EFFECTS OF APPRENTICESHIP AND SOCIAL CAPITAL ON NEW BUSINESS CREATION PROCESS OF IMMIGRANT ENTREPRENEURS

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1 Review of Public Aministration an Management Vol., No. 3, July 3 ISSN: 3-44 Website: Publisher: Department of Public Aministration Nnami Azikiwe University, Awka, Nigeria an Zainab Arabian Research Society for Multiisciplinary Issues Dubai, UAE EFFECTS OF APPRENTICESHIP AND SOCIAL CAPITAL ON NEW BUSINESS CREATION PROCESS OF IMMIGRANT ENTREPRENEURS Onyima Jue K.C., Nzewi Hope N. & Chiekezie, Obianuju M. Nnami Azikiwe University, Awka Abstract This stuy investigate the effects of apprenticeship an social capital on new business creation process of Igbo entrepreneurs in Wukari Taraba State. The high success rate of apprenticeturne entrepreneurs an increasing attachment of these entrepreneurs to their ethnic base union were the reasons that gave rise to the stuy. 4 businesses locate in Wukari Local Government Area that were establishe by Igbos were ranomly selecte an questionnaire metho was the mechanism applie in generating responses. Finings reveale that while apprenticeship ha significant effects on pre-founing activities- when the business was taking off, social capital became important when the business ha been establishe. Apprenticeship ha significant effects on business iea generation, iea moification, business location an financing while social capital serve as source of insurance services an access to information. The stuy recommens that apprenticeship practice shoul be revive an moernize an also that ethnic base unions shoul be given legal recognition an restructure to play both social an economic roles Introuction Entrepreneurship among immigrants is on the rise worlwie as more immigrants are eliberately choosing self employment. In the view of Tanaka an Krishnan (6), they are even more likely to be self-employe than natives. Immigrant entrepreneurs, from ethnics entrepreneurship literature, are persons who migrate from their home/region to another region with ifferent set of business culture, customs an language an run their own business ventures

2 Review of Public Aministration an Management Vol., No. 3, July 3 there. The growth in the number of immigrant entrepreneurs is viewe as a way for labour market inclusion for the immigrants (Heberg, ) Immigrant entrepreneurs usually start their business venture in their states of origin an become self employe then turn to be immigrant entrepreneurs. Although the number of immigrant entrepreneurs from abroa who evelop business ventures in host states is growing, the number of successful ones is few. These entrepreneurs face many ifficulties both in registering an in founing activities owing to high entry barriers. The level of entrance barriers may iffer between states an even locations within a country because of ifferences in the business environment. Suwannapisit an Apiratpinyo () opine that the complicate processes an ifficulties face by these entrepreneurs coul be the reason why some new entrepreneurs commence business without proper registration. Some of these barrier problems inclue lack of creibility with customers an investors, spoken an written language barrier, the legitimacy proceure, taxation an employment proceures. Furthermore, legal systems, lack of focus, poor unerstaning of the market, lack of exit route an the poor unerstaning of unwritten rules an business culture of the host state are possible challenges facing immigrant entrepreneurs. Moreover, immigrant entrepreneurs firms are often smaller in size an less successful than mainstream business (Butler an Greene, ) ue to lack of financial capital, iscrimination, language problem an limite markets, when they remain within the ethnic market (Walton- Roberts an Herbert, ). Many stuies conucte in the fiel of immigrant entrepreneurship reveale that many immigrant entrepreneurs relie on human an social capital in overcoming these entry barriers. Knowing that establishing new venture in another environment is more ifficult than starting their business venture at home, these entrepreneurs use social an human capital to cushion the effects of unfamiliar environment. With reference to effectuation theory, entrepreneurs as creative actors usually evelop opportunities an markets from the existing resources on han with major concern on who they are, what they know an whom they know (Saravasthy, ). In other wors, the major concern of entrepreneurs in overcoming these entry barriers is focuse on the human an social capital that they can lay hans on. In the context of immigrant entrepreneurship, social capital is referre to as the set of facilitating network factors that inclue the use of co-ethnic markets, co-ethnic suppliers an employees, an community sources of information, capital an avise. Social capital can assume ifferent forms such as social skill, charisma, cooperative nature or care for others. It is a prouctive resource at the interface of iniviual an collective interest. Deakins et al () posite that social capital is a commitment from partners to reuce uncertainties an facilitate flow of information as well as create opportunities for personal an societal wealth. Human capital on the other han refers to possession of skills, work experience, knowlege or other useful characteristics (motivational incentive, leaership style an locus of control). Other human capital factors that affect entrepreneurship inclue gener, age, ethnicity, relevant inustry experience an general management experience (Shepher et al, ; Lee an Chang, ). Human capital such as apprenticeship eucation enables immigrant entrepreneurs to eal with a host of challenges. Some scholars have claime that success in entrepreneurial venture can be attribute to superior human capital resource an not other external factors. For instance, Saners an Nee () ha prove that human capital resources are positively relate to

3 Review of Public Aministration an Management Vol., No. 3, July 3 business longevity an profit. They also prove that an immigrant with higher apprenticeship eucation have greater chances of succeeing in new venture creation. Since time immemorial, people have transferre skills from one generation to another in some form of apprenticeship. In Nigeria an all over Africa, apprenticeship has been an age long metho of training young people in trae an craft, agriculture, business an catering. When youths in olen ays achieve the status of skille worker; they become important members of the society. In Igbolan, apprenticeship system was an institution that was generally guare by customs, lineage an rituals. Every male born into a family was expecte to learn his matrilineal craft, an it was easy to ientify a young male chil as a member of lineage foun to be proficient in the lineage craft. The apprenticeship system was brought to the limelight in Nigeria after the Nigerian-Biafran war. Many parents who were left with nothing after the war were force to sen their chilren (- years) to survive as traers. This was how Igbo settlers after the war rebuilt Onitsha, Nnewi, Aba an most parts of Lagos. In the apprenticeship system, the Oga an Nwaboyi are in agreement for a perio ranging from 4- years whereby the apprentice is to serve an learn from the Oga. Usually, the moe of settlement is containe in the agreement. Apprenticeship as a metho of establishing young people, an training the unskille, has been very beneficial to the Igbos. Many people achieve excellence in their calling because their Oga traine an settle them well. Many notable business moguls in Onitsha attribute their success to what they learnt as apprentice. Amittely, apprenticeship offers the Nwaboyi the opportunity to acquire business acumen, work attitue, how to eal with suppliers an customers, an interaction with other practitioners. It provies contacts/networks an lessens the buren on the Nwaboyi s parents. In aition, it has helpe youths from inigent homes to achieve excellence in what they o. The increasing number of Igbo entrepreneurs in Wukari an increasing number of people that start new ventures within few years of staying in there, couple with increase in the number of ethnic base networks an higher success rate of entrepreneurs who starte as apprentices, le the researcher into querying how these entrepreneurs evelop businesses outsie their region especially with the ai of social an human capital. To ate, there is a limite number of stuies on immigrant entrepreneurship an use of social/human capital. Most of the stuies focus on features of immigrant entrepreneurs (Peter De Vries, ) but little or no stuy has been conucte on how entrepreneurs from ifferent backgrouns within a country use apprenticeship an social capital in overcoming these entry barriers an in creating new business ventures. Therefore the objective of this stuy was to investigate the extent to which apprenticeship an ethnic base networks have assiste these entrepreneurs in overcoming entry barriers an in creating new businesses. Literature Review Suwannapisit an Apiratpinyo () efine immigrant entrepreneur as one who migrate from home to another region an run own business venture there. Bessant an Te () x-raye 3

4 Review of Public Aministration an Management Vol., No. 3, July 3 various reasons for creating new ventures as well as motive types. Heberg () asserte that the number of immigrant entrepreneurs is increasing worlwie an that entrepreneurial activities are in a high level among immigrants than native people. Kloosterman an Ruth (4) opine that the involvement of these immigrant entrepreneurs in ifferent inustries results from special knowlege or resources which have become competitive ege. He equally observe that these entrepreneurs face many entry ifficulties as a result of being in unfamiliar environment. Peter e Vries () while acknowleging the presence of many ifficulties for immigrant entrepreneurs highlighte the impacts of immigrant entrepreneurship to the host country. He asserte that it brings novel ieas an culture an positively impact on host s way of life. Butler an Green () reiterate the problems face by immigrant entrepreneurs an conclue that such problems are the reason why immigrant firms are usually smaller. Walton-Roberts an Herbert () ientifie lack of financial capital, legitimacy problem, iscrimination, language problem an limite markets as major entry barrier facing immigrant entrepreneurs. Timmons (4) propose a successful venture creation moel base on the three crucial riving forces of entrepreneurship: the founers, the resources neee to foun the firms an recognition of opportunity. Surrouning the process are such things as risk, information asymmetries, resource scarcity an uncertainty, all of which complicates the process. Singh et al (6) combining the iscussions of Timmons (4) an Long an Mcmullan (4) propose a moel of new ventures creation. In their view, the starting point is business iea, through opportunity recognition an possible new venture creation. They went further to show when/conitions uner which new venture iea becomes entrepreneurial opportunity an how long after the recognition of opportunity are new ventures foune. Suwannapisit an Apiratpinyo () following Casson an Guista () ientifie three stages of business venture creation process: the opportunity seeking stage, the resource acquisition stage an the market organization stage. Long an McMullan (4) escribe the opportunity ientification process as being at least partially uner the control of the entrepreneur. They suggest that in orer to realize the potentials of an opportunity, a significant amount of preparation is require. An inee, it is this preparation that shapes an personalizes the opportunity, making it inaccessible to other people. Clausen (6) stuie what type of knowlege, resources an competences iniviuals nee to etect opportunities an start a firm. He conclue that iniviuals with higher specific human capital an social networks succee more than those who possess them in a lesser egree. This fining is in line with earlier fining by Christensen an Petersen () that in aition to profoun market an technological knowlege, social networks are a great source of successful venture creation process. Apiratpinyo an Suwannapisit () observe that more successful immigrant entrepreneurs make less use of social capital; an Hjerem (4) collaborating the statement, ae that immigrant entrepreneurs because they ten to have smaller firms epene so much on social capital. Both De Carolis an Saparito (6) an Anerson an Jack () extolle the importance an contributions of social capital in facilitating business creation. In fact, Kalninis an Chung (6) who stuie the Gujarat immigrants in the US observe that they epene on social capital to evelop an sustain their businesses. 4

5 Review of Public Aministration an Management Vol., No. 3, July 3 On the other han, researchers such as Lee an Chang () an Shepher et al () have unerscore the relevance an contributions of human capital especially apprenticeship in overcoming entry barriers an in eventual business creation. Saners an Nee (6) even prove that human capital resources are positively relate to business longevity. 3. Research Methos This was a stuy of entrepreneurs of Igbo extraction living an running businesses in Wukari. The stuy was quantitative in nature an the research esign was escriptive survey. The area of stuy was Wukari Local government Area in Taraba State, Northeastern Nigeria. Wukari was a commercial town with large number of businesses most of which were owne by Igbos. The population of the area accoring to the population census figure was 4,. The target population consists of all Igbo entrepreneurs who have businesses in the area. The researchers use snowball sampling an criterion-base sampling technique. In this arrangement, first responent was locate an he in turn ientifie an recommene others. This enable the researcher to compile a list of probable responents from which 4 responents (those who meet selection requirements) were ranomly selecte. Likert scale structure questionnaires were use to generate responses from the selecte sample an the ata were analyze using percentages an mean scores Data analysis was one by using percentages an mean scores. Percentages were use for analyzing the backgroun information of responents while mean scores were use to analyze the remaining research questions. In this regar a mean value of 3. an above was accepte while value below 3. was rejecte. The questionnaire items were mae of five- () point scale type of responses as follows: Strongly agree (SA), Agree (A) 4, Unecie (UD) 3, Disagree (D), Strongly Disagree (SD). Data Analysis an Discussion of Finings Table Description of Entrepreneurs Stuie Membership of Igbo Union Option Percentage Member 4 % Non member % Type of business training unergone Apprenticeship 3 % Othe.r trainings apart from apprenticeship % Years of operation Less than years 3% Between an years 43% Above years % Type of business Traing 6 6% Manufacturing.% Services.% Source: Fiel Survey, Analysis of ata presente in Table reveale that all entrepreneurs belonge to Igbo Union which serve as their social capital. % of the responents passe through the tutelage of

6 Review of Public Aministration an Management Vol., No. 3, July 3 business mentors (masters) as apprenticeship before creating their own business venture. Furthermore, it was reveale that majority of the businesses were young as greater percent (3%) ha not existe for more than years. As expecte, greater number of the responents was into buying an selling as oppose to those in manufacturing an service sector. Table : Mean Response on the effects of social capital on new business creation process. Items SA A U D Belonging to Igbo Union ha significant effect on my business iea generation Belonging to Igbo Union ha significant effect on moification of my business iea 3 Belonging to Igbo Union ha significant effect on where I locate my business 4 Belonging to Igbo Union ha contribute to my business financing Belonging to Igbo Union ha significant effect on my customer management an pricing ecisions 6 Belonging to Igbo Union assiste me in getting an maintaining suppliers D SD Mea n Remar k. Rejecte 3.4 Rejecte Rejecte 3. Rejecte Rejecte 3. Accept e Belonging to Igbo Union is a source of avertisement for my business 3 4. Accept e Belonging to Igbo Union ha provie me with wie range of insurance services Igbo Union ha assiste my business in making istribution channels ecision Igbo Union ha contribute significantly to increase Accept e Rejecte 6

7 Review of Public Aministration an Management Vol., No. 3, July 3 access to new markets Igbo Union Provies my business with access to information Igbo Union ha contribute significantly to overcoming legal an cultural hurles in my business Source: Fiel Survey, Rejecte Accept e Accept e Finings from Table showe that social capital (Igbo Union) ha significant effect on stabilizing an running the business but not in kick-starting the business. The Table reveale that social capital ha significant effects on getting an maintaining suppliers, on making istribution channels ecisions an as source of avertisement. While social capital has not contribute much in pre-founing activities, it ha contribute significantly in proviing wie range of insurance services, access to information an in overcoming legal an cultural hurles confronting business success. Table 3: Mean Response on the Effects of Apprenticeship on new business creation process. Items SA A U D Apprenticeship ha significant effect on my business iea generation Apprenticeship ha significant effect on moification of my business iea 3 Apprenticeship was major eterminant of my business location 4 Apprenticeship ha contribute significantly to my business financing Apprenticeship ha significant effect on my customer management an pricing ecisions D SD Mea n Remark Accepte Accepte Accepte Accepte Accepte

8 Review of Public Aministration an Management Vol., No. 3, July 3 6 Apprenticeship ha assiste me significantly in getting an maintaining suppliers 3. Accepte Apprenticeship was a source of avertisement for my business Apprenticeship ha provie me with wie range of insurance services Rejecte Rejecte Apprenticeship ha assiste my business in making istribution channels ecision 3 3. Rejecte Apprenticeship ha contribute significantly to access to new markets Apprenticeship ha Provie my business with access to information Rejecte Rejecte Apprenticeship ha contribute significantly to overcoming legal an cultural hurles in my business Accepte Source: Fiel Survey, Analyses of ata in Table 3 showe that unlike social capital, apprenticeship ha significant effects on pre-founing activities an in new business take-off but not on the ay-to-ay running of the business. It was reveale that apprenticeship ha significant effects on business iea generation, iea moification, business location, new business financing an selection of suppliers. Apprenticeship ha also contribute positively to customer management an pricesetting ecisions.

9 Review of Public Aministration an Management Vol., No. 3, July 3 Conclusion This stuy has succeee in bringing to the limelight the ifferent roles apprenticeship an social capital play in business evelopment as well as the stages when they are neee. It shows that social capital an apprenticeship are not substitutes as some scholars believe; rather, they are complementary. The stuy has also show-case the inispensable role of apprenticeship in entrepreneurship evelopment. Inee, apprenticeship oes not only provie training for the apprentices; it equally provies mentoring services an serves as nursery for any entrepreneurial ambition. Recommenation Having iscovere the critical role of apprenticeship in new business evelopment, effort shoul be mae to revive the practice. Amittely, the system has been abuse by the stakeholers but abuse oes not remove use. Moern forms of apprenticeship as seen in Singapore an Malaysia where grauates are attache to establishe entrepreneurs for some perio of tutelage shoul be aopte. Seconly, since the role of ethnic base networks such as Igbo Union has significant effects on business sustainability, they shoul be given legal recognition an strengthene as platform for capacity builing, technology transfer an as isciplinary force to regulate members behaviour. Finally, ethnic base groups such as Igbo Union in this case shoul see themselves not only as social groups but also as economic forces that can own businesses, negotiate business terms on behalf of their members an also provie public goos which members woul not fin viable to provie iniviually. References Apiratpinyo S an Suwannapisit () Social capital: A tool or Thai Entrepreneurs to Start Business Venture in Sween. Master Thesis. Umea School of Business Anerson, A.R. an Jack, S.L. () The Articulation of Social Capital in Entrepreneurial Network: Glue or a Lubricant? Entrepreneurship an Regional Development, 4 (3), 3-. Bessant, J. & Te, J. (). Innovation an Entrepreneurship. st eition. Englan: John Wiley & Sons Lt. Casson, M. & Guista, M.D. (). Entrepreneurship an Social Capital: Analyzing the Impact of Social Networks on Entrepreneurial Activity from a Rational Action Perspective. International Small Business Journal, (3), -44. Christen P S an Petersen R () Opportunity Ientification: Mapping the Sources of new venture ieas (Paper presente at the th Annual Babson Entrepreneurship Research Conference, April) Denmark Aarhus University Institute of Management

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