What is Minority (ethnic) Entrepreneurship?

1. What is Minority (ethnic) Entrepreneurship? Laquita C. Blockson, Ph.D. Minority Entrepreneurship (MGMT 351) January 22, 2008 (c) Laquita C. Blockson, Ph.D.

2. Contents • Definitions of Ethnic Economies • Components of Ethnic Entrepreneurship • Definition of Minority Entrepreneurship (c) Laquita C. Blockson, Ph.D.

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

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

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

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

7. 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. 1 Light and Rosenstein, Race, Ethnicity and Entrepreneurship in Urban America, 1995 (c) Laquita C. Blockson, Ph.D.

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

9. Question to ask ourselves: Does self-employment offer better earning opportunities than wage work? Answer: It depends… • It depends on what type of self-employment one specifies; and, • It depends on whether employees are in an ethnic-controlled economy or in the general market (c) Laquita C. Blockson, Ph.D.

10. 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 2 Aldrich and Waldinger, Ethnicity and Entrepreneurship, 1990 (c) Laquita C. Blockson, Ph.D.

11. 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” (c) Laquita C. Blockson, Ph.D.

12. Group Characteristics • Predisposing factors • selective migration • settlement characteristics • culture and aspiration levels • First pattern trait: sojourner’s 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 (c) Laquita C. Blockson, Ph.D.

13. Ethnic Strategies • Strategy definition: “the positioning of oneself to others in order to accomplish one’s 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.