Ethnic Entrepreneurial and Marketing Systems ... - SAGE Journals

Ethnic Entrepreneurial and Marketing Systems: Implications for the Global Economy

The role of immigrant ethnic entrepreneurs in the small business milieu of the developed world has been studied within sociology for the past three decades. This article attempts to generate interest in the study of ethnic entrepreneurs within marketing and international business, especially noting the distinct business and marketing systemic features of ethnic entrepreneurial networks. Using prior literature and the findings from a qualitative study, the authors build some elements of a theory of ethnic business systems and demonstrate aspects on which such systems differ from other business firms and networks, especially in the United States. The authors argue that ethnic enterprises make tremendous contributions to local and international economies while bridging small business, globalization, and the nation-state in interesting ways.

ABSTRACT

The history of international trade exhibits a remarkable pattern of exchanges among specific communities, castes, and clans, especially because the propensity to trade emerged more readily within groups sharing common ethnic identities (Kotkin 1992). For example, Phoenician, Jewish, Indian, Chinese, Syrian, and Arabian traders contributed to much of the transnational exchanges of products, technology, knowledge, and culture even before the Medieval Age and the subsequent European ascension to global trade and trading routes.

Gopalkrishnan R. Iyer and Jon M. Shapiro

In recent times, despite an overall professionalization of international business and the growth of the modern contractual business firm, a substantial proportion of international business is still conducted by family firms organized along kinship lines. Global ethnic economic networks of Japanese, Chinese, Jews, and Indians account for tremendous amounts of foreign direct investment (FDI), trade, and exchanges in many goods and services (Kotkin 1992; Weidenbaum and Hughes 1996). Academic study of transnational trade and international business has given primary attention to contractual and corporate relations, macro-level FDI and trade statistics, and larger, more visible multinational corporations. However, it has largely ignored the growing influence of transnational ethnic exchanges conducted by family firms. Part of the general neglect of the family firm may be attributed to the exclusion of such firms in nominal interactions with academic and research settings, as well as to the perception that such firms "often function in confusing and clan-

Submitted September 1998 Revised November 1998 July 1999 © Journal of International Marketing Vol. 7, No.4, 1999, pp. 83-110 ISSN 1069-031X

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destine ways" (Litz 1997, p. 66). However, the ethnic family firm, with its ready appreciation of transnational exchanges and international network strengths, calls increasing attention to itself as one of the chief harbingers of transnational movements of capital, products, services, and business knowledge. The primary focus of this article is on immigrant family firms set up by those who have migrated across their national boundaries and cultures and, instead of assimilating with the mainstream society, have chosen to retain their distinct identity. Apart from the obvious lacuna in international business/marketing research on such types of entrepreneurs and family firms, there are several other reasons for making them the focus of inquiry. First, ethnic entrepreneurs retain distinct systems of business operations and pursue different strategies than the majority. Existing research has only scratched the surface in uncovering these distinctions. Second, these entrepreneurs use an extensive network of identity, family, community, and class resources that aid them in obtaining business information, entry, and operations. Third, a majority of such firms also maintain business and kinship links with others in their countries of residence and origin, contributing thus to FDI transmission, international trade, and economic development of their host and home countries. Although historically, the chief reasons for migration were conquest, freedom from tyranny, and expulsion, the migration of intermediaries and traders-such as Jews from Europe, Marwaris from India, the Hokkien Chinese, and the Lebanese, among others-has only increased through the twentieth century. If only migration patterns were to be traced, historical migration would include 100 million migrants from practically all nations and cultures (Sowell 1996). Migrants who do not acculturate within their countries of residence retain their distinct culture and often continue to have linkages with their countries of origin. Their distinct patterns of trade, as well as their selective migration and settlement, contribute to the emergence of trading networks or trading diasporas (Sowell 1996). Trading diasporas share several features in common, such as strong ethnic identity and mutual dependence, informal networks based on mutual trust and family reputation, and a belief in the utility of knowledge from all possible sources (Kotkin 1992). The relative success of ethnic immigrant entrepreneurs may be attributed to these factors, as well as to strong sources of support from their community networks. The thesis advanced here regards networks of ethnic enterprises as distinct marketing systems within the economy. If marketing systems were to be characterized by their funda-

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mental features of actors, processes, structure, and functions (Boddewyn 1969), ethnic enterprise networks would differ sharply on all these features from their majority counterparts in the same economy. Our objective is to demonstrate the crucial elements of differentiation in ethnic entrepreneurial marketing systems within the economy and comment on the growing significance of such systems to the study and conduct of international business. The organization of the article is as follows: In the sections immediately following, we provide reviews of interdisciplinary literature on immigrant ethnic enterprises and ethnic networks. In the next section, we present our empirical study and report its major findings. Finally, we detail the extensive impacts of such ethnic marketing systems on aspects such as globalization, international collaboration, and global competition and discuss their academic and managerial implications, as well as public policy impacts. Existing data provide little by way of understanding the size, prevalence, and major characteristics of immigrant ethnic enterprises. This is because existing census data imprecisely club together a variety of ethnicities under the three umbrella minority groups: "Blacks," "Hispanics," and "Asian Pacific Islander/American Indians and Alaskan Natives (API/AlAN)." Selected data on these three minority groups culled from the recent issue of Characteristics of Business Owners (U.S. Department of Commerce 1997) are provided in Table 1. Among the minority groups, the highest proportion of sales, foreign-born owners, and percentage with a college degree or higher is among the API/AlAN category, which includes Asian immigrants. When compared with all other firms, the average sales and receipts for the API/AlAN category was second only to the relatively more privileged nonminority male-owned businesses, though the API!AlAN category had the highest percentage of owners with a fouryear college degree or higher compared with all other groups, including nonminority male business owners.

IMMIGRANT ETHNIC ENTREPRENEURS

Further problems stem from defining ethnicity itself. Broadly stated, ethnic groups are those groups that "entertain a subjective belief in their common descent because of similarities of physical type or of customs or both, or because of memories of colonization and migration" (Weber 1968, p. 389). However, objective blood or kinship relations are not crucial to the formation and propagation of the ethnic group; merely the subjective belief in common descent or presumed identity is sufficient (Weber 1968). Geertz (1963, p. 109) offers a more stringent definition of ethnic groups based on the primordial tie or the "longing not to belong to any other group." Between these broad and narrow definitions of ethnic groups is that proposed by Yinger (1985, p. 159), to which we sub-

Ethnic Entrepreneurial and Marketing Systems

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Table 1. Some Characteristics of Immigrant, Minority, and Other Small Business

Other Women Nonminority Men

Black

Minority Hispanic

620,912

771,708

606,426

5,888,883

10,114,456

3.6%

4.47%

3.51%

34.13%

58.62%

Percentage of all minority firms

31.59%

39.26%

30.85%

Sales and receipts ($ mill.)

32,197

72,824

99,709

642,484

2,526,942

Average sales per firm"

51,824

94,367

164,421

109,101

249,835

Percentage foreign-born

8.4%

44.8%

63.2%

8.0%

4.7%

Percentage with college or higher degree'

24.6%

21.2%

44.7%

32.8%

36.4%

Percentage with prior work experienced

35.3%

43.2%

40.7%

36.2%

45.1%

Number of firms Percentage of all firms

APIIAlANa

'API!AlAN = Asian-Pacific Islander/American Indian Alaskan Native. bAverage sales per firm for all firms in 1992 was $192,672. 'Four-year college degree. dPrior work experience refers to work experience in a similar business. Source: U.S. Department of Commerce (1997).

scribe: "[A]n ethnic group ... is a segment of a larger society whose members are thought, by themselves and/or others, to have a common origin and to share important segments of a common culture and who, in addition, participate in shared activities in which the common origin and culture are significant ingredients." Typically, the term "ethnic economy" is used to denote selfemployed ethnics and their coethnic employees, excluding workers whose employers are not coethnic (Light et al. 1994). Historically, certain ethnic groups in business were organized along similar lines, regardless of their geographical 10cation (Bonacich 1973). For example, subgroups among the Chinese, Armenians, Indians, Jews, and Greeks were primarily intermediaries for several centuries within their countries of origin, as well as in their countries of domicile. The spatial proximity of coethnics, both self-employed and workers, leads to a form of locational clustering that confers specific economic advantages. These "ethnic enclaves," according to Portes (1981, pp. 290-91), "consist of immigrant groups who concentrate in a specific location and organize a variety of

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enterprises serving their own ethnic market and/or the general population.... Their basic characteristic is that a significant proportion of the immigrant labor force works in enterprises owned by other immigrants." The term ethnic enclave economy is generally defined to include a specific locational cluster along with coethnicity, such as Cubans in Miami, Koreans in Los Angeles, Asian Indians in Edison, N.J., and so forth (Light et al. 1994; Portes 1981). The growing literature on ethnic enterprises can be classified into two broad themes: one that contributes to an understanding of the emergence and organization of ethnic enterprises and one that focuses specifically on the dynamics of ethnic networks. However, as will be evident in the next section, both these streams of literature can be collapsed into the overarching framework of marketing systems. The study of marketing as a social system has a long history, especially within the area of comparative marketing [e.g., Boddewyn 1969; Iyer 1997). Analysis of the organization of immigrant ethnic entrepreneurs and their network structures as marketing and business systems has two immediate conceptual advantages. First, the analytical domains and categories of the study of marketing systems extend across national borders and are more readily cognizant of international and cross-cultural differences. Second, because both marketing and international business find relief in exchange as the fundamental unit of analysis, the analysis of exchanges, as in the study of marketing and business systems, makes possible ready comparisons and extensions to theories of international marketing and business.

ETHNIC ENTREPRENEURIAL NETWORKS AS MARKETING SYSTEMS

Boddewyn (1969) was prescient in his call for the analysis of comparative aspects of marketing systems in terms of the constituent elements of actors, processes, structures, and functions and how these relate to the environment. Actors are all relevant participants to exchange processes, and their geographic location, scope, economic, social, political, and psychological aspects are especially useful in characterizing marketing systems. Actors' activities and interactions (or processes) help describe what the actors do within the marketing system, and their relationships undergird the structure of the marketing system. Finally, the actors' contributions within the system and to the environment (or functions) enable the assessment of contributions of the system, as well as of individual firms and participants. These constructs are readily applicable to any exchange system in general and can be applied to the study of ethnic entrepreneurial systems as well. Using the framework of marketing systems, we have organized prior literature on ethnic entrepreneurship into the various constituent constructs of actors, processes, structures, and functions.


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Actors

Although there is some notable dissent among scholars as to the specific reasons fueling the rise of ethnic entrepreneurship, most agree that the special social and cultural situation of immigrant ethnic groups is a clear factor in their proclivity toward self-employment (Aldrich and Waldinger 1990; Barrett, Jones, and McEvoy 1996; Light 1984). Some key factors accounting for the emergence and spread of immigrant ethnic entrepreneurs are elaborated next.

Labor Market Disadvantages and Discrimination. In early statements ofthe thesis by Bonacich (1973) and Light (1972), the constituent structure of immigrant groups within their host societies places them at a relative disadvantage in the labor market, driving them thus to become self-employed and seek status as petite bourgeoisie and then, finally, as more established businesspeople. Ethnic and minority immigrant groups often lack language skills, educational attainment, and specific career-related skills, which thereby effectively blocks their opportunities in the general labor market (Barrett, Jones, and McEvoy 1996; Light 1984). Even when there is sufficient educational attainment beyond that of the natives, as in specific Asian immigrant groups in the United States, the immigrants' educational credentials are often not recognized by the primary labor market. Moreover, historically as well as recently, Asian immigrants have faced discrimination and racial hostility that transcends the labor market (Aldrich et al. 1981). Faced with adverse labor market conditions and the prospects of un- and underemployment, entrepreneurship emerges almost as a choice of last resort. However, racial prejudice and host-country hostility historically prevented Asian entrepreneurs from engaging in ownership of modes of production and entering lucrative trades (Ong 1981).

Thus, the opportunity structure for immigrant ethnic minorities includes, initially, racial hostility, prejudice, and exclusion and then more positive elements, such as the discovery of entrepreneurial opportunity in coethnic niche markets. Extensive networks of family and community support and the development of class resources within the host society then contribute to the relative success of specific immigrant ethnic groups.

Just "Sojourning". Bonacich (1973) argues that one principle reason for the immigrant entrepreneur's acceptance of harsh work conditions and short-term deprivation is his or her desire to return to the homeland. Immigrant entrepreneurs are thus sojourners, who are willing to work harder, save more and spend less by living frugally, and enter businesses, especially in distribution channels, in which there are fewer fixed encumbrances and more portable or easily liquidatable assets. This sojourning behavior among immigrants is more ob-

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vious when the immigrants intend to repatriate and are nostalgic for their homelands and, thus, perceive that there is less value to maintaining relations with the larger society. Barrett, Jones, and McEvoy (1996, p. 789) note that the sojourners' behavior, especially "thrift, deferred gratification, zeal, [and] stakhanovite working regimes" is the very essence of small business survival and render the immigrant entrepreneur "ideally equipped to thrive in the most competitive and labor-intensive sectors of the economy," including food retailing, catering, and clothing manufacture.

Business "Veins". For some immigrant groups, however, business is the occupation of traditional choice and ancestry. Certain ethnic groups are overrepresented even in their own host countries for their business acumen and zeal. When transplanted out of their own cultural context, these values are protected within their minority communities in every place they call their "home." For example, the Marwaris and the Gujarati [ains of India who settled in East and South Africa, the Hokkien Chinese in Singapore, the Jews in medieval Europe, groups of Lebanese in North Africa, and Syrians in West Africa all showed a remarkable proclivity to trade and extended their trade monopoly and dominance by using highly particularistic exchanges within their diaspora (Iyer 1999; Landa 1981). The predominance of specific ethnic groups in trade could be explained by their unique religious sanctions, community concerns, family organization, or other reasons, but most important, it was their organization of trade into closed diasporas or communities that enabled intergenerational transfers of knowledge, reputational sanctions on trade, and repeated transactions bearing lower costs (Iyer 1999). Special attention could be devoted to the activities that bring ethnic immigrants closer to realizing their entrepreneurial potentials, as well as to the factors that mediate the relations ethnic entrepreneurs have with the majority economy around them. A growing number of immigrants sharing common ethnicity within a spatial region fuel the growth of ethnic markets that could be viable in and of themselves. Usually, such ethnic segregation tempers an entrepreneurial spirit in those that find an opportunity to engage in selfemployment. An ethnic enclave economy emerges with its attendant specialization of supply, manufacturing, trading, and labor. Ethnic residential areas provide a "protected market," with possible "captive prices" for ethnic goods and services (Aldrich and Waldinger 1990; Bonacich 1973). Therefore, in the initial period of self-employment, ethnic entrepreneurs from larger immigration groups invariably start off serving and employing coethnics. Several goods and services, especially food items, clothing, music, and other ethnic choices, are provided by ethnic entrepreneurs, who


Processes

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access supply in the home country and realize the demand by immigrant consumers in the host country. However, as the tastes and preferences of the regular (i.e., nonethnic) consumers for ethnic products (especially food) develop, ethnic entrepreneurs find opportunities outside their ethnic enclaves. Moreover, with the decline of the majority in trade and specialization that require lower technology, and consequently lower margins and/or wages, ethnic entrepreneurs move in to fill the gap. For example, newspaper/magazine trade, delis, convenience stores in urban areas, and cheaper-priced motels in most parts of the United States and United Kingdom are examples of ethnically preponderant ventures. Aldrich and Waldinger (1990) summarize that ethnic forays into nonethnic markets are especially into those niches that (1) are underserved or abandoned by large mass-marketing organizations, (2) require low economies of scale, (3) have low or unstable market demand, and (4) characterize exotic demand. Longer operational hours, yearround operations, low-technology operations, lower capital intensive and margin operations, lower economies of scale, fluctuating demand, and fragmented markets are all criteria to which large organizations are averse, but these are seemingly viable and even attractive to the ethnic entrepreneur. Part of this attraction may be because the comparison point for immigrant entrepreneurs and immigrant workers is conditions back home. From this relative standpoint, such harsh business conditions and lower wages appear quite sufficient (Light 1984).

Structures

Several interrelations among the ethnic entrepreneurs, their families, and coethnic workers lead to the formation of a variety of networks. Distinct network structures emerge and go beyond mere business goals and objectives (Iyer 1999). The immediate networks of ethnic entrepreneurs are formed through the recognition of a common ethnic identity. In the case of ethnic enclaves, a common geographical location also provides several crucial advantages to the individual entrepreneur. In the first case, ethnic identity serves to reduce the transaction costs of dealing in open markets with strangers. Personalization or particularization of exchanges, as in the case of trade with members who share common identity, serves to reduce contract uncertainties. For example, intermediary groups with a tightly knit kinship structure of four clans from the Hokkien Chinese ethnic group historically dominated the marketing of rubber in West Malaysia (Landa 1981). Mutual trust and aid among these intermediaries particularized exchange relations and served to differentiate transactions. Credit transactions were common within the same and similar ethnic groups, whereas cash transactions served to reduce the contract uncertainty of dealing with

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non-Chinese (Landa 1981). Ethnic identity serves to reduce the costs of procuring relevant ex ante information on the trading partner and thus reduces the costs of exchange. Ex post contractual obligations are obtained through the reputational sanctions of the moral economy that emerges within the trading groups (Iyer 1999). The specific network strengths of ethnic enterprises arise from the three broad resource domains considered seriatim.

Identity Resources. Although information and the quality thereof are necessary for any entrepreneur, ethnic entrepreneurs obtain such information from the larger ethnic group. Ethnic identity relations contribute to the development of mutual trust among entrepreneurs, as well as between the entrepreneur and coethnic employees. Penalties for distortions of information and ex post opportunism are high because reputational sanctions are effective within the close-knit community structure. Ethical standards of behavior readily emerge within the community, which makes possible transactions that otherwise would require serious attention to contractual details. For example, goods worth a fortune are often exchanged within the Jewish diamond trade with barely a handshake, and informal credit is often extended without any paperwork. In the labor market, ethnic identity helps foster trust in the employer-employee relationship. For example, immigrant entrepreneurs in relatively high-volume retail establishments, such as newspaper and candy stores, delis, and so forth, in which there is a preponderance of cash transactions, often use employees related by either kin or identity. The costs of cheating are particularly severe for the employee, because apart from any immediate penalties (such as losing the job), reputational sanctions ensure that the errant employee would find it difficult to obtain alternative employment or social benefits within the ethnic group. The costs are particularly severe when the employee is a recent immigrant for whom identity relations confer the only economic and social sources of support. Family Resources. The family provides convenient and low-

cost sources of support-both emotional and labor-to the business. Moreover, the emphasis among immigrants to accord family status to a larger extended kinship network enlarges the labor pool. This form of extended family support is also a source of competitive advantage, especially given the smaller, nuclear family of the nonethnic entrepreneur. Among the general nonethnic entrepreneurs, research results indicate that entrepreneurial inclinations often develop within a context of societal disruptions (Kets de Vries 1996). As Barrett, Jones, and McEvoy (1996, p. 791) note, "what gives the immigrant family business its special strength is the decline of the extended family among the mainstream popu-


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lation ... once again we have the theme of traditionalism nesting within modernity and providing its bearers with a commercially privileged position." At another level, the reputation of the business is tied more intricately to family reputation, in so much as in some communities, the reputation of the family business is secondary in importance to the reputation of the business family (Iyer 1999). The strength of the family business is derived from the societal reputation of its members. For example, among the Chinese, noncollateral informal credits are honored by family members, even if the creditor has defaulted because of death or bankruptcy (Light 1972). In ethnic communities organized along religious lines, as in the case of [ains from India, family piety has the commercial advantages of enhancing economic reputation (Iyer 1999).

Enclave Resources. A high degree of social solidarity is obtained from the immigrant's minority status and helps in the development of sophisticated and intricate social networks into which fresh immigrants are indoctrinated (Light 1984). Both entrepreneurs and their coethnic workers stand to gain from the resources afforded by proximal location and social adhesiveness. Entrepreneurs are better able to develop strong vertical ties with suppliers and ethnic customers, obtain the necessary work force at lower costs and often at "relaxed standards" (Portes 1981), generate sufficient capital and other resources at a short notice through informal associations (Light 1972), and later generate class resources (Light and Bonacich 1988). For their coethnic labor, there is the opportunity for employment, despite a lack of skills that could be marketable in the open labor market. However, the acceptance of hard work at lower wages is also prompted by the ethnic worker's dreams of future self-employment. In this quest, the current toil is a small price to pay for the invaluable mentorship and training afforded by the employer (Bailey and Waldinger 1991).

Functions

Ethnic entrepreneurs make a variety of contributions to the economic milieu of their host and home countries. At the micro-level, ethnic entrepreneurs help satisfy a variety of ethnic needs and wants for both ethnic and nonethnic consumers. Often, their entry into low-technology manufacturing, distribution, and retail sectors frees more expensive business operations and labor from these sectors, thereby maintaining consumer costs at low levels. The same effect is also obtained by ethnic entrepreneurial competition in nonethnic markets, especially in food, laundry, and a variety of low-cost, serviceintensive retail sectors. It is, however, at the macro-level that their intangible contributions often go unnoticed. Through the creation of a selfsupporting and self-regenerating system, especially in terms

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of business information and credit crucial to the development of new entrepreneurs and business expansion, ethnic entrepreneurial networks contribute to economic development activities that are often completely devoid of any government support. Such private funding of networks may also have the effect of rendering business capital markets more efficient while contributing to sectoral and economic growth of the regional economy. Successful, albeit unacculturated, ethnic entrepreneurs may also contribute to economic development in their host countries through their remittances and investments. Although mere remittances may contribute only to the enhancement of purchasing power and quality of life for the immigrant's immediate family, investments in supply sources may have suitable multiplier effects in the home country economy. An overwhelming amount of prior research, some of which was reported previously, points to notable distinctions in the formal and informal organization of ethnic entrepreneurs. Thus, a treatment of ethnic enterprises and their relation to a larger ethnic network as a marketing or business system is appropriate.

Summary

Apart from the cultural context of the ethnic enterprise, specific motivations and business strategies of the entrepreneur might shed further light on the differences between ethnic entrepreneurs and other small business entrepreneurs. Moreover, ways in which ethnic entrepreneurs gather resources and information from their immediate networks, choose selfemployment and specific businesses/industries for entry, conduct business with coethnics and the larger community, use transnational connections, and expand internationally, among other crucial elements, are issues for consideration. To explore these systemic features of ethnic entrepreneurs, we conducted an empirical study of immigrant ethnic entrepreneurs in a large Eastern U.S. city. In the next section, we intertwine several characteristics of ethnic entrepreneurs and their networks with our qualitative study. We attempt to present such networks as distinct marketing systems that deserve greater attention. For our empirical study, we chose four ethnic groups-Chinese, Korean, South Asian, and Jewish-primarily because of their history of successful global entrepreneurship. The industries or trade sampled had a history of immigrant ethnic participation: restaurants, clothing, dry cleaning, and jewelry. Because of the time involved (each interview lasted from 45 minutes to two hours), our final sample consisted of 17 participants. The breakdown in terms of ethnicity was 5 Chinese (1 from Taiwan), 6 Korean, 4 South Asian (1 from In-


EMPIRICAL STUDY AND FINDINGS

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dia and 3 from Bangladesh), and 2 Jewish. All respondents in the study were founder-owners of their businesses, and their business experience ranged from 2 to 45 years (the median was 15 years). Because of the exploratory nature of the study and the sensitive tone of some information, as well as language and other barriers, a personal interview along with a short questionnaire for specific questions, with some translation help, were used to collect data. Moreover, because our primary objective was theory-building as opposed to theory-testing, sample sizes and statistical generality is of less concern than the validity of the constructs themselves. A grounded theory approach and its associated methodologies, including in-depth interviews, were employed (Glaser and Strauss 1967; Strauss and Corbin 1992). The grounded theory approach involves building theory inductively on the basis of data generated from an in-depth study of a phenomenon. In other words, a grounded theory is discovered, developed, and verified through systematic data collection and analysis of a phenomenon of interest (Strauss and Corbin 1992). Theory development occurs after each step of data collection. In addition, after each interview, data are analyzed, theory is developed, and the emergent theory guides the next stage of data collection. Subsequent stages of data collection attempt to challenge and expand the proposed theoretical relationships. A range of questions and probes was used to get the informants to discuss their (1) motivations for entering into business, (2) motivations for becoming an entrepreneur (versus remaining a member ofthe traditional labor force), (3) experiences regarding community and institutional business assistance, (4) general interactions within their ethnic enclave, and (5) perceptions of the host country environment and how it shapes their business strategies.

Some Findings and Discussion

Analysis of the transcripts of the interviews led to the emergence of following themes and findings, organized here within the framework of marketing systems.

Actors. Ethnic identity pervades much of the business and

social life of the immigrant ethnic community. Part of this may be from the immigrants' desire to preserve aspects of their community life away from home, though part of it is also driven by their relative difficulties in integrating with the majority community because of racial and social factors, including language and other barriers. The strategy/response of the ethnic entrepreneur is to take an active interest in identity relations in business and social life. As one of our informants, labeled Z, mentioned,

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We help each other, business and social also. If like somebody has a friend from the village [at home country], we help ... here and there. Sometimes with money or what to do wisely, what not to buy, things like that. Socially, yes, we have our own mosque, we have mass and everything. We help each other. Ethnic groups often migrate because of political, religious, economic, and racial injustices. For example, the Jewish informants in our study had left Europe after the Holocaust. The United States afforded them an opportunity to start over; however, they experience racism today. As one of our respondents put it, Y: It was not a question of motivation. It was not a question of my choice. It was a question of not being wanted anymore where you were. A question of being, everybody has been killed there, it was a massacre there, and that was, after the War, the attitude was the same as during and before the War. It didn't change. Also, some of the Korean informants in this study had left Korea because of their involvement with student democracyrelated movements and organizations. Such immigrant experiences counter the sojourner thesis reported previously, though with the same end effects. Whereas the sojourner wishes to amass as much wealth as possible to be able to return to the homeland, immigrants for whom the doors are closed behind them make the best of their situations in their host countries. In the end, both groups show the same proclivity to hard work, thrift, and savings, though the latter group is more inclined to be acculturated eventually into the mainstream society. Also, the latter group differs in its business choices, tending to move away from businesses that are characterized by high turnover, low margin, and lower fixed assets that are the sojourner's preference. Nevertheless, several immigrant ethnic entrepreneurs are attracted to businesses that are easily portable, primarily because of their desire to return to their homelands. According to the data as well as the literature, this portability is accomplished in two ways. First, they tend to acquire skill sets that they can transfer easily across geographic contexts (e.g., jewelry, restaurant business, dry cleaning). Second, they favor businesses in which invested assets are relatively liquid. Thus, they choose low-margin, high-turnover strategies. Their need for liquidity tends to be highest within the early venture stages. This may be due to the uncertainty associated with early endeavors and the inherent variability of retail demand cycles. In such cases, high-turnover, low-margin strate-


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gies facilitate easy payment of unexpected bills. The statement by one of our respondents indicates this latter theme: V: My business is high turnover and low margin.... Besides high turnover, liquidity, I took this in a different sense. Like at the beginning, you might not be able to make your ends meet, so you need some cash flow. You always have to inject some more capital in order to supply ... to reach the point where your business is stabilized. If you would not have that kind of money, that would be a point where your business might demise. We also found that ethnic entrepreneurs do not seek help from public or private institutions for several reasons: (1) They lack information regarding government programs as well as ways to formalize proposals for bank loans, (2) There is a cultural aversion to bank lending, and (3) Banks are unwilling to extend loans to them. Even if they have knowledge about bank loans and funding opportunities, they tend to be skeptical, as noted next: V: If you walked in a bank tomorrow and you say, "Here, I have $50,000, I have a project of $150,000, I need $100,000," you won't get it, because most of the banks ... have a criteria where you have to be in business for three years and you have to show income as equity against the loan.... Government has agency for funding for small business, but not a new, but not to begin new commerce. First, ethnic entrepreneurs are unaware of financial resource opportunities because (1) there is a limited, or unsuccessful, effort by governmental agencies to disseminate information; (2) ethnic entrepreneurs are unable to understand available information (i.e., due to problems in understanding the host culture language); and (3) ethnic entrepreneurs are too busy [i.e., work too many hours) to conduct information search effectively. Second, there is an overall aversion to banks because of prior bad experiences in their countries of origin and the insecurity of borrowing, especially within some Asian cultures. Third, some ethnic entrepreneurs try to avail of funding opportunities from banks but fail for a variety of reasons: T: Well, I did seek a bank once. Actually twice, I think, and they turned me down. Interviewer: What did they say to you? T: Well, because I wasn't in the system, I guess. I didn't have a steady 9-to-5 job, and I didn't have a work history

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in terms of getting a paycheck from a company or something like that, so I had no credit history. So, that was basically that.. .. I think ... Asian people, they like to hold their money, they really don't trust investment types of things because of the unstable condition of ... their country ... in terms of the banking laws and you know, the investments and stuff like this, because it is so unstable ... back there. In terms of their specific business strategies, all the ethnic entrepreneurs in our group emphasized hard work, including longer working hours and thrift. For example, S: [W]e immigration people, vegetable business or grocery business or dry clean business, if we work like American way, we don't make any money. We work double or triple .... We work more or fast, very hard work. That's the main way we save money.

Processes. Ethnic entrepreneurs generally start at a strategic disadvantage because they are unable to tap adequately various financial resources, either private [i.e., banks) or public [i.e., governmental agencies). We found that many Chinese and Korean entrepreneurs use surrogate modes of venture capital generation. These methods facilitate the birth of innumerable businesses globally, because they break through red tape, facilitate capital efficiency, and allow for quick business geneses in contexts in which people lack credentials to acquire loans from traditional channels. Koreans are involved in a process called gui in which community business owners pool cash on either a weekly or monthly basis. At periodic intervals, one member withdraws the entire accumulation of cash for commercial purposes. To account for the time value of money, group members who withdraw at earlier time periods must contribute more each time compared with members who withdraw later. Exact contributions are determined by a bidding process. All activities, rules, and responsibilities for payment are controlled by a chairperson. This is usually an older, trusted male member who has close relationships with all group members. Because there are no written agreements, trust within this group is vital and all members tend to be from the same extended family or community. The Chinese process, biao guey, is similar to that of the Korean one, though at least one Chinese respondent believed that Koreans obtain support from their governments. The Chinese informal credit networks are also organized around bidding, a tightly knit community, and a chairperson. S: So 20 people [in] a group, a man is a head of this group, okay? They just collect 20 people here and say okay, now we collect each ... $1,000. 20 people, $20,000. First month, all money give to chairman, right? Okay,


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the second month, they say, how much do you want? I say, I need money. Okay. $1,000 I just say 100, he say 100, you say 200, he say 150. So you lose, right, but you pay him $800, because he say 200, then you pay $800. But me, I pay $1,000. Some months, everyone say, high is $300. Okay the other guy pay $700. But you have to pay $1,000.... The chairman, he decides who pays. Help to new immigrants and entrepreneurs may have the intended effect of creating and expanding internal networks within the enclave. In other cases, businesses that have moved out of ethnic markets to a nonethnic local space tend to operate similarly to any other business, though they may frequently avail of ethnic supply sources and informal credit associations. We find strong evidence of such ethnic ties, especially in the restaurant and dry cleaning businesses, in which ethnic supply sources contribute to the competitive strengths of such ethnic firms in a nonethnic space. Although ethnic cohesion, community solidarity, and informal networks appear to indicate strong horizontal cooperation among business, it must be reiterated that in each ethnic group, we find strong evidence of competition, especially for vertical resources such as suppliers and customers. Also, as the community matures, subtler forms of differentiation, not evident to the outsider, playa crucial part. For example, the Taiwanese owner of a small, slightly upscale (higher-priced), mostly vegetarian Chinese restaurant rued that competitive mimicry from a Cantonese in his own neighborhood is driving him slowly out of business. Another informant had this to say about former employees becoming competitors: Q: Mr. S got a job with my father because the guy was a friend of the family and he really needed the work, so my dad gave him work, basically, and he was just there to fix stuff and he stabbed him in the back ... a lot of people that opened stores were people that worked for my father, which is kind of a ratty thing to do, it's ratty, but it's common, very common ... and, how do you learn about a business, you work in it ... you're working for somebody and you see him rolling in the money and you're sitting there, and you're like, you know what? I could do the same thing he's doing. All I need is a little bit of money.

Another Chinese business owner had less than charitable words for his Chinese competitors, including: "The Fukkiens [Chinese from the Fukkien province] ... they are cutthroat ... we are not like them."

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At another level, competitive strengths of individual enterprises arise from lower prices and clientization, as evident in the following: Q: [Yjou've got to play cutthroat with the competition, because that's the only way. Something for $5,000, they'll sell for $4,000. Regardless of what the profit margin is, that's what you've got to do to survive. But, we've been there longer, we have the customer base, and everything that we do ... we're one step ahead of everybody else.

T: We have people coming here ... from Korea to do some shopping ... and people send those customers to us. I mean, different people send those people, they know that they can always get a good deal here without being ripped off. Another competitive strength of ethnic enterprises lies in their emphasis on high turnover. We found that business opportunities often are evaluated solely on the basis of turnover. Although it may be because daily sales receipts are the most observable aspects of a business, ethnic entrepreneurs are also confident of their cheaper access to conversion processes, including labor. Also, as indicated by one respondent in the dry cleaning business, making attributions to hard work rather than operational details, S: If American learnt this business, for example, he needed seven people ... we need just two or three people.

Structure. Ethnic entrepreneurs typically base their particular venture decision [i.e., the type of business to enter) on the prior experience of the community. This business domain knowledge serves to identify potentially lucrative businesses of the type most congenial to new entrants and reduce the overall risks of failure. Ethnic entry into specific businesses or locations is often reflective of the accumulated knowledge of the particular ethnic group. We also found that the ethnic enclave acts as a familiarity vehicle through which the group is able to regenerate business configurations and formats. In other words, established ethnic entrepreneurs often hire and train fellow ethnic members with the understanding and hope that they eventually will start noncompeting businesses. Thus, the ethnic community provides the springboard for business generation among new immigrant members. Initially, however, the pioneers in the particular community are similar to the Schumpterian-type innovator/entrepreneur. For example,


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Z: [W]hen I started, it was very hard for me. I had to find my own way. But right now, the market has grown up. Example ... when I started business, it was very difficult to get [help] .... Right now, you can get it very easily. Immigrants who do not become self-employed also gain from the business experience in the enclave. Immigrant workers gain useful job skills in the ethnic business, and skills that are transferable to nonethnic businesses often provide them with higher, probably at par, wages in the general labor markets. Z: No one would ever say that I love my boss. Boss is always a bad person because he always pick on you doing the wrong thing. So, I have a lot of enemies, okay, 2000, 3000 people who went through this, I don't make friends. I tell him, why did you do this, you should have done this. People don't like it. One guy came back in and said, the other day, was sitting there and he was passing by and he sat down with me and he said, "I am thankful to you," and I said why, and he said, "Remember you used to [say] do this or that." Now, I realize this is really very appreciated. I said what, and he said, "I earned $1,500 a week." I said, "How do you do that?" He said, "You taught us how to be a good waiter, how to be a good manager, and they appreciate us. I work in a big company and in an American place, and they appreciate this and the pay is good.... " So, one guy I taught out of 3000 or 4000 people who appreciates being, I mean, being scorned, being tormented. The use of family labor and grateful coethnic employees enables the ethnic entrepreneur to offer better value compared with the majority in the same business. This finding can be interpreted as indicative of the exploitation of coethnic labor within ethnic enterprises (e.g., Bonacich 1973). However, it must also be noted that the ethnic family firm attempts to increase collective value rather than focus attention on individual contributions and compensations. Ethnic entrepreneurs often reproduce their own business in multiple geographic locations. Thus, there is evidence of horizontal expansion into new areas. As noted by prior research, immigrant entrepreneurs often start out within their own ethnic enclaves and then move on to serve nonethnic markets as well. Also, expansion serves to move the nature of the business from emphasis on high turnover and lower margin to higher status and higher margin. We find this to be particularly true in the restaurant business, in which the ethnic community's price preference for its own type of food is considerably lower than the nonethnic market's willingness to pay a higher price for what it deems "exotic" food. At an-

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other level, there is some parallel to the well-known "wheel of retailing" hypothesis in marketing, which predicts that retail establishments usually start as low-status, low-margin enterprises and in later stages of their development turn into high-status, high-margin operations.

Functions. Ethnic enterprises make several functional contributions to the economy. At the level of their industry or business, they are the chief source of lower-priced, and often better value, products and services. For example, in New York City, ethnic dry cleaners undercut chain store dry cleaners for basic services without substantial decreases in quality. They are also the chief source for exotic ethnic products and services, ranging from restaurant food to canned items from Asia (such as the jackfruit, to give but one example) to international courier services to clothing. Their international contacts and low-cost sourcing extends the range of choices available to coethnics as well as to the majority community. Preferences for low-margin, high-turnover business possibly keep the ethnic entrepreneur shielded from competition that may prefer high-margin retail sectors. As one ethnic restaurant owner explained, Z: My business is low-margin business. I like to do lowmargin business. Low-margin business is terribly active. You see lots of people coming by and I feel good about it. Very busy place, instead of sitting down and doing nothing. The resultant effect translates into satisfactions of consumers' ethnic preferences at lower prices. Through extending a helping hand to fellow ethnics and through their extensive support networks, ethnic entrepreneurs contribute to fueling entrepreneurial ambitions within the economy while placing practically no burden on government and other institutional sectors. For example, Z: We help each other.... I'm talking about financial, they get help from their relatives and their friends, because in the community, there's a little money and right now its much easy. Plus very good ideas, they can have ideas from me, maybe my other friends, they always help others when somebody's coming into business. At a more macro-level, the role of ethnic family firms in economic development has been well noted (Benedict 1968). In economically underdeveloped countries, family firms generate maximum use of liquid resources and provide training to others so that they may undertake risky entrepreneurial projects with reasonably good chances for success (Benedict 1968). In developed countries, such as the United States and


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the United Kingdom, wherein ethnic enterprises have made some headway, the informal, external training and knowledge resources offered by ethnic enterprises to coethnic workers increases the level of entrepreneurial activity and contributes to substantial regional economic development (Bailey and Waldinger 1991). The development of vertical structures and supply linkages spawned by a successful ethnic enterprise converts into market opportunities for other coethnics. This form of network creation mimics the development of industrial districts, albeit on a smaller and more informal scale. Apart from these findings that relate to the general nature of ethnic entrepreneurial systems, the deeper understanding obtained through our interviews and the relevant literature leads us to draw some sharp contrasts between ethnic and nonethnic entrepreneurs. Skeptics may even proffer the explanation that hard work, thrift, adverse working conditions, and informal sources of support from family and community are all features of any small business and, thus, not necessarily the domain of ethnic entrepreneurs. Our own research and the deeper understanding we obtained from the hours spent with such entrepreneurs makes us aware of such similarities; however, we also find a variety of other differences that enable us to offer some generalized points of difference with other small business that, for space considerations, are summarized in Table 2.

Table 2. Some Crucial Differences Between Ethnic Entrepreneurs and Other Small Businesses

Domains

Ethnic Small Business

Other Small Business

Choice of business type

Guided more by community knowledge

Guided more by product and market considerations

Areas of family

Labor, community relations, and credit guarantees

Emotional, limited labor and financial support

Areas of community support

Informal credit, business knowledge, and shared expertise; business training and resource mobilization

No specific area of support

Low Higher and very critical

Low to medium Not very critical

Short-term Low

Short- to long-term Higher

High

Low to high

Evaluation and business choice guided by Capital Investments Liquid assets/ cash flows Liabilities Profit margin expectations Turnover

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One of the crucial points for the study of ethnic entrepreneurship is the international trading links that such entrepreneurs hold and perpetuate. Apart from mere repatriation of wealth to their homeland, immigrant entrepreneurs, especially those who are nostalgic and still possess strong ties to their homeland, are often the strongest contributors to FDI and business creation abroad. Recent studies have particularly focused on the Chinese entrepreneurs settled in the West who are responsible for much of the FDI flow to South China, Hong Kong, and Taiwan (Ong 1997). As Weidenbaum and Hughes (1996, p. 5) note, "massive investments are being made by overseas Chinese capitalists to establish new businesses in their original home, or that of their parents and grandparents. These extensions into China have largely overshadowed the efforts of even the most successful Western firms." Thus, the ethnic small business expands into an international family business, the vestigial roots of the current large and dominant family groups that already are to be found in much of South and Southeast Asia.

THE GLOBAL ETHNIC CONNECTION

Compared with other small business, the ethnic entrepreneur's business, simply by virtue of ethnic ties, takes on global scale and scope in operations over time. For example, ethnic food businesses rely almost completely on imported sources, at least in the initial stages of community formation in the country of domicile. As more immigrants form a larger community, there is considerable activity in the vertical chain and enhanced supply competition. Thus, importing activity becomes more the domain of specialized suppliers, and the individual entrepreneur concentrates more on market development and horizontal expansion. However, some or all of this business expansion may involve moving capital back to their own homeland, usually in a business domain that is unconnected or may even include involvement in manufacturing. Various stages in the expansion of the typical successful ethnic business, including specific ties with the homeland at each stage, may be roughly sketched out as follows: Stage 1: Stage 2: Stage 3: Stage 4:

Immigrant labor in ethnic enclave (repatriation of portion of income to support extended family in the homeland). Immigrant self-employment in ethnic enclave (repatriation of portion of profits to homeland). Horizontal expansion into nonethnic markets (repatriation of portion of profits to homeland). International investments (investments in small business or equity or capital markets in homeland).


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Stage 5: Stage 6:

International expansion (involvement in operation of business in homeland). Lateral connections between firms across national borders (supply chain relations between businesses in homeland and country of domicile).

Furthermore, the importance of ethnic entrepreneurs in a global economy should be noted, especially in terms of their influence in the spread of FDI, globalization of the family firm, market development in developing countries, transmission of management values, and influence on the nationstate. Each of these contributions of ethnic entrepreneurs is elaborated next.

Spread of FDI. As noted previously, the typical ethnic small business often expands internationally in value-creating and value-delivery activities. Part of the reason for their international expansion is the emotional attachments that ethnic entrepreneurs still have to their homelands. However, given their detailed knowledge of the economic, cultural, and political environments of their own home countries, ethnic entrepreneurs perceive lesser risks in their international investments compared with others unfamiliar with the international environment. Moreover, their contacts with extended family and friends reduce their risks further and allow for agency control of their investments without the associated agency costs. Kinship, friendship, and identity ties and the resulting trust, informality, and social enforcement renders FDI with less risk and higher profitability. It is, thus, no accident that overseas Chinese, Indians, Koreans, and other groups have contributed an increasing proportion of the FDI invested in Asia. Globalization of the Family Firm. Despite the growth of modern corporations, family firms account for more than 90% of all firms in many countries, including developed ones such as the United States. However, though the assets and revenues of the small proportion of corporations far exceed those of the total of all family firms in developed countries, the situation is quite different in developing countries. For example, in India, more than 99% of all firms are family firms, and family groups represent more than 75% of all private- and public-sector firms in the Top 100 firms. Family groups are common over South Asia, Southeast Asia, and South China. Again, taking into account the role of specific family identity, the international expansion of such groups represents a major aspect of the phenomenon of globalization. Although increased transportation, communication, and homogenization of preferences are the rubric of globalization, family firm transactions, by virtue of identity relations, provide lower costs of communications, international

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transactions, and stimulation of cross-border demand and, thus, contribute to the increasing homogenization of consumer preferences.

Market Development. Some immigrant ethnic entrepreneurs come from trading groups that have a long history of trade and business. The lack of adequate market and economic incentives are major contributing factors to their leaving the homeland in search of better business opportunities. This is especially true of the Chinese and South Asian entrepreneurs, for whom Maoist China and the welfare state socialism of India and Pakistan, respectively, did not provide the necessary incentives for viable entrepreneurship. However, as soon as the environment and, more important, the political attitudes toward private investments changed in these countries, overseas entrepreneurs were the first to bring in capital, business acumen, and foreign goods and services. Once the role of such overseas investments was recognized and acknowledged by the home country governments, these entrepreneurs have played a major role in influencing industrial policy and enabling the development of markets, thus opening the entrepreneurial structure not only for their own investments, but also for indigenous private capital. Transmission of Management Values. Anthropological studies have noted that family firms are not averse to professional management values and practices (Benedict 1968). Ethnic entrepreneurs place a great stress on education, and it is not uncommon for the second and third generations to be qualified professionally in business disciplines. For example, the British government's Labor Force Survey shows that, between 1988 and 1990, 37% of whites, 16 to 19 years of age, were in full-time education, whereas the figure for members of ethnic minorities was 56% (The Economist 1994). By the time of international expansion, the founder of the family firm may have inducted professionally qualified progeny into the business. Education, as well as isomorphism with the environment, renders the family firm somewhat more professional. When such firms expand into their homelands, they transmit these management values and professional cultures and are able to attract professional managers to operate their business. Thus, over a period of time, the family firm turns into a family-controlled, professionally managed group. However, not all ethnic enterprises follow the evolutionary path just described. In some cases, professional education may turn the second generation away from the family business and into professional, white-collar occupations. Especially because the professionally educated second generation might not face the same labor market disadvantages as its parents, it may be less favorable to entrepreneurship. However, the entrepreneurial zeal of parents may move the sec-


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and generation into exploring business opportunities of its own. This is all the more so when the family business is a traditional, enclave-supported business that involves manual labor. Professionally qualified progeny may find their traditional family business less attractive compared with other entrepreneurial opportunities.

Influence on the Nation-State. Although overseas ethnic entrepreneurs are sought for both their money and their economic advice in the initial period of the country's transition to a market economy, their impact on the home country is not without controversy. Sometimes, such entrepreneurs transcend the nation-state, and their economic clout subdues political differences and challenges. For example, overseas Chinese "created all kinds of border crossing networks that seem to subordinate political differences to trade interests" (Ong 1997, p. 335). The haiwai huaren (overseas Chinese) and nonresident Indians (NRIs) were offered privileged access to markets and the political machinery in China and India, respectively. However, such privileges also become a focal point for nationalistic criticism of the role and patriotism of the overseas investors. For example, one criticism of the overseas Chinese within China has been that "foreign Chinese nationals are said to have invested in China primarily for profits, not because they were loyal to the Chinese nation-state" (Ong 1997, pp. 337-38). Similar sentiments are echoed in India, where NRIs are often accused of deserting the country when it was in need and of having overbearing and elitist attitudes when they return periodically. This discussion points to several interesting resolutions to some current paradoxes within international marketing and international business. In the debate between globalization and fragmentation, ethnic entrepreneurs, through conscious identity creation, community cohesiveness, and global expansion, facilitate the process of globalization. However, the expansion of trade within identity and ethnic groups leads the casual observer to note an increasing fragmentation of markets, trade, and nation-states. Ethnic entrepreneurs appear to be a contributing factor to both the erosion of the nation-state and the reemergence of nationalism. The economic clout of their investments subjugates the interests of the nation-state, which oddly enough needs such investments for its own political future. Conversely, the dominance of the "foreign" tends to fuel nationalistic passions further, which leads to newer regimes that are more attentive to identity boundaries and newer definitions of a "national identity." RESEARCH, MANAGERIAL, AND PUBLIC POLICY IMPLICATIONS

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The preceding discussion and empirical study enable us to suggest the following insights for small business research, management, and public policy.


Comparative aspects of ethnic and nonethnic entrepreneurship show that some factors, such as the emphasis on hard work and thrift, may be common to all small business. However, the methods of human capital generation and social networks are features that may be contributing to the success of ethnic entrepreneurs. Further research must focus more on specific comparative studies that identify success factors across and within the two groups. The cross-use of factors that contribute to the success of ethnic and nonethnic business may lead to the reduction of the incidence of failure in small business enterprises Typically, the role of governmental and other institutional forces has been to provide business information, technical and capital start-up support, and management and business skills training to potential entrepreneurs. However, institutions such as the Small Business Administration and Minority Business Development Agency provide loans and support with the implicit assumption that entrepreneurial motivations and well-developed business plans are the strongest predictors of success. However, substantial differences, apart from motivations and market opportunity seeking, between ethnic and nonethnic entrepreneurs provide support to the view that entrepreneurial tendencies and success are affected by community and cultural considerations. This may lead people to discount the emphasis on capital, formal training, and business plans as the major instruments for evaluating entrepreneurship potential and include emphasis on greater assistance in the formation and support of networks and business-community linkages. With increasing globalization, the nation-state is less powerful in determining the nature, direction, and/or extent of international business. However, those against the theses of globalization often argue that the specificity of identity will be a countervailing force to increasing globalization. The thesis on ethnic entrepreneurship merges these opposing arguments and demonstrates that specific identities may contribute to increasing levels of globalization. For example, the 55 million overseas Chinese contribute to a fairly large volume of business that is global not only in scope, but also in interconnections (Weidenbaum 1996). Managers from larger multinational firms also can gain considerably through exposure to ethnic firms. Multinationals seeking knowledge and alliance strengths for entry and operations into newer regions, especially in Asia, would find such firms invaluable alliance partners. On the one hand, such ethnic enterprises have detailed and tacit knowledge of their home country; on the other, because of their acquired skills in the West, they are better able to communicate and partner effectively with the Western multinational. The


Focus on Ethnicity

Institutional and Cultural Support

Globalization of Identity

Alliance Strengths

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resultant closing of communication gaps would make possible effective transfers of information and yield better development of market entry and functional strategies. CONCLUSION

We have attempted to identify the phenomenon of ethnic entrepreneurs by focusing on their prevalence, constituent elements, operations, and global features. Apart from contributing to the emergence of entrepreneurship, ethnicity in business is a potent explanatory tool for a variety of aspects of international environments and business. Additional research must go beyond a mere identification of the phenomenon and specify meaningful research questions and research studies. In the underdeveloped countries of Africa, as well as in developed countries, such as the United Kingdom and the United States, ethnic entrepreneurs have played a major role in trade and lower-value commercial activities, especially in small business. Surviving through various odds and adverse circumstances, the immigrant ethnic entrepreneur emerges as the critical link between small business and globalization and the major force behind an increasing momentum toward a market economy in the developing world. Given such an important contribution, increasing curbs on immigration, especially in the United Kingdom (The Economist 1994), and redefinition of national identity in the developing world appear to be reactionary tendencies toward a past that was never perfect and a future that only can be limited. These forces place further hurdles on the path of ethnic entrepreneurs, but ones that, as history has shown, they will eventually surmount.

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THE AUTHORS Gopalkrishnan R. Iyer is associate professor of marketing at Florida Atlantic University. Jon M. Shapiro is assistant professor of marketing at Northeastern State University at Tulsa.

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ACKNOWLEDGMENTS The authors acknowledge, with gratitude, the detailed insights and comments of Professors Richard Wright and Hamid Etemad and participants of the International Conference on "Globalization and Emerging Businesses: Strategies for Survival in the 21st Century" at McGill University, Montreal, Canada. Several crucial insights by Professor Jean J. Boddewyn and three anonymous JIM reviewers on previous versions also are gratefully acknowledged. Jon Shapiro acknowledges financial support from the NSU College of Business for conducting the empirical study reported in this article. A longer version of this article is available from the authors.

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