Linköping University SE-581 83 Linköping, Sweden
Analysis of vulnerability
of immigrant owned
restaurants
A focus on immigrant entrepreneurship in
Linköping, Sweden
Marius Mavoungou
ACKNOWLEDGEMENTS
Carried out during the Spring 2020, this thesis has been written as part of the Atlantis Program in Linköping Sweden in order for me to attain my Bachelor in Management. Immeasurable appreciation and deepest gratitude for the help and support are extended to the following persons, without whom this thesis would not have been written smoothly and who, in one way or another, have contributed to making my thesis possible. First and foremost, Aliaksei Kazlou, my supervisor, to whom I am extremely thankful and indebted for sharing his expertise, and his sincere and valuable guidance and encouragement. I am also grateful to Olga Yttemyr, for introducing the course and establishing the directives, and trusting my capabilities of achieving this academic paper alone. I wish to express my sincere thanks to Gunilla Söderberg Andersson, Swedish director of the program, for the opportunity to participate in the three-diploma program. The Atlantis course was of previous help to carry out my research. I place on record my sincere thank you to the interviewees for their time and valuable knowledge. I take this opportunity to express gratitude to all the Atlantis students, for their attentive input all through this process. I also thank my parents for their unceasing encouragement, support, and attention and for having enabled me to come to Sweden. I also place on record my sense of gratitude to one and all, who, directly or indirectly, have lent their hand to this venture.
Analysis of vulnerability of immigrant owned restaurants
A focus on immigrant entrepreneurship in Linköping, Sweden
The problem that will be investigated in this research paper is up to date and contemporary. This thesis research topic is related to the general field “immigrant entrepreneurship” including the “Immigrant Small Business Research” field. Moreover, the field is not well documented and lacks concepts and theories. It is hoped that this paper will contribute to developing the field. In order to examine the issue, the collection of information has been affected through literature review and compilation of the main and most important theories. In addition to responding to my problem, this project endeavors to fill some of gaps in the void or at least narrow them for others to complete and use in turn. The literature review and the data collected highlight factors and difficulties faced by immigrant owned restaurants. To put it in a nutshell, the current virulent sanitary crisis has constrained most countries to close their borders and governments, thereby almost bringing their economies to a standstill. It is jeopardizing and disrupting the entire economic system. Countless immigrants’ restaurants are facing financial difficulties or bankruptcy, whether it is at this very second or in a foreseeable future. Besides habitual struggles with external factors contributing to making them vulnerable, immigrant restaurant owners have no choice but to cope with a major global economic downturn. The sustainability of those businesses is challenged as difficulties and vulnerability factors are exacerbated under this crisis.
Table of content
1.Introduction ... 1 1.1 Background ... 1 1.2 Problem statement ... 2 1.3 Research purpose ... 2 1.4 Research question ... 3 1.5 Scope of research ... 3 2.Methodology ... 4 2.1 Research philosophy ... 4 2.2 Research Approach ... 4 2.3 Research Strategy ... 5 2.4 Research Methods ... 5 2.5 Sampling ... 5 2.6 Data Collection ... 6 2.7 Data Analysis ... 62.8 Research Validity & Reliability ...7
2.9 Ethical Considerations ... 8
2.10 Limitations ... 8
3. Empirical findings ... 10
3.1 Semi-structured interview preparation ... 10
3.2 The restaurant market ... 10
3.3 Company presentation ... 12 3.3.1 Restaurant A ... 12 3.3.2 Restaurant B ... 13 3.3.3 Restaurant C ... 13 3.4 Empirical Framework ... 15 3.4.1 Macro-institutional Framework ... 15
3.4.2 Meso-level of local opportunity structures and links ... 15
4 Literature review ... 17
4.1 Key terms ... 17
4.2 Mixed embeddedness as a theoretical lens ... 18
4.2.3 Mixed embeddedness: the Swedish context... 22
4.2.4 Critiques of mixed embeddedness as a theoretical perspective ... 25
5. Analysis ... 27
External factors affecting the vulnerability of immigrant owned restaurants... 27
5.2.1 The macro-institutional context ... 27
5.2.2 Meso-level social capital ... 28
Internal factors affecting the vulnerability of immigrant owned restaurants ... 29
5.2.3 Micro-level ... 29
6. Discussion ... 32
6.1 Similar study presentation ... 32
6.1.1 The world system level ... 33
6.1.2 The national level ... 33
6.1.3 Study limitations ... 34 6.2 Macro level ... 35 6.3 Meso level ... 35 6.4 Micro Level ... 36 7.Conclusion ...37 7.1 Main Findings ...37 7.2 Further research ... 38 8.References ... 39 9. Appendix ... 43
TABLE OF FIGURES
Figure 1: Number of entreprises in the restaurant industry in Sweden from 2007 to 2017 (Statista
survey, 2018)...12
Figure 2: Information on immirant owned restaurants in Linköping (own source 2020)...15 Figure 3: A typology of opportunity structures (Kloosterman 2020)...23
1.Introduction
1.1 Background
The emergence of immigrant entrepreneurship has been the result of the international migration process. In recent years, this economic behaviour has drawn the attention to immigrants’ self-employment. Historically, the development of entrepreneurial activities among immigrants was the reason for the development of employment opportunities. Self-employment improves social and economic status of the immigrants through labour and social mobility (Rath 2006). This growing phenomenon is now a part of the European economy functioning (Markova 2013). Scientists admit that ethnic economic participation is an influential economic power, full of potential. In industrialized countries immigrant businesses drive national and regional economies (Baycan-Levent & Nijkamp 2009).
In this thesis, the concept of immigrant entrepreneurship within the Swedish context will be explored, analysed, and discussed. Like most developed countries, international migration has also become for Sweden a key characteristic of the society, from the social, economic, and political perspectives (Baycan-Levent & Nijkamp 2009). The study of Sweden is really interesting for the reason in that it is an open country, welcoming many foreigners. As a matter of fact, since 2008, the country has implemented a liberalization policy (Berg & Spehar 2013) which, in short, has affected the supply of immigrant entrepreneurs by decreasing entry barriers as well as increasing immigrant flow. These policies have, as a result, placed Sweden in 2018, as the 5th country in the world with the largest proportion of foreign-born people in terms of percentage of the total population with 18.8% (OECD 2020). Since then, this number has slightly increased; in 2020 foreign people account for almost 20% of the Swedish population (SCB 2020). As well as their growing presence in the Swedish demography, immigrants, as entrepreneurs, are becoming more and more relevant actors in the country’s economy. As reported by the Swedish Agency for Economic Regional Growth, since 2005 the number of immigrant firms has risen significantly. In 2005, there were 60 800 entrepreneurs with a foreign background. By the first quarter of 2010, this number was 74 100, an increase of 22%. In 2014 there were approximately 75 000 firms founded by entrepreneurs with a foreign background. Still according to the Swedish Agency for Economic and Regional Growth, in 2014, the number of companies started by immigrants accounted for 16% of the total amount of companies established in Sweden, generating, during that year, a turnover of 110 billion krona and profits of 30 billion krona. In 2016, they were 95,000, employing 300,000 people, around 3% of the total population. The numbers above give evidence of the major economic weight of foreign-born business creation.
1.2 Problem statement
As previously explained, immigrant entrepreneurship is a growing phenomenon in Sweden and more generally in Europe. However, institutional changes, such as work and entrepreneurship-related migration policy liberalization in 2008 (Berg & Spehar 2013) have affected the supply of immigrant entrepreneurs by decreasing entry barriers in Sweden (Kazlou & Klinthall 2018). The liberalization policies implemented since 2008 by the Swedish government have resulted in an overrepresentation of immigrants among the self-employed (Andersson & Wadensjö 2004). “At the same time, rising immigration with no other employment opportunities for some migrant groups have fuelled labour intensive opportunities such as ethnic business ownership.” (Karan 2017). Depending on the group of immigrant entrepreneurs, responses to such institutional changes and new opportunity structures diverge. As such, outcomes from institutional reforms may be varied and sometimes be unexpected for some groups of immigrant entrepreneurs (Kazlou & Klinthall 2019). Indeed, among immigrant entrepreneurs, two types of entrepreneurs can be identified: low-skilled and high skilled entrepreneurs (Price 2012). Highly skilled immigrant entrepreneurs contribute to sectors that require an educational background. On the other hand, low-skilled immigrant entrepreneurs are limited with their options due to the lack of requisite knowledge. This leads to low-skilled immigrant entrepreneurs introducing ethnic products such as clothing and food that are related to their backgrounds (Kloosterman & Rath, 2002). In other words, they try to penetrate niche markets, or sectors that are over-represented. According to Auster and Aldrich, (1984), these small businesses owned by low-skilled immigrant entrepreneurs are more vulnerable to external factors because of their size. The literature highlights factors faced by immigrant restaurant owners that are threatening their business. If research has enabled the understanding of which variables motivate immigrants to engage in self-employment and which are the success factors, the immigrant entrepreneurship field remains an understudied field. The rising economic importance of this trend necessitates a full comprehension of this phenomenon for all the actors involved.
1.3 Research purpose
The problem I intend to investigate is up to date and contemporary. The thesis research topic is related to the general field “immigrant entrepreneurship” including the “Immigrants Small Business Research” field. Currently, the field is not well documented and lacks concepts and theories. It is hoped that this paper will contribute to developing this field. In order to examine the issue, the collection of information has been affected through literature review and compilation of the main and most relevant theories. Besides responding to the thesis objective, this project will endeavour to fill gaps in the void or at least narrow them for
others to fill and use in turn. With regard to the economy, the Swedish government should be concerned by the stability and healthy development of immigrant entrepreneurship, as it is a meaningful economic driver. The Swedish Authorities have every interest in knowing the causes of this vulnerability and acting on them through policy enforcement to preserve their wealth-producing system. The mixed-embeddedness theory (explained below) provides an explanation of the liability of immigrant entrepreneurs. In short, they are inserted at different levels of society. This theory is studied both from a social and economic point of view as well as from an institutional stance.
The major issue at stake is to understand what threatens immigrants’ businesses in order to overcome these threats. It can be noted that what is at stake is not only the entrepreneur per se but also the whole ethnic community that relies on his/her business. Moreover, this endeavour has become even more essential as of now given that the vulnerability has increased tenfold.
1.4 Research question
The overall research will aim to answer the following problem:
Why are immigrant owned restaurants more vulnerable faced with the current COVID-19 crisis?
Along with the main question, this analysis aims to propose solutions to the following interrogations:
- Which are the driving reasons for immigrants to start a business of their own? - Why are immigrants' restaurants more vulnerable in general?
1.5 Scope of research
The study is dictated by several criteria, first, the research will focus exclusively on immigrant entrepreneurship. Secondly, only small, and medium-sized enterprises (SMEs) will be targeted, within the restaurant industry. Due to time limitation and since it takes too long to set up a meeting with big restaurants chains, big restaurant groups will not be studied. Given that immigrant entrepreneurship is a growing phenomenon, but remains an understudied field, I have assumed that any investigation in this field, in a country where the foreign population represents an important part of the national demography, would be relevant. The study will be limited to Sweden and more precisely, the city of Linköping. However, there is no limit or criteria regarding the origins of the immigrant entrepreneurs. As a result, because the focus is on the Swedish market, the results cannot be applied more generally to a European or worldwide context.
2.Methodology
This chapter concerns the methodology adopted. It is dedicated to describing the scientific approaches adopted in the thesis and the methods used for carrying out the study. The chapter starts with an explanation of the different approaches and the perspectives adopted thereafter.
2.1 Research philosophy
The aim of this thesis is to understand why immigrant owned restaurants are more vulnerable when faced with the COVID-19 crisis. Bryman, Bell, and Harley (2019) have described two ontological approaches: objectivism and constructionism, which can be applied while conducting a study. The fundamental aim of Ontology is to understand reality. Differential ontological positions define reality in different ways. The ontological assumptions that have been made thus determine the issues that this author seeks to understand through research. Objectivism, according to Bryman et al. (2019) “asserts social phenomena and their meanings have an existence that is independent of social actors. It implies that social phenomena and the categories that we use in everyday life have an existence that is independent or separate from actors”. On the other hand, the authors have defined constructionism as follows: “the assertion of social phenomena and their meanings are continually being accomplished by social actors. It implies that social phenomena and categories are not only produced through social interaction but are also in constant state of revision”. In other words, a constructivism ontology suggests that the research and results are not considered as definitive and can still evolve, thanks to further research, new factors and circumstances, which can modify the context and the reality of a phenomenon (Bryman et al. 2019). Therefore, as the social phenomenon study is subject to variations, the research philosophy in this thesis is thus based on constructive ontology. As a result, by considering the constructivist perspective, the data collected as well as the analysis of these data are not considered as a unique and absolute path. Consequently, the debate remains open on this topic, and all information allowing the development and improvement of the discussion is welcome.
2.2 Research Approach
In research, to deal with the relationship between theory and empirical observations two main approaches can be used: “induction or deduction”. According to Paulsson (1999), induction comes into play when researchers search for some patterns in facts and try to draw a conclusion from them, whereas in the case of deduction, researchers start from theories and implement the phenomenon into the reality (Paulsson 1999). Throughout this paper, an inductive approach will be adopted. Since the purpose is to describe, analyze and understand
the behavior of individuals and/or groups of people from the perspective of those being studied, induction is the approach which best suits in this context. (Lindahl & Skärvad 1999).
2.3 Research Strategy
Lack of literature has led to the use of an inductive approach. The data collected have been combined with the review of the literature in order to carry out an in- depth analysis of the topic and to draw accurate conclusions. Despite a qualitative research method being used, the data collected was insufficient to fully study the question raised. For this reason, the literature review is used as a source of information to overcome this breach. The research conclusions are fundamentally based on data collected through interviews. Once gathered, data are analyzed and processed. The analysis of empirical data allows some patterns and conclusions to appear. These conclusions are then compared and contrasted with the existing literature. Some of the concepts and theories developed by previous researchers are used to support the empirical data findings. The scope of research is focused on the analysis of immigrant owned restaurants.
2.4 Research Methods
The aim of the study is to understand why immigrant-owned restaurants are more vulnerable faced with the COVID-19 crisis, and, by extension, which are the internal and external variables that affect them. As previously explained, the inductive approach has been selected as the research approach. This logic is respectively associated with qualitative research methods, thereby leading to the research method being selected to answer the research question. The argument made by Bogdan and Taylor (1984) is that a qualitative method enables the exploration of elements that may be lost in other research approaches. According to Bryman et al (2019), qualitative research is a research method that usually emphasizes words and images, rather than quantification, in the collection and analysis of data and that predominantly emphasize an inductive approach to the relationship between theory and research, in which the emphasis is placed on the generation of theories. A qualitative research strategy that is sensitive to how participants interpret their social world is exactly the aim of this present piece of research. (Bell, Bryman & Harley 2019). In the study, the qualitative method will take the form of semi-structured interviews. It will allow the retention of an open conversation with the interviewees while preserving a clear structure (Bell, Bryman & Harley 2019).
2.5 Sampling
To address the issues raised, this thesis will gather qualitative data. The collection of data will be affected using semi-structured interviews. Since the research is aiming to study immigrant owned restaurants, an initial list of criteria has been established to select pertinent
restaurants appropriate for the research: Firstly, the location - the restaurant must be located in Linköping city. Secondly, the size - the restaurant chosen should be a small- or medium-sized company. Thirdly, the origins of the restaurant owner - the restaurant must be run by a foreign individual. Lastly, given that interviews are carried out only by the author, in order to narrow the list of restaurants to contact, the list has been restricted to Italian and Thai restaurants. Since the email of most of the restaurants was not freely accessible, the initial contact was made either by phone or physically. The first contact was mostly with employees and after with senior managers or owners. In total, 3 interviews were conducted. This number was not by choice, but due to the fact that only a few restaurants positively responded to the request and some others agreed too late, resulting in too little time to conduct the interview and to include the results in the research. In order to obtain the most accurate, pertinent, and relevant information possible, the participants were all restaurant owners or long-term managers.
2.6 Data Collection
The data collected changed all through this research project. First, the qualitative research consists of three field interviews, from a Lebanese, an Italian, and a Thai restaurant. In order to investigate the core issues, two interviews were conducted with owners and one with a manager. This way the information is more complete. Despite the quality of these field interviews and the collection of information, the quantity remains limited. First, time was scarce, both for the author and for the owners who had limited time for questions. Consequently, gathering more information in this timeframe was challenging. Second, the language barrier created a restriction on reaching more restaurants because some owners speak exclusively Swedish. In qualitative research, three kinds of interviews can be conducted: unstructured, structured, and structured. Throughout this thesis, the semi-structured approach has been used to ensure flexibility. Flexibility and detailed answers are part of the qualitative interviewing process (Bryman and Bell 2019). As a matter of fact, doing as such enables the interviewer to guide the interviewee while allowing him/her to develop their view. In order to derive the most benefit from these interviews, they were carried out face to face so as to be able to react and discuss important points.
2.7 Data Analysis
Bryman et al. (2019) described the data analysis as a stage essentially serving to reduce the data gathered. As they observe, it is all about “reducing the large corpus of information gathered to make sense of it … Data are being made more manageable… the researcher is making sense” thus, by doing so, links could be made between data and the research question, as well as with the literature and theoretical concepts (Bryman et al. 2019). According to the authors, without the compilation of information into categories, it is more
or less impossible to interpret the material. For qualitative data, they suggest dividing the information into categories such as themes, for example. This approach is referred to as “Thematic analysis”. It is one of the most used techniques to categorize qualitative data. The analysis of the data collected for this study is inspired from Braun and Clarke’s research (2012). Similarly, to Braun and Clark (2018), the interviews were audio-recorded and transcribed. However, some limitations for this method have been outlined by Holloway and Todres (2003). According to them, flexibility may lead to inconsistency and lack of coherence.
2.8 Research Validity & Reliability
In order for a research project and its results to be considered trustworthy and honest, some criteria have been established and have proved to be essential for assessing the quality of business research. Three of the most prominent criteria for the evaluation of business and management research are as follows: reliability, replicability, and validity (Bryman et al. 2019). However, the previously cited criteria are mainly used in quantitative research (Bryman et al. 2019) since quantitative researchers are more likely to be concerned with whether a measure is stable or not. Since qualitative research is conducted through this thesis, an adapted version of reliability and validity to qualitative research developed by other researchers such as Mason (1996), LeCompte and Goetz (1982), and Kirk and Miller (1986) will be used to guarantee the trustworthiness and honesty of the research. Mason (1996) argues that reliability, validity, and generalizability (replicability) are the main components of “external validity”. Concerning the concept of reliability, LeCompte and Goetz (1986), developed two types of reliability: external and internal reliability. External reliability concerns “the degree to which a study can be replicated”. As LeCompte and Goetz recognize, this is not an easy criterion to meet, since it is not possible to “freeze” a social setting and the circumstances of an initial study in order to make it replicable, in the way the criteria was initially envisaged. Internal reliability defines a situation where there is more than one observer, i.e. “do members of the research team agree about they see and hear?”. In as far as validity is concerned, for Mason (1996), this refers to whether “you are observing, identifying or ‘measuring’ what you say you are”. LeCompte and Goetz (1996) expanded their adaptive thoughts to the validity criteria. Moreover, they defined two different types of validity, internal and external. The concept of external validity corresponds to the extent to which findings can be generalized across social settings. Additionally, this type of validity causes both authors a problem, which is more likely to concern qualitative researchers because of their tendency to use case studies and small samples. Internal validity monitors whether there is a correlation between the researchers’ observations and the theoretical ideas they develop.
2.9 Ethical Considerations
Four ethical principles are to be upheld. They are as follows: whether there is deception, whether there is harm to participants, whether there is a lack of informed consent and whether there is any invasion of privacy (Bryman 2019). Respecting these principles is of major importance in order to neither discredit the research nor to potentially sever the relationship with interview participants. These ethical considerations and the preventive measures to avoid breaking them are outlined below. First, deception applies to a thesis that differs to what the interviewee was presented with. In truth, it refers to dishonesty. To avoid such issues, interviewees are given a complete description of the purpose and use of their data from the start. The second ethical consideration concerns avoiding harm caused to the participants. To ensure that there is no harm caused to the interviewees, their name, company, whereabouts, and other personal identifiers are omitted from the research. Therefore, interviewees’ anonymity is retained by only publishing their responses to the interview questions. Consequently, this avoids any repercussion in a foreseeable future due to their collaboration. Thirdly, to avoid the lack of informed consent, all the participants are informed of the purpose, use, motivation and objectives and public reach by this thesis. Furthermore, with a view to complete transparency, all their questions are answered honestly and without any restraint at any moment. Finally, the last ethical consideration is to avert any invasion of privacy. Private questions are kept out of the questionnaire and avoided at all times to protect every participant and uphold a strong and trustworthy relationship with them. If at any time, by mischance, such a question was to distress the interviewee, he/she is free to refuse it.
2.10 Limitations
The limitations as presented hereafter, focus on method analysis and self-criticism. In other words, the methods chosen will be assessed, together with the limits of the research. The first limitation of this thesis was time restriction, in that the deadlines imposed did not allow as many interviews to be carried out as the study might have needed. The second limit that restrained the qualitative research is the fact that the study and the interviews were processed by a single person. Thirdly, due to the small amount of data collected, the findings cannot be generalized. Fourth, the language was a barrier, both for obtaining meetings or to carry them out, since all the persons contacted and interviewed did not speak English fluently. The criteria for the sampling were established however, with the most significant criteria and limitation at the same time being the language, i.e. only English speakers were interviewed. Fifth, the accessibility to data was also a factor that slowed down the collection of data. Since the information regarding the restaurants, such as their contact, date of creation, size, owner
origin, are not accessible publicly and at the same place, the research on the immigrants’ restaurants was done one after another thanks to the use of Google. Neither the Linköping Municipality, the Tax Agency nor the Swedish National Statistics Agency SCB were able to provide me with a list of all the restaurants located in Linköping. Lastly, one of the most relevant limitations was due to the current sanitary and economic situation. Due to COVID-19 a lot of companies have closed, which reduced the number of companies to contact. Furthermore, due to the pandemic, people were less inclined to talk about their business, as their situation was extremely worrying.
Concerning the limitations of the methodology, in order to fully grasp the phenomenon from multiple perspectives, some improvements could have been made with the sampling. Firstly, priority should have been placed on interviewing the owners. In fact, even though the managers were able to answer most of the questions, they were sometimes unable to provide in-depth answers. Secondly, albeit the project aim was to focus on immigrant restaurants, in order to provide a wider perspective, it could have been useful to interview other actors such as institutions, banks or indeed native entrepreneurs.
3. Empirical findings
This chapter will focus on summarizing and explaining the empirical findings. The chapter is structured as follows: firstly, the preparation of the semi-structured interviews, further details are given on the manner in which the interviews were prepared. Secondly, a presentation on the current situation of the restaurant market during the current COVID-19 crisis will be made. Thirdly, the three companies studied will be presented. In the fourth section, data are classified on the basis of the levels defined by the concept used. The fourth section is structured according to the three levels of the Mixed Embeddedness concept. Using those levels allows the author to keep the structure and to remain consistent throughout the thesis. Additionally, it enables an easier understanding when the concept is defined in the coming chapters.
3.1 Semi-structured interview preparation
As mentioned in the methodology chapter, the qualitative research method was selected for this study. In the sampling section, the initial criteria were presented: First, the location, i.e. the restaurant must be located in Linköping city. Secondly, the size, the restaurants chosen should be a small- or medium-sized company. Thirdly, the origins of the restaurant owner, the restaurant must be run by a foreign individual. Lastly, in order to narrow the list of restaurants to contact, due to the fact that the interviews were carried out only by the author, the type of the restaurant should be Italian and Thai restaurants. However, to increase the chances of obtaining an interview, the criteria were modified. It was decided to broaden the criteria and extend the sample to all immigrant owned restaurants located in Linköping. In total, 27 restaurants were contacted either by phone or physically, once, or more. Only three accepted to take part in the study. In this research, the qualitative research method takes the form of semi-structured interviews. In order to collect pertinent and valuable data, and regarding the type of information sought, only managers and owners were interviewed since they were considered able to provide relevant information in answer to the research questions. All the interviewees were asked the same questions (Cf. Appendix 1). They agreed to participate, however on the proviso that, they remain anonymous, thus, only the minimum amount of information is given about their identity. In fact, besides intruding on their professional activity, they considered the study to be intrusive on their private lives. For that reason, they will be known as restaurant A, B and C.
3.2 The restaurant market
As previously mentioned, the focus for the research is on immigrant owned restaurants. A brief description of the Swedish restaurant market over the past years follows. Regarding the restaurant market, the number of companies in the restaurant industry has been increasing
constantly in the past years. In 2017, there were almost 25.5 thousand registered restaurants. However, the regional distribution is not equal; indeed, as of 2017, most restaurants were in Stockholm, Sweden’s capital, reaching approximately 3.3 thousand. In the same year, in Gothenburg, there were more than 1.6 thousand restaurants located, whereas in Malmö, the third-largest Swedish city, there were around 700 restaurants more than in Gothenburg. (Ridder 2020).
Figure 1: Number of enterprises in the restaurant industry in Sweden from 2007 to 2017 (Statista survey, 2018)
According to a survey conducted in Sweden by Statista in 2018 on favorite ethnic restaurant types, 89 per cent of Swedes seemed to prefer Italian restaurants. Thai food was popular too, with 80 per cent of respondents claiming to enjoy eating there. Additionally, Greek, Mexican, and Chinese restaurants were among the top five restaurant types (Ridder 2020).
The COVID-19 crisis is the current economic context under which this study is carried out. The current coronavirus crisis is severely affecting the catering sector. Repercussions of this pandemic on the industry are already visible and have started to be studied and assessed by companies and national institutions. A Swedish credit company, UC has edited reports on the health sector for the first half of 2020. On April 1st, the company stated that bankruptcies
in the restaurant and hotel sector reached 123% in March 2020. By the end of April, they announced that Sweden had recorded a 200% rise in the number of restaurants declaring bankruptcy in April 2020, compared to April 2019. They commented that even though some establishments were introducing reduced working hours, opening their terraces, delivering food to homes, and trying to find new concepts to survive, it was deemed insufficient for most of them to save their businesses. According to the company, in April, Sweden witnessed a jump in bankruptcies with the rate among hotels and restaurants set to triple to 3.6 from 1.2 per day a year ago.
3.3 Company presentation
Each of the restaurants studied will be briefly presented, in the following paragraphs, while preserving their anonymity. Additionally, there will be updated information on the restaurant situation during the current COVID-19 pandemic.
3.3.1 Restaurant A
Restaurant A is a small company employing a total of 13 employees in 2019 (interviewee A). Restaurant A is part of a larger group comprising five other restaurants, all based in Sweden. The manager explained that the creation of this restaurant was purely a strategic decision by the owner. He continued:”We acquired the building from an existing restaurant and
renovated it. The objective was to offer a kind of food not proposed in the city. We were the first to develop and offer that kind of speciality”. Restaurant A operates in the restaurant
market, offering to individuals cooked meals to eat in or take out. The restaurant already has a good and established reputation; in ordinary times, they serve between 200 and 250 meals per service. In the last financial year, its turnover was around SEK 12 million (2019).
The figures indicated above correspond to the year 2019 and the beginning of 2020. In fact, since the beginning of the crisis, March 2020, the turnover has fallen very significantly. The manager of restaurant A states that ”Within the last two months, restaurant sales have
dropped by 75%. This is explained by two major reasons: firstly, the new regulations, which restrict the number of people at no more than 50 and impose safety distances. Secondly the change in behaviour of consumers who are scared to get the virus so they go less and less to restaurants.” (interviewee A). That activity decline has led to a reduction in the workforce,
as the manager continues ”the economic downturn has forced us to lay off several of our
employees”. Restaurant A has now only five employees, including the manager. To overcome
this situation, the company has implemented different measures.The manager explains ”To
minimize the effect of the crisis on the activity, we have decided to create a partnership with a delivery company in order to deliver our meals directly to customers’ houses. Secondly, to attract more clients, we decided to open our terrace”. According to the manager, the first
measure was not very successful, since people are not ordering sufficiently to cover the shortfall (interviewee A).
Furthermore, the interview carried out with the manager of restaurant A enables us to understand, from a different perspective, the influence of the three levels of embeddedness on the vulnerability of immigrant owned restaurants. In fact, interviewee A is from Croatia; before moving to Sweden, he was a diplomat and worked in the United States of America. He has been company A’s manager for 2 years. The manager’s perspective is interesting because it exposes the experience of those who have desired to initiate such projects but
stopped because of policies, laws, and regulations. According to the manager of restaurant A, when he first moved to Sweden, he considered creating a company. Subsequent to receiving information on how to start a business in Sweden he said, “I finally decided not to pursue
my idea because it was too difficult and complex at different levels”. In fact, these
institutional barriers will be examined later.
3.3.2 Restaurant B
Restaurant B is a small company employing 4 employees in 2019 (interviewee B). The company operates in the restaurant market, offering to individuals cooked meals to eat in or take out. The owner explained that he created the restaurant because he wanted to be more independent. He said ” after years of working in different restaurants as an employee, I
wanted to become independent and run my own restaurant. Then, 8 years ago, I opened my own business”. The turnover of the company for the previous fiscal year (2019) was
around SEK 2.4 million.
As observed before, the current crisis is affecting the restaurant market. However, surprisingly, restaurant B is much less impacted by the pandemic compared, for example, to restaurant A. Restaurant B’s owner doesn’t have accurate numbers for the moment, however, he estimated a decrease in sales of between 5% to 10%. From his perspective, two factors explain why his business is relatively unaffected. He said ” I am a small restaurant, the
majority of my clients, around 70% to 80%, order but do not eat in the restaurant, they usually take away.” In other words, restaurant B’s clients have not had to change their
habits. The second factor is the location, affirms the owner. He explained ”My restaurant is located in a neighborhood on the suburban outskirts of the city and my clients are mainly from this neighborhood. Consequently, even if we are going through a period in which people are encouraged to minimize their travel, as we are close to our customers, they still come to the restaurant and buy our food and eat it outside, as usual”.
3.3.3 Restaurant C
Restaurant C is a small company, employing a total of 9 employees in 2019 (interviewee C). The company operates in the restaurant market, offering to individuals cooked meals to eat in or take out. According to the owner, the restaurant was created for her family’s financial needs. She asserts ”I moved to Sweden 17 years ago; after struggling to find a job for about
a year, because I do not have hig-level and recognizeable skills, I made the decision to start a restaurant so I could work and have a regular income”. Created more than 15 years ago,
restaurant B is today part of a well established restaurant chain in one of the biggest cities of Sweden. All the restaurants are spread throughout the city, and restaurant B is located on
the outskirts of the city. In the last financial year (2019), the company achieved a turnover of SEK 6.4 million (interviewee C).
Similar to restaurant B, restaurant C is located far from the center of the city. Equally, being a neighbourhood restaurant, the company is less affected by the current crisis than restaurant A. However, due to the behavioural habits of its consumers, who are more used to eating in the restaurant, the company has experienced more impact on its sales (interviewee). Furthermore, due to the initial financial health of the company, the current crisis is exacerbating the company's already poor financial results. The owner states ” for the past
three years, we have had negative results; indeed, because of the Covid impact, the sales have decreased by 15 to 20%, which is consequently negatively accentuating the financial stability of the restaurant”.
The three interviews have contributed to the study of the immigrant entrepreneurship phenomenon from different points of view, with different actors involved in this phenomenon. The table below summarizes key information regarding the companies.
Restaurant Year of
creation Restaurant Type Work position Years of experience Number of employees Nationality of employees
A 2016 Lebanese Manager 2 years 14 Croat,
Brazilian, Afghan and others
B 2012 Italian Owner Since
the opening 4 Iraqi
C 2005 Thai Owner Since the
opening 9 Asian
Figure 2: Information on immigrant owned restaurants in Linköping Table (own source, 2020)
3.3.4 The impact of COVID-19 on businesses raises several issues
The COVID-19 crisis is impacting on the entire economy and as described earlier, the restaurant market is being particularly severely hit. However, out of the three restaurants interviewed, only one was significantly affected. The reason for that, given by the owner of restaurant B, is that, from his point of view, the location of the restaurant plays a crucial role. This can be correlated by observing that , Restaurant A, the restaurant the most impacted, is located in the city center of Linköping, while the two less affected, restaurants B and C, are located on the periphery of the city in smaller neighborhoods. The owner of restaurant B emphasizes the fact that one of the other reasons they are impacted on a smaller scale is because of their customers’ habits. Restaurant B’s customers are in the habit of ordering the food and eating it away from the premises. They almost never ate inside the restaurant. Thus, when the government implemented social distancing and number restrictions in public areas, these restaurants/customers were not really concerned. Being located in the center of
a small neighborhood allows proximity to the people who are living there. During a period where less movement/travel are required, restaurants B and C might gain a few clients who, rather than bike for 10 min to go to the city center as they might usually do, tend to go closer because of the fear of spreading the virus. This analysis made by the owner of restaurant B can equally be applicable to restaurant C since they are located next to each other.
3.4 Empirical Framework
3.4.1 Macro-institutional Framework
As it will be more precisely defined in the literature, the institutional context is all about laws, regulations and policies that are enforced by the government. All three interviewees agree that the major component that impacts on them is the “institutional context”. As a matter of fact, it is the primary issue they are confronted with first with when it comes to starting, running, or developing a business. Due to how little time they were able to give me, no further reasons were given. However, they all claimed that the process was long and complex in regard to the strict policies, bureaucracy, and language barrier. Indeed, when they first arrived, they spoke neither English nor Swedish well. Nevertheless, they were able to share their experiences from a more practical point of view. They depicted the difficulties they went through as well as how they felt about the experience. Their path was long and arduous. The owners of restaurants B and C explained they went through those procedures a long time ago and that they probably would not be relevant nowadays. For this reason, they were not prompted to detail their journey. They focused on the bureaucracy, the financial funds, the network that must be built and the fact that they were not Swedish citizens. It would seem that not being Swedish confers fewer rights in terms of building a business. According to him, if you open a restaurant, you should have a long-term plan to settle in the country, since in Sweden especially some rights are accessible to Swedish citizens. In fact, this citizenship is obtained only after a few years’ residence, but this long-term stay was not part of this person’s plan.
3.4.2 Meso-level of local opportunity structures and links
From a social embeddedness perspective, even if the interviewees did not explicitly say so, it is clear that the three restaurants are deeply embedded in their ethnic network. One detail which confirms this statement is the employee composition. In all three companies, the employees were all from ethnic minorities. However, differences can be observed between the restaurants. The restaurant A workforce is composed of several nationalities, as follows: the owner is from Afghanistan, as are some of the waiters and the cook, the manager is from Croatia and a waitress is from Brazil, whereas the workforce of restaurants B and C is mainly composed of the same nationality, or the same geographical zone. The owner of restaurant B
is from Iraq, as are his three employees. The owner of restaurant C is from Thailand, and most of the employees are of Asian origin or background.
4 Literature review
The following chapter reviews the literature gathered to build the theoretical framework. The literature review chapter is divided into two sections. In the first instance, the key terms of the study are defined and the concepts related to immigrant entrepreneurship are discussed in-depth. Secondly, existing theories illustrating the vulnerability of immigrant owned restaurants are explained.
4.1 Key terms
Immigrant Entrepreneurship
In general, all the concepts referring to immigrant entrepreneurs indicate different degrees of foreignness. The degree of foreignness varies from being born abroad to being born to non-Swedish parent(s) (Sweden Agency for Economic and Regional Growth, 2008). The first degree of foreignness refers to an individual who was born abroad or who comes from another country and has lived in Sweden for at least 1 year (ibid). Immigrants are also referred to as foreign-born and foreign background (ibid). The second degree, linked to the term “foreign background”, is defined as a person who lives in Sweden and was born abroad or born in Sweden with two foreign parents (ibid). Entrepreneurs with a foreign background are also classified as immigrant entrepreneurs. It is used in relation to the term Swedish background, which refers to a person who was born in Sweden with one or two Swedish-born parents (ibid). Regarding the topic of immigrant entrepreneurship, different terminologies are used to describe the same subject matter: ethnic entrepreneurs, ethnic minority entrepreneur and foreign-born entrepreneur. However, in this research paper, the term immigrant entrepreneur is mostly used.
In this thesis, an immigrant is defined as a person who lives in Sweden and was born abroad to two foreign-born parents. An immigrant entrepreneur is defined as an individual who was born abroad to two foreign-born parents, who lives in Sweden and has founded a company in Sweden.
Additionally, it is important to understand that there are two types of entrepreneurs: low-skilled and highly low-skilled entrepreneurs (Price 2012). Highly low-skilled immigrant entrepreneurs contribute to sectors that require a significant educational background. On the other hand, low skilled immigrant entrepreneurs are limited with their options due to their lack of required knowledge. This leads low skilled immigrant entrepreneurs to introduce ethnic products that are connected to their background, such as clothing or food (Klosterman & Rath 2002).
Vulnerability: definition
In order to fully and clearly grasp the aims of the research question and the response that will be given, a definition of “vulnerability” is given hereafter. According to the Cambridge Dictionary, vulnerability is “The quality of being vulnerable = able to be easily hurt, influenced, or attacked”.
4.2 Mixed embeddedness as a theoretical lens
A substantial number of research projects have been carried out on immigrant entrepreneurship, thereby providing a broad understanding of the reason behind immigrants’ motivations to become entrepreneurs. These articles enlighten internal and external motivation factors as well as the components that contribute into making them successful entrepreneurs. More precisely, the literature covers the embeddedness of immigrants as entrepreneurs in the economy and has depicted a picture of the average immigrant entrepreneur. When it comes to discussing immigrant entrepreneurship, three main concepts are used to describe this phenomenon (Barakji & Kalssli 2018): the cultural perspective, which is defined as whether or not a person’s ethnic background is one that supports and pulls towards entrepreneurship (Rath & Kloosterman 2000); the structural perspective, which stems from a result of discrimination from the host country and other factors, such as language skills, education levels and mixed embeddedness, which combines factors from both the cultural and structural perspectives (Mitchell 2016); Rath and Swagerman 2015). To understand the immigrant entrepreneurship phenomenon, this thesis has used the Mixed Embeddedness (ME) approach as a theoretical lens. The study has been based on the innovative framework developed by Kloosterman (2010) to analyze immigrant entrepreneurship. The approach combines the microlevel of the individual entrepreneur (with his or her resources), with the meso-level of the local opportunity structure and links the latter, in a looser way, to the macro-institutional framework. (Kloosterman 2010).
4.2.1 Embeddedness
The concept of embeddedness was one of the central concepts in scientific discussion that focused on explaining the success of (immigrant) entrepreneurship (Portes 1995). Focused on immigrant/ethnic entrepreneurship, this concept also covers mechanisms and factors of informal economic activities, even if they are outside of the regular (legal) framework. The main focus of the embeddedness concept is on the social characteristics of the groups that are considered to consist of co-ethnics. Indeed, it appears that immigrants are involved in a complex environment and neglecting the institutional and economic sides of this environment meant that this concept excluded two main sides of immigrant life. Due to this
fact, the concept was criticized for its narrow view of the problem (Kloosterman et al. 1999). The embeddedness concept inspired the ME approach.
4.2.2 Mixed embeddedness
Immigrant entrepreneurship complexity has been explored using the ME approach in several studies. For this paper, using the concept of mixed embeddedness would seem relevant in order to examine immigrant entrepreneurship more closely and thus contribute to a more complete study of the concept. In fact, using the mixed embeddedness concept as the theoretical perspective confers to the thesis a more intelligible aspect, thereby allowing us to fully grasp all the dimensions of the problems of vulnerability that immigrant owned restaurants are facing in Sweden. ME is one of the most recent approaches that explains the entrepreneurial success and, in particular, factors that facilitate the development of immigrant entrepreneurship. The concept of mixed embeddedness originates with Robert Kloosterman, a Dutch professor and recognized specialist working with migrant entrepreneurs, cultural industries, and unemployment, from social, economic, geographical, and historical perspectives. The mixed embeddedness approach is characterized by the significant interplay between economic, social, and institutional contexts and factors (Kloosterman et al. 1999). The concept is defined as “a concept [...] which encompasses both
sides of embeddedness to analyze processes of insertion of immigrant entrepreneurs”
(Kloosterman et al. 1999). Mitchell (2016), who describes the concept of mixed embeddedness as a cross between the structural and cultural perspective, depicts it to be a combination of internal and external forces. Additionally, thanks to a wide scope, there is a possibility of studying the demand and supply sides of immigrant entrepreneurs, (Kloosterman et al. 1999). In order to draw a realistic and accurate picture of immigrant entrepreneurship, a connection between economic and social relationships is made (Ram et al. 2013, 2017). The ME approach is well suited to explaining the interconnections between macro-level contexts and individual entrepreneurial responses. Furthermore, ME considers economic factors embedded in social structures at three levels – institutions at the macro level, social networks, often located in city neighborhoods, at the meso level, and human capital resources of entrepreneurs at the micro level (Kloosterman 2010; Kloosterman et al. 2016).
One of the main elements of the mixed embeddedness concept is “Opportunity structure”. It covers both economic and institutional environments. It includes market conditions and collaboration, the un-/employment situation, accessibility of capital. While ME posits that immigrant entrepreneurial actions are embedded in institutions and social structures, also called ‘opportunity structures’ (Kazlou and Klinthall 2019; Kloosterman et al. 1999), it says little about how immigrants respond when the opportunity structures change over time and at different stages of the entrepreneurial process (Vinogradov and Elam 2010). For example, an immigrant entrepreneur can decide to enter a high-skilled, growing segment as a
consequence of entry barriers decreasing. Immigrant entrepreneurs might perform better because of a support program that was adopted by government (Andersson Joona and Nekby 2012) or exit due to recognizing new opportunities (Wennberg 2009). Immigrant entrepreneurs may adjust to the new environment via acquiring financial resources, entrepreneurial experience and developing stronger social network resources. This theoretical prediction may be in line with the empirical findings of Kloosterman et al. (2016) for the Netherlands and Edwards et al. (2016) for the UK.
The macro-level institutional context
In the mixed embeddedness approach, institutional context refers to the macro-level of the concept. It encompasses both formal and informal ‘rules of the game’ (North 1990). Those “rules”, influence individuals’ behaviors toward entrepreneurship, thereby creating a framework of constraints and boundaries, but also enablers and encouragers (Kazlou 2018). The “formal rules” are established by the state; they take the form of laws, regulations, or policies etc. They are officially accepted and can be modified easily by decision makers. The “informal rules” correspond to non-codified rules of behavior such as cultural and social norms. Those values are accepted by society and guided by individual persons or their networks. Slower to change, informal rules are also less impacted by decision makers (Kim, Wennberg and Crodieu 2016; Williamson 2000). More concretely, entrepreneurship access or exit thresholds for immigrants may be predefined by formal regulations, while informal institutions may alter an entrepreneur’s activity through consumer discrimination or (mis)trust. (Davidsson, Hunter and Klofsten 2006). The institutional context, shaped by governments, is used as a tool to structure economic activities, behavioral norms, and entrepreneurial strategies (Hall and Soskice 2001, Hall and Gingerich 2009). The institutions frame the opportunity structure (Rath and Kloosterman 2001, Ram, Jones, and Villares-Varela 2016, Waldinger, Aldrich and Ward 1990). The opportunity structure concept is part of ME. The opportunity structure relates to the demand side of the market. As Kloosterman (2000) puts it, “different welfare regimes create different economic
opportunity structures (types and sizes of economic sectors) because of their distinct ways of interfering with the labor market”.
Depending on the level, opportunity structures differ; at the macro-level opportunity structures are defined by the varieties of capitalism theory (Hall and Soskice 2001), while meso-level opportunity structures refer to urban economies (Kloosterman and Rath 2018).
Meso-level social capital
In the mixed embeddedness approach, social capital refers to the meso-level. It encompasses social and ethnic capital (Klaesson and Larsson 2014). While discussing the social aspect of immigrant entrepreneurship, embeddedness as a process named "Social embeddedness" is frequently mentioned by researchers. According to that process, immigrants become
‘embedded’ in social relations of the host society. Cities are used as places of interconnections between different ethnic groups sharing their cultural and religious behaviors (Kloosterman et al. 1999). The creation by ethnic groups of heterogeneous social networks in large cities enables immigrant entrepreneurs to have simpler access to valuable resources, eases information flow and may boost their creativity (Florida et al. 2016, Jacobs 1969, Portes 1995). Jack and Andersson (2002) go further and define social embeddedness as “A process of becoming part of the structure. However, it is more than simply developing social networks. Embeddedness involves understanding the nature of the structure, enacting, or re-enacting the structure, which forges new ties, and maintaining both the link and the structure. As a process, this entailed developing credibility and acquiring knowledge of how business is conducted” (Jack and Anderson 2002, p.468). In more concrete terms, social capital is defined by Lin (1999) as “investment in social relations with expected returns”. Two essential elements composing social capital have been identified by the author: resources and structure. It answers the questions of what kind of resources an immigrant entrepreneur can obtain through a social connection on the one hand and how, on the other hand, s/he can obtain the required resources. Lin (1999), has investigated and discussed how various resources within social networks, such as land, human capital, information, and entrepreneurial abilities can be attained via a social network. The study of immigrants’ connections to family and co-ethnic groups allows researchers to define two forms of social capital: ethnic capital (Borjas 1992) and family capital (Bird & Wennberg 2016; Evansluong & Pasillas 2017). Portes (1995) described ethnic resources as “socio-cultural features of the whole group which co-ethnic entrepreneurs actively utilize in business or from which their business passively benefits. Ethnic resources include an ethnic culture, structural and relational embeddedness, social capital, and multiplex social networks that connect the entire group”.
Micro-level individual characteristics
In the mixed embeddedness approach, individual characteristics refer to the micro-level. This encompasses resources such as human or financial capital brought by immigrants to the host country. According to several authors, (Becker 1975; Dimov 2017; Marvel, Davis, and Sproul 2016) human capital includes knowledge, skills, and abilities, health, and other individual characteristics. ME estimates immigrant entrepreneurs’ financial capital to be at a constantly low level since they usually lack finance (Kloosterman 2010). Through ME, Kloosterman (2010) determines the role of education in entrepreneurship. In fact, the type of education influences industry selection. Two types of immigrants can be observed: high-skilled immigrant entrepreneurs are able to enter industries with diversified production, whereas low-skilled individuals tend to start a business in highly standardized industries (Lofstrom et al. 2016).
Opportunity structure
The term “opportunity structure” is frequently used in discussions of (immigrant) entrepreneurship as one of the main actors of existing conditions in the social, economic, and institutional environment. Particularly with respect to immigrant entrepreneurship, this aspect is one of the most predominant that firstly, defines the sphere of potential business, secondly, determines the factors of success, and thirdly, includes the prospects for support and “guarantee paths” for new entrepreneurs. Opportunity structures may be different in different contexts, which is why it is important for researchers to specify and describe the characteristics of a particular country, welfare regime, city or even district in order to note what regulations on different levels are available to develop opportunity structures of particular cases (Markova 2013). The institutional side of opportunity structure includes elaboration of formal laws and rules and specific requirements that allow an (ethnic) entrepreneur to receive legitimate institutional support (Oxford Dictionary, 2004). Social environment is interaction between people and people, including culture, networks, social status, and background. This theoretical approach claims that opportunities for ethnic entrepreneurial activities are placed at the intersection of the factors and change according to the economic, institutional and socio-cultural framework transformations (Kloosterman et al. 1999).
Figure 3: A typology of opportunity structures (Kloosterman 2010)
4.2.3 Mixed embeddedness: the Swedish context
As stated previously in this thesis, mixed embeddedness is proposed as the theoretical lens. Hereafter, I will use the Swedish context as a framework in an endeavor to discern immigrant restaurants’ vulnerability in the Swedish economy. The following two subsections correspond to the two notions mentioned in the mixed embeddedness theory. In the first one,
I will describe the institutional context; the means, the laws and regulations implemented as a way of regulation for immigrant entrepreneurship businesses by the Swedish government. The second part will posit an explanation of the socioeconomic context, in order to distinguish the place of immigrant entrepreneurs in Swedish society as well as their place as individuals.
The institutional context
The politico institutional embeddedness is manifested by policies, laws and regulations that influence economic action. The institutional context represents both constraints and boundaries, but also enablers and encouragers applied to entrepreneurship (Kazlou 2018). In fact, two forms of institutions can be distinguished, formal and informal. Formal institutions include constraints officially accepted and enforced by the State, such as laws, property rights and regulations (North 1990), which can be more easily affected by decision makers (Kazlou 2018). On the other hand, informal institutions consist of social factors such as culture and social norms. These are non-codified rules of behavior, values and norms accepted in society and controlled by private persons or their networks. Informal institutions are less easily affected by decision makers and generally change much more slowly (Williamson 2000). Some formal regulations may predefine entry or exit thresholds via official policies and laws, while informal institutions may affect entrepreneurs via consumer discrimination or (mis)trust. Formal and informal institutions have differing paces of change. Governments can suddenly change formal institutions, e.g. policies or regulations. Informal institutions, however, such as cultural traditions or attitudes, transform slowly in society. The institutional theory offers a good explanation of how institutional changes influence entrepreneurship (Davidsson ,et al. 2006). Since 2008, Sweden has made several institutional changes regarding work and entrepreneurship-related migration. The country has implemented numerous labor market policies and programs to improve recognition of immigrants’ education and skills. One important change was the immigration policy reform launched in 2008, which allowed recruitment of labor from outside Europe. A second change was the policy reforms that were introduced in 2007 in order to enhance entrepreneurship and self-employment. The new rules for labor immigration introduced in December 2008 implied that the demand for labor from third countries should be decided by employers and not, as had been the case, by the employment authorities. Hence, temporary work permits were issued on the basis of individual employers’ needs to recruit labor. Permanent residence could be granted to those holding work permits for a total of four years during a five-year period. However, it was not only employees who were covered by the new rules; a unique element implying the possibility of issuing residence permits for third-country nationals intending to run a business in Sweden was introduced as part of the legislation (SFS 2008). “The temporary residence permit can be transformed into a permanent permit after two
support the individual and any dependent family members” (Migratory Agency). The
relatively short two-year qualification period for self-employed immigrants attracted migrants holding temporary residence permits to self-employment, including those no longer eligible for guest student visas or those who had been denied refugee status (Emilsson 2014).
Socio capital
Different ethnic groups of immigrants who share their cultural and religious norms interconnect in cities with other ethnic groups and with the host society and become ‘embedded’ in social relations (Kloosterman et al. 1999). This process is called social embeddedness. Jack and Anderson (2002) defined it as “a process of becoming part of the
structure. However, it is more than simply developing social networks. Embeddedness involves understanding the nature of the structure, enacting, or re-enacting the structure, which forges new ties, and maintaining both the link and the structure. As a process, this entailed developing credibility and acquiring knowledge of how business is conducted”.
Social embeddedness is manifested by the social network to which immigrants have access, the ethnic network and ethnic resources (Vershinina et al ,2018), the culture and language, the social norms, and family ties and the family background. Heterogeneous social networks of immigrants, usually in large cities, provide easier access to valuable resources, ease information flow and may boost creativity (Florida et al. 2016). Regarding the “opportunity” offered by the Swedish government through its policies and because getting a job can be quite challenging due to some informal institutional settings, immigrants often want to start up their own business. In this way, they help themselves in social and economic mobility. Immigrants’ businesses are established and operate in many cities and in different industries in Sweden. According to census data, Stockholm is the city in Sweden that has the largest share (19 percent) of businesses established by immigrants (Sweden Agency for Economic and Regional Growth, 2011). Uppsala, Skåne, Västra Götaland, Jönköping, and Kronoberg are among the cities with a share ranging from 11 percent to 13 percent of immigrant businesses (Sweden Agency for Economic and Regional Growth, 2011). Due to immigrants’ contacts with their native countries and with a preexisting network, information about the economic opportunities is transmitted to the people who are willing to immigrate to that region or nation. Therefore, recently immigrated people have often made a decision about which type of economic activities they could perform even before their arrival in Sweden. The best economic activity may be to start a business, even if they have only recently arrived. A study conducted by the Sweden Agency for Economic and Regional Growth in 2010 indicated that the number of such companies was growing in many sectors, from retail, hotel, and restaurant sectors to construction, hi-tech, education, recreational, cultural and sports sectors. Among these, retail, hotel and restaurant and personal care are the three sectors overrepresented by the number of companies founded by immigrant entrepreneurs (NUTEK
