Impact of embeddedness in co-ethnic & non co-ethnic networks on business performance : evidence from Chinese immigrant entrepreneurs in Australia

This paper investigates the research question ‘What is the effect of co-ethnic and non coethnic networking on business performance in Chinese immigrant businesses?’ The research will discuss key themes such as the extent to which Chinese immigrant entrepreneurs are embedded in co-ethnic and non co-ethnic networks and the affect of embeddedness on business performance, such as the entrepreneur’s satisfaction and business growth. Research on immigrant entrepreneurship has emerged as an important new area of inquiry within the field of entrepreneurship. The increased importance of the subject is due in part to major immigrant receiving countries, such as Australia, the United States and Canada, experiencing a high growth rate in their immigrant population. Reflecting on the existing research on immigrant entrepreneurship, it was decided to investigate the role of embeddedness on entrepreneurial business performance. This research seeks to identify the impact of embeddedness in co-ethnic and non co-ethnic networks on business performance of Chinese immigrant entrepreneurs in Australia. Chinese immigrant restaurant entrepreneurs in southeast Queensland, Australia were studied. The result expands on existing research on immigrant entrepreneurship, since the majority of immigrant entrepreneurship studies have been conducted on the United States and Canada immigrant experiences, but few have been conducted in the Australian immigrant entrepreneur context. This thesis also adds empirical testing to a research area with little empirical testing. The results indicated that embeddedness in the co-ethnic network is positively related to business performance measured by both growth and satisfaction. Embeddedness in the non co-ethnic network of the Chinese immigrant entrepreneurs in Australia did not show a similar pattern in accordance with studies conducted in the United States and Canada. This result is interesting and creates the opportunity for future research employing a comparative study.

The role of immigrant entrepreneurs in international new ventures

Immigrant Entrepreneurs (IE) are often portrayed as being pushed into self-employment due to employment barriers in their adopted countries. But IE have human resources, like international experience, which can help them form international new ventures (INV). We question the role of IE in INV. We use randomly selected data from 561 young firms from the Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE) project. We find that IE are overrepresented in INV and have many of the characteristics known to facilitate INV success. These findings have relevance to policy makers, IE and NE.

Human resource characteristics of international new ventures : the role of immigrant entrepreneurs

Immigrant Entrepreneurs (IE) are often portrayed as pushed into self-employment due to employment barriers in their adopted countries. But IE have human resources, like international experience, which can help them form international new ventures (INV). We question the role of IE in INV. We use randomly selected data from 561 young firms from the Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE) project. We find that IE are over-represented in INV and have many characteristics known to facilitate INV success including more founders, university degree, international connections and technical capability. These findings are relevant to policy makers, and nascent IE.

Impact of embeddedness in ethnic networks on business growth : evidence from Chinese immigrant entrepreneurs in Australia

Immigrant entrepreneurship, or, self-employment by immigrants (Light & Bonacich, 1988), has been of growing interest to researchers (Hosler, 1996). This is due in part to major immigrant receiving countries, such as Australia, the United States, Canada, the United Kingdom and Western Europe, experiencing a high growth rate in their immigrant populations, leading to a more visible presence of immigrant business in major cities (Woon, 2008). By starting their own businesses, immigrant entrepreneurs may circumvent some of the barriers and disadvantages encountered in looking for a job (Sequeira & Rasheed, 2006). Successful immigrant entrepreneurs will integrate into the economy by creating jobs, providing products and services for members of their own ethnic community and society, as well as introducing new products and services that expand consumers’ choices (Rath & Kloosterman, 2000). Immigrant entrepreneurs tend to start business within their ethnic enclave, as it is an integral part of their social and cultural context and the location where ethnic resources reside (Logan et al., 2002). An ethnic enclave is an interdependent network of social and business relationships that are geographically concentrated with its co-ethnic people (Portes & Bach, 1985).

Characteristics of immigrant entrepreneurs and their involvement in international new ventures

We studied 561 young firms in Australia to understand the involvement of immigrant entrepreneurs (IE) in international new ventures (INV). We found that IE are over-represented in INV and have many characteristics known to facilitate INV success including more founders, university degree, international connections and technical capability. Our study has implications for immigration policy and economic policy and the efficient use of a nation’s human capital. This research challenges a necessity-based stereotype of immigrant entrepreneurs by identifying areas in which immigrant entrepreneurs have natural competitive advantages over native entrepreneurs. This research makes a contribution to the theory of immigrant entrepreneurship by identifying the significant role of immigrant entrepreneurs in INV and the suitability of immigrant entrepreneurs for the development INV. We inform diverse streams of research in transnational and immigrant entrepreneurship with broader strategic work on the creation of INV.

Integrating the resource-based view and transaction cost economics in immigrant business performance

This paper presents a new integrated framework that integrates the resource-based view and transaction cost economics to explain the phenomenon of immigrant entrepreneurship. We extend the existing literature on immigrant entrepreneurship by identifying different types of ethnic network resources and demonstrating how these resources interact with transaction costs in the context of Chinese immigrants. Thus, our study contributes to the literature by providing a theoretical framework which identifies mechanisms immigrant entrepreneurs use to strategically deploy resources to minimize costs and maximize performance outcomes.

The role of the ethnic enclave in facilitating immigrant business performance and social integration

Chinese immigrant entrepreneurs, known the world over for their successful business practices (Kee, 1994), tend to start businesses within their ethnic enclave. But in a move away from multiculturalism, host countries increasingly fear that immigration and asylum pose a threat to social integration resulting in a lack of social cohesion and a plethora of government programs (Cheong, Edwards, Goulbourne & Solomos, 2007). For many immigrant entrepreneurs, the EE is an integral part of their social and cultural context and the location where ethnic resources reside (Logan, Alba & Stults, 2003). Immigrant entrepreneurs can harness the networks for labor and customers through various ties in their EE (Portes and Zhou, 1996). Yang, Ho and Chang (2010) illustrate in their paper that the Chinese immigrant entrepreneurs (IE) were able to utilize ethnic network resources as their social capital in order to reduce transaction costs and thus enhance business performance. Tilly (1990) explains that immigrants’ reliance on such networks for business or other information minimizes the socioeconomic hardships they would experience in host countries (Raijman & Tienda, 2000). Acquiring jobs in ethnic businesses and establishing businesses within an EE may facilitate migrants’ social integration into the host country (Tian & Shan, 1999). Although an EE has distinct economic advantages for immigrant entrepreneurs, Sequeira and Rasheed (2006: 367) argue that ‘Exclusive reliance on strong ties within the immigrant enclave has a negative effect on growth outside the enclave community.’ Similarly, Drori, Honig and Ginsberg (2010: 20) also propose that ‘The greater the reliance of transnational entrepreneurs on ethnic (versus societal) embedded resources and network structure, the narrower their possibilities of expanding the scope of their business.’ This research asks, ‘What is the role of the ethnic enclave in facilitating immigrant business growth and social integration? This project has the following important aims: A1 To better understand the role of IE, in particular Chinese IE in the Australian economy A2 To investigate the role of the EE in facilitating or inhibiting immigrant business performance A3 To understand how locating their firm inside or outside of the EE will affect the IE’s embeddedness in co-ethnic and nonco-ethnic networks and social integration A4 To understand how an IE’s social network affects business performance and social integration

Ethnic enclave lifecycle : a case study of Chinese restaurants in south east Queensland

Immigrant entrepreneurs tend to start businesses within their ethnic enclave (EE), as it is an integral part of their social and cultural context and the location where ethnic resources reside (Logan, Alba, & Stults, 2003). Ethnic enclaves can be seen as a form of geographic cluster, China Towns are exemplar EEs, easily identified by the clustering of Chinese restaurants and other ethnic businesses in one central location. Studies on EE thus far have neglected the life cycles stages of EE and its impact on the business experiences of the entrepreneurs. In this paper, we track the formation, growth and decline of a EE. We argue that EE is a special industrial cluster and as such it follows the growth conditions proposed by the cluster life cycle theory (Menzel & Fornahl, 2009). We report a mixed method study of Chinese Restaurants in South East Queensland. Based on multiple sources of data, we concluded that changes in government policies leading to a sharp increase of immigrant numbers from a distinctive culture group can lead to the initiation and growth of the EE. Continuous incoming of new immigrants and increase competition within the cluster mark the mature stage of the EE, making the growth condition more favourable “inside” the cluster. A decline in new immigrants from the same ethnic group and the increased competition within the EE may eventually lead to the decline of such an industrial cluster, thus providing more favorable condition for growth of business outside the cluster.

Ethnic cluster lifecycle : a case of Chinese restaurants in South East Queensland

Immigrant entrepreneurs tend to start businesses within their ethnic enclave (EE), as it is an integral part of their social and cultural context and the location where ethnic resources reside (Logan, Alba, & Stults, 2003). Ethnic enclaves can be seen as a form of geographic cluster, China Towns are exemplar EEs, easily identified by the clustering of Chinese restaurants and other ethnic businesses in one central location. Studies on EE thus far have neglected the life cycles stages of EE and its impact on the business experiences of the entrepreneurs. In this paper, we track the formation, growth and decline of an EE. We argue that EE is a special industrial cluster and as such it follows the growth conditions proposed by the cluster life cycle theory (Menzel & Fornahl, 2009). We report a mixed method study of Chinese Restaurants in South East Queensland. Based on multiple sources of data, we concluded that changes in government policies leading to a sharp increase of immigrant numbers from a distinctive culture group can lead to the initiation and growth of the EE. Continuous incoming of new immigrants and increase competition within the cluster mark the mature stage of the EE, making the growth condition more favourable “inside” the cluster. A decline in new immigrants from the same ethnic group and the increased competition within the EE may eventually lead to the decline of such an industrial cluster, thus providing more favorable condition for growth of business outside the cluster.