(2)
–0.414***
(–6.40)
0.273
(0.49)
0.674***
(4.33)
0.102*
(2.11)
0.123
(0.08)
0.255*
(2.05)
–0.140
(–0.16)
TIES
(3)
–0.462***
(–7.29)
–0.109
(–0.16)
0.651***
(4.19)
0.100
(1.24)
–0.051***
(–4.19)
0.090**
(2.18)
–0.221
(–0.49)
0.129*
(1.78)
TIES*POP
TIES*GDP per capita
TIE*UNEMPL
TIES*YOUNG
TIES*EDUC
(4)
–0.466***
(–8.81)
–0.108
(–0.21)
0.638***
(3.33)
0.110*
(2.56)
–0.068***
(–4.52)
0.086*
(2.11)
–0.198
(–0.63)
0.106
(1.08)
0.130
(0.54)
0.037**
(1.89)
–0.455
(–1.57)
0.412**
(2.11)
0.082**
(2.22)
TIES*CORRUPTION
TIES*DEMOCRACY
R2
N
0.310
2582
0.312
2514
0.366
2164
0.369
2168
(5)
–0.438***
(–6.40)
–0.222
(–0.77)
0.604***
(4.12)
0.106
(1.24)
–0.064***
(–3.55)
0.098**
(2.60)
–0.211
(–0.51)
0.087
(1.21)
No direct effect
Productive activation of ties
Depends on home country
Conditions and socio-econ
environment
–0.250***
(–3.60)
0.800
(0.84)
0.354
2100
Brzozowski, J. Cucculelli M. & Surdej , A.(2014) Transnational ties and performance of immigrant entrepreneurs: the role of homecountry conditions, Entrepreneurship & Regional Development: An International Journal, 26:7-8, 546-573,