Small Israeli peripheral businesses: spatial and ethnical embeddedness

Abstract

The adoption of Neoliberal policies raises the question on whether small businesses in the Israeli Northern periphery are successful in breaking the barriers of peripherality and ethnicity in developing their businesses. It is argued that peripheries create heterogeneous ecosystems for entrepreneurs. In our research, the main division within the periphery is between Arab and Jewish entrepreneurs. We compare the strategies used by Arab and Jewish entrepreneurs to overcome these barriers. This study is based on a stratified and systematic sample of 192 Jewish and 76 Arab entrepreneurs. Participants were asked about their embeddedness in various business linkages. The results were analyzed on a planar order. From the results most small businesses are low-tech and locked in intra-ethnic and peripheral linkages. They rely mainly on local linkages of support and recruitment of labor. Arab entrepreneurs specialize in construction materials in the Arab market, and Jewish entrepreneurs mainly develop agro-food and tourism industries for the national markets. Arab entrepreneurs rely on bonding linkages in addition to their efforts to penetrate Jewish peripheral markets. Jewish entrepreneurs tend to bypass the less rewarding Arab market by focusing on Jewish peripheral markets in an effort to develop the larger markets at the core.