Ethnic entrepreneurship and immigration

Abstract

Entrepreneurship among ethnic minorities and immigrants is an increasingly hot topic. There are several reasons for this. It is widely believed that entrepreneurship offers a route out of poverty for disadvantaged groups and opens up opportunities for economic advancement and assimilation. The value of entrepreneurship for ethnic minorities is enhanced to the extent that they face discrimination. Thus Glazer and Moynihan (1970, p. 36) argue that ‘business is in America the most effective form of social mobility for those who meet prejudice’. Also, minority entrepreneurship can promote economic development and job creation in poor neighbourhoods (Bates, 1993, 2006), although it can also be a source of ethnic tension, as has been observed among Korean-owned businesses located in black communities, for example (Yoon, 1991; Min, 1996). It might be helpful to commence with several ‘stylised facts’ about ethnic entrepreneurship. Most of the extant evidence pertains to the USA and the UK, although it should be borne in mind that the rise of ethnic minority and immigrant entrepreneurship is an international trend, driven largely by demographic changes in both developed and developing economies (Ram and Smallbone, 2003). First, the evidence generally shows that a far higher proportion of whites engage in entrepreneurship than blacks do. For example, self-employment rates of whites are between two and three times higher than those of blacks. According to Fairlie and Meyer (2000), this differential has persisted since at least 1910, suggesting that little has changed since Myrdal (1944) first bemoaned the dearth of black-owned businesses in America.