Market orientation of small ethnic minority-owned hospitality firms

Abstract

This paper seeks to evaluate the influence of changing co-ethnic consumer habits and the nature of competition on the market orientation of ethnic minority-owned hospitality firms in the UK. The paper reports and analyses the findings of 40 face-to-face interviews with Turkish small business owners. The findings of the study indicate that ethnic minority owned small firms operate within a strong socio-cultural environment. Not only co-ethnic customers and competitors but also both mainstream customers and competitors have a bearing on the market orientation of firms. Their market orientation is the result of the interplay between the changes in ethnic and mainstream business environments.

Introduction

Ethnic enterprises are normally small businesses with 2–50 employees, owned and managed by members of a single ethnic family living in a host country (Iyer and Shapiro, 1999, Waldinger et al., 1990). These ethnic businesses are surrounded by the cultural environment of their own community but elements such as the economic, political and socio-cultural aspects of the host country affect them (Barrett et al., 2002). Recent studies have shown that staying within the community, not being able to attract mainstream customers from outside the ethnic market or respond to changing market conditions hinder the growth of ethnic businesses (Altinay and Altinay, 2008, Jamal, 2005). Therefore, to sustain growth and survive in a competitive environment, a strategic ‘breakout’ into mainstream markets is needed. This, however, requires innovation—‘the notion of openness to new ideas as an aspect of a firm's culture’ (Hurley and Hult, 1998, p. 44) and more specifically the adoption of a strong market orientation (Altinay and Altinay, 2008). Considered to be a form of strategic marketing, ‘market orientation sets the tone and determines the basic approach for making marketing strategies’ (Guo, 2002, p. 1158). It focuses on meeting customer needs and understanding the competitive environment by collecting and exploiting market intelligence (Kohli and Jaworski, 1990, Narver and Slater, 1990). Market orientation can lead to better performance attained through strong internal coordination and the better understanding of, and clarity of focus towards customers and competitors (Cano et al., 2004, Egeren and O’Connor, 1998).

The market orientation of a firm is dependent upon the customer market, the competitive environment and inter-functional coordination. However, the literature is lacking in empirical insights into the relationships between market orientation and these three dimensions. In particular, it is as yet unknown how ethnic small firms respond to the dynamics of the competitive market, as the protection of ‘ethnic enclaves’ is decreased by the changing consuming habits of co-ethnic customers and by competition from mainstream competitors. The well-known ethnic enclave theory postulates that the ethnic population within which ethnic minority owned businesses operate provides ethnic firms with a competitive advantage as they are able to serve the unique needs of their co-ethnic clients (Ram and Hillin, 1994, Waldinger et al., 1990). However, in today's world, they must also compete with mainstream businesses which sell ethnic products and also continuously seek ways to attract ‘second generation immigrant’ customers from ethnic minority owned businesses (Altinay and Altinay, 2006). Indeed, the ethnic identities of consumers co-evolve and change within the host community (Burton, 2000). This paper therefore seeks to add to the existing literature by presenting empirical evidence about the marketing practices of Turkish ethnic entrepreneurs in the UK hospitality industry and by evaluating to what extent their market orientation is sensitive to these two dimensions, namely changes in co-ethnic consumer behaviours and intensifying competition in the ethnic minority business context.

The hospitality industry, including restaurants, take-aways and cafes has always been popular with ethnic minority businesses in the UK (Atkinson and Hurstfield, 2003). There is a high concentration of self-employed immigrants in the hotel and restaurant industry; some estimates suggest that 36% of all immigrants end up in this sector (Dustmann et al., 2003). This can be explained by the relatively low entry barriers, such as the low financial start-up capital required compared to other sectors (Basu and Altinay, 2002), low skill requirements (Basu and Goswami, 1999) and the cultural business traditions of ethnic groups (Basu and Altinay, 2002). To date, the research into the marketing practices of small firms has concentrated almost exclusively on practices of small businesses operating in different sectors in general (see Jamal, 2005, Altinay and Altinay, 2008). However, there is only a limited extant literature concerning the market orientation of ethnic minority small businesses in the hospitality industry, and little is known regarding how ethnic hospitality businesses survive given the continuously changing consumer behaviours and growing competition in the market.