Ethnic Enterprises

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Ethnic Enterprises


Ethnic enterprises, which often result from voluntary or involuntary segregation or segmented economic systems, are economic entities tied to specific cultural groups. They provide goods and services both within and external to the specific group. Ethnic enterprises that are associated with ethnic communities provide avenues for social mobility, socialization, and acculturation for group members. There are several factors, occurring both internal and external to the specific community, that account for the viability of ethnic enterprises. For example, among some immigrant communities (such as Koreans), ethnic enterprises appear to be more vibrant and produce significantly higher rates of self-employment than in the rest of the United States. Alternatively, some racialized groups, such as blacks, appear to have markedly lower rates of enterprise viability and self-employment.

The success or failure of ethnic enterprises cannot be viewed in a vacuum. The road to success has much to do not only with entrepreneurial skill and motivation, but also with the business climate in which the enterprise operates. The relative success of Koreans in the United States, for example, had a lot to do with the U.S. governments influence in creating cheap labor in South Korea, the economic interests of the South Korean government, the decline of U.S. labor standards, and the positive response of U.S. corporations to Korean small business development. As pointed out by Ivan Light and Edna Bonacich, in Immigrant Entrepreneurs (1988), business enterprises among Korean immigrants were positively influenced by a decades-long international process that was stimulated by U.S. governmental policies encouraging the development of capital, technology, and military power in Korea. The ability of Korean businesses to take advantage of these external stimuli was greatly influenced by their use of kin labor networks and the traditional Korean revolving credit association, or kye. Thus, external and internal factors produced a situation that enhanced the viability of Korean ethnic enterprises. With time and success, the Korean economic sphere grew beyond their enclave economy. However, other ethnic and racial groups have at times responded to the Koreans success with antagonism. Consequentlyas exemplified by the 1992 Los Angeles riots, in which several Korean businesses were targetedsuch success is not without its costs.

Similar positive results have also been witnessed among Japanese and Chinese immigrant enterprises. One should not, however, assume that their immigration experience has not been fraught with significant loss, nor should one look upon these success stories as indicative of the failure of other groups. The experiences of some groups, such as blacks, have been drastically different, suggesting alternative (and often negative) development. The involuntary migration of blacks, followed by centuries of oppressive slavery, racial segregation, and an economic system hostile to black economic development, has severely restricted the development of African American enterprise.

Nonetheless, a continual record of black enterprise development can be identified in the United States from as far back as 1736. Significant developments have always been associated with external and internal factors. For example, in both the Revolutionary War and the Civil War, black business flourished as a direct result of blacks taking advantage of enhanced business climates in the U.S. The 1920s, for example, is often described as the golden era for black business development. Over 100,000 black business enterprises were observed by 1932. Another period of black economic success followed World War II, and a final boom in black enterprise development was associated with the 1960s civil rights and affirmative action initiatives. Thus, by 1969, approximately 1,603,000 black enterprises, generating annual receipts of 4.5 billion dollars, were concentrated in five states (California, Illinois, New York, Ohio, and Texas). The leading businesses, in terms of revenue, were automotive dealers, service stations, and food retailers. These successes belie the hardships, setbacks, and failures along the way.

As pointed out by Manning Marable, both dominant corporations and the public in the United States have met each period of black business success with significant retrenchment, racial hostility, and racially exclusionary practices. Vandalism targeting black enterprises occurred during and immediately after each of the above periods, leading to a significant decline in black businesses in each instance. In 1919 alone, twenty-six race riots were identified. In cities like Tulsa, Oklahoma, and Cincinnati, Ohio, blacks were uprooted and forced to leave.

Another example occurred in California in association with the gold rush of the mid-1800s. Originally, blacks were encouraged to develop a wide range of businesses. But with the eventual decline of opportunities, white racial preferences began to restrict black business operations to the service trades, such as tonsorial, boot-black, livery, restaurant and catering, and drayage businesses. Blacks restricted to the tonsorial trade developed a monopoly. This monopoly however was short-lived, as white patrons began expressing a preference for white barbers. Restrictive ordinances, city covenants, real estate and business redlining, and racially exclusionary business and labor practices served to curtail black enterprise development from 1910 to the mid-1960s. The 1960s civil rights movement, and its associated affirmative action programs, marshaled in what many thought would be a new day for black business development. This fifteen-year period, unprecedented in U.S. history, witnessed the development of a large, diverse middle class working in the public sector. Accompanying this was the growth of a new black elite in such areas as media, politics, sports, and entertainment.

Conservative backlashes to the civil rights movement, starting in the mid-1980s, served to stymie black economic enterprise development in the black community. These conservative backlashes took the form of (1) conservative attacks against affirmative action, (2) continual bias in banking and lending programs, and (3) a reluctance on the part of corporate America to fully encourage or utilize products and services.

Contrary to popular belief (or mythology), white ethnicity is alive and well in America. While the illusion of a monolithic white world serves specific political and cultural purposes, the reality of specific white enclaves serves very real and continuous economic needs. Thus, white ethnic enterprises associated with Italians, Irish, Germans, Poles, Jews, and others are easily identifiable throughout the United States. Throughout much of America, major white ethnic holidays not only celebrate white ethnicity but also tend to feature white ethnic enterprises. Such ethnic celebrations include Oktoberfest (German), St. Patricks Day (Irish), and Columbus Day (Italian), though the fact that these celebrations take on a national character does much to hide the fact that they are indeed ethnic in nature. Since the 1960s, a tremendous amount of scholarship has been produced documenting the emergence and the continuance of ethnic communities and identityas well as the resultant white ethnic enterprises.

White ethnic communities persist because they continue to provide for the special needs of specific communities. The principal ways in which these needs are satisfied are through the perpetuation and creation of ethnic enterprises. While these enterprises and communities were once located mainly in urban areas, they are now also associated with suburban growth. What this suggests is that as these white ethnic communities gave way to urban migrants, they were able to continue their existence in suburbia.

The economic viability, diversity, and independence an ethnic enterprise enjoys is dependent upon such things as the perceived status of the immigrant community in the host society, the availability and types of financial resources, and the size, longevity, and history of the ethnic group (and other ethnic groups) in the host society. Larger and more financially secure ethnic enterprises are typically able to operate more independently of a particular ethnic community. Alternatively, smaller and less financially secure enterprises are more likely to be dependent upon constituent ethnic communities for survival. For these latter types, growth and development of ethnic enterprises are more likely to be dependent upon the capacity of the ethnic entrepreneur to accumulate start up capital.

Postcolonial situations may provide the most fertile environments in which unique hybrid ethnic enterprises can develop. Richard Werbner documented this hybridism in Botswana in the early years of the twenty-first century. He calls it a cosmopolitan ethnicity that builds inter-ethnic alliances from intra-ethnic ones and constructs differences while transcending it (Werbner 2002, pp. 731732). This approach maintains traditional intra-ethnic identity while also seeking to identify with a national ethnic elite identity. Such transcendence is most appropriate in those situations in which an ethnic elite is able to promote a set of national economic and political agendas through its various enterprises. Thus, the Kalanga elites, originating in the borderland of Botswana and Zimbabwe, are able to utilize a form of super-tribalism to foster nation-building in Botswana.

Although ethnic enterprises facilitate the economic stability of ethnic elites in specific host countries, they may also facilitate the economic stability of the countries of origin. By tracking remittance and capital flow data to developing countries, researchers have demonstrated that these transfers can mean the difference between economic stability and financial crisis. Billions of dollars go from primarily Western host countries to developing countries in the form of remittances. (Remittances to developing countries were estimated by the World Bank to be US$72 billion in 2001 and US$93 billion in 2003, which was significantly higher then the global foreign aid in those years of US$52 billion and US$69 billion, respectively.) Between 2001 and 2006, such remittances doubled, as countries became more aggressive in documenting and encouraging the transfer of funds. Unfortunately, activities that may account for even more transfersillegal drugs and organized crimeoften still go under the radar. Regardless, such remittances provide the basis of considerable reinvestment, capital transfer, and economic investment in third world countries. While Latin America (specifically Mexico) accounts for the largest share of such remittances, the amount going to Asia, the Middle East, Israel, and Africa cannot be discounted.

SEE ALSO Ethnic Enclave; Immigrants to North America


Alba, Robert D., John R. Logan, and Kyle Crowder. 1997. White Ethnic Neighborhoods and Assimilation: The Greater New York Region, 19801990. Social Forces 75 (3): 883912.

Lieberson, Stanley, and Mary Waters. 1988. From Many Strands: Ethnic and Racial Groups in Contemporary America. New York: Russell Sage Foundation.

Light, Ivan, and Edna Bonacich. 1988. Immigrant Entrepreneurs: Koreans in Los Angeles, 19651982. Berkeley: University of California Press.

Marable, Manning. 2000. How Capitalism Underdeveloped Black America. 2nd ed. Cambridge, MA: South End.

Marger, Martin N., and Constance A. Hoffman. 1992. Ethnic Enterprise in Ontario: Immigrant Participation in the Small Business Sector. International Migration Review 26 (3): 968981.

Werbner, Richard. 2002. Cosmopolitan Ethnicity, Entrepreneurship and the Nation: Minority Elites in Botswana. Journal of Southern African Studies 28 (4): 731753.

World Bank. 2003. Global Development Finance Report 2003: Striving for Stability in Development Finance. Washington, DC: World Bank Group.

Rodney D. Coates