A comparison of indigenous and non-indigenous enterprise in the ...

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Int. J. Business Performance Management, Vol. 9, No. 3, 2007

A comparison of indigenous and non-indigenous enterprise in the Canadian sub-Arctic Leo-Paul Dana University of Canterbury Private Bag 4800 Christchurch, New Zealand E-mail: [email protected] Abstract: Entrepreneurship has conventionally been thought of as a function of opportunity. The problem with such an ethnocentric approach, however, is that it assumes a uniform response to opportunity across cultures. In contrast, this article makes use of ethnographic means in a cross-cultural setting to illustrate that aboriginal and non-aboriginal persons in Churchill expressed fundamentally different concepts of self-employment. The study took place in the Canadian sub-Arctic town of Churchill, in Northern Manitoba, over a period of two years. Rather than base himself on a random sample, the researcher immersed himself in the field and contacted each entrepreneur in town. Findings suggest that the causal variable behind enterprise is not an opportunity, but rather one’s cultural perception of opportunity. Keywords: aboriginal business; Canada; management; opportunity; culture; entrepreneurship; Keynesian stabilisation policy; comparative study; informal enterprise; self-employment. Reference to this paper should be made as follows: Dana, L-P. (2007) ‘A comparison of indigenous and non-indigenous enterprise in the Canadian sub-Arctic’, Int. J. Business Performance Management, Vol. 9, No. 3, pp.278–286. Biographical notes: Leo-Paul Dana is Senior Advisor to the World Association for Small and Medium Enterprises, and tenured at the University of Canterbury. He was formerly Deputy Director of the International Business MBA Programme at Singapore’s Nanyang Business School. He also served on the faculties of McGill University and INSEAD. He holds BA and MBA degrees from McGill University, and a PhD from the Ecole des Hautes Etudes Commerciales. He has an extensive research background studying entrepreneurship in different cultures and is the author of a number of books and articles on the subject.

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Introduction

In 1717, the Hudson’s Bay Company set up a trading post in the vicinity of where Churchill stands today. Trade flourished, and when the Hudson Bay Railroad was completed, in 1929, the town became an important transportation hub. The Port of Churchill was subsequently built. Since 1931, Churchill, which is 1000 miles closer to Europe than is the port of Montreal, has been the point where prairie wheat has been transferred from rail (see Figure 1) to sea vessels using the deep sea port. Consumer goods are often transported into Churchill by air (see Figures 2 and 3). Copyright © 2007 Inderscience Enterprises Ltd.

A comparison of indigenous and non-indigenous enterprise Figure 1

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The train station

Source: Photo by Leo Paul Dana © 2005 Figure 2

Curtiss C-46 Freighter operated by Air Manitoba

Source: Photo by Leo Paul Dana © 2005

Churchill is inaccessible by road, and many of its residents have never ventured out of the area. Nevertheless, the airport (see Figure 4) can be busy and the population of Churchill fluctuates with southerners, increasing in summer and decreasing during the long sub-Arctic winter. Big businesses in Churchill include the Royal Bank of Canada at Hudson Square, the Canadian National Railways (CNR) and VIA Rail. A popular shop is the Manitoba Liquor Control Commission at Bayport Plaza in Hudson Square adjacent to the Royal Bank.

280 Figure 3

L-P. Dana Inside the Freighter


Churchill Airport


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The researcher identified 118 persons (15 years or older) who were self-employed, in this community of 1217 people. The self-employment rate was thus found to be 97 per thousand. This includes the unofficial informal sector (subsistence self-employment,1 the legitimate informal economy,2 and criminal activity3) as well as the official formal sector.4

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Findings

Individuals from different ethno-cultural backgrounds do not all become self-employed for the same reason, nor should they be expected to respond the same way to any stimulus. People from entrepreneurial cultures may be pre-disposed to self-employment by virtue of cultural conditioning resulting in pro-enterprise values (thrift, frugality, etc.); this results in orthodox entrepreneurship (Dana, 1997). Individuals from non-entrepreneurial cultures may also become self-employed, in the absence of cultural predisposition. In this case, explanatory variables are the function of circumstance within the ethnic community or circumstance in the host society. When one’s reaction to circumstance is to become self-employed, the result may be described as reactive self-employment. In other words, different explanatory variables are relevant to specific ethnic communities. The majority of the non-aboriginal interviewees described their self-employment as passive, i.e., in response to an opportunity, rather than innate. A typical respondent explained, “It’s just something that happened”. In contrast, a majority of the aboriginal interviewees described their self-employment as active. Typical explanations included, “I was born like that”. However, 50% of the aboriginal respondents (compared to 26% of the non-aboriginals) said that self-employment was not their primary occupation. Although active self-employment was more common among aboriginals than among non-aboriginals, active self-employment among the aboriginals was often in the informal sector, a part-time occupation such as subsistence hunting or fishing. Some even spoke of hunting unofficially (see Figure 5). Among the 35 part-timers, 11 (31%) cited active self-employment, while 2 (6%) described their experience as reactive and 22 (63%) spoke of their experience as passive. Analysis by sector reveals that non-aboriginal respondents were concentrated in service industries. In contrast, aboriginal respondents were under-represented in the service sector, completely absent in retail trade, and concentrated in the informal economy. In the informal5 sector, 46.51% of the sample were female. Although 76.66% of aboriginal respondents were involved in the informal economy and aboriginal people constituted 53.49% of the informal economy, only 23.26% of the sector were aboriginal females, while 50% of non-aboriginal interviewees in the informal sector were female.

282 Figure 5

L-P. Dana Unsuspecting Polar Bear – Ursus maritimus – Note that its hair follicles are not white, but clear, acting as optical fibres, channelling sunlight to its black skin


Back from the hunt



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Analysing along ethnic lines, the following findings can be observed: (a) 22 (39%) of the 57 full-time self-employed non-aboriginals described active/innate self-employment compared to 9 (60%) of the 15 full-time self-employed aboriginals; (b) 3 (5%) of the 57 part-time self-employed non-aboriginals described active/innate self-employment compared to 8 (53%) of the 15 part-time self-employed aboriginals. This suggests that while the rate of self-employment among aboriginals is considerably lower than among non-aboriginals, the self-employed aboriginals are more likely to express innate, active self-employment than are non-aboriginals. Yet aboriginals figure less in formal entrepreneurship.6 Passive self-employment was described by 23 (40%) of the 57 full-time non-aboriginal interviewees and by 16 (80%) of the 20 part-time non-aboriginals. This is high compared to 0 (0%) of the full-time aboriginals and 6 (40%) of the part-time aboriginals. In other words, 39 (51%) of the 77 non-aboriginal respondents expressed a passive experience in contrast to 6 (20%) of the 30 aboriginal respondents; this indicates that non-aboriginals in Churchill are more likely than aboriginals to get involved in passive self-employment as a result of opportunity identification. Self-employment and new ventures are often considered to be among the world’s global solutions for economic malaise. Therefore, it has been the policy of many governments to spend much money on new venture programmes. These programmes are intended to assist entrepreneurs in setting up a new business, resulting in job creation. A problem, however, is that the findings of this study indicate that for most of the self-employed persons in Churchill, self-employment was not their original intent. Few were naturally attracted to full-time self-employment. Moreover, findings indicate that the majority of self-employed persons in Churchill were not attracted to active self-employment. Instead, most of them were engaged in reactive self-employment or passive self-employment. For many aboriginal people, self-employment consists of a non-business activity, such as subsistence hunting, contributing to their personal economic needs, without engaging in business. For these people, new venture programmes are of little if any relevance at all. To somebody whose idea of being self-employed is going fishing, the concept of having employees and creating jobs is irrelevant. The very essence of entrepreneurship is in the perception of a situation as a business opportunity. There does not appear to be a lack of opportunity in Churchill. However, empirical evidence gathered from the respondents in Churchill suggests that non-aboriginal respondents tend to respond differently to opportunity than do their aboriginal counterparts. Aboriginals in Churchill see self-employment less as a business opportunity than as a means to supplement their income through an informal, often part-time, activity such as hunting or fishing. This suggests that opportunity identification, and/or response to opportunity, is culture-bound. In other words, there are differences among ethno-cultural groups in Churchill. Members of the non-aboriginal group are identifying opportunities and becoming self-employed by pursuing such opportunities; yet aboriginal respondents in this study have reported less self-employment as a function of opportunity identification. This early empirical evidence is significant because it suggests possible falsification of the applicability of Keynesian stabilisation policy to non-Keynesian cultures. The above is significant because it suggests that entrepreneurship should not be defined on the basis of opportunity, but rather, cultural perception of opportunity should

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be considered. Classic works provide a theory which is appropriate for understanding entrepreneurship in industrial societies. However, aboriginals in Churchill perceive the concept of opportunity differently. Thus, entrepreneurship among them should not be viewed as a function of opportunity; classic literature is less useful in such a context, because of differences in perception and reaction. The opportunity concept, therefore, cannot be transported across cultures, and government policy should be sensitive to this.

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Towards an understanding of indigenous self-employment

The literature of Western-style entrepreneurship in industrialised societies has focused on the entrepreneur as a risk-taker; as an expresser of cultural values; as a creator of opportunities; as a need achiever; as an agent of social change; and as an identifier of opportunities. Usually, such literature deals with formal enterprise and often, growth is implied. The small business owner also tends to be viewed, by Western researchers, as the owner of a formal firm. However, findings of this study reveal that aboriginal respondents do not associate the same dimensions with being entrepreneurs. Aboriginals reject Cantillon’s (1755) definition, because they have a different perception of risk. Respondent #100, for instance, associates risk with polar bears rather than with enterprise, while Respondent #178 was happy to be self-employed because “I am my own business, so there is no risk”. To aboriginals in Churchill, being an entrepreneur is simply acquiring assets without a boss, e.g., carving, painting, trapping, etc. In contrast to non-aboriginals who expect a profit from their enterprise, aboriginals sometimes care little whether their product will be sold; aboriginal self-employment is often an expression of traditional activities, such as hunting and fishing. Respondent #81 explained, “I did like my parents in the good ol’ days”. Being an entrepreneur is synonymous with making a gain on one’s own. Self-employed aboriginals tend to be involved in unincorporated, informal activity. This is substantially different from the entrepreneurs of traditional Western studies. Furthermore, while self-employment among non-aboriginals in Churchill tends to be one’s full-time, primary occupation, among aboriginal respondents, self-employment is often part-time. Being an entrepreneur, according to aboriginals in Churchill, is working for one’s immediate gain, here and now, without great concern as to the future. It is usually not a substitute for government money, but rather a supplement to such assistance. Respondent #107, for example, said he lives “off of U.I.C. and welfare” but he hunts for food. Thus, aboriginal self-employment in Churchill often involves no money; it is simply a means to improve one’s self well-being, maximising gains, without forfeiting welfare money. This explains why self-employment among aboriginals often takes the form of informal subsistence hunting and fishing, as opposed to manufacturing. Financing, if any, is usually informal. One shares a gun with a relative, and then shares the meat of his kill; this reflects the collective values of aboriginals for whom the extended family is more important than monetary gain. This suggests that traditional theories may be culture-specific and less applicable to aboriginal society. The Western understanding of the entrepreneur, incorporating innovation, growth and job-creation, undermines the importance of cultural values and their impact on behaviour.


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Conclusion

4.1 Towards the future This empirical study of the self-employed individuals in Churchill revealed an important difference between aboriginals and non-aboriginals in this remote sub-Arctic community. Self-employment among aboriginals in Churchill tended to be informal. In contrast, non-aboriginal self-employment in Churchill tended to be more full-time in nature, and formally structured; its explanatory variable was often influence from external circumstance, such as displacement, or the identification of an opportunity. Whereas traditional self-employment literature emphasises innovation, opportunity and job-creation, these concepts are less central to culturally influenced self-employment among aboriginals in Churchill. While self-employment among non-aboriginals in Churchill is largely a result of opportunity identification, self-employment among aboriginals is more an expression of traditional activities such as hunting and fishing. Indeed, a sensitivity to ethno-cultural differences is essential in the quest for furthering the understanding of self-employment. Presented with the same opportunities in Churchill, aboriginals and non-aboriginals responded differently. While non-aboriginals concentrated in formal self-employment, aboriginals focused on the informal. Informal enterprise may have deep cultural roots, and to some cultures, informal enterprise is natural while formality is a foreign concept. Response to a business opportunity is thus culturally influenced. Opportunity cannot receive the same response in all cultures; nor should it be expected to. Similarly, government should recognise the impact of culture on enterprise, and policy should avoid the translocation of models. New venture programmes are not the optimal type of government intervention in Churchill. Instead, effort should be made to encourage more individuals to seek wealth-producing and job-creating full-time self-employment, as opposed to simply supplementing one’s income with subsistence non-monetary income such as fish or game. Rather than being limited to reactive self-employment, more individuals may benefit from active self-employment. Given that opportunity identification and/or response to opportunity appears to be influenced by cultural values, it would seem useful to encourage entrepreneurial activity among individuals from ethnic groups, which have historically lacked a business orientation. The study of informal enterprise has not been a priority of research. Given the high percentage of informal self-employment among aboriginal peoples, future research might focus on this phenomenon.

References Cantillon, R. (1755) Essai sur la nature du commerce en général, London and Paris: R. Gyles; translated (1931), by Henry Higgs, London: MacMillan and Co. Dana, L.P. (1997) ‘The origins of self-employment’, Canadian Journal of Administrative Sciences, April, Vol. 14, No. 1, pp.99–104.

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Notes 1

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Subsistence self-employment is the term used to describe the activity of gathering food for one’s personal use. This includes hunting and/or fishing. It may be a full-time activity or a part-time activity in addition to working for an employer. The legitimate informal economy involves the uncontrolled exchange of goods/services in the absence of an official enterprise. This may involve selling surplus fish from a weekly catch. In Churchill, this usually involves the sale of illegal drugs, obtained from foreign vessels using the port. Self-employment in the formal sector takes the form of official, legal enterprise, profits of which are declared to government authorities. A dentist is officially self-employed. The informal sector, here, includes unincorporated home-based businesses, such as: making and selling pottery, painting, selling illegal drugs, selling photography, babysitting, playing recorded music at parties, raising poultry, dealing in raw and dressed furs and fish, trapping, painting and trading, hairdressing at home, selling art, sideline income production, accounting, illustrating, contracting, installing peepholes, art, hunting and trapping, sculpting, hunting, selling leather products, making handmade moccasins, doing beadwork, making clothing, cleaning homes, doing artwork and singing, playing guitar, hunting and fishing, and shovelling snow. Formal entrepreneurship involves entrepreneurial activity in the form of a structured official enterprise outside the informal economy. An example is manufacturing.