Research indicates ethnic groups have greater resource disadvantage then labour market disadvantage. This may help explain why some ethnic groups seem to be more entrepreneurial than others.
A desire to accumulate wealth and possibly return to one's homeland may be another reason to set up business. (Aldrich and Waldinger 1990). When asked as to why the ethnic minorities are successful in Britain? Rueben Singh says it was due to the fact that they came here in survival mode to make something of themselves. Such entrepreneurs often retain their distinct ethnic identity and form close links with co-ethnic workers and consumers, while choosing to remain separated from the mainstream business culture.
Taking risks is a desired trait of an entrepreneur, and by immigrating to the UK first generation ethnic minorities unquestionably took risks. Making a start from nothing also helped breed a hard work ethic. Many ethnic shopkeepers for example, work around eighteen hours a day to help provide for their children's education and build their business. They fear failure and so compensate for this by working every hour necessary.
The new generation of ethnic minorities consider themselves very much integrated into UK society. The industries that were traditionally associated with ethnic minorities are no longer exclusive to retail, pharmacy, textiles and the restaurant trade but cover every area of industry and business by demonstrating the money-making skills needed in today's job market. The new generation no longer want to rely exclusively on their family for success, and with traditional sectors slowly declining, they are actively equipping themselves with viable skills in order to succeed in today's society.
Despite the importance of cultural factors, traditional theories of entrepreneurship give only slight attention to ethnic minority communities in business ownership. The dominant economic and psychological factors that are usually used in texts are limited in explaining entrepreneurship and business strategies among ethnic groups. However, some literature on ethnic entrepreneurs’ entrepreneurial motivations, formation of enclaves, use of ethnic and class resources, and the tendency to specific business forms is found in sociology (Aldrich and Waldinger 1990; Bonacich 1973; Light 1972).
The largest ethnic groups in the UK are Indian, Pakistani, Chinese and Black Caribbean. It is however Asian communities that have the highest rate of self-employment, in relation to the national figure. This is mainly due to a strong motivation to be independent and a keen interest in entrepreneurial activity.
But what is it that makes Asians such good business people? A close family upbringing and involvement in the family business from young helped the second and third generation to become business oriented. The first generation created the stereotype of the corner shop and brought their children up in a house where business was always discussed. This helped them learn the values of hard work and owning your own business. (Gidoomal et al.)
This view of Asian self-employment has however been increasingly questioned for offering too one-sided a view of Asian business development. The real choices that ethnic minorities may make in deciding to go into business and also the line of business they will enter isn’t acknowledged (Werbner 1990). An alternative approach to understanding Asian entrepreneurship has been put forward which has been referred to as the 'cultural resources' approach. Werbner, in a study of Pakistani entrepreneurship, argues that the critical factors in the success of Pakistani businessmen are their cultural heritage, which stresses thrift, overdue gratification, conscientiousness and self-reliance (Werbner 1990). Such attributes rather than the wider environment are seen as central to the development of Asian business.
Gidoomal, et al demonstrates the importance of ethnic businesses to the UK. The authors identify a number of ‘fault-lines’, which affect the integration of ethnic businesses into the UK economy. Franchisers being an exception are actively targeting these groups as a main source of future growth, Due to the strong working culture of ethnic minorities.
Many white children are taught the value of education in order to get a professional job. many Asian children however, strive to have their own business, which to them is the height of success. Doctors, lawyers and dentists are considered lower down the scale than someone who works for him or herself. Asians look up to people like Richard Branson who have built their business from scratch and are now very successful.
Case Studies
Data obtained from a series of in-depth interviews (conducted in America) with entrepreneurs from four ethnic groups – Koreans, Chinese, South Asian and Jewish, where interviews lasted from between 45 minutes to 2 hours and looked into various structural and strategic features of ethnic entrepreneurship. The findings show that ethnic entrepreneurs are quite intricately connected to family and community sources of support.
This is a contrast to the individualistic, and self-made entrepreneur, model in Western business literature. Cultural ties and specific cultural factors, of which identity is one, enables the ethnic entrepreneur to view business conduct and strategies rather differently from that used by the more common entrepreneur. A unique finding is the ethnic entrepreneurs’ emphasis on business cash flow and turnover rather than on margins.
The researchers suggest that the increase of such entrepreneurship across national borders may be characteristic of the next phase of globalisation, one that merges and extends the historical link of cultural identity and trade in interesting ways. (Gopalkrishnan et al).
Research that has been undertaken by NatWest and Barclays Bank into Asian and African-Caribbean identifies the following:
- Asian businesses have a higher rate of self-employment than the national figure. This is because there is a strong motivation to be independent and an interest in entrepreneurial activity.
- Asian entrepreneurs start their business because it was something that their fathers had done and therefore a family tradition.
- African-Caribbean business owners tend to start a business because of lack of employment opportunities.
- African-Caribbean business people are mainly sole-traders, two of the most popular businesses being in hairdressing or beauty salon and the building trade.
- Black people feel that it is more difficult for them to start a business than it is for either whites or Asians, particularly when it comes to borrowing money. However, in recent years black business owners have noticed a gradual change in the culture of the lending banks.
The Entrepreneur displays values such as risk taking, initiative and creativity, which ethnic minority business owners surely posses to make their businesses thrive. Enterprise is a modern concept while the entrepreneur has a longer standing history. With periods of public mistrust in one time, viewed as a hero in the next.
The meaning of the word entrepreneur comes from “entre” to enter, “pren” to grasp and “eur” to leave smart. The ethnic entrepreneur, as does the mainstream entrepreneur, enter into a new business seizes hold of the opportunities and leaves the business if things start to go down hill.
Rueben Singh is an ethnic entrepreneur whose entrepreneurial activities continue to flourish. On the other hand many business owners in my eyes stop being an entrepreneur and continue as a manager when they are no longer opening new branches or coming up with new ideas.
I will evaluate the impact of the growing presence of members of ethnic minority communities in business ownership on our understanding of the entrepreneur. There are many schools of thought associated with the entrepreneur.
The Great Person School this is where an entrepreneur is characterised as being born with great energy, vision, intelligence, dynamism, perseverance and daring. It’s possible that ethnic entrepreneurs are born with these traits; they would certainly need them to set up business. They may however have been brought up in a certain way leading to these qualities appearance. This is what leads to some scepticism of this school as it presents a strong cultural image of the entrepreneur.
The Psychological School stresses entrepreneurs have a certain type of personality and they act in accordance with their values. Through cultural socialisation, occurring more often in childhood, in places such as at home with the family, which ethnic entrepreneurs seen to have a strong link with. At the church or other place of worship, for ethnic community business owners, and education where many ethnic groups tend to show a high aspiration is where responsibility, risk-taking, innovation and a need to achieve is established.
In the Classical School creativity and discovering opportunities are the main characteristics. There is a focus on opportunity seeking styles of management, which cause innovation leading us to conclude this school believes you are not born as an entrepreneur. Being from an ethnic background would have no impact on this train of thought.
In the Management School there is a link between entrepreneurship and the ability to perform competently management tasks including planning, organising, budgeting, staffing, controlling and co-ordinating. This viewpoint understands the entrepreneur as someone who uses management functions to run the firm. Coming from an ethnic background would not affect ones ability to perform proficiently in the areas outlined above.
The Leadership School identifies an entrepreneurs knack to “grab the hearts and minds” of those he or she works with. This may be easier if working with co-ethnics, as there is already a link between you and your colleagues. They may look up to you as a foreigner making it in Britain, sharing with you the knowledge of discrimination, which occurs in Britain. There is a concentration on skills such as empowerment and Human Resource Management techniques that business owners would use to commit employees to their vision.
The Intrapreneur School is where an entrepreneur exists and shows enterprising activities within a large organisation, however I am only interested in entrepreneurs from ethnic minorities owning their own business.
As you can see certain schools of thought point out that culture does have an effect on being an entrepreneur with other schools of thought pinning it down to management skills.
A study conducted in Edgware, North London by Barry Kosmin showed Jews use their minority group status as an economic resource. They make an effort to move into areas of work in which they can maintain individual autonomy and cultural integrity required by Jewish tradition but still compete for status and success in the majority society. Jewish tradition attaches merit to work performed and to the material rewards it produces. The pursuit of leisure is rejected, while the idea of work is a means with which to provide increased leisure time. The emphasis on financial success is key to social status respect. Another reason for self-employment among Jews and other ethnic minorities may be due to the need to arrange working hours around religious observance.
My opinion is that the culture and society you were brought up in determines your drive to open a business. I was brought up in Edgware where many business owners are Jewish, some observe Sabbath on Saturday while closing on other religious days of the year too. There is a large community probably paving the way for other Jews to open business here too this is how enclaves occur e.g. China Town.
