Ethnic Businesses In Multiethnic Cities


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Ethnic Businesses In Multiethnic Cities

  1. 1. Ethnic Businesses in Multiethnic Cities Eric Fong, Emily Anderson, Wenhong Chen, and Chiu Luk University of Toronto July 2007
  2. 5. Overview <ul><li>An examination of ethnic business locations in multiethnic cities </li></ul><ul><ul><li>Multiethnic : Patterns of ethnic business location in neighborhoods with various racial and ethnic compositions </li></ul></ul><ul><ul><li>Multi-industry : Patterns of ethnic business location for certain major industries </li></ul></ul><ul><li>Argument: Ethnic business location is determined by optimization of: </li></ul><ul><ul><li>Neighborhood business environment, </li></ul></ul><ul><ul><li>Unique locational demand of each industry, and </li></ul></ul><ul><ul><li>Spatial consequences of ethnic embedded structures of ethnic businesses. </li></ul></ul>
  3. 6. Overview <ul><li>Literature Review </li></ul><ul><li>Discussion of Neighborhood Types and Industrial Sectors </li></ul><ul><li>Presentation of Hypotheses </li></ul><ul><li>Data and Methods </li></ul><ul><li>Results and Discussion </li></ul>
  4. 7. Literature Review <ul><li>Sociological Theory </li></ul><ul><ul><li>The Chicago School: Ethnic business locations reflect the size of the ethnic population (Burgess, 1925) </li></ul></ul><ul><ul><li>Concept of Social Capital: Ethnic communities linked structurally, embedded ethnic relations (Portes and Sensenbrenner, 1993) </li></ul></ul>
  5. 8. Theoretical Background <ul><li>Geographical Theory </li></ul><ul><ul><li>Neo-classical “optimization” approach to business location (Weber, 1909; L ösch, 1949) </li></ul></ul><ul><ul><li>Structural linkages in ethnic and economic relations are facilitated and reinforced by spatial proximity (Dicken and Lloyd, 1990) </li></ul></ul><ul><ul><li>Dense patterns linkages create agglomeration economies whose benefits to all involved vastly outweigh their costs (Scott, 1998) </li></ul></ul>
  6. 9. Four Neighborhood Types <ul><li>Ethnic Enclave Neighborhood </li></ul><ul><li>Ethnic Clustered Neighborhood </li></ul><ul><li>Minority Neighborhood </li></ul><ul><li>Non-Minority, Non-Ethnic Neighborhood </li></ul>
  7. 10. The Ethnic Enclave Neighborhood <ul><li>Central to the ethnic community both socially and economically </li></ul><ul><li>High ethnic concentration </li></ul><ul><ul><li>Many new immigrants </li></ul></ul><ul><li>Home to many ethnic businesses (Zhou 1992, Kwong 1979). </li></ul><ul><ul><li>Sustained by a sizeable local ethnic population </li></ul></ul>
  8. 11. The Ethnic Clustered Neighborhood <ul><li>Lower ethnic proportion than enclave, but still has an ethnic character </li></ul><ul><li>Provide goods and services demanded by both the ethnic and non-ethnic communities residing there (Logan et al, 2002) </li></ul><ul><li>Usually located adjacent to ethnic enclaves and spread over large area </li></ul>
  9. 12. The Minority Neighborhood <ul><li>Substantial number of other ethnic or minority group residents – commonly found in multiethnic cities </li></ul><ul><li>Not always located next to each other </li></ul><ul><li>Frequently dominated by their own businesses, but often contain a number of establishments operated by other ethnic groups </li></ul>
  10. 13. The Non-Ethnic, Non-Minority Neighborhood <ul><li>No substantial proportion of ethnic members or minorities, often referred to as “majority” </li></ul><ul><li>Industrially diverse yet proportionally few ethnic businesses </li></ul>
  11. 14. Four Unique Local Business Environments: <ul><li>1. The ethnic enclave neighborhood: </li></ul><ul><ul><li>Many ethnic businesses </li></ul></ul><ul><ul><li>Low industrial diversity among ethnic businesses </li></ul></ul><ul><ul><li>Larger proportion of recent ethnic immigrants </li></ul></ul><ul><li>2. The ethnic clustered neighborhood: </li></ul><ul><ul><li>A large number of clustered ethnic businesses </li></ul></ul><ul><ul><li>Many recent ethnic immigrants (but fewer than in the enclave) </li></ul></ul><ul><li>3. The minority neighborhood: </li></ul><ul><ul><li>A smaller number of ethnic businesses </li></ul></ul><ul><ul><li>A small proportion of ethnic businesses in adjacent neighborhoods </li></ul></ul><ul><li>4. The non-ethnic/minority neighborhood: </li></ul><ul><ul><li>A small number of ethnic businesses </li></ul></ul><ul><ul><li>High levels of industrial diversity </li></ul></ul>
  12. 15. Four Major Industrial Sectors: <ul><li>1. Manufacturing </li></ul><ul><li>2. Retail </li></ul><ul><li>3. Food Retail </li></ul><ul><li>4. Finance, Insurance, and Real Estate </li></ul>
  13. 16. Ethnic Manufacturing Sector <ul><li>Industrial Characteristics </li></ul><ul><ul><li>Small ethnic firms, often in subcontracting roles </li></ul></ul><ul><ul><li>Labor intensive, unpleasant working environments, high turnover </li></ul></ul><ul><ul><li>Labor pool includes members of other ethnic groups </li></ul></ul><ul><li>Unique spatial characteristics </li></ul><ul><ul><li>Need to locate near source of labor supply </li></ul></ul><ul><ul><li>Avoid ethnic agglomeration with other co-ethnic businesses </li></ul></ul><ul><ul><li>Seek ethnic agglomeration with other manufacturing businesses </li></ul></ul><ul><ul><li>Locate close to suppliers and transportation infrastructure </li></ul></ul>
  14. 17. Ethnic Retail Sector <ul><li>Industrial Characteristics </li></ul><ul><ul><li>Not food retailers; instead, are apparel stores, general wares, dollar stores, gas stations (Zhou) </li></ul></ul><ul><ul><li>Need to attract a wide variety of customers to reach profit </li></ul></ul><ul><ul><li>Offer diverse products and services to their customers </li></ul></ul><ul><li>Unique spatial characteristics </li></ul><ul><ul><li>Seek locations where there are other businesses to maximize flow of shoppers </li></ul></ul><ul><ul><li>Frequently serve co-ethnic members, so choose locations convenient to them in ethnic enclave or clustered neighborhoods </li></ul></ul>
  15. 18. Ethnic Food Retail Sector <ul><li>Industrial Characteristics </li></ul><ul><ul><li>Often small in scale, deeply embedded in ethnic networks for recruiting workers and obtaining market information (Song, 1995) </li></ul></ul><ul><ul><li>Most customers are co-ethnic </li></ul></ul><ul><li>Unique Spatial Characteristics </li></ul><ul><ul><li>Prefer locations with highest number of co-ethnic members, but may be discouraged by the high rents of ethnic enclaves </li></ul></ul><ul><ul><li>Smaller retailers mitigate high rents by locating in ethnic clustered neighborhoods, which still lets them access many co-ethnic customers. </li></ul></ul><ul><ul><li>Take advantage of scale economies by agglomerating with other food retailers </li></ul></ul><ul><ul><li>Low industrial diversity </li></ul></ul>
  16. 19. Ethnic Financial, Insurance, and Real Estate Sector <ul><li>Finance, Insurance, and Real Estate Sector </li></ul><ul><ul><li>Provide loans, mortgages, insurance coverage to ethnic entrepreneurs and homebuyers </li></ul></ul><ul><ul><li>Strong “interweaving” relationships that facilitate information sharing, trust </li></ul></ul><ul><li>Unique Spatial Characteristics </li></ul><ul><ul><li>Clustering to maintain essential business linkages </li></ul></ul><ul><ul><li>Prefer locations in ethnic enclaves: main venue for selling products and services to the widest range of co-ethnic customers </li></ul></ul>
  17. 20. Hypotheses: Locational Preferences of Ethnic Industrial Sectors <ul><li>Manufacturing Industry </li></ul><ul><ul><li>Fewer ethnic businesses </li></ul></ul><ul><ul><li>Lower industrial diversity </li></ul></ul><ul><ul><li>Fewer co-ethnic workers </li></ul></ul><ul><li>Retail Industry </li></ul><ul><ul><li>Higher industrial diversity </li></ul></ul><ul><ul><li>Larger ethnic populations </li></ul></ul><ul><li>Food Retail Industry </li></ul><ul><ul><li>High co-ethnic population </li></ul></ul><ul><ul><li>Fewer nearby ethnic businesses </li></ul></ul><ul><ul><li>Lower overall industrial diversity </li></ul></ul><ul><li>Finance, Insurance, and Real Estate Industries </li></ul><ul><ul><li>Larger co-ethnic populations </li></ul></ul><ul><ul><li>Lower industrial diversity among all ethnic businesses </li></ul></ul><ul><ul><li>Lower proportions of recent immigrants </li></ul></ul>
  18. 21. Summary Hypothesis Matrix
  19. 22. Data <ul><li>Business Directories: 2000 City of Toronto, 2001 York Region </li></ul><ul><li>2001 Census Tract Data </li></ul><ul><li>included 85% Chinese in Toronto census metropolitan area </li></ul><ul><li>Chinese businesses: </li></ul><ul><ul><li>business name: </li></ul></ul><ul><ul><ul><li>sounds like a translation from Chinese (e.g. Wah Fung) </li></ul></ul></ul><ul><ul><ul><li>uses a typically Chinese expression (e.g. Golden Happiness) </li></ul></ul></ul><ul><ul><ul><li>comes from a well-known landmark in Hong Kong, mainland China, or Taiwan </li></ul></ul></ul><ul><ul><li>contact name: </li></ul></ul><ul><ul><ul><li>President, owner </li></ul></ul></ul>
  20. 23. Results: Table 1
  21. 24. Results: Table 2
  22. 25. <ul><li>Controlling for the business size: </li></ul><ul><ul><li>Chinese manufacturing firms: </li></ul></ul><ul><ul><ul><li>↓ Chinese enclave neighborhoods </li></ul></ul></ul><ul><ul><ul><li>↑ non-Chinese/non-visible minority neighborhoods </li></ul></ul></ul><ul><ul><li>Chinese retails other than food retails: </li></ul></ul><ul><ul><ul><li>↑ Chinese enclave neighborhoods </li></ul></ul></ul><ul><ul><ul><li>↓ non-Chinese/non-visible minority neighborhoods </li></ul></ul></ul><ul><ul><li>Chinese food retails: </li></ul></ul><ul><ul><ul><li>↓ Chinese enclave neighborhoods </li></ul></ul></ul><ul><ul><ul><li>↑ Chinese clustered neighborhoods </li></ul></ul></ul><ul><ul><li>Chinese FIRE businesses </li></ul></ul><ul><ul><ul><li>↑ Chinese enclave neighborhoods. </li></ul></ul></ul>
  23. 26. Results: Table 3
  24. 27. Results: Table 4
  25. 28. Conclusion <ul><li>The results of our analysis have shown the existence of different locational patterns by ethnic businesses involved in different industrial sectors. </li></ul><ul><li>Locations of ethnic businesses reflect the match among locational demands of a particular industry, spatial consequences of ethnic embedded structures, and a particular business environment of the neighborhood. Our data in general confirm our central assertion. </li></ul>