Linköping university - Department of Culture and Society (IKOS) Master´s Thesis, 30 Credits – MA in Ethnic and Migration Studies (EMS) ISRN: LiU-IKOS/EMS-A--20/06--SE
Experiences of immigrant
entrepreneurs in the context of the
Swedish society
Kin Ting Ip
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Abstract
Immigrant entrepreneurs are seen in many societies in present days, no exception for a country like Sweden with a significant number of foreign-born populations. This thesis gets in touch with current immigrant entrepreneurs in the country to obtain first-hand experiences in the entrepreneurial process. The thesis explores the factors affecting these immigrant entrepreneurs in business establishment from the first-person point of view. Employing the mixed embeddedness approach in analysis, the thesis investigates the interactions between the immigrant entrepreneurs and the environment. Every part of the society and individual characteristics could impact the decision made by immigrant entrepreneurs regarding business establishment. The establishment of business is a result of contributions from many different elements surrounding the immigrant entrepreneur. This thesis represents some of the many actual experiences in the Swedish society. There is still an extensive field left to explore and many diversified experiences to be discovered.
Keywords: immigrant entrepreneur, ethnic business, self-employment, immigrant business owner, Sweden, entrepreneurial activity
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Acknowledgements
I would like to take this chance to thank my supervisor, Martin Klinthäll for his continuous support in this research project. Thank you for taking me through from zero to this point in this research. Your advices and guidance helped me to overcome many challenges in this academic journey, particularly in this period of hard time.
I would also like to thank all the faculty in the EMS community. The previous one and a half year aroused my curiosity in conducting a research in the field. The time has also helped me to build up the necessary knowledge base to kick off this research project. Moreover, the warm atmosphere has been supporting me through this almost two-year period.
Last but not least, to all fellow master students, a great thank you to you all. Thank you for those who have helped me contacting participants in this study. Thank you for everyone who has given me advices and supports in all these academic works. Thank you for everyone who shared their works in the community, you are all inspiring. I am very glad to be in a truly diversified student group. You guys have made my study life fruitful.
There are perhaps many more thank you to say, to my friends and family far away. Without supports from all of them, it is not possible for me to walk till this point.
Norrköping, May 2020 Dennis Kin Ting Ip
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Table of Content
1 INTRODUCTORY CHAPTERS ... 4
1.1 INTRODUCTION ...4
1.2 DEFINING ETHNIC BUSINESS FOR THE STUDY...5
1.3 RESEARCH AIMS AND QUESTIONS ...7
1.4 PREVIOUS RESEARCH AND LITERATURE IN SWEDEN ...9
1.4.1 Overview of immigrant business research in Sweden...9
1.4.2 General situations surrounding immigrant entrepreneurs ... 10
1.5 THEORETICAL FRAMEWORK ... 12
1.5.1 Mixed embeddedness approach ... 12
1.5.2 Opportunity structures ... 14
1.6 RESEARCH METHOD ... 16
1.6.1 Data collection ... 16
1.6.2 Ethical consideration ... 18
1.6.3 Data Analysis – Thematic analysis ... 18
1.7 SAMPLING ... 19
1.8 LIMITATIONS AND CONSTRAINTS ... 19
1.8.1 Sampling size ... 19
1.8.2 Language differences ... 20
2 ANALYTICAL CHAPTERS ... 22
2.1 PARTICIPANTS ... 22
2.2 MICRO LEVEL EMBEDDEDNESS ... 24
2.2.1 Human capital ... 24
2.2.2 Financial capital ... 27
2.3 MESO LEVEL EMBEDDEDNESS ... 27
2.3.1 Personal network ... 27
2.3.2 Ethnic network ... 30
2.3.3 Informal (un)written social norms in the neighbourhood ... 33
2.4 MACRO LEVEL EMBEDDEDNESS ... 35
2.4.1 Governmental regulations and policies ... 35
2.4.2 Non-governmental institutions ... 37
2.5 ASSESSING MARKET OPENINGS BY THE IMMIGRANT ENTREPRENEURS ... 39
2.5.1 Niche market ... 39
2.5.2 Post-industrial/high-skilled openings ... 41
2.6 SUMMARY: REASONS TO ESTABLISH A BUSINESS ... 42
2.7 INTEGRATION THROUGH SELF-EMPLOYMENT ... 44
2.8 IMMIGRANT ENTREPRENEURS UNDER PANDEMIC... 47
3 CONCLUDING CHAPTERS ... 49
3.1 FINDINGS SUMMARY... 49
3.2 IMPLICATIONS ON THE THEORETICAL FRAMEWORK ... 51
3.3 SUGGESTIONS FOR FURTHER RESEARCH... 52
4 REFERENCE ... 54
5 APPENDIX I GUIDING QUESTIONS AND INTRODUCTION TO THE STUDY FOR INTERVIEWEES ... 57
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1 Introductory chapters
1.1 Introduction
In the contemporary world, the ties between countries have become closer and closer. The movements of people across countries have also become more frequent. It is now more common for people to choose to reside in countries apart from their countries of origin. There is no exception for Sweden. According to Statistics Sweden (2020), the number of foreign-born populations has been doubled to over 2 million in the past two decades. The incoming populations bring along with workforce, human capital, cultures and many more to the host country. As every individual is different, they would develop themselves in the new country of residence in their own ways. Among the large number of incoming populations, a part of them would choose to establish their own businesses to become self-employed instead of entering the labour market as an employee. This phenomenon is very common in modern societies around the world. It is easy to observe shops and businesses on the streets that are owned by immigrants. The term “ethnic business” emerged as businesses established by immigrants have become more significant in the society. It would be worthy to explore more deeply to understand the decisions made by these immigrants to establish their own businesses.
In this introductory part, I first set up the stage for discussions of the study by defining the scope and terms under the theme. Ethnic business could carry various meanings in different contexts. It is essential to establish the ground for discussion in the beginning of the thesis before going into discussions. Interrelated terms are also introduced and discussed in this section. Following that, the purpose of research and the research questions are explained. It is to clarify and further elaborate the aims of this study so the scope of the study could be seen more clearly. After that, previous research from the field in the Swedish context is reviewed. This provides a general picture of the topic in the particular context of the Swedish society. Then, the theoretical framework is introduced. There are several theories or approaches that could be employed to conduct research in this field. In this part, the rationale of the choice of approach in the study are explained. I am going to discuss the merits of the approach adopted over the others. In the following sections in this introductory part, the research method is described and explained. This includes the explanations of ways to collect information for
5 study and the actual practice done in the research. The whole introductory part is setting the scene for the analytical chapters. It is establishing the structure of the research and paving the way to more in-depth discussions in the following sections. By the end of the introductory chapters, there is a discussion on the constraints and limitations of this study.
1.2 Defining ethnic business for the study
The term “ethnic business” is a general term describing the behaviour of self-employment among ethnic minority groups in the society. There have been a wide range of discussions on the topic in the academia worldwide. Due to the differences in the sociocultural contexts, there could be various similar academic terms describing the situation. Some examples are “ethnic minority business”, “emigrant ethnic business”, “immigrant entrepreneur” and etc. In order to establish the ground for discussion here in this research, it is necessary to define the meaning of “ethnic business” before going deep into the discussion. This study aims to explore the behaviour of business owners who are immigrants from other countries. Therefore, the term “immigrant entrepreneurs” is employed to specify the target group of population to study as well as to avoid possible confusions in the Swedish context. The study aims to focus on the unique environment faced by this group of population in the society. The main purpose of the study is to explore the factors affecting immigrants’ decision to go into self-employment in Sweden. Thus, it is necessary to distinguish foreign-born people to conduct the study. The term “ethnic minorities” would not be accurate enough to specify the research target. It is because in the Swedish context, there are five official national minorities defined by law, which are Jews, Roma, Sami, Swedish Finns and Tornedalers. Their languages and cultures are protected by law and have a specific legal status (Swedish Government, 2009 Lag (2009:724) om
nationella minoriteter och minoritetsspråk). These official national minorities would be in an
environment differ from immigrants from other countries and hence leading to another area of study. In order to avoid confusions in the discussions in this paper, it has to be clear that the topic of ethnic business is focusing on the businesses established by foreign-born population. These population groups could be identified as “ethnic minorities” in general in the society, however, they should be carefully distinguished from the official national minorities which refer to particular groups of population as defined by law.
6 In order to foster the discussions and to standardise the term for the study in the following parts, the term “immigrant entrepreneurs” is going to be used as the subject of the study. In the previous part, I have explained the contextual relations between the terms “ethnic minority” and “immigrant”. As a way to avoid confusions in discussions, the use of “immigrant” is more preferred than to mention the business owners than the use of “ethnic minority”. In previous research, it is often for scholars to describe immigrant business owners as self-employed, as an opposition to the counterparts entering the labour market through employment by firms already existing. “Business owners” and “self-employed” are almost interchangeably used in research. In here, I would like to introduce the term “entrepreneur” to describe the subjects of study in this thesis. The three terms are almost used as synonyms in the academia by scholars but in some circumstances the term “entrepreneur” or “entrepreneurship” may be dedicated to businesses in a larger scale which are more significant in the society, there is also an emphasis on innovative elements in the business, meanwhile, smaller businesses operated by average households are excluded as “entrepreneurship” (Kloosterman and Rath, 2003; Welter et al., 2017). Kloosterman and Rath (2003) had put strong emphasis on the opportunity structure when studying self-employed immigrants. The scale of the businesses depends on the environment of the society and the market. Therefore, different types and sizes of businesses could both be seen as entrepreneurship. Welter et al. (2017) shares similar notion, as limiting the term “entrepreneurship” to large-scale businesses restricts the scope of study and thus restricting the findings. These ideas would be implemented in this thesis so the target of study could be more open and at the same time, the cases studied would be closer to everyday life examples and more commonly seen. To conclude, the term “entrepreneur” or “entrepreneurship” carries almost identical meanings and implications as other mentioned terms like “business owner” and “self-employed”. It also suits the context of the study therefore the term “immigrant entrepreneur” will also be used together with the other mentioned terms to describe the research targets throughout the paper.
In here, I would like to address a special concern on business owners with European Union citizenships. Strictly speaking, these people satisfy with the criteria to be defined as immigrants because they are not born in Sweden. However, their situations are in practice lying somewhere in between local and foreign-born. Due to the unique conditions of entry to Sweden applied to EU citizenship holders, the situations they face are different from non-EU immigrants. Similar situations also apply to immigrants from Norway and Iceland, who have migration arrangement conditions differ from non-EU immigrants. One major difference is the ease to enter the
7 country. The free movement of EU citizens between member states brings along with the right of residence and the right to work. EU citizens and citizens from Nordic countries are not required to obtain a residence permit to stay and work in Sweden while non-EU immigrants are required to prove their capability to sustain their living in order to obtain a residence permit to stay and work (Swedish Migration Agency, 2020). This poses a great difference in accessing the labour market between EU citizens and non-EU immigrants. As going into self-employment is considered as an alternative to entering the labour market, the access to the labour market implies huge influences on the individual’s decision to establish a business. There is a need to distinguish immigrants from the EU and non-EU immigrants as two different population groups. In this study, I would like to focus on non-EU immigrant population groups that have chosen to start their own businesses. Therefore, immigrants from the EU are excluded as the target subjects in the study. It is to eliminate the possibility of huge divergence between non-EU immigrants and the immigrant groups mentioned above that could not be compared directly in the study.
1.3 Research aims and questions
The main purpose of this study is to explore the reasons why some immigrants have decided to run their own businesses in Sweden. Generally speaking, by the time when individuals migrate to Sweden, they have to decide on how to maintain their living in the new environment. It is one of the basic steps for every immigrant to adapt to the host society. From another point of view, the adaption process of these immigrants is reflecting the major area of discussion about integration in migration studies. The ability to work and maintain the living, and hence not requiring the host society to provide prolong assistance are often seen as crucial in integrating foreign population in the host society (Kloosterman and Rath, 2003). Immigrants are also looking for ways to get themselves to be a part in the society and avoid exclusion in many senses. In the economic context, immigrants have the need to produce wealth in order to integrate into the host society. Their decisions would usually go into one of the two directions, that is, either entering the labour market through employment from firms or being self-employed as business owners. The two options to a certain extent, are in the opposite direction. Although the two options may not be mutually exclusive as some individuals may become wage labour and business owner at the same time, there are still factors motivating them to make such a decision. The study aims to answer the following three research questions:
8 - Why do these immigrant entrepreneurs choose to be self-employed?
- How do they cope with the business environment in Sweden?
- How do they see self-employment as a way to integrate into the society?
The first question focuses on the root causes of the decision to start businesses instead of other alternatives by these immigrant entrepreneurs. It is to examine how an original idea has grown into an actual plan in the establishment of business. The answers of this question would be relating to the personal aspects and attributes of the informants. It is the personal perception from these entrepreneurs on assessing the opportunities in the country. Assessments of opportunities had been carried out by these entrepreneurs at the beginning stage of business development. Multiple concerns should be considered by the entrepreneurs. They could have considered the potential rewards that are comparable to entering the labour market, and to utilise cultural or situational advantages to bring in the rewards (Kaplan, 1998). The analysis and conclusion done by the entrepreneurs reflect that there were possible advantages to start their own businesses over other alternatives. To assess these possible advantages, there could be contributions from various aspects. Different aspects of contribution as a result would become the general motivation to start the business as a final decision.
The second question aims to figure out the interactions between the Swedish business environment and the immigrant entrepreneurs. Despite extensive assessments of opportunities done by these immigrant entrepreneurs, there could still be hurdles or unexpected challenges experienced during the setting up of business as well as daily operations. Immigrant entrepreneurs need to adapt to the unfamiliar environment in order to be successful or survive in the market. Through this research question we can observe the business environment in Sweden through an immigrant entrepreneur’s perspective. The research question would probably open up a discussion in the institutional aspects as institutions and regulations are building up the framework of business environment in the society. There could also be some social norms or cultural differences posing hurdles for immigrant entrepreneurs to operate their businesses in a place away from their country of origin.
The third question refers to the theme of integration through employment opportunities. This is to see to what extent these self-employed immigrants perceive their businesses performing the purpose of integration in the host society. While integration to the society may not be their initial intention to establish the business, there is chances that the business actually help them
9 to integrate into the society. It is also to see how a self-owned business can take part in the integration process of immigrants. Integration can be both the cause and effect of business establishments by immigrants. This question could explore the perceptions of immigrant entrepreneurs in the theme of integration.
The three research questions aim approach the topic from different dimensions. They are relating to different levels of the society that immigrant entrepreneurs are engaging in. Through investigating in the three research questions, it is hoped that the study could generate a comprehensive view explaining the emergence of immigrant entrepreneurs in the Swedish society. The phenomenon is multi-faceted and the reasons behind shall be linked with many aspects. It is to see the driving forces of business establishments perceived by immigrants and on the other hand the potential impacts on integration through entrepreneurial activities.
1.4 Previous research and literature in Sweden
1.4.1 Overview of immigrant business research in Sweden
Looking at the research field of immigrant business worldwide, Sweden has a lower number of researches comparing to countries like the United States, the United Kingdom, Australia, the Netherlands and Germany (Klinthäll et al, 2016). Studies originated in different countries could have different focuses and approaches. The research field in Sweden is also influenced by other countries that have developed immigrant business research in earlier years (Slavnic, 2013). During the past decades, there were shifts in the research trend in general in the field of immigrant small business in Sweden. In the 1990s, immigrant small business research in Sweden focused on the side of policy supporting. Most of the studies on immigrant small business in Sweden in this period of time were published in relation to government organisations, institutions and authorities. The purposes of these studies were primarily echoing the policy agenda of the government. Immigrant small businesses in these studies were portrayed as the propellers for the Swedish society by offering flexibility, economic growth and integration of immigrants through employment (Slavnic, 2013). The general perception about immigrant businesses reflected by studies in that period of time was rather one-sided and thus influenced the development of the research field in the next decade. A more diversified research field emerged in Sweden in the 2000s. While policy-supporting studies were still
10 widely seen, there were higher academic interests in immigrant small business and more political-critical studies were present. There were also more specific themes in the studies of immigrant businesses in Sweden. These resulted in more depth and width in the research field of immigrant business in the Swedish society (Slavnic, 2013).
1.4.2 General situations surrounding immigrant entrepreneurs
There used to be a higher proportion of immigrant population than local population in Sweden to become self-employed. The situation has changed slightly as nowadays both population groups share similar proportion of self-employed population. There is a widespread of business sectors that immigrants are engaging in, but some sectors are particularly overrepresented in academic research (Kilnthäll et al, 2016). Previous research has discovered several features about immigrant entrepreneurs in Sweden. There are also common challenges that these group of population faced in conducting entrepreneurial activities or getting into the society in general.
Work is an imminent need to many immigrants when they arrived in the host country. Slavnic (2012) has pointed out that the purpose of work for immigrants is not limited to maintain their living following the arrival. It is to satisfy the economic need for money as well as psychological demand. In the case investigated by Slavnic (2012), the immigrant demanded to work as he would like to create a sense of normal life in the host country. He could even do that without monetary rewards. The purpose of work then poses a question to immigrants on how to get the opportunity to work in Sweden. Discrimination against immigrants in the Swedish labour market is widely observed and mentioned in previous studies. This could come in the forms of barriers in job seeking or unequal treatment in same job positions (Evansluong, 2016; Slavnic, 2012; 2015). Immigrants were also facing discrediting or undervaluing of their qualifications and experiences from employers in the Swedish society. This had resulted in a mismatch in human capital and corresponding job positions (Khosravi, 1999). The labour market environment has been undesirable to many immigrants because of the above factors, therefore, some of the immigrants would consider an alternative way to serve the need of work by getting into self-employment. To a certain number of immigrant entrepreneurs, there has been a push from the mainstream labour market to them to consider establishing their own businesses. Entrepreneurships have been a solution to them to get around the discriminations faced in the mainstream labour market in Sweden. To a certain extent, self-employment also
11 acts as a way to preserve dignity by providing an opportunity that fits with the immigrant’s calibre (Khosravi, 1999).
Self-employment does not imply an absolute better-off to immigrants in many cases. Slavnic (2015) investigated on self-employed immigrant taxi drivers that these group of immigrant entrepreneurs suffered from self-exploitations in daily operations of the business. These immigrant entrepreneurs had to endure long working hours in order to compensate the lower price rate in comparison to local competitors. Articulating demands from co-ethnics could also draw competitions from the same ethnic group, and face culture-related challenges in daily operations in business (Khosravi, 1999). When the business has entered a stable stage, immigrant entrepreneurs could face obstacles in expansion of the business. One of the obstacles comes from financial institutes. Capital injection for expansion is proved to be challenging to immigrant entrepreneurs, despite having a decent business operation record. This reflects some unwritten rules in the banking industry that hinder the expansion of businesses established by immigrant entrepreneurs (Slavnic, 2012). Another side of obstacles comes from the barriers in obtaining larger-scale business contracts. The size of firms operated by immigrant entrepreneurs has become a huge constraint in attending larger tenders. Examples like public procurements are proven unfavourable to immigrant entrepreneurs as the requirements in different aspects applied to suppliers are too high for immigrant small businesses to meet. Although supplier diversity and inclusive purchasing are promoted in public procurement, the barriers are still high to immigrant entrepreneurs in Sweden (Kordestani et al, 2017). Lack of resources including manpower and assets is the main challenge for immigrant entrepreneurs to further expand their businesses and move upward in the market. This situation is more obvious when the market is occupied by large-scale firms. Immigrant entrepreneurs could thus only remain in the lower quartile of the market segment (Slavnic, 2015).
Tibajev (2019) has studied about the correlations between entrepreneurships in Sweden and the country of origin of immigrants. The study affirmed a positive relationship between entrepreneurial experiences in the country of origin and the tendency in business establishment in the host country. The relationship is not built upon the popularity of entrepreneurship in the country of origin, but the actual entrepreneurial histories of individuals instead. Entrepreneurial experiences possessed by immigrants are a form of human capital that could be brought across borders. This type of entrepreneurial human capital is not necessarily business sector-specific, which means immigrant entrepreneurs could actually generalise their entrepreneurial skills in
12 various business sectors. The transferability of the mentioned entrepreneurial human capital could imply similar conditions for immigrant entrepreneurs in other countries (Tibajev, 2019).
1.5 Theoretical framework
1.5.1 Mixed embeddedness approach
There has been extensive research in the field of immigrant entrepreneurs worldwide. Approaches to the topic also vary from time to time and from country to country. It is somehow hard to define a “perfect” approach to conduct studies in the field. However, previous research may provide insights on possible choices to address the topic. Ibrahim and Galt (2003) have argued that the cultural approaches and the economic approaches are insufficient to explain the relationships between ethnic groups and business formations. These approaches fail to compile the complex and intersectional reality that contributes to the situation and thus underestimate the influences on the individuals from various aspects. They could only provide a partial explanation to the actions taken by the population groups. In order to provide a more comprehensive explanation to the phenomenon in the study, it is essential to adopt an approach that can incorporate different aspects in analysing the situation in the society. In this part of the thesis, I would like to introduce the mixed embeddedness approach. This approach will be the adopted in this thesis.
Concerning the shortcomings of the traditional neo-classical model in analysing the emergence of immigrant entrepreneurship, Kloosterman and Rath (2001) proposed a more extensive approach to include factors apart from the market demand and supply. It is suggested that opportunities involve not only the demand and supply in the market, but also many other influences. Immigrant entrepreneurs are embedded into different layer of influences that would affect their assessments of opportunities in the market. These layers of influence in general could be divided into three different layers. In earlier literature, the three layers were described as the national level, the urban/regional level and the neighbourhood level (Kloosterman and Rath, 2001). Following development in research, the layers are now referred as the macro, meso and micro level to describe the influences on immigrant entrepreneurs from different aspects. Opportunity structures are not limited to the market economy, there are also dynamics between institutions, regulations and socio-cultural contexts. On the macro level, it is typically
13 referring to the institutional or regulatory context. Opportunities available to entrepreneurs are restricted by law or governmental rules, shaping the general outlook of the market. It is also linked to the macro-economic aspects that the economy of a country as a whole could impact the business environment for every entrepreneur. On the meso level, the network and connection of the entrepreneur are concerned. Social network of immigrant entrepreneurs concerns mainly about family network and ethnic network. They contain a certain amount of social capital like information and resources that are only accessible to family members or individuals with same ethnic background (Kazlou, 2019). Access to the market and resources are important to a business so network and connection could be crucial to a successful business. Lastly the micro level, it is referring to the personal capital and resources, including the supports from family members, that the entrepreneur possesses. These resources could be financial capital as well as human capital. The educational level as well as technical skills and knowledge of the entrepreneur is considered to be a significant factor affecting the choice of business while the amount of financial capital available would also determine the scale and type of business the entrepreneur chose to establish. Human capital is also referred in a broad sense that the personalities and characteristics of an individual should also be considered. The availability of family members as the reinforcement of manpower also contributes to the capability of business operations. The three layers are interrelated and the dynamics between the entrepreneur and these layers of factors finally contribute to the choice of business establishment (Kloosterman and Rath, 2001; 2018).
The mixed embeddedness approach has been widely adopted in the field of immigrant entrepreneur studies since its introduction. It is an open framework to explain the interactions between the environment and individual entrepreneurship (Kloosterman and Rath, 2018). The approach offers a composition of analysis in various aspects and hence generating a more complete explanation to the entrepreneurial decision made by the entrepreneurs. Through the observations in different levels of embeddedness of the immigrant entrepreneurs, it could provide a dynamic analysis to explain the phenomenon about the emergence of immigrant entrepreneurs. While different places would cause diverse embeddedness to immigrant entrepreneurs, this study would focus on the embeddedness of immigrant entrepreneurs in the Swedish society. In short, the mixed embeddedness approach could serve the purpose of the study to explore the factors contributing to the emergence of immigrant entrepreneurships in the Swedish society.
14 Putting the mixed embeddedness approach in actual practice, here I would like to further elaborate the exclusion of EU and Nordic citizens as the subjects in this study. As mentioned in the previous chapter, Swedish Migration Agency implements different procedures on immigrants from the EU and Nordic countries and the others. The regulations and steps applied to establish businesses are different for these population groups. This means that embeddedness of the immigrants on the macro or institutional level is diverse in the first place. This poses certainly divergence in the assessment of market by immigrants from different countries. The market environment is arguably more open to EU and Nordic citizens than the others. Informal institution may also apply as the European region shares more commonalities in culture. All these could lead to different opportunity structures observed by the immigrant entrepreneurs. This divergence should be limited so comparisons could be drawn. Therefore, EU and non-EU immigrants should be differentiated in the study.
1.5.2 Opportunity structures
Opportunities occur when there is a certain amount of demand for a particular product. The demand needs to be satisfied through market transactions bridging the supplies of the products with the demand. Market exists when there are needs to connect the demand and supply of products in the society. This is the basic principle in business and the root for entrepreneurial activities (Kloosterman, 2010). Kloosterman (2010) proposed a four-quadrant model to demonstrate the split of market opportunities for immigrant entrepreneurs. The model divides the market into four parts according to the threshold of human capital and the growth potential. There is a total of four combinations with the two variables in the model. A typology of the opportunity structures is presented in figure 1.
First of all, there is a blank area which describes a market requiring high level of human capital with a stagnating growth potential. It is argued that immigrant entrepreneurs are unlikely to enter this market segment because of the limited rewards gained from the market. Also because of the high level of human capital possessed, they could have high mobility to explore in other sectors with better potential (Kloosterman, 2010).
The second quadrant is described as vacancy-chain openings. This quadrant is characterised by a low entry requirement and low growth potential. A large number of immigrants can have the
15 ability to enter this sector of the market. Product in this market has been developed into a mature phase. Low entry barrier in return implies fierce competition for immigrant entrepreneurs to face. The sources of competition are not limited to fellow immigrant entrepreneurs, but also mainstream enterprises in the same industry (Kloosterman, 2010).
H um an c api ta l Growth potential H igh t hre shol d Post-industrial/high-skilled L ow t hre shol d
Vacancy-chain openings Post-industrial/low-skilled
Stagnating Expanding
Figure 1. A typology of opportunity structures (Kloosterman, 2010)
The third quadrant combines a low entry requirement and high growth potential. It is argued that there is chance for this market to exist in the post-industrial economy context. The product can be in an early product-life cycle so that it provides the room for the market to expand. On the other direction, the product can be protected in some ways due to its distinctiveness that others are not easy to follow. There is also chance of a lifting of restrictions that opens the market to the public to create this opening (Kloosterman, 2010).
The last quadrant concerns with high human capital threshold and high growth potential. This market is attractive to immigrant entrepreneurs with recognised high-level qualifications. The market is usually seen in a high-technology sector which is in an early product-life cycle. Another example is seen in the professional services sector that provides substantial demand in the post-industrial economy setting. Only immigrant entrepreneurs with high qualifications can enter this market (Kloosterman, 2010).
16 It is argued that there is one special category of market that could be positioned in more than one quadrant in the model. This is described as a niche market that is protected, at least temporarily because of the distinctiveness of the product. Sometimes it is emerged as an ethnic market that the products are closely related to the country of origin of immigrants. Immigrants in a urban area could strongly contribute to the demand of such kinds of products and as a result foster the emergence of this type of ethnic market (Kloosterman, 2010).
1.6 Research method
1.6.1 Data collection
The purpose of the research is to look for factors that could explain the emergence of immigrant entrepreneurs in the Swedish society. In order to achieve that, I have adopted the mixed embeddedness approach to analysis the phenomenon that is explained in the previous section. As a way to examine the embeddedness of immigrant entrepreneurs, and also how they interact with different levels and aspects in the society, a qualitative approach is chosen by interviewing current immigrant entrepreneurs to gather first-hand experiences about the process of business establishment. Qualitative approach is chosen as it is more capable to capture more abstract information. In this study, one major theme to understand is the motivation of the immigrant entrepreneurs, which is difficult to quantify. Therefore, the qualitative approach gathering more open-ended narrations is preferred. Semi-structured interviews with several guiding questions are used to elicit immigrant entrepreneurs’ own perceptions on starting business in Sweden. The guiding questions act as a frame to gather information that could cover different levels of embeddedness applied to these immigrant entrepreneurs. Despite the existence of guiding questions, interviewees are encouraged to express themselves. Semi-structured interviews could provide interviewees the freedom to responds but at the same time the flow is controlled by the interviewer. The control over the interview process ensures to gather certain information (Walle, 2015). Narrations from the interviewees could also provide insights in analysis as these immigrant entrepreneurs could have unexpected experiences during the stage of starting business in the Swedish society. These narrations could fill the gap between actual business owners and the researchers. In order to ensure the consistency of information collected from interviews, an interview guide is set up and followed in all interviews. Guiding questions
17 together with a brief introduction are also sent to interviewees to inform them the purpose of research for preparation (Appendix I).
The guiding questions invite the interviewees to share their experience and thoughts through different aspects. The questions start with getting to know the background of the entrepreneur by gathering information about their immigration history and business experience. After that, the questions elicit the thoughts of the entrepreneur on assessing the possibility of running a business. This opens up the room for the next questions to explore the choice of place and product for the start of the business. Then, the questions focus on asking about the actual experiences in running the business. These questions are structured to elicit information about different levels of embeddedness on the immigrant entrepreneur. They start with the micro level, and then moving on to the meso and macro levels. Therefore, the interview questions will eventually serve the purpose to answer the research questions stated above from different aspects.
Interviews are conducted face-to-face in the premises and voice recorded. In order to ensure the quality of the responses in the interviews, the interviews are conducted during less busy business hours that are preferred by the participants. This is also to minimise the disturbance caused to business operations. Interviews are conducted preferably in English, but participants are also free to use their native language with the presence of an interpreter. A cosy environment is preferred for the interviews to take place as the conversations between the participants and interviewer can be developed in a more natural way. Each interview lasts no more than 30 minutes. The timeframe is enough to capture the information needed for analysis while there is also room for the participants to express themselves. All interview recordings are transcribed for later analysis.
While interviews from the immigrant entrepreneurs are the major sources of information for analysis, some other sources of information could also be supplements to the analysis. As in the macro level of the mixed embeddedness approach institutions and regulations are setting up the context, review of government policies and regulations could be a source of information echoing or reinforcing the claims by these immigrant entrepreneurs. Other kinds of second-hand resources like previous research or case studies are also in use when drawing comparisons in the analysis. The main idea of using second-hand resources is to reveal any commonalities
18 that could exist together with the interviewees’ experiences. The analysis in the study is anchored in the interviews done with immigrant entrepreneurs.
1.6.2 Ethical consideration
Privacy and confidentiality are strictly observed in the study. Interviewees are clearly informed about the purpose of the research and all the data collected through interviews is for academic purpose only before the commencement of the interview. Also, the names of the participants and their business are not to be disclosed. All participants are asked for consent to participate before the interview begin. They also reserve the right to withdraw from the study. Personal preferences are respected if participants refuse to respond to particular parts of the questions. In the composition of this thesis, all participants are mentioned through alphabets as a practice to maintain the privacy and confidentiality. The anonymity of interviewees in this thesis on one hand copes with the ethical considerations while on the other hand could encourage the interviewees to express more and thus yield a better outcome.
1.6.3 Data Analysis – Thematic analysis
Thematic analysis offers the flexibility to fit into a wide range of research topics and datasets. It stands alone as a method of analysis and does not tie with a particular theoretical framework (Braun and Clarke, 2013). In this study, the characteristics of thematic analysis can combine well with the mixed embeddedness approach that frames the scope of data collection. The data analysis in the study identifies the theme according to the three different levels of embeddedness framed by the mixed embeddedness approach. As the interview questions are set to address the three levels of embeddedness of the participants, the outcomes of these questions are seen in a systematic way to reflect the different levels of embeddedness. In the data analysing process, transcripts of the interviews are coded according to different themes, that is, the three levels of embeddedness. There are also smaller themes under the main micro, meso and macro levels. In the micro level, data can be further sorted into skills, knowledges and financial endowment. In the meso level, there can be family relations and social ties within the ethnic group. In the macro level, data can be divided in relation to different kinds of institutions. In addition to the three levels of embeddedness derived from the mixed embeddedness approach, there is an overarching theme of integration to look for. Related
19 information can be mentioned or implied in the narrations by the participants. Through analysing the experiences shared by the participants under different themes, the study can finally answer the research questions stated in the previous section.
1.7 Sampling
A total of three participants are interviewed for the study. As mentioned in the above sections, this study concerns about the establishment of businesses by immigrants in Sweden. Therefore, all business owners who are not born in Sweden could satisfy the criteria to be informants in the study. They can be classified as immigrant entrepreneurs in the context of the study. One added condition to these informants is that they are non-EU and Nordic citizens as it has been explained in the previous section that these two groups of population are situated in a unique environment that is not very comparable with other research targets. The search for informants relies on personal networks in the country. Criterion of informants are passed to fellow students to help identifying possible business owners for interviews. Fellow students are acting as the bridges in reaching the target informants. Informants are contacted through them and arrangements for interviews are made afterwards.
1.8 Limitations and constraints
1.8.1 Sampling size
Due to the unexpected pandemic causing potential participants to leave the country and become unreachable, the sampling size of the research turned out to be less than expected. The small sampling size greatly limited the amount of first-hand information collected from actual immigrant entrepreneurs. As the main source of data for analysis in this study is the interviews conducted with immigrant entrepreneurs, the small sampling size inevitably causes a lack of width in the analysis. The situations faced by immigrant entrepreneurs discussed are limited to a small number of participants, leaving a large area in the field to be explored. A small sampling size would also lower the possibility to find common characteristics between cases for comparison, particularly when there are greatly diversified participants. As a result, the analysis and findings in the study would become more case specific, hence, the generalisation ability of the findings in this study is lowered.
20 The small sampling size of this study was a matter of time, and also a matter of network. There are chances that the original targeted immigrant entrepreneurs will eventually return to business when the situation calms down. And apparently there are still many immigrant entrepreneurs operating their businesses in the city. However, it would take time and effort to establish trusts and relationships with these immigrant entrepreneurs before inviting them as participants in this study. Language barrier is also another major challenge to reach a larger number of participants for the study, as not all immigrant entrepreneurs are able to communicate fluently in English. The constrains regarding network and resources to establish a communication channel with immigrant entrepreneurs have significantly restrained the possibilities for the study to reach out to a larger amount of immigrant entrepreneurs to participate in the study, thus resulting in a small sampling size. This has become a major weakness in this study.
1.8.2 Language differences
It has to be noted that none of the interviewees in the study uses English as their native language. Translations were necessary in either the interview processes or transcription works afterwards. Although the translation works were done from our native languages into English, none of us are professional interpreters. Despite the efforts to keep the accuracy of the translation, there is still chance of small discrepancies between the original wordings and the presentations in English. This could lead to possible gaps between the original ideas posed by the interviewee and the presentation here in the thesis. Voice recording is an important component in the study to provide the chance to review the interview content in order to refine the translation process. This helps to minimise the chances of error in translation in the study. Translation is an inevitable process in many cases working with immigrant entrepreneurs, particularly when the study is in a third language other than the native languages of the host country and the country of origin. This is exactly the case in this study. While English is the medium in this thesis, Swedish or their native languages were more preferred by the participants. This has brought more twists in the research work.
On the other hand, some ideas are originated from a different language and cultural background. There are probably no corresponding concepts in another language. It could be troublesome to present the ideas in another language. Although the ideas would not become completely
21 different from the original language, there could be some distortions during the process of translation. In that case, the general picture of the ideas could still be presented in the thesis but could be lacking a few elements from the original narration. There was also a case when the interpreter was having difficulties in finding the exact wordings for an idea. He finally had to compromise and express the idea in another way. While it is unavoidable to cover some language and culturally specific concepts in studies with diversified cultural backgrounds, it is essential to maintain and capture the ideas in contexts.
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2 Analytical chapters
This part deals with empirical data collected from the interviews conducted with immigrant entrepreneurs. To start with, the general outlook of the composition of participants is presented as a background to the analysis. The composition of participants shaped the data collected and hence should be taken into account for the analysis in this paper. Following the background information of the participants, I will move on to sections under different themes of analysis. Using the mixed embeddedness approach as the theoretical framework, the analysis is divided into themes under the three levels of embeddedness. In each level, there are also sub-sections to provide a more focused and precise area for analysis. The analysis of all levels of embeddedness will then serve the purpose of addressing the research questions posed in the introductory part. It is to provide the reasons for immigrant entrepreneurs to start their own businesses and the ways they cope with the Swedish business environment. After that, there is also a section to address the relationship between self-employment and integration from the owners’ point of view, which is another area of focus in this study. By the end of the analytical chapters, there is a review on effects from the unexpected pandemic situation on immigrant entrepreneurs.
2.1 Participants
The study interviewed and voice recorded three immigrant entrepreneurs contacted through different networks. Their backgrounds are quite diverse with each other. The backgrounds here refer to their migration history, cultural heritage, length of residency and the level of education. Therefore, a lot of distinctive experiences had been seen during the interviews. The diversity of participants offers different angles to investigate in the topic of immigrant entrepreneurs. It is a merit that the interviewees offer a chance to see the dynamics between their cultural backgrounds, education and types of business. In the study, we can see how these factors influence their entrepreneurial decisions. In general, there are few common characteristics in their experiences. Each of them is representing a particular type of immigrant entrepreneur. However, the distinctiveness of their experiences enriches the study by showing the uniqueness of every single stories took place in these immigrant entrepreneurs.
23 The first participant (Interviewee A) owns a bakery that sells traditional types of bread originated from middle east and Balkan countries. He is from the middle east region and Persian is his native language. He refused to reveal his detailed migration history due to his personal reasons. He came to Sweden alone as a refugee. There were not any family members or friends he knew in Sweden when he came. Having stayed in Sweden for about four years, he developed his network in Sweden and no longer had any linkages with his country of origin. It is uncertain about his exact education level. Prior to his migration to Sweden, he owned a business in his country of origin, but it was in an industry unrelated to bakery. The interview was in Persian with the second interviewee who translated his words into English.
The second participant (Interviewee B) also came from the middle east region and speaks Persian. He is a friend of the first participant. He has been staying in Sweden for almost 11 years now. Same as the first participant, he also came to Sweden as a refugee and had no friends and family members with him. By the time when he came into the country, he was very young so that he had got the chance to receive formal education in mainstream schools. He had received a bachelor’s degree in civil engineering from a Swedish university and is now pursuing a master’s degree in management. He worked as a civil engineer following his graduation and then quitted the job after about a year. After quitting his job, he established his own construction company. The interview was conducted together with the first interviewee that he was responding in English and helped to translate the responses from the first interviewee.
The third participant (Interviewee C) came from Hong Kong and stayed in Sweden for more than 40 years. He came to Sweden following the footsteps of his father. He had work experiences in restaurants before moving to Sweden, so as his parents and relatives. His native language is Cantonese and can also speak Mandarin Chinese and basic English. He acquired Swedish language ability through self-learning following his arrival to the country. He studied up to secondary level in Hong Kong and did not receive any formal education in Sweden after his arrival at the age of 19. He is now running a restaurant specialised in but not limited to Japanese cuisine. The restaurant also offers a wide range of Asian dishes. The current restaurant is not his first business. He had run several restaurants in different municipalities before, either on his own or in partnership with relatives. He has family members living in both Sweden and Hong Kong, with his own family in Sweden and his siblings in Hong Kong. The interviewee
24 was conducted in Cantonese as it is the native language of both the interviewer and the interviewee.
Looking at the basic information of the participants, we can see there are both cases of voluntary and involuntary migration. This could influence their initial reception from the host country at the very beginning, thus shape the paths they would encounter in later days. In the upcoming analysis, there are certainly influential factors related to their immigrant status. Apart from that, there are also both high and low level of education among the participants. It offers the room to investigate the effects of formal education to immigrant entrepreneurs. Moreover, the participants are from different ethnic groups. This provides the chance to examine the possible differences in perception surrounding the topic of ethnic business. Different ethnic groups could also have different ethnic ties that could possibly influence the business establishment process.
2.2 Micro level embeddedness
2.2.1 Human capital
All interviewees have shown their possession of human capital in their narrations, although the level of human capital and the process of acquiring them varied. The possession of knowledge and skills had hugely influenced their choice of business during the business establishment process. All interviewees stated that they started the business in the field they had worked for and experienced before. Among them, only one had the experience in the same business field in the country of origin. The others were acquiring the necessary skills and knowledges about the business after arriving in the host country.
“I had also worked in restaurant in Hong Kong. We worked in the industry in Hong Kong before. We were not doing this here without a clue.”
Interviewee C
The interviewee reviewed his experience before and in the early years arriving the host country, stating that the experience and knowledge in the food service industry possessed by his relatives and himself fostered the establishment of the business. Despite he was not moving the
25 whole business from the country of origin to the host country, he brought along the skills and knowledge about the industry during the migration process. These skills and knowledge became the foundation of his own business, following co-operations with his relatives in the host country. On the opposite side, he also hinted that the human capital he lacked was an important factor for him to stay in the corresponding industry.
“Basically, when Chinese people came here, there were not many choices for work, except jobs from the grassroot like restaurants, cleaning and factories. First of all, there is a language barrier, isn’t it? If you want a better job, you have to study.”
Interviewee C
Referring to his own case, the interviewee lacked opportunities to higher education both before and after his migration to the host country. This had restricted the opportunities available to him following his arrival to the host country. He had been pushed away from sectors that required higher skills in the job market. From the view of business establishment, the opportunities available to him were the usually referred as low threshold and growth potential. The business eventually established required relatively low human capital and small scale, thus, the profits and potential were also comparatively low (Kloostermann, 2006). The participant’s own perception also reinforced this description on the business. When asked about his aspirations about the business, he clearly expressed his beliefs that the business is a way to maintain his daily living, with stability as the major concern. He denied any thoughts of growing into a large business and generating huge profits through his own business. From this case, the human capital possessed by the participant influenced the opportunities available and also the immigrant’s own perception on the opportunity structures. The same interviewee on the other hand pinpointed endurance was also the personal quality that contributed to the business. When asked about the challenges faced, he indicated that tiredness was one of the major challenges he had to overcome. The effort he put in order to maintain the business required him long hours of hard work every day. The personal characteristic of endurance was contributing to the continuation of business. In a previous survey done by former Swedish magazine Entreprenör, the result showed that entrepreneurs in Sweden perceived themselves as having better mental and physical health (Swedish Agency for Economic and Regional Growth, 2016). This shows the presence of several personal characteristics can be common in entrepreneurs and these characteristics can contribute to business operations in certain ways.
26 Interviewee A has a similar situation regarding the technical skills in the current business. Despite having business experience in his country of origin, he acquired the skills to operate a bakery following the arrival to the new country. Language barrier was also present to him in obtaining a job or establishing several types of business. The baking skills acquired in the host country during some practice programmes opened up the way for him to establish his own business. The human capital was limited so that the business established eventually was also in small scale and belonged to the low threshold nature.
“It’s difficult for me to start another thing and not knowing about that. So, in construction, it’s my thing. I have done it before so that’s why I started that.”
Interviewee B
While the interviewee is also preferring a type of business he knows, the tertiary qualification he possesses allows him to enter a more knowledge-intensive industry. Receiving education in the host country from the secondary level to the tertiary level, professional knowledge and on-job experiences in civil engineering have given him the vision to establish his own business in a relatively higher threshold industry. There is no doubt that a construction company has a higher entry barrier than a restaurant and the market is less open because of the requirement in knowledge. The growth potential is also higher because of the difficulties in entering the market by newcomers to create competition. In the case mentioned, the opportunity to a higher threshold industry only available because of the human capital possessed by the interviewee. This is a typical case of how formal education and recognised qualification positioned immigrants in a similar position as indigenous entrepreneurs (Kloosterman, 2010).
There is also another area of human capital that is less visible and less mentioned during interviews, that is, the entrepreneurial skills. As human capital is usually referring to education levels, qualifications and skills, the possession of entrepreneurial skills should not be overlooked. Apart from the knowledge and skills required for the production, entrepreneurial skills foster the operation of business as a whole. Among the interviewees, there are signs that they all possess a certain level of entrepreneurial skills. This could be seen as they could have their own business before migrating to Sweden, or they could have cooperated closely with the business owner before starting their own business. Previous co-operations in business with family members could also be linked with the meso level embeddedness of the immigrant
27 entrepreneur. This would be further elaborated in the next section. Another way to acquire entrepreneurial skills is through formal education, with the example of attending management courses in the university. Despite entrepreneurial skills are more abstract to observe, it is important to take into account that they can also be influential in motivating immigrants to establish their own businesses.
2.2.2 Financial capital
In general, the financial capital possessed by immigrant entrepreneurs is not very abundant (Kazlou, 2019). There is no exception to the participants in this study. Their own financial resources were fairly limited as all of them only worked for a short period of time in the host country. Despite financial resources are essential towards establishment of business, none of the interviewees had cited financial capital as a major challenge in setting up their own businesses. They had several ways to get around the problem. Simply speaking, these individuals were able to obtain financial injection from different parties. In other words, these financial capitals were not possessed by the interviewees at the very beginning. This has linked up the dynamics with the other layers of embeddedness, both the meso level and the macro level. The presence of personal network and financial institutes became the key players in the acquisition of financial capital by these immigrant entrepreneurs. The interviewees in this study belong to the group of limited financial capital looking through the micro level, however, it does not imply that financial had become a huge hurdle to them. The dynamics between different levels of embeddedness are observed here. This will be further discussed in the corresponding parts in the following sections.
2.3 Meso level embeddedness
2.3.1 Personal network
The availability of personal networks has been proven crucial to immigrant entrepreneurs in the experiences shared by the interviewees. Individuals within these networks could offer assistance to immigrant entrepreneurs in various ways. These assistances could empower immigrant entrepreneurs to overcome the challenges faced during the process of business
28 establishment. From the experiences of the interviewees, there could be direct financial assistance as well as technical aids to the immigrant entrepreneur.
“My parents were important, they had some money, so we could start doing partnership with my uncles.”
Interviewee C
The interviewee recalled his memory about the availability of financial resources from his parents so that his family could start the partnership with his relatives at the early stages. This had created a stable income stream to the family, laying the foundation to acquire financial capital for business establishment in later stages. Family members in this case provided direct financial capital injection to the immigrant entrepreneur. As mentioned in the previous section, lack of financial resources is a common phenomenon among immigrant entrepreneurs. It is also common to see family and relatives are the sources of manpower and financial capital (Kloosterman and Rath, 2018). Although the interviewee may eventually accumulate enough financial capital through employment, the financial assistance from family members could speed up the preparation for business establishment in a more direct way. Apart from the financial capital available from the parents of the interviewee, the family network also enabled him to gain first person experience in running a restaurant in the host country environment. The partnership between his parents and relatives to a certain extent diluted the risks in comparison to sole proprietorship. This experience helped build up the human capital possessed by the interviewee. In the previous section, the importance of human capital has been addressed. In this case, the personal network enabled the immigrant entrepreneur to actualise the idea to establish his own business. The network helped him in both the human capital and financial capital that were essential to start the business.
While it is true for many of the immigrant entrepreneurs can be dependent on family and relatives to gather resources for business start-up, there are still many immigrant entrepreneurs do not have this privilege. Interviewee A moved to the host country alone without any family members. He has to bear all the responsibilities in doing business. It was really challenging to him in the early stages of the business establishment, particularly because of his limited language ability. The situation changed only until he could establish a personal network with individuals in the host country. The personal network has been proven very important to him in starting his own business in a new environment.
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“The owner of this property needed to have some kind of credits from me to rent this place. How I solved this problem was that two of my friends who have their own companies came and guaranteed me to rent this place.”
Interviewee A
The interviewee had faced obstacles in obtaining a place to start his business because he did not have the necessary credits to rent a place from the landlord. The obstacles were embedded in the society that rules and business practices were in place to regulate the business establishment process. These are linked to the macro level embeddedness of immigrant entrepreneurs and will be further discussed in the later section. In the case here, the friends of the interviewee were a key player to aid him getting around the challenges in renting a place to start his business. These friends used their own resources, that were, the already established businesses and credits available to make guarantee to the landlord so that the interviewee could secured a rental agreement.
“It was one of my friends here in this city. He has been here for a while in Sweden and he helped me a lot and showing me what I had to do.”
Interviewee A
The interviewee also got practical help from his network during the establishment of his business. The process of starting a business need to comply to the system in the society, this includes regulations and institutional requirements. As a newcomer to the society, the interviewee was not familiar with the practice in the society. The situation was challenging when considering the language barrier as an additional obstacle. There were a lot of paperwork to be done during the process. The immigrant entrepreneur also had to deal with various parties. Because of the actual experiences in setting up own business in the Swedish society, these friends of the interviewee could help him and provide practical advices on the process to deal with paperwork involving different parties in the society. These eased the difficulties faced by the interviewee. Without the personal network, the interviewee could have to spend much more time to sort out the necessary paperwork.
There is also the case that personal network is not very influential and less mentioned by the immigrant entrepreneur. One factor affecting it is the length of stay in the host country. With a
