Ethnic Entrepreneurship Entrepreneurship Entrepreneurship Studies Term Paper

Excerpt from Term Paper :

Timmons (1994) in his study presents a three-dimensional model of practical application of a good idea:

Comprehensive evaluation of the opportunity;

Comprehensive evaluation of one's own expertise and inclination; and Comprehensive evaluation of the resources gathering process to maintain the launch of business venture.

Long and McMullan (1984) propose that application of a good idea depends on two processes; namely, elaboration and evaluation. Singh (1998) found that those entrepreneurs who spend more time studying the pros and cons of an idea before embarking on its application tend to set up fewer businesses than those who spend less time in the elaboration and evaluation phase. However, Singh (1998) points out that higher majority of successful entrepreneurs are those who spend more time in elaboration and evaluation.

1.4 Traits of entrepreneurs

Wright et al. (1997a) studied motivational drivers of entrepreneurs and found that entrepreneurs are primarily driven by either one or both factors. They divided entrepreneurs into two groups based on their desires:

Craftsman: He is an entrepreneur who is driven by the desire for independence and freedom

Opportunist: He is an entrepreneur who is driven by the desire for monetary gains

Entrepreneur Research has put forward many different traits of entrepreneurs.

These traits are founded on several innate attributes, as well as, the stage of business he/she is in. For instance, research has divided entrepreneurs into the following types:

Serial entrepreneurship

Habitual entrepreneurs

Nascent entrepreneurs

Novice entrepreneurs

Habitual entrepreneurs

Portfolio entrepreneurs

Personality traits of each type vary significantly. However, all entrepreneurs possess certain common personas. Cowe (1998) studied serial entrepreneurs and their common traits with other entrepreneurs. He cited four common attributes, which are as follows:

Extremely good in business startups

Fairly good in sustaining a business venture

Extremely good communicators; and Highly visionary

Westhead and Wright (1998a) assert that almost all entrepreneurs are concerned with gaining popularity and gathering money for the entrepreneurship. Other common traits that many researchers have pointed out are as follows (Westhead and Wright, 1998a):

They have the will to succeed;

They love responsibility;

They want to be in control;

They possess outstanding leadership qualities;

They work extremely hard;

Most have experience in a volatile industry; and They encounter early success and hold a good reputation.

Motivations

In line with the two-dimensional motivational model of Wright et al. (1997a), Carland et al. (2000) identified three forms of entrepreneur motivation:

Strong inclination towards innovation;

Strong inclination for taking risk; and Strong desire for accomplishment

Wright et al. (1997a) writes that motivations of entrepreneurs change with time, but they, nonetheless, revolve around the same premise. Entrepreneurs, according to Wright et al. (1997a), are motivated by the following desires:

1) Monetary success, 2) Risky business ventures, 3) Personal achievement, and 4) Innovation.

Similarly, Ucbasaran et al. (2000) revealed the same results in this research and included two subsequent motivational drivers:

1) the desire to work closer to family; and 2) the desire to benefit from tax breaks.

Birley and Westhead (1993) in their research identified two additional motivational desires (in addition to the ones specified by Wright et al. 1997a; Ucbasaran et al. 2000; Carland et al. 2000) of successful entrepreneurs:

1) Job satisfaction, and 2) Personal independence.

2. Ethnic entrepreneurship:

Definition

Fairlie (1996) asserts that ethnicity is the background of the entrepreneur and it impacts a number of business processes, such as, the product being sold or distributed and the experience of conducting business activities. He observes that most ethnic entrepreneurs are moving away from the typical shop-around-the-corner business, towards more profitable sections of the economy, such as, computers, electronics, estate agencies, entertainment enterprises etc. This trend is increasingly being seen more amongst the ethnic youth, than it was amongst the older generations (Fairlie, 1996).

Light (1972) was the first to distinguish between minority entrepreneur, immigrant entrepreneur and ethnic entrepreneur. Immigrant entrepreneurs are those individuals who migrated to another country and established a successful business. Ethnic entrepreneur are those individuals whose parents had migrated to a specific country before their birth. And minority entrepreneur includes both ethnic entrepreneur and immigrant entrepreneur. This distinction made by Light (1972) was also observed by many other scholars subsequently. Another definition of ethnic entrepreneur was recently given by Chaganti and Greene (2002) who defined ethnic-entrepreneur as the strength of an individual's recognition with an ethnic community not considering his/her generation. In this study we define ethnic entrepreneur in lines of definition given by Light (1972)

2.1 the role of culture and identity in motivating ethnic entrepreneurs

Van Delft et al. (2000) observed that various ethnic groups are moving towards self-employment at a very rapid pace. This trend has been consistently growing throughout the past three-decade. Choeni (1997) distinguishes between ethnic entrepreneurs from the normal entrepreneurs and gives four distinct attributes of ethnic entrepreneurs:

Their orientation towards ethnic products;

Their focus towards ethnic markets;

Their orientation towards customers; and Their orientation towards ethnic business strategies.

Greenwood (1994) studies the cultural factors that influence the success of ethnic entrepreneurs. He argues that these individuals have specific skill sets and cultural attributes that make it easy for them to become successful entrepreneurs. He highlights some of the most common cultural factors that have assisted large number ethnic entrepreneurs:

Strong unity, loyalty and trustworthiness amongst the community;

Higher levels of flexibility;

Personal factors influencing motivation;

Strong work ethics;

Casual and informal social network and contacts with people from his/her ethnic community, and Accommodating and easy financing provisions.

Scholars have found that ethnic entrepreneurs have taken the lead in setting up new business ventures from the local entrepreneurs. For instance, Van den Tillaart and Poutsma (1998) discovered that a higher percentage from Turkish ethnic group in Neitherlands have set up new business ventures than the indigenous people.

Another important finding regarding the role of culture, ethnicity and identity in motivating individuals towards entrepreneurship is the structural theory presented by Waldinger et al. (1990). According to their findings, society plays a major role in the drive towards entrepreneurship by ethnic groups. They provides a three dimensional model, underlying the causes of higher levels of entrepreneurship trends amongst ethnic groups. Their three dimensional model includes:

Opportunity structure (e.g. entrepreneurship access, conditions of the market),

Predispositional factors (e.g. levels of aspirations, deficiency in language, motives of migration)

Source mobilization (e.g. social networks of ethnic groups, commitment towards religion and culture)

Bates (1997) along with several other researchers studied the target market of these entrepreneurs (see for example Deakins et al., 1997; Deakins, 1999). They discovered two distinct patterns which led them to classify entrepreneurs into two groups. The first group of ethnic entrepreneur is that which has limited technical skills and a strong social network. This group has internal orientation and targets the local community members. The second group has strong technical skills and targets people beyond the local ethnic community.

In UK, Asian entrepreneurs form the bulk of the ethnic entrepreneurs. Recently, Shanmuganthan et al., (2003) assessed the trends being established amongst Asian British. He discovered the following traits of Asian ethnic entrepreneurs:

They are structured into several smaller groups;

Each group speaks different languages and has different rituals;

Together their earning potential is predicted at £5 billion annually;

Majority of them are below the age of 30 (60%);

small number of them are university students (12%);

They have higher inclination towards savings their profits;

They risk unfavorable trends;

They consider family values to be very significant;

Many of them still dwell with their parents; and Most of them are well-educated.

Gidoomal (1997) studied the motives of immigrant entrepreneurs in UK (first generation) to set up businesses and how this group impacted the present generation to move towards entrepreneurship. He found some common motives to set up businesses amongst all ethnic entrepreneurs:

Aiming to secure financial comfort for the family;

Aiming to seek profits from opportunities that UK offered.

Aiming to maintain closeness amongst family members; and Aiming to enhance their social status in the wider community.

Janjuha and Dickson (1998) asserts that most entrepreneurs from the first generation spent a lot of time conducting business activities and spent less time with their families. This allowed their children to intermingle with the indigenous community, and thus, they were given exposure to two different kinds of cultures as they were growing up. On one hand, they were exposed to a set of traditional values of respecting elders, cherishing family values etc.; and on the other hand they were exposed to the western culture of freedom and liberty. The present Asian generation has been influenced by both cultures. They have moved away from the values of the immigrant generation to some degree. They have also shown the inclination towards becoming more mature, more self-assured and more coherent in their business dealings (Janjuha and Dickson 1998).

2.3 the present status of ethnic economy in UK

NatWest (2000) and ONS (2001) in their review asserted that ethnic entrepreneurship has progressed tremendously in the preceding twenty years. Bank of England (1999) in their annual review asserts that ethnic entrepreneurs open…

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