What is Minority (ethnic) Entrepreneurship?

Laquita C. Blockson, Ph.D. Minority Entrepreneurship (MGMT 351) January 22, 2008

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Contents
Definitions of Ethnic Economies Components of Ethnic Entrepreneurship Definition of Minority Entrepreneurship

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Definitions
Ethnicity refers to a sense of kinship, group solidarity, common culture, and self-identification with an ethnic group (Hutchinson & Smith, 1996) In the context of ethnic entrepreneurship, ethnic refers to a set of connections and regular patterns of interaction among people sharing common national background or migration experiences. (Waldinger et al, 1990: 33)

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Definitions (continued)
While many people may use the terms ethnic entrepreneurship, minority entrepreneurship, and immigrant entrepreneurship interchangeably, Chaganti and Greene (2002) note subtle differences among the terms: Immigrants are recent arrivals in a country, who often enter business as a means of economic survival. They may or may not be part of a network linking migrants, former migrants, and non-migrants with a common origin and destination.
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Definitions (continued)
Minority entrepreneurs are business owners who do not belong to the majority population. In the United States, the government identifies the following groups as minorities:
Blacks Hispanics Asians Pacific Islanders American Indians (also referred to as Native Americans) Alaska Natives

Women are also occasionally included as a minority group A minority may not (necessarily) be an immigrant and may not share a strong sense of group solidarity with an ethnic group, in terms of a shared history, religion, or language. (Basu, 2002)
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Definitions (continued)
An immigrant entrepreneur of Caucasian descent would not be considered an ethnic minority entrepreneur in the western world. An ethnic entrepreneur may or may not be an immigrant, but is likely to belong to a minority community. An ethnic minority entrepreneur is an entrepreneur who belongs to a minority ethnic community. (Basu, 2002)
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Ethnicity and Economics

Definitions1: Ethnic economy (also known as ethnic ownership economy): an economy comprised of self-employed employers, unpaid family workers, and co-ethnic employees.
The common trait this economy shares is that these employed individuals belong to the same ethnic group. With this basic definition, this does not mean that the buyers/customers necessarily share the same ethnic characteristic(s) as the employers/employed.
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Light and Rosenstein, Race, Ethnicity and Entrepreneurship in Urban America, 1995

Ethnicity and Economics

Definitions: Ethnic enclave economy: an ethnic economy that is clustered around a territorial core
Cultural identity is key Businesses and customers proactively and significantly recapture spending along ethnic lines and at all levels Examples: Koreatown in Los Angeles; Durham, NC after Reconstruction; Calle Ocho in Miami

Ethnic-controlled economy: significant and persistent economic power exercised by ethnic employees in the mainstream economy
Ethnic entrepreneurs usually cluster in the same occupations and industries This can encourage and confer market power above and beyond individual wealth and human capital Example: Koreans influence in Los Angeles soft drink distribution
Koreans were 5% of all Los Angeles business owners in the 1980s, but Koreans owners represented more than one-third of soft drink dealers.

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Question to ask ourselves:

Does self-employment offer better earning opportunities than wage work? Answer: It depends It depends on what type of selfemployment one specifies; and, It depends on whether employees are in an ethnic-controlled economy or in the general market
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Ethnic Entrepreneurship
Three components of the ethnic entrepreneurship framework2 opportunity structures:
market conditions which may favor products or services oriented to coethnics situations in which a wider, non-ethnic market is served

group characteristics:
predisposing factors such as selective migration, culture and aspiration levels includes the possibilities of resource mobilization Includes ethnic social networks, general organizing capacity, and government policies that constrain or facilitate resource acquisition

ethnic strategies: strategies that emerge from the interaction of opportunities and group characteristics, as ethnic groups adapt to their environments
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Aldrich and Waldinger, Ethnicity and Entrepreneurship, 1990

Opportunity Structures
Market conditions
Ethnic consumer products Non-ethnic markets
underserved markets markets with low economies of scale markets affected by instability or uncertainty markets with high demand for exotic goods

Access to ownership
Interethnic competition for vacancies
residential segregation and succession

State policies
Role of middlemen minorities
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Group Characteristics
Predisposing factors
selective migration settlement characteristics culture and aspiration levels
First pattern trait: sojourners orientation to host country Second pattern trait: distinctive social and cultural characteristics that promote solidarity communities Third pattern trait: distinctive economic traits (e.g., concentration in entrepreneurial roles, tendencies to keep capital liquid, and preference for kin and coethnic labor)

Resource mobilization
class versus ethnic resources ethnic social structures
social networks organizing capacity
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Ethnic Strategies
Strategy definition: the positioning of oneself to others in order to accomplish ones goals Typical challenges that necessitate strategy:
skills acquisition and training recruitment and management of workers managing relations with customers and suppliers surviving competition protecting oneself from political attacks

Strategic responses
self-exploitation business expansion by moving forward or backward in the chain of production founding and supporting ethnic trading associations cementing alliances to other families through marriage Bribery, penalty payments, searching for loopholes, and organizing protests

(c) Laquita C. Blockson, Ph.D.