The role of migrant entrepreneurs
Entrepreneurship and migration are an increasing focus of academic literature and policy discourse. With over 232 million cross-border migrants, the development impacts of both migrants and entrepreneurs are likely to be substantial (Naude et al.
2015). Many migrants engage in entrepreneurial activities; however, these individuals have been largely peripheral in mainstream discourses on entrepreneurship (Ram et al.
2008). An emerging body of literature has begun to explore the experiences of such entrepreneurs (Anderson et al.
2010; Chand and Ghorbani
2011; Koning and Verver
2013), and this paper contributes to this discourse, through a focus on forced migrant entrepreneurship.
A key element of migrant entrepreneurship research has been to show a higher than average rate of entrepreneurial activity, a recurring feature applying just as much to the recent waves of Somalis and Poles as to their South Asian and Hong Kong Chinese precursors (Edwards et al.
2016). Neville et al. (
2014) find that migrant enterprises are not generally better performing than those of non-migrants and that very often immigrant-owned firms underperformed; migrant firms who export are found to perform better. Within this, typical measures in firm performance such as experience, skills, gender, access to finance and growth orientation were found to apply in equal measure to both migrant and non-migrant enterprises (Naude et al.
2015). Yet, such groups have rarely figured in contemporary debates on entrepreneurship, other than in a few notable studies (Edwards et al.
2016; Ram et al.
2008). Indeed, given the diversity of ethnic and migrant entrepreneurship, it has been argued that research and practice have entered a phase of ‘super-diversity’, which aims to underling of complexity surpassing what has previously been experienced, and is distinguished by a dynamic interplay of variables among an increased number of new, small and scattered, multiple-origin, transnationally connected, socio-economically differentiated and legally stratified immigrants (Vertovec
2007).
As Ram et al. (
2017) state, this new ‘super-diversity’ has presented challenges for researchers, for example, the unprecedented geographical hyper-mobility of the post-Soviet East Europeans (Legrain
2007) and the active transnational networks of African groups (Thompson
2016). At the same time, however, such changes do not generally translate into changes in performance, with new migrant business owners experiencing structural disadvantages similar to their predecessors (Edwards et al.
2016; Jones et al.
2014).
In common with entrepreneurs more broadly who can enter activity out of opportunity or necessity (Williams and Williams
2014), migrants arriving in a new country can be both pushed and pulled into entrepreneurship. With regards to push dynamics, migrants can face a range of labour market obstacles, which leaves entrepreneurial activity as their only option for generating income (Gilad and Levine
1986; Elo
2016). Such individuals can face discrimination from the indigenous population, lack relevant forms of cultural capital (knowledge and language skills in the host country) and also to access to host-country relevant social capital (Neville et al.
2014). For these individuals, developing forms of entrepreneurial activities is viewed as a survival strategy (Portes
1994), which involves relying on the social capital of their ethnic group (Drori et al.
2009) in the absence of any other relevant economic options. With regards to push dynamics, migrant groups can also be characterised as having a strong sense of self-sufficiency (Legrain
2007), which pulls them into forms of entrepreneurship as a means of ‘getting by and getting on’ (Anderson et al.
2010). Indeed, those with highly developed skills and numerous alternatives for their career and livelihood who embark on entrepreneurial endeavours (Mullings
2011), as well as those who are not pushed to migrate by necessity, but who choose to become migrants to fulfill their entrepreneurial, career or social goals and dreams (Elo
2016). Yet, the push/pull dichotomy can be considered to be simplistic, as often motivations will shift over time and will be dependent on context (Williams and Williams
2012). Indeed, in the case of forced migrants as the resources that they can access change over time, we posit that this will influence their motivations. While forced migrants may enter entrepreneurship out of necessity initially, as they acquire more resources, in particular through the development of human and social capital, they will be exposed to more opportunity-driven entrepreneurship.
Whether they enter entrepreneurship can also be determined by ethnicity (Fairlie and Meyer
1996). Ethnic characteristics can act as drivers for some migrant groups to be more entrepreneurial than others, including the ability to develop entrepreneurial strategies effectively (Chaganti and Greene
2002), or use their ethnic resources (i.e. access to social capital within an embedded network) in the new country (Chand and Ghorbani
2011; Koning and Verver
2013). As such, migrants can exploit the underdeveloped markets which have emerged within ‘ethnic enclaves’ in the host country (Koning and Verver
2013), using their access to ethnic and migrant networks and access to informal sources of finance and labour through ethnic ties and/or shared cultural values and language use (Vershinina et al.
2011). In examining access to different forms of capital, finance and opportunity, an important development in examining migrant entrepreneurship has been the emergence of a mixed embeddedness approach to understand migrant forms of entrepreneurship (Ram et al.
2008; Kloosterman
2010; Vershinina et al.
2011). This approach takes into account the embeddedness of migrant entrepreneurs within co-ethnic networks and seeks to contextualise them within broader social, political and economic spaces within the host country (Ram et al.
2008). It focuses on the many difficulties that migrant entrepreneurs face in the host country (access to finance, access to training) as necessarily part of the social and political
context of the host country (Ram et al.
2008). As such, the mixed embeddedness approach argues for the need to focus not only on ethnic strategies but also personal strategies within specific opportunity structures, markets and regulatory environments.
Human capital and migrant entrepreneurship
The key constructs of human and social capital will have an impact on not only indigenous entrepreneurs, but also crucially for migrant entrepreneurs (Bagwell
2015), including those who are forced to migrate. Human capital consists of characteristics, skills, competences, education etc. that are inextricably tied up with the individual and that have a positive impact on him/her (Becker
1975). While links between human capital and entrepreneurship are the subject of debate, it has been suggested that there is a positive relationship between more formal human capital in the shape of higher educational attainment and entrepreneurship due to greater skills associated with opportunity recognition (Williams et al.
2017). Furthermore, more highly educated individuals are expected to have higher ability and a superior information set, and therefore more start their own businesses (Constant and Zimmerman
2006). As Wauters and Lambrecht (
2008) state the process for leaving one’s home to start a new life in a new country is self-selective, with immigrants often being more prepared to take risks than those who stay at home, yet this does not apply to forced migrants as they have to leave their country, often quite suddenly, and thus lose access to social capital. Among these are also older people and people with country-specific skills and qualifications who in normal circumstances would not leave their home country (Gold
1988). For such migrants, over time, the stock of human capital acquired in the COR may better fulfill the needs of the host-country labour market (Bean et al.
2004). This means that as more human capital is acquired in the COR, it may increase the opportunities for salaried employment, rather than entrepreneurship (Donato et al.
2008). Given this discussion, we propose the following hypothesis to examine the role of human capital in migrant entrepreneurship:
Social capital and migrant entrepreneurship
Within the entrepreneurship literature, social capital is often seen as a resource, enabling migrant entrepreneurs to access co-ethnic social networks in order to gain finance (Vershinina et al.
2011). One of the most important contributions linking social capital to knowledge networks is that of Nahapiet and Ghoshal (
1998), which focuses on the importance of social capital and the advantages and intellectual capital creation it facilitates through personal relationships which fulfill social motives such as sociability (Portes
1998), approval and prestige. Within this, the structural dimension refers to the interactions, network connections, patterns and strength of ties; the cognitive dimension considers shared vision, purpose and meaning, normally as a result of the shared history in families; while the relational dimension regards to trust, norms, obligations and identity, and also the quality of the connections. Social capital depends in the context; hence, higher levels of social capital indicate mutual interdependence between actors (Nahapiet and Ghoshal
1998). This work is particularly useful, not only because it makes the link between intra-organisational networks, knowledge and social capital, but because it focuses on the combination and exchange of knowledge in relation to factors such as access, motivation, capability and anticipation of value (Williams et al.
2017).
Most commonly, social capital consists of the perceived value inherent in networks and relationships generated through socialisation and sociability as a form of social support (Borgatti and Foster
2003). The network space can be defined by the nature of the relationships, interactions and ties underlying particular networks (Williams et al.
2017). For example, Putnam’s (
2000) analysis of social capital presents an intricate examination of the types of network space occupied by actors across a range of interpersonal networks. The network can be perceived as the sum of the invisible links between nodes that form the network, and as such, these links provide the relationship and channels of communication between individuals (Jack
2005). However, these links are not simply relationships and channels of communication, they also act as the mechanism through which information and resources are drawn from, and exchanged with, the social context and provide the vehicle through which an individual learns about the social context and the social context learns about an individual (Jack and Anderson
2002). They also provide the bridges to new information and resources in other social structures and bond the various relationships between nodes together (Granovetter
1973) and are the key to unlocking and accessing the social capital that resides within a network (Anderson et al.
2007). Social capital’s power is its ability to understand how individuals are able to mobilize their network to enhance personal returns usually within place-bound environments (Westlund and Bolton
2003).
Social capital is a product of aggregated resources held within durable networks (Ram et al.
2017). While migrant networks vary in terms of the number of actors they incorporate, their location, the benefits they provide to individual members and the strength of relations between network actors can all influence economic activity (Smallbone et al.
2010; Lajqi and Krasniqi
2017). Indeed, networks offer migrant entrepreneurs invaluable and unique competitive advantages, making them fundamental to the growth and success of their own businesses, and a potential resource for harnessing entrepreneurship (Nielsen and Riddle
2010). Yet, the social networks that forced migrants can access are likely to be less extensive than that of voluntary economic migrants, who are often better able to access social capital through ethnic ties and/or shared cultural values (Vershinina et al.
2011). Due to the forced and sudden nature of their flight, they can lack networks in their COR, with the only option being to develop them over time. As they have experienced traumatic events both in their country of origin (COO) and during flight which can cause psychological problems which hamper self-reliance and entrepreneurship (Hauff and Vaglum
1993). Also, as a result of the nature of conflict, they are often unable to return home to acquire funds, capital or labour for their ventures which would supplement their limited social capital in the COR (Wauters and Lambrecht
2008). In order to examine social capital and migrant entrepreneurship, we propose the following hypothesis:
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Hypothesis 2: There is a positive relationship between higher social capital: 1) fluent in COR language 1b) foreign spouse, 1c) co-ethnic networking of migrants, 1d) family size and probability of being an entrepreneur
Forced migration and entrepreneurship
While the economic impacts of voluntary labour migration have been examined, the literature on the development impacts of forced migration needs to be deepened (World Bank
2009). In recent years, forced migration due to conflict has reached its highest level since World War II, affecting more than 51 million people around the world (World Bank
2014). While forced displacement is often viewed as a humanitarian issue, given that it has impacts on growth, employment and public spending for countries of both origin and destination, it is also a major development issue. The majority of forced displacement is driven by conflict, generalized violence and/or human rights violations (UNHCR
2014). Palestinian refugees continue to comprise the biggest refugee group worldwide, with other major source countries for refugees being Afghanistan, Syria, Somalia, Sudan, the Democratic Republic of the Congo and the Central African Republic, while further displacements have been seen through conflict in Iraq and Ukraine (UNHCR
2014). Many forced migrants are in protracted situations, with estimates that two-thirds of refugees have been in exile for more than 5 years (World Bank
2014).
In the COR, the influx of displaced people impacts on growth and public policy aimed at integrating new populations and providing economic opportunities (Wauters and Lambrecht
2008). Increased labour supply can impact on wages depending on whether the forced migrants complement or substitute the skills of local workers, while growth is enhanced if migrants bring new skills and additional sources of financing, and increase trade and domestic demand (Enghoff et al.
2010). At the same time, an influx of forced migrants can place pressure on public services, and to counterbalance these effects, the COR needs to increase public expenditure, while at the same time developing policies to enhance social cohesion (World Bank
2014). For the forced migrants themselves, displacement has impacts on their human and social capital, income and employment, as well as entrepreneurial opportunity (Jacobsen
2005). Because of the nature of the displacement, forced migrants face significant loss of assets and networks, and this differentiates them from economic migrants (Ibanez and Moya
2009).
A key challenge of public policy is to find resilient solutions to the increasing number of refugees in protracted displacement situations (World Bank
2014). This means that policy makers need to examine not only the vulnerabilities of forced migrants, but also ways in which the COR can make the most of their education, skills and experience. One element of this which is currently under-researched is the role that entrepreneurship can play. A key unexplored question regarding forced migrants is the ways in which their resources may be harnessed in order to develop entrepreneurial ventures which have the potential to benefit the economy of the COR. We contend that forced migrants face acute occupational choice constraints. In the context of forced migrants, it can be argued that they were not ‘prepared’ for migration as they were not responding to opportunity, for example they had not secured employment before migration and/or were not responding to start a business. Also, the level of skills they acquired in their COO may not be adequate to respond the needs of labour market in Western countries. In such circumstances, migrants do not have many employment options and may be pushed to entrepreneurial activities. Accordingly, this discussion leads as to following hypothesis: