Regina Kachidza

 Definitions of Ethnic Economies

 Components of Ethnic Entrepreneurship
 Definition of Minority Entrepreneurship
Ethnicity refers to a sense of kinship, group
solidarity, common culture, and self-
identification with an ethnic group
(Hutchinson & Smith, 1996)
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.’
(Waldinger et al, 1990: 33)
While many people may use the terms ethnic
entrepreneurship, minority
entrepreneurship, and immigrant
entrepreneurship interchangeably, Chaganti
and Greene (2002) note subtle differences
among the terms:
 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.
 Minority entrepreneurs are business owners who do
not belong to the majority population. In the
United States, the government 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. (Basu, 2002)
 An immigrant entrepreneur of Caucasian
descent would 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. (Basu, 2002)
Definitions1:
 Ethnic economy (also known as ethnic
ownership economy): an economy
comprised of self-employed employers,
unpaid family workers, and co-ethnic
employees.
◦ The common trait this economy shares is that
these employed individuals belong to the same
ethnic group.
◦ With this basic definition, this does not mean that
the buyers/customers necessarily share the same
ethnic characteristic(s) as the
employers/employed.
Definitions:
 Ethnic enclave economy: an ethnic economy that is clustered
around a territorial core
◦ Cultural identity is key
◦ Businesses and customers proactively and significantly recapture
spending along ethnic lines and at all levels
◦ Examples: Koreatown in Los Angeles; Durham, NC after
Reconstruction; Calle Ocho in Miami
 Ethnic-controlled economy: significant and persistent
economic power exercised by ethnic employees in the
mainstream economy
◦ Ethnic entrepreneurs usually cluster in the same occupations and
industries
◦ This can encourage and confer market power above and beyond
individual wealth and human capital
◦ Example: Koreans’ influence in Los Angeles soft drink distribution
 Koreans were 5% of all Los Angeles business owners in the 1980s, but
 Koreans owners represented more than one-third of soft drink dealers.
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
Three components of the ethnic entrepreneurship
framework2
 opportunity structures:
◦ market conditions which may favor products or services
oriented to coethnics
◦ situations in which a wider, non-ethnic market is served
 group characteristics:
◦ predisposing factors such as selective migration, culture
and aspiration levels
◦ includes the possibilities of resource mobilization
◦ Includes ethnic social networks, general organizing capacity,
and government policies that constrain or facilitate resource
acquisition
 ethnic strategies: strategies that emerge from the
interaction of opportunities and group
characteristics, as ethnic groups adapt to their
environments
 Market conditions
◦ Ethnic consumer products
◦ Non-ethnic markets
 underserved markets
 markets with low economies of scale
 markets affected by instability or uncertainty
 markets with high demand for exotic goods
 Access to ownership
◦ Interethnic competition for vacancies
 residential segregation and succession
◦ State policies
 Role of “middlemen minorities”
 Predisposing factors
◦ selective migration
◦ settlement characteristics
◦ culture and aspiration levels
 First pattern trait: sojourner’s orientation to host country
 Second pattern trait: distinctive social and cultural
characteristics that promote solidarity communities
 Third pattern trait: distinctive economic traits (e.g.,
concentration in entrepreneurial roles, tendencies to keep
capital liquid, and preference for kin and coethnic labor)
 Resource mobilization
◦ class versus ethnic resources
◦ ethnic social structures
 social networks
 organizing capacity
 Strategy definition: “the positioning of oneself to others in
order to accomplish one’s goals”
 Typical challenges that necessitate strategy:
◦ skills acquisition and training
◦ recruitment and management of workers
◦ managing relations with customers and suppliers
◦ surviving competition
◦ protecting oneself from political attacks
 Strategic responses
◦ self-exploitation
◦ business expansion by moving forward or backward in the chain
of production
◦ founding and supporting ethnic trading associations
◦ cementing alliances to other families through marriage
◦ Bribery, penalty payments, searching for loopholes, and
organizing protests