78 gue s t e dit o r s ’ i n t r o d u c t i o nInt r o d u c t i o n Taxonomy of Immigrant EntrepreneurshipI mmigrant entrepreneurship has become an impor- tant socioeconomic phenomenon today. In countries that are major destinations for immigrants such as the Classification Based on Integration Level in the HostUnited States, Canada, the United Kingdom, and Aus- Countrytralia, immigrant entrepreneurship plays a critical role The classification based on the integration level of the immi-in economic development. It creates jobs through new grant entrepreneur in the host country has been proposedbusiness ventures that contribute to wealth creation. The by Curci and Mackoy. They consider three levels of integra-economic impact of immigrant entrepreneurship in the tion in the host country—low level of integration, middlehost country is better known today, as it has been studied level of integration, and high level of integration. Theyby many researchers. But the influence of immigrant en- relate each level of integration to a very specific categorytrepreneurship in the host country is not limited to its eco- of immigrant entrepreneur business. They suggest that thenomic aspects. It includes important noneconomic effects immigrant entrepreneur businesses of the low level of inte-such as the development of vibrant ethnic communities, gration should be considered a highly segmented category,social integration and recognition of immigrants, a nurtur- while the immigrant entrepreneur businesses of the highing entrepreneurial spirit, and providing role models for level of integration should be considered a highly integratedimmigrants. Yet immigrant entrepreneurship remains an category. They suggest two other categories for the immi-underexplored research topic in the field of management. grant entrepreneurs of the middle level of integration—theMany of the existing research works focusing on immi- product-integrated category and the market-integrated cat-grant entrepreneurship have been proposed by sociolo- egory. The highly segmented category of immigrant entre-gists and anthropologists. Hence, from the management preneur businesses targets an ethnic market with an ethnicperspective, the literature is still very limited, and there product, while the highly integrated category of immigrantare many aspects of immigrant entrepreneurship that are entrepreneur businesses targets a nonethnic market with astill unknown and need to be addressed. The purpose of nonethnic product. The product-integrated category of im-this special issue is to shed light on some of those aspects. migrant entrepreneur businesses targets an ethnic marketThe articles selected to be published in this issue offer an with a mainstream product, while the market-integratedexcellent analysis of various important topics such as the category targets the mainstream market with an ethnic prod-success factors of immigrant entrepreneurship, diaspora uct. The classification of Curci and Mackoy is very interest-entrepreneurship, the influence of a family network on ing in various respects. First, it convincingly points out thattransnational immigrant entrepreneurs, the noneconomic it is important and necessary that the government customizeeffects of immigrant entrepreneurship, a classification of its support to each category of immigrant entrepreneurs.immigrant entrepreneurs based on integration level in Second, this classification explains how the immigrantthe host country, the influence of location and ethnicity entrepreneurs move from one category to another. In thison immigrant entrepreneurship, and the issue of necessity regard, it is very interesting to notice that, contrary to whatimmigrant entrepreneurs versus opportunity immigrant one can easily assume, the immigrant entrepreneurs do notentrepreneurs. necessarily move from a low level of integration to a high The goal of this article is to give an outline of these level of integration.various contributions. For that purpose, the first sectionwill focus on the various taxonomies of immigrant entre- Classification Based on the Motives of Venture Creationpreneurs proposed—namely, the taxonomy based on the The classification based on the motives of venture creationintegration level of immigrant entrepreneurs in the host distinguishes between the necessity immigrant entrepre-country, the taxonomy based on the motives of the ven- neur and the opportunity immigrant entrepreneur. Ac-ture creation by the immigrant entrepreneurs, and the cording to Chrysostome, who proposes this classification,taxonomy based on the economic embeddedness. The there are two motives for venture creation by immigrantsecond section will focus on immigrant entrepreneurship entrepreneurs: on the one hand, the necessity of survival ofin North America. It will stress immigrant entrepreneur- the immigrant in the host country in which it is difficult forship in the United States and Canada and will analyze the him or her to find a job, and, on the other hand, a businesssuccess factors of immigrant entrepreneurs as well. The opportunity identified by the immigrant in the host country.third section will discuss transnational immigrant entre- The merit of this classification is that it examines the profilepreneurs and diaspora entrepreneurs. of these different types of immigrant entrepreneurs. It is aThunderbird International Business Review Vol. 52, No. 2 March/April 2010 DOI: 10.1002/tie
Immigrant Entrepreneurship: Scrutinizing a Promising Type of Business Venture 79classification that contrasts with the previous homogeneousconception of an immigrant entrepreneur. On the basisof the existing literature, Chrysostome suggests that neces-sity immigrant entrepreneurs are, in general, middle-aged Today, immigrants, evenmales who come from developing countries with a relativelylimited professional experience. Many of them have to rely those in the wage employmenton their families, friends, and ethnic community to find theresources they need to operate their businesses. In particu- and enclave categories, havelar, the ethnic community helps them to raise the start-upcapital and find coethnic employees. Unlike necessity immi- to face a reality wherein theirgrant entrepreneurs, opportunity immigrant entrepreneursare not always from developing countries. In general, they host and original home coun-are highly educated, with a graduate degree from the hostcountry and are proficient in English. They have access to tries are increasingly con-the financial institutions of the host country. They targetmainstream industries and do not rely on an ethnic market nected economically.and do not limit their workforce to the coethnic workers.Chrysostome suggests that opportunity immigrant entrepre-neurs can be the subject of a taxonomy including traditionalopportunity immigrant entrepreneurs, diaspora entrepre-neurs, transnational entrepreneurs, and global immigrantentrepreneurs. CDE and TE in terms of embeddedness with host versus The classification based on the motives of venture home country. The final yet most known form of immigrantcreation represents a good tool that can help policymak- economic adaptation is the so-called ethnic enclave. A typi-ers promote immigrant entrepreneurship through more cal enclave business is oriented toward coethnic communi-effective support programs. ties, often associated with geographically segregated ethnic neighborhoods. Enclave businesses could have clientele inClassification Based on Economic Embeddedness the broader society or engage in importation from theirImmigrants adapt economically by coupling their resources original country, but largely draw on local coethnic com-with the opportunities available to them under each histori- munities for supply, production, and market. As such, theycally contingent moment (Aldrich & Waldinger, 1990). As are considered “marginalized” in terms of embeddednessWestern economies become increasingly globalized, diversity with both host and home country. It is important to notein immigrant economic adaptation has become more obvi- that the various forms of immigrant economic adaptationous. Using a two-dimensional model, Lin distinguishes vari- are “ideal types” and that social embeddedness of immigrantous forms of immigrant economic adaptation by the immi- businesses can be defined only relatively. Today, immigrants,grant’s embeddedness in host versus home country. On the even those in the wage employment and enclave categories,one hand, there are those who have chosen and been able to have to face a reality wherein their host and original homebe employed in the general labor market. These immigrants countries are increasingly connected economically.are fully integrated into the host country and are largelyseparated from their original home country economically. Immigrant Entrepreneurship inOn the other hand, there are those who have permanentlyreturned to their home country in business pursuits and, if North America: Overview andventuring in contemporary technologically intensive sectors, Success Factorsare referred to as contemporary diaspora entrepreneurs(CDEs). However, CDEs are not exclusively embedded in the Ethnic Entrepreneurship in the United Statesoriginal home country. According to Lin, many returnees For many years, the United States has been an important des-are able to draw on resources in the host country and thus tination of international migration, and, consequently, eth-maintain a certain level of “duality.” Another dually embed- nic entrepreneurship has always been part of its economy. Inded category is transnational entrepreneurship (TE), a particular, during the last few decades, ethnic entrepreneur-practice by immigrants who have selected the host country as ship has played a critical role in the U.S. economy. Accord-their primary home. Lin argues that home base distinguishes ing to Zhou and Cho, who have studied ethnic entrepre-DOI: 10.1002/tie Thunderbird International Business Review Vol. 52, No. 2 March/April 2010
80 gue s t e dit o r s ’ i n t r o d u c t i o nneurship in the United States, mainly through the business ethnic entrepreneurship: (1) it nurtures the entrepreneur-activities of Chinese and Korean immigrants, the number ial spirit and provides role models and informal trainingof minority-owned businesses in 2002 was near four million, among ethnic communities; (2) it serves as an alternativewith gross sales of $637 billion. They also noted that Asian- means to social status recognition; (3) it creates ethnic so-owned businesses are growing faster than Hispanic-owned cial spaces and consolidates local social structures; and (4)businesses, even if the percentage of Asian-owned businesses it contributes to the formation of social capital. In other(28%) is lower than that of Hispanic-owned (41%). The words, Zhou and Cho suggest that ethnic entrepreneurshipscope of the business of the ethnic entrepreneur in the contributes to building thriving ethnic communities. ThisUnited States is no longer limited to the traditional occupa- reality of ethnic entrepreneurship in the United States is il-tions of shopkeepers, petty traders, or peddlers (Fairlie & lustrated well by Chinatown and Koreatown in Los Angeles.Robb, 2008; Fong & Luk, 2007; Zhou, Chen, & Cai, 2006). Itincludes businesses operating in high-technology industries, Ethnic Entrepreneurship in Canadaprofessional services, and transnational corporations. Ethnic Two limitations have been recognized in the literature onentrepreneurship, in particular in the United States, has ethnic entrepreneurship. First, researchers have devotedbeen studied mostly from an economic perspective. Hence, disproportionally greater attention to the United Statesthe most important economic effect of ethnic entrepreneur- than to other countries where ethnic entrepreneurshipship is that it creates job opportunities for many immigrants plays an equally important role in the economy. Second,who would be otherwise excluded from the mainstream comparative research has been rare, thus failing to pro-labor market. Therefore, ethnic entrepreneurship helps to vide a comprehensive picture of ethnic entrepreneurshipreduce competition with native workers in the job market. and to address some of the key contingencies affectingAlso, like any business in the mainstream economy, the such conduct. Brenner et al. attempt to fill the void withbusinesses of ethnic entrepreneurs pay taxes to the govern- results from a Canada-focused project, comparing variousment. These economic effects of ethnic entrepreneurship ethnic groups across three major immigrant-attractingare known and are the subject of various studies in the exist- cities. According to these results, entrepreneurship hasing literature. Unlike the previous studies, Zhou and Cho’s well become a viable alternative for immigrant economicwork proposes a new and original perspective by focusing adjustment in Canada. However, the characteristics of en-on the noneconomic effects of ethnic entrepreneurship in trepreneurs and the role they play in the economy couldthe United States (Zhou & Kim, 2006). The noneconomic be different, depending on their ethnic origin and loca-effects of ethnic entrepreneurship have not been explored tion. Ethnic entrepreneurs of different country originsand, therefore, represent a very interesting contribution to demonstrate differences in age, ability to speak Canada’sthe literature. They propose various noneconomic effects of official languages, and business acumen. On the other hand, while all three cities are main destinations for im- migrants, each seems to attract different kinds of immi- grants. Investigating the total effect of ethnic origin and The most important economic location choice, the authors demonstrate that there is no universal pattern by which ethnic entrepreneurs use social effect of ethnic entrepreneur- capital. For example, firms run by ethnic entrepreneurs in both French-speaking Montreal and English-speaking ship is that it creates job op- Toronto exhibit typical features of ethnic enclaves such as reliance on coethnic labor. However, compared to portunities for many immi- their counterparts in Montreal, ethnic entrepreneurs in Toronto are not as much involved in ethnic business asso- grants who would be otherwise ciations and social clubs. The study suggests the need for further comparative studies of ethnic entrepreneurship. excluded from the mainstream Success/Survival of Necessity Immigrant Entrepreneurs labor market. As mentioned earlier, the business of the necessity immi- grant entrepreneur is created for the purpose of the survival of its owner in the host country. Hence, its characteristics do not reflect the traditional small business and, therefore, the usual success indicators of small business cannot be ef-Thunderbird International Business Review Vol. 52, No. 2 March/April 2010 DOI: 10.1002/tie
Immigrant Entrepreneurship: Scrutinizing a Promising Type of Business Venture 81fectively applied to it. In his article, Chrysostome proposes toward certain locations, perhaps the key reason for thea reflection about success versus survival of the necessity im- overrepresentation of immigrants in the transnational en-migrant entrepreneur. He explains why several of the usual trepreneurship field. Finally, family ties appear to be ansuccess indicators of small business are irrelevant for the important factor in all stages of the internationalizationbusiness of necessity immigrant entrepreneurs. He argues process, including aspiration to internationalize, choicethat the concept of survival is more appropriate for the of location, entry modes, and market development. If thebusiness of necessity immigrant entrepreneurs and suggests active participation and relative success of immigrantsthe age of the business as the best indicator to measure the can be explained by the strength of their transnationalsurvival of the business of the necessity immigrant entre- family networks, the question to ask would be which im-preneurs. Thus Chrysostome’s article mainly focuses on migrant communities have maintained stronger familythe determinants of the survival of the necessity immigrant relationships. For a nonimmigrant entrepreneur withoutentrepreneur and proposes a model that can be considered such a family network, the challenge will be how to tapa new contribution to the field. In fact, the existing literature into it instead of devoting energy to develop just any formhas not addressed the survival factors of immigrant entre- of social capital when entering an international market.preneurs, as it has not differentiated between the necessityimmigrant entrepreneur and the traditional small business. Diaspora EntrepreneurshipOf course, this may lead to the mistaken assumption that Immigration-induced transnationalism is not a new phe-the survival of necessity immigrant entrepreneurs is based nomenon, and immigrant homeland business engage-on the usual success factors of the traditional small business. ment can be traced back to the very beginning of immi-Chrysostome proposes five categories of survival factors for gration history. According to Lin (2006), however, onenecessity immigrant entrepreneurs: ethno-cultural factors, type of transnational businesses is worth special atten-financial factors, managerial factors, psycho-behavioral fac- tion—contemporary diaspora entrepreneurs. Like thetors, and institutional factors. Ethno-cultural factors include “ideal type” of TEs who have maintained a primary homethe ethnic market niche and ethnic social network. Finan- base, CDEs, perhaps to a lesser extent, could draw re-cial factors include start-up capital and emergency loans. sources from a previously adopted country and maintainManagerial factors include education level and previous an international orientation in business, typically towardprofessional experience, while psycho-behavioral factors the same country. Lin’s examination of CDEs is focusedinclude the level of risk aversion and commitment. on how such transnational ventures could serve as an al- ternative mode of innovation capacity development in theTra n s n a t i o n a l Im m i g r a n t home country. He explores the advantages of CDEs over indigenous firms and multinational companies as agentsEntr e p r e n e ur shi p of capacity development in terms of legitimacy, resource endowment, and cognitive ability. Using cases mainlyTransnational Entrepreneurship from China, he compares the traditional approach ofAn important outcome of globalized economies has been engaging emigrant talent to an entrepreneurship-ledthe expansion of transnational entrepreneurship (Lin, approach, as exemplified by CDEs. The conclusion isGuam, & Nicholson, 2008; Portes, Guarnizo, & Haller, that skilled diaspora entrepreneurs returning as private2002). While any ventures involving two or more environ- business owners often represent a more productive wayments simultaneously can be viewed as transnational en- of contributing to national capacity development. Whiletrepreneurship, the type of entrepreneurship is often as- China could be unique in some aspects as far as diasporasociated with those of immigrants. A key reason, according engagement is concerned, there are certainly lessons toto Mustafa and Chen, is the ability of certain immigrant be learned by countries that have long experienced pain-groups to utilize transnational family networks. Their ful “brain drain” in the global war for talents.case studies show that family ties are of greater strengththan other types of social networks. Unlike nonfamily Conclusion and Future Researchrelationships, these relationships do not need frequentcontact in order to be maintained, and family members The collective contribution of this issue lies in its atten-often remain committed to each other in spite of geo- tion to theory. While providing practical implications, agraphic distance. Because of their strength, transnational tradition in the literature of ethnic and entrepreneurshipfamily ties prove to be a pulling factor that encourages studies, each article is richly grounded in existing theo-internationalization and orients international ventures retical frameworks. Several articles, such as those offeringDOI: 10.1002/tie Thunderbird International Business Review Vol. 52, No. 2 March/April 2010
82 gue s t e dit o r s ’ i n t r o d u c t i o nnew categorizations of immigrant/ethnic entrepreneur- business (e.g., importing) more effectively by leveragingship, are also motivated by theory development. Clearly, home-country-oriented social capital. Whether or not thethe contribution is made possible by the multidisciplinary patterns of immigrant economic adaptation are changingknowledge of the authors, who are trained to conduct re- and, if so, what impact such changes are having on the im-search in sociology, entrepreneurship, and international migrant communities and all countries involved should bebusiness. By definition, immigrant entrepreneurship is at an important issue for future research.the intersection of the social (immigration) and business(entrepreneurship) arenas. As such, the interaction across Referencesdisciplines is not a luxury but a necessary requirement for Aldrich, H., & Waldinger, R. (1990). Ethnicity and entrepreneurship.deepening our knowledge of the subject matter. Annual Review of Sociology, 16, 111–135. As the title of the special issue suggests, our objective Fairlie, R. W., & Robb, A. M. (2008). Race and entrepreneurial success:was to examine immigrant entrepreneurship in the context Black, Asian and white owned businesses in the United States. Cam- bridge, MA: MIT Press.of an increasingly globalized world. With that in mind, sev- Fong, E., & Luk, C. (2007). Chinese ethnic business: Global and localeral articles consider those who are engaged in two socially perspectives. London and New York: Routledge.embedded societies—that is, the immigrants’ host and origi- Lin, H. (2006, October). Diasporic entrepreneurs and homeland devel-nal countries. However, what is largely unaddressed in this opment in a globalized world. Presented at the United Nations Academy of Management Business as Agent of World Benefit Forum, Cleveland.volume is the impact of globalization on the conventional, Lin, H., Guam, J., & Nicholson, M. (2008). Transnational entrepreneurshost-country-embedded immigrant business. Since host as agents of international innovation linkage. Research Report, Asiaand home countries increasingly come into contact, those Pacific Foundation of Canada. Portes, A., Guarnizo, L. E., & Haller, W. J. (2002). Transnational en-who used to be sheltered in ethnic enclaves can no longer trepreneurs: An alternative form of immigrant economic adaptation.be isolated from the larger environment. For instance, American Sociological Review, 67, 278–298.an immigrant entrepreneur may find himself exposed to Zhou, M., Chen, W., & Cai, G. (2006). Chinese language media and im- migrant life in the United States and Canada. In W. Sun (Ed.), Mediacompetition from his or her original home country in pro- and the Chinese diaspora: Community, communications, and com-viding ethnic products in local markets. At the same time, merce (pp. 42–74). London and New York: Routledge.host-country/home-country interaction may also offer op- Zhou, M., & Kim, S. (2006). Community forces, social capital and educational achievement: The case of supplementary education in theportunities to enhance an immigrant entrepreneur’s com- Chinese and Korean immigrant communities. Harvard Educationalpetitive position if he or she is able to conduct transnational Review, 76(1), 1–29. Elie Chrysostome is an associate professor of strategic management and international business at the State University of New York campus of Plattsburgh. The other institutions where Dr. Chrysostome has taught are Laval University and the University of Moncton in Canada, National University of Benin, and Institut Supérieur d’Informatique Appliquée et de Management (ISIAM) in Morocco. His publications focus on international joint ven- tures, small businesses internationalization, and international entrepreneurship. Dr. Chrysostome has also been a guest editor and member of editorial boards of several highly respected journals. He is a member of the Academy of International Business and served as the chair of the International Business Division of the Administrative Sci- ences Association of Canada. Dr. Chrysostome earned his PhD at Laval University in Canada. Xiaohua Lin (PhD, Oklahoma State University) is a professor of international business and entrepreneurship and director of the International Research Institute at Ryerson University’s Ted Rogers School of Management. He previously taught in Penn State’s School of Professional Graduate Studies and the University of Windsor. He is the Canada chapter chair of the Academy of International Business and vice president (research) of the Canadian Council for Small Business & Entrepreneurship. His research has been published in scholarly journals such as Strategic Management Journal, the Journal of International Business Studies, Management Interna- tional Review, the Journal of World Business, and the Journal of International Marketing. His current research is focused on immigrant and transnational entrepreneurship. His action-oriented research has led to the creation of the Canadian Entrepreneurship & Innovation Platform (www.haiounet.com), a nonprofit organization committed to promoting transnational entrepreneurship through education, mentoring, and networking.Thunderbird International Business Review Vol. 52, No. 2 March/April 2010 DOI: 10.1002/tie
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