Ethnic Diasporas and Business Competitiveness: Minority-Owned Enterprises in London

Abstract

This paper focuses on the commercial exploitation of ethnic diaspora-based networks. Using qualitative data from four London minority-owned enterprises, diaspora-based linkages in the UK and beyond are examined and the implications for policy discussed. We conclude that, under certain conditions, diaspora-based networks enable higher levels of business competitiveness. They facilitate access to resources and markets by minority-owned businesses, particularly for those supplying ethnic goods and services,. Exploiting diaspora-based networks effectively depends not only on business owners’ capabilities and motivations to do so but also on diaspora structures—their size, geographical and sectoral locations—and the resources and opportunities they make available to business owners. Conversely, in certain circumstances, engagement with diaspora-based networks can constrain business competitiveness, particularly where this restricts the resources and markets available. Diaspora-based networks are potentially important influences on business competitiveness but do not negate the importance of class resources such as property, education and skills in processes of business formation and development among minority groups. The implications for existing theory and for policy are considered.

Keywords:

• Ethnic Minority Enterprise
• Ethnic Diversity
• City Competitiveness
• London
• Diaspora

Acknowledgements

The authors are grateful to the London Development Agency for funding the research upon which this paper is based and to the two anonymous JEMS referees for their comments.

Notes

1. Discussions of social capital often focus on trust and its role in facilitating market relations. The notion of social capital must, however, go beyond agents’ beliefs and norms of reciprocity to incorporate the material aspects of social relations—in particular, the economic and political resources that social positions confer upon particular agents (Bourdieu 1986). Given the unequal distribution of resources in society, agents might have high-trust, solidary relations with others but still have access only to limited or poor-quality resources (Portes and Landolt 2002). High-trust diaspora-based networks are of little value to minority business owners if they cannot supply much-needed resources and/or afford to buy the goods and services these enterprises bring to market.

2. This figure excludes the 20,000 Census respondents who reported Hong Kong as their country of birth rather than China (LDA 2005b: 70).

Additional information

Notes on contributors

John Kitching

John Kitching, David Smallbone and Rosemary Athayde are respectively Reader, Professor/Associate Director and Senior Researcher at the Small Business Research Centre, Kingston University