Ethnic Enterprises and Their Clientele

By Dyer, Linda M.; Ross, Christopher A. | Journal of Small Business Management, April 2000 | Go to article overview
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Ethnic Enterprises and Their Clientele


Dyer, Linda M., Ross, Christopher A., Journal of Small Business Management


The goal of this article is to examine the relationships between ethnic-minority businesses and their co-ethnic customers. Semi-structured interviews with 33 black owner/managers were conducted, followed by a qualitative analysis of their comments. Out of these interviews emerged a theoretical framework which highlights three dimensions: (1) the coincident roles of business owner/manager and co-ethnic individual; (2) the easy flow of communication among co-ethnics; and (3) the symbolic aspects of ethnicity. These dimensions are causes of the ambivalent relations that exist between many businesses and their co-ethnic clients. Operating in the ethnic enclave and having a large proportion of co-ethnic clients accentuates ambivalence. Propositions are developed for future testing.

This article explores the ongoing relationships between ethnic minority businesses and their co-ethnic clients. In the eyes of business owners, what is the role of ethnicity in their dealings with customers? The majority of studies on ethnic entrepreneurship focus on business start-ups, explaining why and how members of various ethnic groups create new businesses (Aldrich and Waldinger 1990; Juteau and Pare 1996; Light 1980; Waldinger,Aldrich, and Ward 1990). Neglected, however, are other aspects of business activity such as management and growth, strategy, and social issues. A better understanding of the social networks within which entrepreneurs continue to develop their operations is required (Donckels and Lambrecht 1997; Greene 1997). We need to recognize that entrepreneurs are interdependent social actors who must "build relationships in which other actors cooperate" (Seltsikas and Lybereas 1996, page 33).

The goal of this research is to explore the significance of the ethnic-minority group in relations among business operators and their clients, in particular, their ethnic clients. We use Feagin and Feagin's (1996) definition of the ethnic group as a group that is socially distinguished (by others or by itself) by characteristics of cultural or national origin. We subscribe to the view that "ethnicity remains essentially subjective, a collective sense of social belonging and ultimate loyalty related to parentage and a belief in common origins" (RomanucciRoss and DeVos 1996, pg. 350). Ultimately, we wish to build a theoretical framework which explains the factors and strategies used by ethnic firms in their relationships with clients.

Greene (1997) argues that the ethnic community may be a source of such intangible assets as values, knowledge, and networks upon which entrepreneurs may draw. Bonds of solidarity within the ethnic community provide resources for business operators as they establish and develop their firms. In her case study of a Pakistani community in the United States, Greene found that ethnic ties were a source of sustainable competitive advantage which encouraged the emergence and growth of new business ventures. By extension, these intangible bonds might show themselves in the loyalty of co-ethnic customers to the ethnic enterprise. Fukuyama (1995) also notes that trust within communities aids the development of secure business relationships and positive economic outcomes. To the extent that ethnic ties are a basis of trust between business and client, we should be able to detect benefits to individual businesses derived from a shared ethnicity with their clients--ethnicity might contribute positively to a firm's relatio nships with clients.

The competitive advantage that derives from ethnic ties would, of course, be tempered by the strength of these ties. Marketing researchers have found that consumers vary in the strength with which they identify with their ethnic groups, and this affects their shopping patterns. Donthu and Cherian (1994), for example, found that those Hispanic-Americans who said that they identified strongly with their ethnic group were more likely than weakly-identified Hispanics to patronize Hispanic service vendors.

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