Immigrant Capital and Entrepreneurial Opportunities

Abstract

Objective: The main objective of this study is to define and operationalize the concept of immigrant capital, a key factor that differentiates immigrant from host country entrepreneurs in how they recognize and start new ventures. Research Design & Methods: A detailed analysis of contemporary immigrant entrepreneurship and opportunity recognition literature was carried out. Using grounded theory, we synthesized the outcomes from the analysis of eight Canadian and U.S. case studies of successful immigrant entrepreneurs with the key findings from the literature to define and develop a model of immigrant capital. Findings: Based on our grounded theory development process we show that the concept of immigrant capital as a distillate of human, cultural, economic and social capital that goes beyond expected opportunity recognition (OR) drivers like prior knowledge and prior experience to differentiate and enhance the immigrant entrepreneur's ability to recognize business opportunities compared to host country entrepreneurs. We found immigrant capital to be a consequence of being boundary spanners in host and home country networks. Implications & Recommendations: Understanding a unique resource like immigrant capital, will help immigrant as well as host country entrepreneurs further develop their opportunity recognition ability by bridging gaps and fulfilling the needs for both, immigrant and host country consumers. Contribution & Value Added: The main contribution is the theoretical development, identification and definition of the immigrant capital model and propositions that will articulate the factors that lead to the conceptualization and operationalization of immigrant capital. Furthermore, the immigrant capital model can serve host country entrepreneurs to develop cross-cultural networks and jump-start entrepreneurial activities in their home countries as well as learn how to expand their operations into global markets.

Keywords

immigrant entrepreneurs, immigrant capital, opportunity recogni-tion, boundary spanners

Author Biography

Malavika Sundararajan

Assistant Professor in the Anisfield School of Business, Ramapo College of New Jersey, Mahwah, New Jersey, USA. She teaches Ethics in Business, Organizational Behavior and Entrepreneurship. Her research focusing on applying cognitive and behavioral models in the area of Entrepreneurial Opportunity recognition and ethical decision making. She has a Ph.D. in Management from Rensselaer Polytechnic Institute (New York, USA)

Binod Sundararajan

Associate Professor of Management in the Rowe School of Business at Dalhousie University in Halifax, Nova Scotia, Canada. He teaches Business Communication. His research focuses on Social network analysis, Historical data analysis, Systems theory, Constructivism, Thematic analysis, Language, Organizational learning, Networking technologies. He has a Ph.D. in Communications & Rhetoric from Rensselaer Polytechnic Institute (New York, USA)

References

1. Akee, R., Jaeger, D. A., & Tatsiramos, K. (2007). The persistence of self-employment across borders: New evidence on legal immigrants to the United States. Available at SSRN 1136412.
2. Aldrich, H. E. (1990). Using an ecological perspective to study organizational founding rates. Entrepreneurship Theory and Practice, 14(3), 7-24.
3. Aldrich, H. E., & Zimmer, C. (1986). Entrepreneurship through Social Networks, University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership.
4. Anderson, A. R., & Miller, C. J. (2003). Class matters: human and social capital in the entrepreneurial process. Journal of Socio-Economics, 32(1), 17-36.
5. Ardichvili, A., Cardozo, R., & Ray, S. (2003). A theory of entrepreneurial opportunity identification and development. Journal of Business Venturing, 18(1), 105-123.
6. Arenius, P., & De Clercq, D. (2005). A network-based approach on opportunity recognition. Small Business Economics, 24(3), 249-265.Arenius, P & De Clercq, D (2004). A network based approach to opportunity recognition, Vlerick Leuven Gent Working Paper Series, 2004/23
7. Baron, R. A. (2004). The cognitive perspective: a valuable tool for answering entrepreneurship's basic “why” questions. Journal of Business Venturing, 19(2), 221-239.
8. Baron, R. A. (2008). The role of affect in the entrepreneurial process. Academy of management Review, 33(2), 328-340.
9. Baron, R. A., & Ensley, M. D. (2006). Opportunity recognition as the detection of meaningful patterns: Evidence from comparisons of novice and experienced entrepreneurs. Management science, 52(9), 1331-1344.
10. Barrrett, G.A., Jones, T.P., & McEvoy, D. (2003). United Kingdom: severely constrained entrepreneurialism. In R. Kloosterman & J. Rath (Eds.), Immigrant entrepreneurs: venturing abroad in the age of globalization. Oxford: Berg.
11. Bash, L., Glick Schiller, N., & Szanton Blanc, C., (1994). Nations Unbound: Transnational Projects: Postcolonial Predicaments and Deterritorialized Nation-States. Amsterdam: Gordon & Breach.
12. Basu, A. (1998). An exploration of entrepreneurial activity among Asian small businesses in Britain. Small Business Economics, 10(4), 313-326.
13. Bates, T. (1997). Financing small business creation: The case of Chinese and Korean immigrant entrepreneurs, Journal of Business Venturing, 12(2), 109-124.
14. Becker, G.S. (1964). Human Capital, Chicago, University of Chicago Press.
15. Benhabib, A., Merabet, A., Benachenhou, M., Grari, Y., Boudia, F. & Merabet, H. (2014). Environmental and Individual Determinants of Female Entrepreneurship in Algeria: Applying the Structural Equation Modeling, Entrepreneurial Business and Economics Review, 2(1), 65-80
16. Bhagavatula, S., Elfring, T., van Tilburg, A., & van de Bunt, G. G. (2010). How social and human capital influence opportunity recognition and resource mobilization in India's handloom industry. Journal of Business Venturing, 25(3), 245-260.
17. Bird, B. J. (1992). The Roman God Mercury An Entrepreneurial Archetype. Journal of Management Inquiry, 1(3), 205-212.
18. Burt, R. S. (2009). Structural holes: The Social Structure of Competition. Harvard University Press.
19. Cardon, M. S., Wincent, J., Singh, J., & Drnovsek, M. (2009). The nature and experience of entrepreneurial passion. Academy of Management Review, 34(3), 511-532.
20. Cardon, M. S., Zietsma, C., Saparito, P., Matherne, B. P., & Davis, C. (2005). A tale of passion: New insights into entrepreneurship from a parenthood metaphor. Journal of Business Venturing, 20(1), 23-45.
21. Christenson, P.S., & Peterson, R. (1990) Opportunity Recognition: Mapping the Sources of New Venture Ideas. Paper presented at the 10th annual Babson Entrepreneurship Research Conference, Denmark: Aarhus University Institute of Management.
22. Contreras-Sweet, M. (2015). Immigrant Entrepreneurs Help Fuel Record Growth Streak. Retrieved on May 30, 2015 from https://www.sba.gov/blogs/immigrant-entrepreneurs-help-fuel-record-growth-streak.
23. Cooper, A. C., & Dunkelberg, W. C. (1986). Entrepreneurship and paths to business ownership. Strategic Management Journal, 7(1), 53-68.
24. Dana, L. P. (1996). Self‐employment in the Canadian Sub‐Arctic: An Exploratory Study. Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l'Administration, 13(1), 65-77.
25. Davidsson, P. (2003). The domain of entrepreneurship research: Some suggestions. Advances in Entrepreneurship, Firm Emergence and Growth, 6(3), 315-372.
26. Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3), 301-331.
27. Douglas, D. (2003). Inductive theory generation: A grounded approach to business inquiry. Electronic Journal of Business Research Methods, 2(1), 47-54.
28. Dyer, J. H., Gregersen, H. B., & Christensen, C. (2008). Entrepreneur behaviors, opportunity recognition, and the origins of innovative ventures. Strategic Entrepreneurship Journal, 2(4), 317-338.
29. Fairlie, R.W. (2008). Estimating the contribution of immigrant business owners to the U.S. economy. Office of Advocacy Research Summary No. 334. Washington: Small Business Administration.
30. Foo, M. D. (2011). Emotions and entrepreneurial opportunity evaluation. Entrepreneurship Theory and Practice, 35(2), 375-393.
31. Foo, M. D., Uy, M. A., & Baron, R. A. (2009). How do feelings influence effort? An empirical study of entrepreneurs’ affect and venture effort. Journal of Applied Psychology, 94(4), 1086-1094.
32. Friedman, R. A., & Podolny, J. (1992). Differentiation of boundary spanning roles: Labor negotiations and implications for role conflict. Administrative Science Quarterly, 37, 28-47.
33. Froschanuer, K. (2001). East Asian and European Entrepreneur Immigrants in British Columbia, Canada: post-migration conduct and pre-migration context. Journal of Ethnic and Migration Studies, 27(2), 225-240.
34. Furman, J., & Gray D. (2012). Ten Ways Immigrants Help Build and Strengthen Our Economy, Retrieved on May 30, 2015, from https://www.whitehouse.gov/blog/2012/07/12/ten-ways-immigrants-help-build-and-strengthen-our-economy.
35. Glaser, B. G. (1992). Emergence vs Forcing: Basics of Grounded Theory Analysis. Sociology Press.
36. Glaser, B., & Strauss, A. (1967). The discovery ofgrounded theory. London: Weidenfeld and Nicholson.
37. Hart, D. M., Acs, Z. J., & Tracy, S. L. (2009). High-Technology Immigrant Entrepreneurship in the U.S. U.S. Small Business Administration, Office of Advocacy, July 1 2009.
38. Hills, G. E. (1995). Opportunity recognition by successful entrepreneurs: A pilot study. Frontiers of Entrepreneurship Research, 15, 105-117.
39. Hills, G. E., Shrader, R. C., & Lumpkin, G. T. (1999). Opportunity recognition as a creative process. Frontiers of entrepreneurship research, 19(19), 216-227.
40. Hofstede, G., Noorderhaven, N. G., Thurik, A. R., Uhlaner, L. M., Wennekers, A. R. M., & Wildeman, R. E. (2004). Culture. In Brown, T. E. & Ulijn, J. (Eds), Innovation, Entrepreneurship and Culture (pp. 162-203). Cheltenham, UK: Edward Elgar.
41. Hostager, T. J., Neil, T. C., Decker, R. L., & Lorentz, R. D. (1998). Seeing environmental opportunities: effects of intrapreneurial ability, efficacy, motivation and desirability. Journal of Organizational Change Management, 11(1), 11-25.
42. Ibrahim, G., & Galt, V. (2003). Ethnic business development: Toward a theoretical synthesis and policy framework. Journal of Economic Issues, 1107-1119.
43. Jack, S. L., & Anderson, A. R. (2002). The effects of embeddedness on the entrepreneurial process. Journal of Business Venturing, 17(5), 467-487.
44. Kirzner, I. M. (1973). Competition and Entrepreneurship. University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship
45. Kontinen, T., & Ojala, A. (2011). Network ties in the international opportunity recognition of family SMEs. International Business Review, 20(4), 440-453.
46. Krueger, N.F. (1993). The impact of prior entrepreneurial exposure on perceptions of new venture feasibility and desirability. Entrepreneurship Theory and Practice, 18(1), 5–21.
47. Kwon, S. W., & Arenius, P. (2010). Nations of entrepreneurs: A social capital perspective. Journal of Business Venturing, 25(3), 315-330.
48. Langford, C.H, Josty, P., & Holbrook, J.A. (2013). Driving wealth creation & social development in Canada, 2013 GEM Canada National Report, The Centre for Innovation Studies (THECIS): Calgary, Alberta.
49. LEAF (2005). The Equality Deficit – Chinese Immigrant Women in Canada. Women’s Legal Education and Action Fund (LEAF). LEAF’s Person’s Day Breakfast, Toronto, November 2.
50. Light, I., & Rosenstein, C. (1998). Race, Ethnicity, and Entrepreneurship in Urban America, Aldine Transaction.
51. Light, I. (2014). America: A Land of the Immigrant Entrepreneur, The Islamic Monthly, Septemebr 1, 2014.
52. Marger, M.N. (2001). The use of social and human capital among Canadian business immigrants, Journal of Ethnic and Migration Studies, 27(3), 439-453.
53. Masurel, E., Nijkamp, P., Tastan, M., & Vindigni, G. (2012). Motivations and Performance Conditions for Ethnic Entrepreneurship. Tinbergen Discussion Paper No. 01-048/3.
54. Mitchell, J. R., & Shepherd, D. A. (2010). To thine own self be true: Images of self, images of opportunity, and entrepreneurial action. Journal of Business Venturing, 25(1), 138-154.
55. Nahapiet, J., &Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23(2), 242-266.
56. Ndoen M. L., Gorter, C., Nijkamp, P., & Reitveld, P. (2000). Entrepreneurial Migration and Regional Opportunities in Developing Countries, Tinbergan Discussion Paper No. 00-086/3.
57. Nicolaou, N., & Shane, S. (2009). Can genetic factors influence the likelihood of engaging in entrepreneurial activity?. Journal of Business Venturing, 24(1), 1-22.
58. Ozgen, E., & Baron, R. A. (2007). Social sources of information in opportunity recognition: Effects of mentors, industry networks, and professional forums. Journal of Business Venturing, 22(2), 174-192.
59. Pécoud, A. (2000). Thinking and rethinking ethnic economies. Diaspora: A Journal of Transnational Studies, 9(3), 439-462.
60. Portes, A. (2000, March). The two meanings of social capital. In Sociological forum (Vol. 15, No. 1, pp. 1-12). Kluwer Academic Publishers-Plenum Publishers.
61. Portes, A., & Sensenbrenner, J. (1993). Embeddedness and immigration: Notes on the social determinants of economic action. American Journal of Sociology, 1320-1350.
62. Puhakka, V. (2006). Effects of Social Capital on the Opportunity Recognition Process. Journal of Enterprising Culture, 14 (2), 105-124
63. Putnam, R. (2000). Bowling alone, the collapse and revival of civic America. New York.
64. Ramos-Rodríguez, A. R., Medina-Garrido, J. A., Lorenzo-Gómez, J. D., & Ruiz-Navarro, J. (2010). What you know or who you know? The role of intellectual and social capital in opportunity recognition. International Small Business Journal, 28(6), 566-582.
65. Razin, E., & Scheinberg, D. (2001). Immigrant entrepreneurs from the former USSR in Israel: Not the traditional enclave economy. Journal of Ethnic and Migration Studies, 27(2), 259-276.
66. Riquelme, H.E. (2013). In Search of Entrepreneurial Opportunities - An Integrated Model. Journal of Enterprising Culture, 21 (3), 249-274.
67. Sanders, J., Nee, V., & Sernau, S. (2002). Asian immigrants' reliance on social ties in a multiethnic labor market. Social Forces, 81(1), 281-314.
68. Saxenian, A. (2002). Brain circulation. How high-skill immigration makes everyone better off. Brookings Review, 20(1), 28-31.
69. SBA Report. (2012). https://www.sba.gov/sites/default/files/advocacy/Small_Business_Economy _2012.pdf
70. Schiller, N. G., Basch, L., & Blanc-Szanton, C. (1992). Towards a transnational perspective on migration: race class ethnicity and nationalism reconsidered.
71. Sequeira, J. M., & Rasheed, A. A. (2006). Start-up and growth of immigrant small businesses: the impact of social and human capital. Journal of Developmental Entrepreneurship, 11(04), 357-375.
72. Shane, S. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4), 448-469.
73. Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217-226.
74. Shepherd, D. A., & DeTienne, D. R. (2005). Prior knowledge, potential financial reward, and opportunity identification. Entrepreneurship Theory and Practice, 29(1), 91-112.
75. Simon, M., Houghton, S. M., & Aquino, K. (2000). Cognitive biases, risk perception, and venture formation: How individuals decide to start companies. Journal of Business Venturing, 15(2), 113-134.
76. Singh, R. P., Hills, G. E., Lumpkin, G. T., & Hybels, R. C. (1999, August). The entrepreneurial opportunity recognition process: Examining the role of self-perceived alertness and social networks. In Academy of Management Proceedings (Vol. 1999, No. 1, pp. G1-G6). Academy of Management.
77. Singh, R. P. (2001). A comment on developing the field of entrepreneurship through the study of opportunity recognition and exploitation. Academy of Management Review, 26(1), 10-12.
78. Smith, A. (1937). An Inquiry into the Nature and Causes of the Wealth of Nations. РиполКлассик.
79. Stark, O., & Wang, Y. (2002). Inducing human capital formation: migration as a substitute for subsidies. Journal of Public Economics, 86(1), 29-46.
80. Swidler, A. (2001). Talk of Love. How Culture Matters. Chicago: University of Chicago Press.
81. Tang, J., Kacmar, K. M. M., & Busenitz, L. (2012). Entrepreneurial alertness in the pursuit of new opportunities. Journal of Business Venturing, 27(1), 77-94.
82. Tumasjan, A., & Braun, R. (2012). In the eye of the beholder: How regulatory focus and self-efficacy interact in influencing opportunity recognition. Journal of Business Venturing, 27(6), 622-636.
83. Vaghely, I. P., & Julien, P. A. (2010). Are opportunities recognized or constructed?: An information perspective on entrepreneurial opportunity identification. Journal of Business Venturing, 25(1), 73-86.
84. Vinogradov, E., & Kolvereid, L. (2007). Cultural background, home country national intelligence and self-employment rates among immigrants in Norway. Paper presented at the 8th ISIR Conference, Amsterdam, Sweden, 13-15 December, 2007.
85. Waldinger, R., Aldrich, H., & Ward, R. (1990). Opportunities, group characteristics, and strategies. Ethnic Entrepreneurs, 13-48.
86. Zhou, M. (2004). Revisiting ethnic entrepreneurship: convergencies, controversies, and conceptual Advancements1. International Migration Review, 38(3), 1040-1074.