Paul Lassalle
Research on Ethnic Minority Entrepreneurs (EMEs) has largely dealt with challenges faced by immigrant entrepreneurs in host countries, especially when it comes to access to resources. As part of the academic debate, previous work stressed the key role played by the community in helping co-ethnic Entrepreneurs to raise resources from their networks in order to start-up businesses. However, little has been said about EMEs from European backgrounds, especially from the new EU member states. EU enlargement in 2004 generated considerable social and political debate, controversy and interest regarding the effects of the freedom of movement of labour upon host economies receiving EU migrants. Under-researched and important aspects of these effects are the entrepreneurial behaviours and business strategies adopted by individuals within and extending beyond the immigrant community.
Our research focuses upon the recent Polish migrant community in the UK from the Greater Glasgow area. Hitherto, most of the evidence of Polish entrepreneurial behaviour (and self-employment) has been anecdotal – the ‘Polish Plumber Effect’ – and there has been little or no theoretical advances in the area of EMEs as a result of this new phenomenon.
By focusing on a new ethnic group, this research underscores the importance of incremental economic behaviour and strategies amongst Polish Entrepreneurs from emigration to later business development. Providing an analysis of the business strategies developed by Polish Entrepreneurs in the context of a migrant community, it also aims to expand the theoretical framework for explaining strategic processes and entrepreneurial behaviours of Ethnic Entrepreneurs.
Based upon empirical data gathered from field-work within the Polish immigrant community, the paper contributes to the conceptual literature on Ethnic Minority Entrepreneurs (EMEs). This research is a first step in re-thinking entrepreneurial behaviours considering their incremental aspects as well as in building a dynamic typology of EMEs.
Incremental strategies and ‘flair’: a key feature of ethnic entrepreneurial behaviour
One of the key directions for future research on EMEs is the incremental nature of the immigrant decision making. The results of the fieldwork highlight the importance of incremental behaviours and ‘flair’ in understanding Polish Entrepreneurs’ migratory and entrepreneurial strategies from the decision to start-up in a niche market to later business development.
A major factor influencing the decision to migrate was the recruitment agency ‘assisted’ employment opportunity in the UK provided for Poles prior to migration. However, they experienced poor levels of job satisfaction due to their over-qualification for their particular positions, and feelings of being under-valued with little prospect of attaining their desired standard of living expectations. Despite dissatisfaction with employment conditions, there was the opportunity to accumulate small amounts of capital. This provided the stimulus for starting-up a new business and influenced entrepreneurial modes of economic behaviour. For these prospective Entrepreneurs, having a small capital fund was sufficient since the market opportunities identified were ethnically based, with low risk financially, culturally compatible (no language barriers). Also the start-up process was relatively painless bureaucratically, and it was fast. They pursue more incremental strategies in order to achieve their goals based upon ‘flair’ and ad hoc market opportunities, rather than recognising clearly identified opportunities. They have developed a business idea, usually predicated upon a community-based niche market; but the opportunity spotted in this niche market is rarely identified in a business plan, or even benchmarked. Thus, the Polish Entrepreneur’s decision to start-up is quick and undocumented; and often the opportunity is the outcome of a hunch or entrepreneurial ‘flair’.
Considering the lack of planning and the relationship between the Polish Entrepreneurs and an opportunity structure which facilitates the start-up of small businesses, there is room for developing concepts based upon spontaneous or haphazard Entrepreneurial behaviour. The (relative) success of these new ventures is partly based on flair when the businesses are small, low risk as they need small amounts of start-up capital; and the businesses are initially focused on the co-ethnic community as its primary market. Finally, the “exit” option of returning to Poland as an EU member state is always available if the venture should fail .
The diversification process: from enclave-markets to mainstream markets
It is difficult to predict long term effects since most of the Polish Entrepreneurs arrived in the UK after 2004, but there is already evidence of development strategies evolving within these Polish businesses. One possible development for EMEs is to break-out into the mainstream market, i.e. serving mainstream goods to mainstream customers (see for instance Portes and Rumbault 1996, Engelen 2001). However, in the case of Polish Entrepreneurs, there is no evidence of direct breaking-out strategies. The future of these businesses lies in a more incremental diversification processes as presented below.
Ethnic communities provide co-ethnic Entrepreneurs with a range of business opportunities in ethnic-based enclave-markets. Nevertheless, staying in the enclave-market can lead to survival strategies. Since an enclave economy is bounded by the size of the community, there is a demographic constraint on further development. Given the limited depth of the enclave economy, EMEs need to develop strategies in order to deal with competitive pressures and market saturation by reaching mainstream or better rewarded markets.
Though there is no evidence in our research of direct break-out strategies to the mainstream market, most of the Entrepreneurs serving co-ethnics and niche-entrepreneurs try to attract local costumers.
This change from one type of EMEs to another depends upon the shift of services or products, and a change of customer base. The change can be conceptualised as the diversification process, as part of an ethnic entrepreneurial strategy. The diversification process is incremental, that is to say it is unplanned. It is not based on any clearly identified strategy or benchmarking, apart from using advertising media in some cases. This process is vital in order to avoid survival or dead-end strategies in a usually limited co-ethnic or niche market. However, so far, most of the businesses studied are (relatively) successful and the diversification process is not perceived as a “need” by Polish Entrepreneurs, but rather as an unclear “wish”.
During the first phase of the diversification process, EMEs shift from an enclave-market to niche entrepreneurs; thereby extending the enclave by providing the clients with new products and services. Simultaneously, Entrepreneurs serving co-ethnics become progressively middlemen entrepreneurs while serving local consumers. The second phase of this process occurs while niche-entrepreneurs gradually enter the mainstream market by offering more services to local customers, or when middlemen entrepreneurs extend their range of products and services. In the case of Polish Entrepreneurs in our study, the latter phase has not been attained by any of the businesses; and this emphases the importance of time for EMEs to develop and implement a diversification strategy.
Conclusion
An important objective for this paper was to elicit a re-conceptualisation of the typology for EMEs, and develop a more dynamic model of business processes based on those that the Polish Entrepreneurs followed. Broadly, this aspired to re-theorise the area of EME business modes, types and strategies within and then beyond the ethnic enclave economy. A key conclusion is that there are diversification strategies developed by enclave-market and niche entrepreneurs; as an incremental process within the entrepreneurial life cycle. The paper presents this more complex array of concepts as its main conclusion.
Paul Lassalle, University of the West of Scotland
Pr. Michael Hughes, University of Aberdeen
Ewa Helinsk-Hughes, University of the West of Scotland