Problems Encountered by Ethnic Entrepreneurs: A Comparative Analysis across Five Ethnic Groups

Article excerpt

Despite growing interest in the difficulties encountered by ethnic entrepreneurs, very little research has yet been done on the subject. This article attempts to fill the gap. A total of 715 Chinese, Italian, Indian/Sikh, Jewish, and Vietnamese entrepreneurs from Montreal, Toronto, and Vancouver were surveyed for the research. The results show that ethnic businesses tend to face the same problems as other businesses, which consequently does not appear to justify the development of support programs specifically for ethnic entrepreneurs. However, this study of established businesses does not consider failed or nascent businesses, which may have experienced additional problems. Further research is required to examine these issues. Also, given the unique social and business dynamics that exist within the ethnic communities studied, support programs should be directed through the networks of these communities.

In the last two decades, the interest shown by governments and researchers in ethnic and immigrant entrepreneurs has grown. There are a number of reasons for this, but all share a common goal, namely to highlight the place and impact of ethnic businesses in the economies of their host countries.1

In the United States, for example, ethnic businesses are present in large numbers, and appear to have maintained their vitality (Montgomery 2005; Waldinger 1989). Indeed, immigrant entrepreneurs are said to be responsible for the revitalization of trade in some peripheral regions and smaller towns (Stauber 2001; Lachman and Brett 1996). One study also revealed that businesses owned by women from the ethnic minorities grew three times faster than all other firms in the period 1987 to 1996 (Mesa and Boles 1997). In addition, the ethnic diversity of Silicon Valley's businesses has given the area a global advantage in terms of marketing, and has generated significant dividends (Menzies, Brenner, and Filion 2003; Saxenian 1999; Engardio and Burrows 1997). Immigration is seen as a major strength, helping reinforce the economy by promoting the arrival of younger, more innovative, and more entrepreneurial immigrants (Davies 2005; Ehrenhalt 1993). Lastly, researchers have also suggested that ethnic businesses have made a significant contribution to the growth of exports, the development of a global vision, and the creation of international contacts by American firms (Mandel and Farrell 1992).

A report, submitted by a committee formed to study the reasons for quicker high technology start-ups in the United States compared with the United Kingdom, pointed to, among other things, the larger numbers of talented immigrants in the United States who were willing to take risks (CSFI: The future is small 1997). A Canadian study by Head and Ries (1998) reported that exports by immigrant entrepreneurs to their country of origin were 10 times as high as exports by all Canadian exporters in the period 1980 to 1992. One of the reasons put forward by the authors was that immigrants have more knowledge of and better access to the markets in their countries of origin. Another Canadian study (Helley and LeDoyen 1994) reported that, generally speaking, immigrants find it easier to create their own businesses than locals (Field 2003; Light and Rosenstein 1995; Stiles and Galbraith 2003; Thonney 1988; Trista Resources Ltd. 1989; Waldinger, Alrich et al. 1990; Ward and Jenkins 1984).

If such observations do in fact reflect reality and are not simply isolated or one-off phenomena, then there is good reason to take a serious look at what can be done to give effective support to entrepreneurship, venture creation, and business expansion in ethnic communities. One way of doing this is to extend our knowledge and understanding of the problems faced by ethnic entrepreneurs. There are three main reasons why such an approach is relevant. First, we know that the entrepreneurs' own understanding of their problems affects their strategic choices and hence the performance of their businesses. …