The Low Participation of Urban Migrant Entrepreneurs: Reasons and Perceptions of Weak Institutional Embeddedness

Abstract

Despite the large influx of ethnic minority (or migrant) entrepreneurs of various origins in the Dutch society, members of this group rarely join institutional collaborative business organizations. This is surprising, as institutional embeddedness and anchoring is usually seen as a powerful organizational mechanism for small and medium-sized enterprises (SMEs). In this paper we focus on franchise organizations, which ethnic entrepreneurs hardly ever join. It is, in contrast, noteworthy that the degree of mutual collaboration among native Dutch firms in the SME sector is generally very high. The motivation for our study stems from the fact that it is, from a social cohesion point of view, important to understand why a certain group within society acts very differently from the rest of society. Furthermore, it is also important to know whether this deviation is temporary or structural, and whether it will be solved by itself over time or only with external assistance (Davidsson 2002). Much has been written about the attitude and behavior of ethnic entrepreneurs in Western economies, mostly from a sociological point of view. However, to the best of our knowledge, the subject of this paper, viz. the lack of institutional collaboration in the form of franchise organizations among ethnic small firms, has never been dealt with till date. In this paper, we investigate the reasons for the weak institutional collaboration among small ethnic firms, by means of an empirical analysis based on semi-structured interviews with 40 ethnic (Turkish) entrepreneurs in Amsterdam (the Netherlands). Turks, who have already lived in large groups in the Netherlands since the 1960s, appear to have a strong inclination to engage in entrepreneurial activities, which means that this group is particularly relevant for the present study. The retail sector, with its low entry barriers, is by definition an important sector in this context.