Economic Incentive, Embeddedness, and Social Support: A Study of Korean-Owned Nail Salon Workers' Rotating Credit Associations

Abstract

Much of the past research on rotating credit associations (RCAs) in the U.S. Korean community has been conducted in the context of Korean entrepreneurs' success in small businesses. By contrast, little has been known about the significance of RCAs in the lives of Korean immigrant workers. Based on a sample of Korean female workers at Korean-owned nail salons in the New York–New Jersey area, the first aim of this study is to address whether Korean immigrant workers, like Korean immigrant merchants, take into account RCAs as a way to save money or raise capital. Second, this study also speculates about the importance of embeddedness (Granovetter) and social capital (Portes and Sensenbrenner) views for both economic behavior and a likelihood of malfeasance by RCA participants. Lastly, this study regards RCA membership as a mechanism of social support for its participating members. Overall, the analyses provide evidence that RCA membership at nail salons leads to both economic benefit and social support for some of its participants, and that embedded networks and an accompanying sense of trust have some connection to the suppression of its members' latent malfeasance.