Challenges and Opportunities of Migrant Entrepreneurship

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Interview with Craig Mitchell,Sten K. Johnson Centre for Entrepreneurship at Lund University, Sweden

The new European Commission, established after the 2014 elections, has carried out reorganisation and created a ‘new’ Directorate General ‘GROW’, aiming to provide business-friendly policies and promote innovation generating new services of growth. It hopes to encourage growth of SMEs and promote an entrepreneurial culture. Jean-Claude Juncker’s Commission’s top priority is to get Europe growing again.
The EU is currently facing immigration related challenges. It can, however, turn these challenges into opportunities for growth instead. ‘Growth – the missing ingredient of immigrant entrepreneurship research’ is the area explored by Craig Mitchell, originally from Scotland, working at the Sten K. Johnson Centre for Entrepreneurship at Lund University in Sweden. His research of growth in immigrant firms is offered from an entrepreneurial standpoint, but at the same time it is sensitive to the context of immigrant entrepreneurship.

Why Immigrant Entrepreneurial Growth Research in Sweden?

Even through Mr Mitchell conducts his research in Sweden, it comes as no surprise that until now the research field has been led by researchers in the United States, the United Kingdom and the Netherlands – countries with a well-founded history of immigration. The research in Sweden mirrors its immigration history in that it is less well-founded when compared to other listed countries, which are now actually experiencing third generation ethnic minority-owned enterprises. Mr Mitchell highlights that the research field in Sweden is more of a piecemeal, but over the last five years or so, encouraging work by a number of Swedish based researchers has been initiated. His own research is also distinctive, as it will bring understanding particularly of growth-orientated ethnic minority and immigrant entrepreneurs. Mitchell’s research has an ambition to be the first explanatory study on firm growth in ethnic minority and immigrant-owned firms in Sweden and beyond. He states that our knowledge of determinants, characteristics and conditions of growth in immigrant and ethnic minority owned firms is really conspicuous in its absence.

Beyond Stereotypes and Misconceptions

The prevailing view of immigrant entrepreneurs (from both a research perspective and our general perceptions) is that they are active in small-scale and survival-oriented types of businesses. These operations may often be found in the least rewarding and most vulnerable economic sectors and spatial locations. A stereotypical view is that of entrepreneurs who own and run small-scale retail outlets, restaurants, dry cleaners and small taxi firms. We can be forgiven for our misconceptions, since these entrepreneurs are particularly visible to us, as we all meet and interact with them in our daily lives. What is less visible is the number of economic success stories and the immigrant entrepreneurs who grow their firms.
Indeed, academic research in the field so far mirrors our general perceptions of immigrant entrepreneurs. Despite a comprehensive amount of it, the existing literature on ethnic minority and immigrant entrepreneurship seldom accounts for growth in immigrant-owned businesses.

Encouraging – Reality of Success

Mr Mitchell describes that while the above-mentioned small-scale firms experience entrepreneurship at its harshest, since it entails a business life centred around staving off threats, cut-throat pricing and a constant fight to survive. He is certain that these firms are, of course, valuable for various reasons and explains that their success need not always be measured in strict economic terms. Such firms not only create jobs for their founder(s) but also employ individuals from the local community, these entrepreneurs and their firms rejuvenate stagnating sectors and spatial areas, act as entrepreneurial training facilities for young employees and are a hub of information for the local ethnic community. In addition, they act as bicultural mediators by selling culturally infused goods to the mainstream population. Finally, some research suggests that the legitimacy of owning a business is a means to social integration for immigrant entrepreneurs.
Furthermore, in terms of growth-oriented businesses, it is possible to find immigrant and ethnic minority entrepreneurs represented as growth-oriented and economically successful actors in the whole spectrum of industries. However, academia has a hard time explaining this contemporary phenomenon. When we lay our cards on the table, the immigrant and ethnic minority entrepreneurship research community actually knows very little about the growth of these exceptional businesses and the contextual determinants which foster them. Theoretical foundations in immigrant entrepreneurship research are insufficient to understand business growth, and business growth research is not sensitive to the nuances of ethnicity and immigration. Thus, Craig Mitchell’s work shows how these research fields can be integrated .
Recently there has been a flurry of interest in the impressive rates of growth, the increasing sectorial diversification and the changing fabric of immigrant entrepreneurship. Such cases are often exposed in the mainstream media, which are keen to adopt a romantic rags-to-riches narrative. These entrepreneurs are also beginning to catch the eye of researchers.
Research in this area has the potential of discovering, highlighting and underscoring how immigrant and ethnic minority owned SMEs, and entrepreneurship in general can help in EU’s effort to ensure economic growth, innovation, job creation and social integration in the EU.

Current Migration Situation – Challenge or Opportunity

Mr Mitchell makes one very timely reflection regarding possibilities of immigrant entrepreneurship related to the enormous amount of displaced individuals who have recently sought asylum in Sweden. Currently Sweden is experiencing a real shortage of accommodation for refugees in big cities, which have so far been overwhelmed with vast numbers of refugees. Thus for better or worse these individuals are finding themselves in rural areas all over Sweden. It will be interesting to see what will be the social and economic consequences of this . ‘Will refugees create the rejuvenation of stagnating sectors and spatial rural areas via entrepreneurship?’ is a question Mr Mitchell plans to approach, as he intends to start a research project which looks into the potential for these refugee groups to breathe life into stagnating sectors in the relevant areas.

Commodification of Ethnicity

The field of immigrant and ethnic minority entrepreneurship is often characterised by the debate on the influence of culture and the influences of structure. In essence, this push or pull debate asks whether immigrant and ethnic minority entrepreneurship is driven by a cultural propensity to do business or by structural stimuli such as blocked mobility in the mainstream labour market. Mr Mitchell agrees with the structural argument and is aware of the danger of attributing too much emphasis on ethnicity and culture, and how it affects entrepreneurial propensity. He, however, states that it is harmful to totally negate culture and ethnicity of immigrant and ethnic minority entrepreneurs. To do so would be equally misleading. Instead, the influence of ethnicity must still be seen as an active force, though operating in more nuanced ways.
Reflecting upon this very question led Mr Mitchell and his friend and colleague, Associate Professor Tobias Schölin, to approach the question what is a nuanced view of ethnicity in immigrant firms. They studied three ‘ethnic’ retailers in the city of Malmö, Sweden. Here the term ethnic referred not only to the background of the entrepreneur but also extended to the goods they were selling. They found that these immigrant – owned firms were heavily infused with cultural and ethnic elements influencing what they produced, what and how they sold, how they marketed their products and who their staff were. Products and the retail setting were loaded with ethnic connotations and perceptions. In this sense, ethnic minority and immigrant entrepreneurs act as brokers of ethnicity as a commodity; they themselves together with foreign products andethnic retail setting (music, smells and symbols) are all parts of the manipulation and the transformation of ethnicity as a strategic entrepreneurial action into a resource for competitive advantage.
This ethnicity under some circumstances is commodified into a source of competitive advantage and strategy for growth, in the sense that it has been utilised by these entrepreneurs in a strategic and purposeful manner by converting both the contents and the symbols of ethnicity into profit-making commodities. In their research project, Mitchell and Scölin called this the process of ‘ethnopreneurship’.

Next Generations

Research consistently shows that the second generation ethnic minority entrepreneurs are to a larger extent found in mainstream rather than ethnic markets, that they are more focused on business services and less on traditional migrant business sectors, as well as their prevalence in growth oriented firms. Some explanations for this include higher achievements in education and skills of the second generation, enabling many of these entrepreneurs to gain access to more promising markets. These individuals also have higher proficiency in the host language and more frequent contacts with the mainstream population than their parents’ generation. Last but not least, they enjoy a better understanding of how things work in the ‘host’ context. Mr Mitchell also adds that the motivation and driving forces of the second-generation entrepreneurs are different to that of their parents’ generation. Entrepreneurship appears to have a different connotation for the second generation immigrants – it is guided by pull motivations rather than push motivation of unemployment experienced by their parents’ generation. Entrepreneurship for the second generation becomes an active choice and their businesses get incorporated into more attractive areas of the economy. Baked into this process comes increased upward economic and social mobility and success. In terms of firm growth, motivations and aspirations of an entrepreneur are a crucial determinant for firm growth. One fruitful research area is that of exploring the prevalence of second and third generation ethnic minority entrepreneurs in the IT and ICT sectors.

Mr Mitchell also reflects upon the potential of newly arrived immigrants in Sweden and this also extends to many incoming refugees. Many of them are highly educated but unfortunately common discourse suggests that the first generation of highly educated immigrants is a huge untapped resource for society and economy. Their competences are underutilised. While these individuals are rich in human capital, they lack the extremely important entrepreneurial resource of social capital. Mr Mitchell points to an exciting upcoming accelerator programme in Skåne in the south of Sweden which he is proud to have the opportunity to follow. Through the accelerator programme the hope is to move these individuals to a sense of embeddedness in the Swedish society and economy. And not least champion the real contribution these individuals will make.

Mr Mitchell is quick to point out that the contents of this blog are the tip of the iceberg in terms of interesting and useful findings he has to offer on the subject, and only a snap shot of what he plans to do in the future. He expresses his sincere motivation to proceed and succeed, ‘Maybe I am a naive young researcher, but it is my hope that my research and my colleagues’ research make a real world impact. Constantly ringing in my ears is the term ‘publish or perish’, though for me research and academia extend beyond that, I hope to become an engaged scholar, by disseminating my findings and paying back to the entrepreneurs and the communities who grant me access to their firms and their lives. I also acknowledge the importance of continued and thoughtful dialogue with our policy and decision makers’.

Mr Mitchell has discussed how it was necessary to combine and integrate research perspectives from firm growth and ethnic minority entrepreneurship to be able to understand the phenomena of firm growth in firms owned by immigrant and ethnic minorities. He makes a similar reflection about the policy aimed at immigrant and ethnic minority entrepreneurs. Integration and migration policies and policies related to SMEs in general should not be mutually exclusive to each other, and it is often appropriate to integrate perspectives of both. What this means in practice is taking stock of the support needs of SMEs owned by immigrants and ethnic minorities in particular, are these needs always the same as mainstream SMEs or are they different? This question needs to be thoroughly understood. The untapped potential of immigrant and ethnic minority entrepreneurs has to be stressed again, this time, in terms of their unique position between host and origin or home countries. These firms are born with a unique global outlook from the start. A challenge for the policy is to tap into this potential of transnational and international entrepreneurship driven by immigrant and ethnic minority entrepreneurs. In summing up. Mr Mitchell positively points to Directorate General ‘GROW’ and believes that encouraging and supporting growth in SMEs should be at the top of its agenda.

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