Thandi, H. S., Dini, K., (2010). Unleashing ethnic entrepreneurship: proactive policy-making in a changing Europe.

Transcription

1 Swinburne Research Bank Thandi, H. S., Dini, K., (2010). Unleashing ethnic entrepreneurship: proactive policy-making in a changing Europe. Originally published in International Journal of Business and Globalisation, 4(1): Available from: Copyright 2010 Inderscience Enterprises Ltd. This is the author s version of the work. It is posted here in accordance with the copyright policy of the publisher for your personal use. No further distribution is permitted. Accessed from Swinburne Research Bank:

2 Unleashing ethnic entrepreneurship: proactive policy-making in a changing Europe Unleashing ethnic entrepreneurship: proactive policymaking in a changing Europe Int. J. Business and Globalisation, Vol. X, No. X, xxxx 1 H.S. Thandi* Corporate and Entrepreneurial Strategy; Organisation & Leadership, Australian Graduate School of Entrepreneurship, Faculty of Business and Enterprise, Swinburne University of Technology, PO Box 218, Hawthorn Vic 3122, Australia hthandi@swin.edu.au *Corresponding author K. Dini Australian Graduate School of Entrepreneurship, Swinburne University of Technology, kdini@swin.edu.au Abstract: Amid mounting concerns in post-2004 Europe about economic growth and competitiveness in global markets, immigrant/ethnic entrepreneurs successfully incorporate and manage new businesses that satisfy ethnic needs, create new jobs, buttress other businesses, stimulate competition and contribute to national coffers. Instituting appropriate immigrant/ethnic entrepreneur-centred policies and initiatives that encourage greater use of co-ethnic, multi-ethnic and host-country business networks could nurture this entrepreneurial activity. This study, incorporating literature and publications within several countries in Europe and elsewhere, reviews entrepreneur interdependence from the networking perspective since, traditionally, immigrant/ethnic entrepreneurs have been self- and mutually reliant. It recommends appropriate policies and initiatives be developed and implemented to promote this mutual reliance to ensure ethnic/immigrant enterprises are (a) increased in number, (b) aided to survive and thrive, (c) accelerated in their growth and (d) facilitated to become more competitive nationally and internationally. Six action areas are proposed. Keywords: action areas; business and globalisation; co-ethnic networks; entrepreneurial activity; entrepreneur interdependence; Ethnic entrepreneurship; immigrant/ethnic entrepreneurs; multi-ethnic networks; policies and initiatives; proactive policy-making; wealth creation. Reference to this paper should be made as follows: Thandi, H.S. and Dini, K. (xxxx) Unleashing ethnic entrepreneurship: proactive policy-making in a changing Europe, Int. J. Business and Globalisation, Vol. x, No. x, pp.xx-xx. Biographical notes: Dr Harchand Singh Thandi is a Senior Lecturer at the Australian Graduate School of Entrepreneurship (AGSE), Swinburne University of Technology. He supervises several doctoral (PhD and Doctor of Business Administration) students. He convenes and teaches Organisation and Leadership in the Doctor of Business Administration programme and Strategic HRM. He was a business consultant, school and College Principal and Copyright 200x Inderscience Enterprises Ltd.

3 2 H.S. Thandi and K. Dini Professor of Management Education. He was also Programme Manager of the Master of Management, MBA (Management) and the Master of International Business, as well as Director of Integrating Projects at AGSE. As Visiting Professor, he has taught at various universities/tertiary institutions in Indonesia, the UK, Hong Kong, Thailand, Malaysia, Singapore and Vietnam. Kourosh Dini completed his Master of Entrepreneurship in 2005 at Swinburne University of Technology and continued with his doctoral studies (PhD) focussing on networking among ethnic entrepreneurs. 1 Introduction In 2002, the Global Entrepreneurship Monitor (GEM) indicated that harmonised rates of nascent entrepreneurship in most European Union (EU) member states were structurally lower than in Australia, Canada, New Zealand and the USA, signalling a need for proaction. Significantly, too, migration processes in Europe have intensified following the EU enlargement in May 2004, as evidenced by the heavy increase in migratory pressure in 2006 on the EU s southern borders (European Commission, 2007a). Trends such as these have affected the economies of host countries in general, and the economies of migration clusters in particular. Such flows have influenced national policy and social structures of the recipient countries. From one perspective, wealth creation in the European economy may be enhanced if supported by policies that reflected the increasingly fluid migrant population that brings, in its train, ethnic entrepreneurs who contribute towards overcoming the perceived relative dearth of entrepreneurship in the EU. Not only must the businesses of these entrepreneurs be encouraged and facilitated in their incorporation but, more importantly, proactive measures need to be instituted by government to ensure that those businesses succeed and grow at a rapid pace to maximise benefits all round. This is especially so as, increasingly, self-employment/entrepreneurship has become a viable alternative form of employment for immigrants in European countries. Apart from accessing the support and facilitating services that all small new businesses thrive upon and are made available by various government and other agencies, ethnic entrepreneurial businesses may also benefit from increased use of co-ethnic and especially multi-ethnic and host-country networks. It is argued in this paper that ethnic entrepreneurs already rely on co-ethnic networks for their business success, and some of those ethnic entrepreneurs do already make use of multi-ethnic networks though only in special circumstances, and that government initiatives are needed to buttress and promote ethnic entrepreneurship. Governments must act entrepreneurially, too. 2 Methodology employed in the present study of ethnic entrepreneurial interdependence Figure 1 is a conceptual framework that guided the processes inherent in the present paper. To justify the set outcomes, describe ethnic entrepreneurship and establish the nature of the interdependent variables required a broad-spectrum review of related literature. The review focuses on the migration phenomenon, modus operandi of

4 Unleashing ethnic entrepreneurship 3 Figure 1 Concepts underpinning the study of immigrant/ethnic entrepreneur interdependence immigrant/ethnic entrepreneur businesses, benefits obtaining from immigrant/ethnic networks, place of immigrant/ethnic businesses from a national and international perspective and the role of government in relation to immigrant/ethnic entrepreneurship. Ethnic entrepreneurial interdependence is explored from the following perspectives interdependence among co-ethnic entrepreneurs; interdependence among multi-ethnic entrepreneurs; and interdependence between the ethnic entrepreneur and government. Then, the role of government in buttressing ethnic entrepreneurship in the broadly European context is discussed, leading to recommendations for development and implementation of government initiatives in the EU and other European countries. Relevant findings from on-going Australian research by the authors are infused to illustrate various positions taken, make comparisons/contrasts and enrich conclusions drawn. 3 Terminology Entrepreneurship and entrepreneurs Most scholars have used some basic concepts from business, economics, management and personal perspectives to define an entrepreneur. Schumpeter (1934) pointed out that entrepreneurs were individuals carrying out new combinations of a firm s operation new products, new services, new sources of raw materials, new methods of production, new markets and new forms of organisation. Later researchers added other dimensions. Constant and Zimmermann (2006a) considered an entrepreneur to be an individual who organised, operated and assumed the risks of a business venture. Hebert and Link (1989, p.213) considered that the entrepreneur is someone who specialises in taking responsibility for and making judgmental decisions that affect the location, form, and the use of goods, resources or institutions. Sahlman and Stevenson (1991, p.1) bringing in the variable of management said that entrepreneurship is a way of managing that involves pursuing opportunity without regard to the resources currently controlled.

5 4 H.S. Thandi and K. Dini Entrepreneurs identify opportunities, assemble required resources, implement a practical action plan, and harvest the reward in a timely, flexible way. Carland et al. (1984) differentiated between entrepreneurs and small business owners. Entrepreneurs pursued profit and growth. They were characterised by innovative behaviour and engaged in strategic management practices. Small business owners were those who relied for most of their income on businesses that used up most of their time and other resources, leaving little or none to engage in innovative practices. The OECD defined entrepreneurs as agents of change and growth in a market economy, where they acted to accelerate the generation, dissemination and application of innovative ideas (OECD, 1998). They took risks when seeking out and identifying potentially profitable economic opportunities (OECD, 1998). Similarly, other writers and researchers have related entrepreneurship to change and the change process (Audretsch, 1995), perceiving new economic opportunities and then introducing new ideas in the marketplace. The term ethnic entrepreneur is somewhat complicated. Waldinger et al. (1990) used the term ethnic entrepreneur, where ethnicity related to people sharing common national background or migration experiences (p.3). Butler and Greene (1997) used the term immigrant entrepreneur to describe an individual who, as a recent arrival in the country, starts a business as a means of economic survival. Chaganti and Greene (2002) differentiated among three kinds of entrepreneurs ethnic, immigrant and minority, where the minority entrepreneur was any individual who was not of the majority population and who owned and ran a business. The present study excludes minority entrepreneurs per se, and regards ethnic entrepreneurs as immigrants who behave entrepreneurially in the conduct of their business. 4 Entrepreneur interdependence within the immigrant/ethnic network Ethnic entrepreneurship has traditionally been seen to be the engagement of foreign migrants in business activities predominantly of a small or medium size, with a view to catering to the socio-economic needs of other immigrants of assorted ethnicities or socio-cultural classes that have tended to conglomerate in ethnic enclaves, generating ethnic economies in the process (van Delft et al., 2000). Light and Gold (2000) itemised the following features of these ethnic enclaves and economies: there is a combination of business owners, unpaid family labour and paid co-ethnic employees (ethnic ownership economy), carrying out business within a spatial clustering (enclave economy) and possessing occupational and industrial employment niches where the overrepresentation of an ethnic group enables its members to benefit from the advantages of informal control (ethnic-controlled economy). The underlying dimension is economic action embedded in integrative, co-ethnic social relations. Co-ethnic networks have distinguishing features. The Scotland work of Deakins et al. (1997), for instance, itemised some examples of co-ethnic network attributes as access to capital through social networks; the ethnic entrepreneur often producing commodities or services of an ethnic or foreign origin; ethnic entrepreneurs usually being found in easy-to-enter, competitive and labour-intensive enterprises; the ethnic entrepreneur often being oriented towards consumers from their own ethnic or cultural group; employees often belonging to the same ethnic group and recruited through the social network;

6 Unleashing ethnic entrepreneurship 5 (management) advice given by the ethnic network; an informal way of doing business and involvement by others being the norm; ethnic entrepreneurs usually being found in urban areas which house a high density of ethnic minorities; ethnic entrepreneurs having less access to a formal knowledge network and, hence, having a lack of knowledge about laws and regulation. The value of co-ethnic networks has been studied for several years. The Israel-based work of Shavit and Yuchtman-Yaar (2001) and that of Light and Gold (2000) indicated that, as migrants found it difficult to secure salaried employments in attractive jobs, they resorted to business creation within their own ethnic groups to gain employment and mobility, obtaining their self-employment resources via the co-ethnic network (Light and Rosenstein, 1995). van Delft et al. (2000) suggested that utilisation of social networks (co-ethnic) enhanced self-employment (and hence entrepreneurship) among ethnic minorities, affording recruitment of personnel and obtaining capital (see also Light et al., 1999). They further implied that co-ethnic networks could utilise the knowledge of two cultures to serve market niches and exploit cultural heritage. This was supported by initial findings in our on-going Australian study, covering immigrant/ethnic entrepreneurship and networking-related aspects in the larger Melbourne area and involving more than 130 entrepreneurs from different ethnicities who, in running their small- to medium-sized businesses, employed others. About 76% of survey participants in the study indicated a preference to selling to co-ethnics. Mutual trust within the co-ethnic network facilitates the conduct of business and the informal exchange of information. About 79% of the ethnic entrepreneurs in our above-mentioned Australian study relied on their co-ethnic network for business-related information and advice. More ethnic entrepreneurs (83%) trusted co-ethnic employees than employees from other ethnicities (44%). Similarly, more ethnic entrepreneurs (62%) trusted their co-ethnic suppliers than suppliers from other ethnicities (53%). Though other studies showed trust to facilitate raising capital from within the co-ethnic network informally, our Australian study showed only 8% of participants of all ethnicities surveyed relying on that source, with 79.5 preferring banks as their preferred lender, and with family coming in at 70% (reasons for these preferences are under study). Many ethnic entrepreneurs in our Australian study agreed that their businesses had benefited from membership, formal or informal, of an ethnic network. This finding complements the following research findings on co-ethnic networks: 1 Co-ethnic networks are a fact of life. Co-ethnic social capital throws up opportunities to create employment. Hence, co-ethnic/immigrant networks promote self-employment, thereby fostering entrepreneurship and enhancing entrepreneurial activity among ethnic minorities. Co-ethnic networks thus stimulate business start-ups. 2 Co-ethnic networks also play a key role in assuring success of newly established and on-going ethnic businesses by enabling ethnic entrepreneurs through providing benefits relating to finance, personnel, customers and suppliers from within their ethnic communities and networks. 3 Mutual trust appears to be the catalyst that facilitates co-ethnic interactions.

7 6 H.S. Thandi and K. Dini 5 Entrepreneurial interdependence across ethnic and host country networks Light and Gold (2000) stressed the importance of class resources for ethnic entrepreneur success. In an earlier Netherlands work, Kloosterman et al. (1999) had identified an undue emphasis on co-ethnic social and cultural networks, regarding it as a one-sided perception of embeddedness. They recommended a broader framework of mixed embeddedness. This concept recognises the crucial significance of co-community networks in the formation and operation of immigrant businesses but calls for the wider economic and institutional context to be included. This is exemplified in our Australian study in which 84% of ethnic entrepreneurs surveyed preferred a multi-ethnic market and, though about 85% of them recruited employees from within their ethnic groups, more than 50% indicated a preference to recruit across ethnic networks. The fact that immigrant entrepreneurs can and do accesses networks other than their co-ethnic one should be considered when promulgating alternative interventions to increase opportunities for immigrant entrepreneurs. Immigrant entrepreneurs importing from their country of origin have infused international activity into the supply and value chains of the social/ethnic networks in different countries (Aldrich et al., 1984; Boissevain and Grotenbreg, 1987; Aldrich and Zimmer, 1986; Iyer and Shapiro, 1999). The work of Dana (2001) suggested that drivers of globalisation are removing traditional barriers to allow firms of all sizes to join international networks. Collaboration among former competitors is heightening competitiveness (Dana, 2001). Such networking is generating unparalleled opportunities, facilitating internationalisation. New initiatives logically are called for that would expose immigrant entrepreneurs in European countries to these new realities and would move those entrepreneurs from the relative seclusion of co-ethnic embeddedness to the wider international activity field afforded by mixed embeddedness. Harrison (1997) suggested that entrepreneurs linking up with larger partners could enable the product of smaller firms to reach global markets quicker or at lower cost than through a business s independent expansion. These symbiotic relationships could increase the competitiveness of smaller firms and allow them to benefit from the opportunities arising from the expanded reach and efficiencies associated with international networks (Dana, 2001). Mostly, the larger firms lie outside the co-ethnic business networks. Thus, networking between the smaller ethnic entrepreneurial businesses and the host-country s larger extended-reach businesses should be proactively facilitated. Some studies indicate that immigrant/ethnic entrepreneur involvement across ethnic and host-country networks is not only inevitable but also inexorable. Sanders (2002) asserted that social networks which provided scarce resources to a wide spectrum of the ethnic community were highly useful to in-group members. However, when ethnic networks appropriate resources, such as access to jobs, from outside the community, ethnic boundaries become more porous because important spheres of life, such as work, necessitate greater involvement with outsiders (Sanders, 2002, p.347). Such involvement led Tsui-Auch (2005) to conclude that the ethnic community was experiencing a decreasing level of homogeneity. Lack of adequate resources inside the ethnic community and the ethnic entrepreneurs desire to enlarge their networks led Janjuha-Jivraj (2003) to conclude that as the younger generation became more integrated with the society at large, their needs to rely on the community (co-ethnics) decreased. In the conduct of business, younger generations intentionally have diminished their

8 Unleashing ethnic entrepreneurship 7 contributions to ethnic communities though retaining their relationships with ethnic networks to fulfil particular social needs and to keep their identities. The work of Saxenian (2000, 2001) on successful West Indian and Chinese entrepreneurs in the Silicon Valley led her to assert that there was growing acknowledgement within those communities that although a start-up might be spawned with the support of the ethnic networks, it needed to become part of the mainstream to grow. The forgoing findings, coupled with those of Yoo (2000) and Ley (2006) on the influence of differing circumstances, ethnicities and location indicate that inter-ethnic collaboration and collaboration with the host society s business networks is already being actively cultivated in some countries. Trust and reciprocity are two reasons why such multi-networking may be successful (see Breton, 2003). Trust plays essential roles in social and business interactions. Average levels of trust and reciprocity are independent of ethnic origin and appear independent of the ethnic origin of the opposite party (Bouckaert and Dhaene, 2004). Our Australian study showed that ethnic entrepreneurs trust of co-ethnic and other-ethnic suppliers varied by less than 10%. Bouckaert and Dhaene (2004) viewed generalised trust (reflected by the extent to which persons were willing to cooperate with random others) as an important source of social capital. They stated further, citing the works of Arrow (1972) and Zak and Knack (2001), that trust enhanced trade and trade enhanced economic development. The above findings have relevance to the increasingly multi-ethnic European context. Ample opportunities can be created when ethnic entrepreneurs interact with business owners from different ethnic communities and build trust in the long term. Additionally, by joining an expanded international network, ethnic entrepreneurs can facilitate their business s growth and development by accessing and leveraging off the opportunity structures of such giant companies. 6 Interdependence between Government and ethnic entrepreneurs Among the OECD countries, Australia could be regarded as one of the most cosmopolitan. It has a long history of immigrant entrepreneurship, with many ethnic groups significantly over-represented in entrepreneurial activities, particularly in the small business sector of the Australian economy (Collins, 2003, p.137). The contributions of the ethnic economy to the GDP in general appear substantial. It is significant, too, that changes to Australian immigration and settlement policy and taxation policy do indirectly impact on rates of immigrant entrepreneurship formation and survival (Collins, 2003). These notable findings on the ethnic entrepreneur government interdependence imply that further government policy is required to shape and hasten the rate of formation, growth and expansion of ethnic enterprises in Australia. Presently, Australian policy on minority immigrant enterprises is largely undeveloped (Collins, 2003). According to the work of Levie (2006), there similarly exists immigrant entrepreneur government interdependence in Europe. Particularly due to the aging population of some European countries, migration has become a major economic issue for governments. Various researchers such as Storper (1997) and Massey and Denton (1993) posited that in future, societies would have a multi-colour composition characterised by a great cultural, social, ethnic and religious variety (see van Delft et al., 2000). The rapid and increasing inflow of foreign migrants

9 8 H.S. Thandi and K. Dini already now presents many socio-economic problems to policy-makers. However, foreign migrants ought not to be regarded as guaranteed sources of evil, but as promising sources of new opportunities for socio-economic life (Ward and Jenkins, 1984). Light contended that migrants could and did support themselves by work via the formal ethnic economy, comprising business firms owned and managed by immigrants as well as the co-ethnics they employed for wages and salaries (Light and Gold, 2000). This ethnic economy could be seen to provide Ward and Jenkin s (1984) sources of new opportunities for socio-economic life within that country. Given these national benefits, governments would do well to reciprocate with measures that shored up such businesses. Traditionally, many European countries introduced for ethnic groups policy initiatives to promote ethnic entrepreneurship so that migrants could look after themselves with minimal state support. Rath and Kloosterman (2000) said that successful ethnic entrepreneurship was valued as it provided work and income for immigrants deprived of jobs in the labour market, thus reducing the high rates of unemployment among them as well as contributing to employment opportunities for other immigrants by networking along the suppliers chain. This is one reason why initiatives to support ethnic entrepreneurship must consider not only the demand side but also the supply side of entrepreneurship. From the national perspective, policy-makers are increasingly recognising entrepreneurship as the key to building and sustaining economic growth i.e. economic development centred on entrepreneurship. The formation and growth of new firms, wherever this occurs, is clearly favourable not just for the locality but for the nation as a whole (Acs and Szerb, 2007). But, undeniably, effective entrepreneurship in the form of business ownership and self-employment for the immigrant is risky though it does grant the migrant a measure of independence, a sense of higher self-worth and general life satisfaction (Constant and Zimmermann, 2006a). Through job creation, for the self-employed immigrants themselves and others, it helps reduce general unemployment and welfare drain on the country. In this way, ethnic entrepreneurship revitalises the economy and contributes to the country s future economic prosperity and development. The contributions and economic roles of immigrant entrepreneurs are facts to face in the European countries. Consider the UK situation. Previous empirical research suggests that, just as is the case in the US (Kim et al., 2003), there is an over-representation of ethnic minorities among start-up entrepreneurs in the UK (Bank of England, 1999). For instance, there are an inordinately high number of start-ups among black African businesses in the UK (Ekwulugo, 2006). By virtue of their willingness to assume the risk of migration and to undertake this new and often risky venture, they become the first entrepreneurs, as in Germany (Constant and Zimmermann, 2006a). This implies that immigrants as risk takers are more dynamic and inherently more prone to becoming self-employed than any other group. For instance, a London-based research shows that Asian people are twice as likely to be involved in autonomous start-ups as their white counterparts (Ekwulugo, 2006). Caribbean people are three times as likely and Africans nearly five times as likely to be involved in an autonomous start-up compared with white people (Ekwulugo, 2006). If ethnic entrepreneurship were regarded thus robust, then additional initiatives by European governments are also logically called for to create a climate of self-sufficiency among migrants to initiate new start-ups as well as to sustain

10 Unleashing ethnic entrepreneurship 9 their present businesses. These initiatives would need to go further than the usual educational support and training programmes that bolster self-employment among immigrants. The works of writers such as McEvoy and Jones (1993) and Waldinger et al. (1990) similarly indicate that, in many European countries, the small business sector has been characterised by escalating participation of ethnic minorities in self-employment. But, though ethnic entrepreneurship has become more prominent in several European countries in the past decades (van Delft et al., 2000), the level of entrepreneurship differs considerably across countries and periods (Verheul et al., 2001). The causes and consequences of ethnic entrepreneurship are very relevant to the EU in socio-economic, political and research terms. For instance, entrepreneurial activity could be assumed not only to initiate innovative activities and job creation and to stimulate economic growth, but also to encourage competition. Note that the rapid number of black business start-ups is changing the face of competition within the London economy in particular and in the UK in general. Ekwulugo (2006) found that the growing number of black African businesses has generated an increase in competition among the minority businesses and appears to be drawing in competition from the mainstream sector, thus contributing to overall national and international competition. Thus, addressing increased competition so as to sustain and grow ethnic entrepreneurial enterprises needs action from governments as well. Most ethnic immigrant businesses are small to medium enterprises (SMEs). They are embedded in the more than 23 million SMEs in the post-2005 enlarged Europe, and Europe s economic performance depends on them to a large extent (Herrero-Rada, 2005). In fact, SMEs play a key role in all industrial, entrepreneurial and open economies. In the EU, they constitute the vast majority of enterprises (99.8%), provide almost 70% of employment in the private sector, while contributing over 57% of total turnover and close to 53% of value added (Herrero-Rada, 2005). Among the SMEs, the biggest contributors to growth and job creation normally are fast growing enterprises but these are few and far between in the EU as a whole. There is now a wide acceptance within the EU that future prosperity hinges on the creation of vibrant indigenous businesses that are deeply rooted in the local economy (Garavan and O Cinneide, 1994). This creation could be achieved in one way by expanding the pool of local immigrant entrepreneurial talent to develop and manage new business ventures. Actualising this would necessitate developing effective support structures to foster new enterprises that could create sustainable employment for all. Hence, the view put forward here is that the EU should promulgate initiatives that not only encourage more immigrant/ethnic entrepreneurial growth but also speed up business growth after start-up. It is reasonable to expect that government interventions in European countries should be predicated upon opportunity structures on which immigrant entrepreneurs thrive (see Figure 2). Waldinger et al. (1990) maintained that, inasmuch as public policy-regulated entry into self-employment, public policy could be regarded as part of the opportunity structures. Like ethnic social networks, public policy is also one of a set of resources that members of ethnic groups might mobilise to ease the process of setting up a business. Public policy thereby becomes a determinant of resource mobilisation (see Waldinger et al., 1990).

11 10 H.S. Thandi and K. Dini Figure 2 Some variables of immigrant/ethnic entrepreneurship opportunity structures The work of Verheul et al. (2001) suggests two areas (the supply side and the demand side of entrepreneurship) where the use of multi-ethnic networks by immigrant/ethnic entrepreneurs could be encouraged. The supply side comprises the demographic composition of the population, the resources and abilities of individuals and their attitudes (preferences) towards entrepreneurship. The demand side represents the opportunities for entrepreneurship, where the latter are influenced by the advent and maturation of new technologies, by the differentiation of consumer demand and by the industrial structure of the economy (Verheul et al., 2001). Multi-ethnic networking on the supply side may ensure access to entrepreneurship capability while multi-ethnic networking on the demand side may increase the number of opportunities for entrepreneurship. In addition to being embedded in their co-ethnic networks, immigrant entrepreneurs have the option of benefiting more by embedding themselves in multi-ethnic networks (mixed embeddedness) that afford access to opportunity structures to start a business and, then, to maintain or expand it. 7 Discussion Government interventions in encouraging immigrant entrepreneurship The research mentioned above, taken individually and collectively, throws light on the following key findings regarding changes taking place in Europe: 1 Concerns are mounting in Europe about economic growth and competitiveness in global markets. 2 The working-age population is forecast to decline further. 3 Small business is now seen as a vehicle for entrepreneurship, contributing in terms of innovative and competitive power, rather than just employment and social and political stability (see also Morris, 2001). 4 Entrepreneurship is one of the determinants of economic growth (see also Audretsch et al., 2001, 2002; Carree and Thurik, 2003).

12 Unleashing ethnic entrepreneurship 11 5 The contributions to the national economies of the immigrant/ethnic entrepreneurs are disproportionately high. 6 There exist vibrant immigrant entrepreneurs already successfully co-ethnic networked. 7 Mixed embeddedness or use of multi-ethnic networks by immigrant/ethnic entrepreneurs broadens the opportunity structures for such entrepreneurs. 8 The phenomenon of small and large company collaborations and networking is escalating. 9 To ensure wealth preservation and creation among ethnic entrepreneurs, the following could form areas of action: Survival of ethnic enterprises. Growth/thriving of ethnic enterprises. Accelerated growth of ethnic enterprises. Proliferation (numerical growth) of ethnic enterprises. Nationally and internationally competitive ethnic enterprises. These findings appear to indicate that European governments would do well to respond with policies and initiatives for stimulating, sustaining and accelerating growth of immigrant/ethnic enterprises. An encouraging fact in this regard is that government policies/initiatives to enhance immigrant entrepreneurship have in the past had good success (see Lerner et al., 2005). Collins (2003) found that there were few direct policy initiatives to promote immigrant entrepreneurship in Australia. Government initiatives may also be sorely needed in the EU (and OECD) countries to promote immigrant entrepreneurship. Collins (2003) suggested that micro policy could focus on the education and training needs of ethnic entrepreneurs, encouraging unemployed immigrants to become entrepreneurs and improving communication with ethnic entrepreneurs. This suggestion seems in line with an earlier comment by Reynolds and White (1997) that government may improve the immigrants resources through training and loans and investment funds. At a macro level, changes to Australian immigration and settlement policy and taxation policy could indirectly increase rates of immigrant minority entrepreneurship formation and survival. Collins (2003) was quite unequivocal that policy development which impacted directly on immigrant enterprises in Australia was very recent and largely undeveloped. To remedy such a situation in whichever European country it exists, an integrated and comprehensive approach is necessitated, which requires that the government must act entrepreneurially to develop relevant initiatives over both the supply side and the demand side of entrepreneurship (see Verheul et al., 2001). In considering the role of government, Lerner et al. (2005, p.193) asserted that While government intervention may occur on the demand side through job creation, the government can also play a role on the supply side by enhancing the resources available to immigrants... By providing retraining and skill acquisition programmes, government can enhance the adaptation of immigrants imported human capital, its transferability, and the creation of new human capital.

13 12 H.S. Thandi and K. Dini Individual European countries have their own programmes to enhance immigrant entrepreneurship. However, it is heartening that the European Commission published, in 2003, a Green Paper entitled Entrepreneurship in Europe, which set a new entrepreneurial agenda for Europe. Attempting to address the twin crucial goals of increasing the number of entrepreneurs and accelerating the growth of an increasing larger number of businesses, the Commission proposed for European entrepreneurship an action plan with five strategic areas. To actualise these, in collaboration with the member states, the Commission set out to implement nine key actions. Germane to the present paper are Actions 6a and 6b, which are aimed, respectively, at facilitating SMEs business cooperation in the internal market and fostering innovative clusters. Actions 6a and 6b could be regarded as implying an endorsement of the use of multi-ethnic networks (mixed embeddedness) for both local and internationally derived benefits. This requires proactive actions not only by umbrella organisations such as the European Commission but more so by individual European governments to encourage and foster ethnic entrepreneurs to cross ethnic boundaries in their quest for business success. 8 Some general recommendations The implications raised in the above discourse lead at least to the following recommendations for government action and initiatives to promote, buttress and accelerate the growth of immigrant/ethnic entrepreneurial businesses in the European Union and other European countries for mutual benefit of the state and the immigrant entrepreneur. First, governments could fine-tune immigrant entry requirements. Collins (2006) opined that some countries viewed immigration as contributing to (increasingly globalised) capital accumulation. Acs and Szerb (2007) advocated that countries should focus on increasing human capital. Baycan-Levent and Nijkamp (2007) acknowledged ethnic and female ethnic participation as powerful economic forces that contributed to overcoming structural labour market problems. All this was reflected in the way that Canada, Australia and New Zealand (Hiebert et al., 2003, cited in Collins, 2006) fine tuned their immigration programmes to maximise the benefits of migrant labour, especially by mandating an increase in the skilled and entrepreneurial categories while also fine tuning attempts to source specific skill shortages overseas. Zimmermann (2005) advocated a policy of discouraging unskilled migrants and attracting skilled foreign workers to vitalise the labour market and nurture growth. However, Collins (2003) maintained that, in Australia, the current political economy of immigration cannot just focus on working class immigrants but must include immigrants across all social classes to foster the growth of immigrant entrepreneurship in the country. Similarly, in the EU, increased migratory flows will be required to meet the future needs of the EU labour market after 2010 due to the anticipated decline in the working-age population. However, some countries immigrant selection systems, such as Denmark s, are regarded as ineffective (Constant and Zimmermann, 2006b). Europe could benefit from a substantive immigration policy that imposes selection criteria that are more in line with economic needs (Constant and Zimmerman, 2005). However, country-specific proclivities in entrepreneurial activity do exist. For instance, in Germany, Turks were 70% more likely to be self-employed than any other immigrant group, although not necessarily

14 Unleashing ethnic entrepreneurship 13 earning more (Constant et al., 2007). In Europe, generally, the probabilities of being self-employed were lower the more educated an individual was (Blanchflower, 2004) though, in Australia, the migration policy change has negatively affected the chances of migrants obtaining jobs commensurate with their educational qualifications (Junankar and Mahuteau, 2005). Acknowledging such a broad-spectrum context, garnering the right immigrants would entail establishing which immigrant profile would best suit the individual country. Resulting policies would then need to be harmonised across Europe. It is imperative that the burgeoning opportunity structures for entrepreneurial activity in the enlarged EU and the appropriate immigrants are brought together as one potential solution to the plethora of social, political and economic problems. Second, governments could formulate and implement initiatives to promote immigrant/ethnic entrepreneurship. At the outset, the availability of self-employment/entrepreneurship information on entry to immigrants would alert the nascent and active entrepreneurs among them. One proposal for the implementation of actions in 2007 under the European Parliament initiative Preparatory Action: Migration management Solidarity in action is a web-based portal on immigration information on migration issues of interest for third-country nationals wishing to immigrate to the European Union. It is strongly recommended that that portal should also include appropriate information that would spur immigrants to exercise their self-employment/entrepreneurial intentions. Another step would be to multiply and accelerate efforts to ensure a level playing field for the immigrants. As the European Commission s first annual report (July 2004) on migration and integration in Europe stated, successful integration of migrants, especially those from third world countries would entail improved access to the labour market and better language skills and education. The European Council adopted the Hague Programme on 4 November 2004 that set the objectives for implementation in the areas of freedom, security and justice in the period (European Commission, 2007b). On 3 July 2007, the European Commission adopted the Second Annual Report (Scoreboard) on its implementation and found that reasonable progress was recorded in First Pillar areas such as fundamental rights and citizenship. Further, the European Fund for the Integration of Third-country nationals was instituted in December 2007 within the new framework programme entitled Solidarity and management of migration flows to deal with the integration challenges that Europe faces in However, to extend to immigrants the freedoms that European Union citizens take for granted requires developing, along the lines of some already in place, concerted policies to ensure freedom of movement and residence throughout the EU, such as when Ireland accorded accession state nationals unrestricted access to their labour market. Securing such harmonised policies may require overcoming existing political blockages (Givens and Luedtke, 2004). Another way would be to extend to ethnic entrepreneurs in European countries the existing national initiatives in place to aid host-country entrepreneurs, similar to the New Enterprise Incentive Scheme (NEIS), an Australian government initiative, which has been developed and implemented to aid eligible unemployed people to start up and run new, viable small businesses. It does so by providing help in diverse ways (see The Australian Workplace, 2007). Anecdotal evidence has it that some immigrant/ethnic entrepreneurs have been availing themselves of the NEIS. It is therefore strongly recommended that, to attract significantly more ethnic entrepreneurs, existing national schemes such as this in

15 14 H.S. Thandi and K. Dini European countries be widely advertised among and targeted to the ethnic communities. Alternatively, or in addition, parallel initiatives could be designed and set up especially to benefit the ethnic/immigrant entrepreneurs. In tandem, programmes may be developed to help initiate change in product offerings and business management practices within existing ethnic/immigrant enterprises so that they are sustainable and competitive both nationally and internationally. For example, though AusIndustry, the Australian Commonwealth government s business unit explicitly designed to help Australian businesses become more innovative and internationally competitive, is a broad-spectrum initiative, its programme for commercialising emerging technologies appears to have much value to introduce innovation and world best practice into Australian ethnic/immigrant entrepreneurial ventures, placing them at the cutting edge of business nationally and internationally. Again, such co-ordinated schemes need to be promoted, across the EU, among and targeted to the ethnic businesses in the EU. In some instances, development of such initiatives may require relaxing of existing labour regulations. In Finland, for instance, the general labour market is, for the most part, closed to immigrants (Wahlbeck, 2007), though the positive effect has been the creation of a Turkish economy, albeit one in which many Turkish immigrants work under bad working conditions. Third, governments could formulate and implement programmes to encourage and facilitate social and business interaction among immigrant entrepreneurs across multi-ethnic lines. Such intent and associated actions could be infused into existing initiatives. For instance, in November 2007, INTI (Integration of third country nationals), an EU funding programme to develop actions to advance the integration of such individuals, called for proposals for Community Actions of the European Fund for the Integration of the Third-country Nationals. It has as its aims one of developing integration models and setting up networks at the European level. As the avowed rationale is to promote new and innovative ways of integrating immigrants as well as giving priority to actions enhancing the empowerment of migrants, such networks could also include business networks of ethnic entrepreneurs. As Rath and Kloosterman (2000, p.666) have contended: entrepreneurs do not operate in a social vacuum, but...they are embedded in various social networks which they use and manipulate for economic goals. Such social capital is an important prerequisite for economic success in Europe as it is elsewhere. Thus, embeddedness not only in social networks of workers but also in economically relevant networks of suppliers and financial institutions across ethnic lines should be fostered in European countries for enhancing immigrant entrepreneurship. Immigrant entrepreneurs could then not only access specific skills which in combination could lead to a more or less unique product but could also escape the trap of traditions that often hampers innovation in their European country of choice. Initiatives such as these would also fulfil INTI s objectives, especially Specific Objective A, as INTI encourages co-operation between Member States, their regional, local authorities and other stakeholders for the creation of trans-national partnerships and networks. Fourth, programmes need to be developed to encourage and facilitate location, and relocation/expansion of a business of given ethnicity in other ethnic areas. For these programmes to be developed and implemented with reasonable success, the different opportunity structures and the markets where potential openings for new

16 Unleashing ethnic entrepreneurship 15 businesses can be found have to be researched carefully and the information made available to the immigrant entrepreneurs. For new immigrants, this could be done via the proposed web-based immigrant information portal (see above) while a new portal could be designed for existing EU-based entrepreneurs. Kloosterman and Rath (2001) have suggested that two dimensions of the opportunity structures market accessibility and market growth potential are crucial for understanding the processes of insertion and social mobility of immigrant entrepreneurs (and their businesses) and should be considered when comparing distribution patterns and trajectories of immigrant entrepreneurs. This will require labour and immigration policies to be articulated with economic ones across the EU. Fifth, programmes are required to develop the infrastructure and make it available to immigrant entrepreneurs. Acs and Szerb (2007) suggested that countries should focus on increasing human capital, upgrading technology availability and promoting enterprise development. It is important to start enterprise development policies early because the main drivers are perceptual variables that are difficult to change in the short run. Similarly, van Delft at al. (2000) recommended, in addition to establishment of socio-cultural and ethnic networks and strategies to improve training and education, facilitating access to facilities and financial resources. The present study posits that the availability to an ethnic/immigrant entrepreneur of such infrastructure as other ethnic entrepreneur networks, host country entrepreneur networks, women ethnic entrepreneur networks, technology (such as development of methods for the cross-national business-to-business integration electronic commerce (B2Bi EC)) and access to facilities, financial (including venture capital, corporate venturing and micro-capital) and other resources would stimulate and accelerate the ethnic/immigrant entrepreneur s business development. Concerted programmes in these areas are currently hard to detect in the EU. Attendant benefits in diverse forms would accrue to the country from future programmes. Sixth, programmes are needed to actively initiate and facilitate research into developing initiatives to enhance immigrant entrepreneurship. Formulating and implementing initiatives in European countries to promote ethnic/immigrant entrepreneurship requires clear perspectives about how immigrants live, work and integrate within their adopted countries, what impels their socio-economic behaviour, their relative contributions to the economy, and their standing within the national and EU welfare system. Such a pan-european perspective could not only help to develop profiles contributing to economic performance but, importantly, it could aid in developing appropriate and uniquely European initiatives to enhance immigrant entrepreneurship. It also entails in-depth research into understanding the political-institutional framework of ethnic entrepreneurship to determine what direct and indirect relationships exist between the political-institutional framework and immigrant entrepreneurs. Freeman and Ogelman (2000) described the institutional framework as including the law and the issuing of rules and regulations concerning economic activity and its implementation within the (host) country. Following the logic of Rath and Kloosterman (2000), it is recommended that more rigorous research on the distribution, density and working of social networks and especially networks of suppliers and financial institutions (covering their international distribution, extent and significance) that traverse ethnic lines is deemed fundamental for