Ethnic/ Immigrant-owned business Transnational Diaspora Entrepreneurship Course: Economic Geography HT 2015 Ali B. Najib Department of Social and Economic Geography, Uppsala University Uppsala, November 13, 2015

2 In this presentation Introduction: Ethnic entrepreneurship / immigrant business Theories of ethnic/immigrant Entrepreneurship –Ethnic/immigrant economy –Ethnic enclave –Ethnic vs. class resources –Ethnic (enclave) economy –Ethnic vs. mainstream markets Transnationalism: –Transmigrants –Diaspora entrepreneurs –Transnational entrepreneurs –Transnational links/networks

3 Why study immigrant entrepreneurship? During the last 20 years, there has been a steady increase in the number of immigrant-owned businesses in Sweden 1.Why is it so, and what make immigrants start their own businesses in Sweden? 2.What kind of businesses do immigrants start? 3.Is business ownership an alternative way to social mobility and integration? 4.What kind of barriers do immigrant entrepreneurs encounter? 5.How does immigrant entrepreneurship contribute to Swedish economy and society?

4 Who is an (immigrant) entrepreneur? Who is an immigrant in Sweden? An entrepreneur is one who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them.

5 What is ethnic/migrant Entrepreneurship Definitions: Ethnicity refers to a sense of kinship, group solidarity, common culture, and self-identification with an ethnic group. In the context of ethnic entrepreneurship, “ethnic” refers to a set of connections and regular patterns of interaction among people sharing common national background or migration experiences.

6 Definitions (continued) Note different concepts are used in various countries: While people in the USA and UK may use the terms ‘ethnic entrepreneurship’, ‘ethnic minority entrepreneurship’, in Sweden we use ‘immigrant entrepreneurship’. Immigrants are recent arrivals in a country, who often enter business as a means of economic survival. They may or may not be part of a network linking migrants, former migrants, and non-migrants with a common origin and destination.

7 Definitions (continued) Minority entrepreneurs are business owners who do not belong to the majority population. In USA & UK, the governments identifies the following groups as minorities: –Blacks –Hispanics –Asians –Pacific Islanders –American Indians (also referred to as Native Americans) –Alaska Natives Women are also occasionally included as a minority group A minority may not (necessarily) be an immigrant and may not share a strong sense of group solidarity with an ethnic group, in terms of a shared history, religion, or language.

8 Definitions (continued) An immigrant entrepreneur of Caucasian descent would often not be considered an ethnic minority entrepreneur in the western world. An ethnic entrepreneur may or may not be an immigrant, but is likely to belong to a minority community. An ethnic minority entrepreneur is an entrepreneur who belongs to a minority ethnic community.

9 Who is an immigrant entrepreneur in Sweden? In Sweden an immigrant entrepreneur is a person who owns own company, or is key person in the start-up process and who is not born in Sweden – or who’s parents are not born in Sweden. However, some immigrants from western countries are often not considered as immigrants and thus not immigrant entrepreneurs either.

10 Immigrant self-employment in Sweden Variation between immigrant Groups Higher self employment rates among non-Nordic citizens People in employment from Iran, Turkey and other Asian groups are more likely to be self employed than Europeans; Finish, Sub-Saharan and Latin American immigrants are the less likely to be self-employed Most non-European immigrant groups are concentrated in particular industries (such as transport, retail, hotel & restaurant industry)

11 Significance of immigrant business In Sweden, immigrants start-up about one- fifth of all annual new ventures in the country, accounting to between 6000 and 8000 new businesses Immigrant businesses make up 14% of all existing businesses in Sweden, accounting to about 80,000 businesses They employ approximately 300,000 people Their annual sales revenue is about SEK120 billion

12 Question to ask ourselves: Why should some foreign groups have higher rates of business enterprise than others? Why should the foreign born in general have much higher rates of business proprietorship than native- born Swedes? Does self-employment offer better earning opportunities than wage work? Answer: It depends… It depends on what type of self-employment one specifies; and, It depends on whether employees are in an ethnic- controlled economy or in the general market

13 Determinants of immigrant businesses Ethnic Strategies Group Characteristics Opportunity Structures Predisposing Factors blocked mobility selective migration aspiration levels Resource Mobilisation close ties to co-ethnics ethnic social networks government policies Market Conditions ethnic consumer products non-ethnic or open/ mainstream market Access to Ownership business vacancies competition for vacancies government policies

14 Mixed embeddedness (ME) ME means that : –The rise of ethnic commercial enclaves can only be understood by addressing the nexus of the enetrepreneurs’ charcteristics and the wider political and economic context –Ethnic commercial enclaves that are seemingly similar may actually be very different, resulting in different outcomes.

15 Reason for self-employment Entrepreneur by necessity vs. Entrepreneur by vocation; Escape unemployment or risk of unemployment Escape 3d jobs- dirty, dangerous and demanding occupation, often badly paid and almost no hope for promotion; Became self-employed may facilitate integration into mainstream society; Entrepreneurs by necessity mostly start a small business with low entry barriers (such as restaurant, food shop, house cleaning and repair, health care, nurses, gardening, textiles and clothing, etc.); Ethnic market; where the main target group of clients are the same ethnic community or residents from the same urban area

16 Immigrant purchasing power Over a relatively short period of time, the phenomenal growth of the Immigrant market has dramatically transformed the Swedish demographic landscape and business environment. Simply stated, immigrant buying power is booming and projections indicate that this trend will continue throughout the 21st century.

17 Who are middlemen minorities? Middlemen minorities negotiates products and services between producer and consumer, owner and renter, elite and masses, and employer and employee Generate the flow of goods and services throughout the economy Less likely to be primary producers of goods and services.

18 Class vs. ethnic resources Most successful entrepreneurs are mainly using their class resources, such as education, working experience and mainstream business skills and tools. During the start-up process, however, most ethnic entrepreneurs have used some ethnic resources; family and co-ethnics have in the beginning often been primary sources to capital, labour suppliers and customers.

19 Ethnic Economy An ethnic economy exists whenever any immigrant or ethnic minority maintains a private economic sector in which it has a controlling ownership stake. An ethnic economy consists of the ethnic self- employed and employers, and their co-ethnic employees. Thus, defined, an ethnic economy distinguishes the employment that immigrant and ethnic minorities create on their own account from employment they find in the general labour market. Ethnic economies depend upon ethnicity, not national origins, for their boundaries.

20 Ethnic Enclaves Ethnic enclave economy is a special case of an ethnic economy. An enclave economy requires a locational clustering of firms, economic interdependency, and co- ethnic employees, whereas an ethnic economy requires none of these.

21 The future of ethnic entrepreneurship In years people of immigrant origin will have a dominant place in the population of large Swedish cities More entrepreneurship for ethnic minorities will facilitate their integration in the Swedish society

22 Immigrant Transnational Entrepreneurship Cross-border business activities Family business and family management Trust relationship between the entrepreneur and the partner

Transnationalism –Transnationalism: –Domains: economic, social, political and cultural –Transmigrants –Transnationalism from below –Diaspora –Diaspora entrepreneurs –Transnational entrepreneurship –Transnational links/networks

24 Migration in transnational social spaces - Transnational Social Spaces: Intensive cross border flows of people, money, goods & information Region of destination Region of origin

Transnationalism What is transnationalialism? The concept of transnationalism involves the processes by which immigrants forge and sustain multi-stranded social relations that link together their societies of origin and settlement. Transmigrant: transnational migrant 25

Process of Transnational entrepreneurship The process of transnational entrepreneurship involves entrepreneurial activities that are carried out in a cross-national context, and initiated by actors who are embedded in at least two different social and economic arenas. The actors or transnational entrepreneurs, are foreign-born individuals who are socially embedded in both their home and host environments, who engage in business activities whose success depends on both their home and host country. 26

Diaspora (entrepreneurs) Diaspora refers to people or ethnic population that leaves their traditional ethnic homelands and being dispersed throughout other parts of the world Diaspora has been often used to denote religious or national groups living outside an (imagined) homeland. Diaspora entrepreneurs often invest in homelands business activities. 27

28 Reason to transnational networks In the past, unidirection of migration: Difference today is –Trade –Travel –Telecommunications –Transfers

29 Types of Ethnic and immigrant Enterprise 1.Circuit firms 2.Ethnic (domestic) enterprises 3.Cultural enterprises 4.Return migrant enterprises, and 5.Transnational enterprise

Diaspora & Transnational Entrepreneurship. Entrepreneurs space Entrepreneurial space (Diaspora) Transnational entrepreneurship International entrepreneurship Ethnic/Immigrant entrepreneurship 30

31 Transnational links Immigrant businesses keep links to their countries of origin Immigrant businesses as agents of change: both in their new country as well as in the country of origin. Immigrant transnational entrepreneurs contribute positively to Sweden’s international trade and to its competitiveness

32 THANK YOU!