BRITISH ASIAN SELF-EMPLOYMENT - THE INTERACTION OF CULTURE AND
ECONOMICS : SUMMARY OF FINDINGS
A personal interview survey of 129 British Asian entrepreneurs conducted
in 1995. The sample was derived from the Fourth National Policy Studies
Institute Survey of British Ethnic Minorities.
For more details contact:
Dr Tariq Modood or Dr Hilary Metcalf, Policy Studies Institute, 100, Park Village East,
London, NW1 3SR, UK, Tel: +171 468 0468; Fax: +171 388 0914.
Key Points from the Research
1. The study successfully combined previously separate economic (Jones et al) and
cultural (Werbner) models of entry into self-employment and developed these to
understand business development. This showed the complexity of self-employment and
how different factors could impinge on business success.
2. The research found evidence to support the hypothesis of cultural and economic
diversity between South Asian Groups affecting self-employment. It also identifies
elements of heterogeneity within groups. This means that it is no longer possible to make
generalisations about a South Asian predisposition towards business.
3. The research identified ways in which culture and religion could impact on entry into
self-employment, on the development of the business and on satisfaction with self-employment. In particular, it identified a cultural orientation among Pakistani Muslims
which allowed economic risk-taking through a dependence on God's will. It found no
evidence for a moral individualism that some have argued characterises the self-employed.
4. The research identified barriers to success in business and how specific problems were
more prevalent amongst specific ethnic groups. It showed how Pakistani entrepreneurs,
in particular, were often ill-equipped for business, having entered business as an escape
from poor labour market prospects and racism.
5. The research has important implications for policy. While the need for education and
advice in respect of taking a business-orientation towards self-employment is well-recognised and that access to capital is often a problem the research showed differences
in need for help in these areas across ethnic groups. Assistance should therefore be
targeted. To improve success in business, the research also showed the need to reduce
negative push' factors pressurising people into self-employment. Particularly poor
employment prospects and racism in the labour market. Finally it was found that most
of the self-employed did not desire that their adult sons should work in the business, and
this has implications for whether high rates of South Asian self-employment will
continue.
Summary of Research Results
Background
Self-employment amongst South Asians has grown disproportionately in the last two
decades, resulting in a third of Pakistani, Indian and African-Asian men in paid
employment being self-employed compared to a fifth of white men. Previous research
into ethnicity and self-employment has provided economic and cultural explanations of
the nature of self-employment amongst ethnic minorities. However, despite evidence that
in self-employment, as in employment generally, the position of Pakistanis and
Bangladeshis is much more disadvantaged compared to African-Asians and Indians,
differences between South Asian groups have been unduly neglected.
Based on interviews with 129 self-employed South Asians in Britain, the research sought
to explain, in terms of cultural and economic factors, differences in the nature of self-employment between groups and to explore the extent to which self-employment
provided upward mobility.
Main Findings
The survey provided a wealth of information about self-employed South Asians, covering
attitudes, education, employment, family networks, business start-up and development.
This has enabled a much greater understanding of the nature of diversity across ethnic
groups and the interaction between culture, economic factors and business
development.
The research found evidence of cultural and economic diversity between South Asian
groups affecting self-employment. It also identified elements of heterogeneity within
groups, particularly amongst African-Asians. This means that it is no longer possible to
make generalisations about a South Asian predisposition towards business.
Explanations of differences in South Asians profile in
self-employment
Many Pakistanis entered business as an escape (from poor employment prospects and
racism in the labour market) rather than as a positive choice. The resources they brought
in terms of finance and skills (in so far as qualifications proxied skills) were poor. The
decision to enter self-employment in these circumstances may have been reinforced by
a religious approach which created a faith-derived optimism about the results of economic
activity. Additionally, the Pakistanis placed value on self-employment as a means of
improving standing with the family. Against this background, it is not surprising that
Pakistani businesses tended to be less successful. Self-employment brought both
satisfaction and problems, although the same religious outlook seemed to reduce the
stress this brought.
Indians appeared to have a greater business-orientation: self-employment was more often
entered for positive reasons and entry and development seemed to take greater account
of business opportunities. Both educationally and financially Indians seemed able to call
on resources (savings, commercial loans and family loans). Although perceptions of
status were less likely to encourage entry into self-employment, family cohesion was a
support, with Indians more often entering businesses with family partners. Indians'
greater risk aversion may have affected both who set up in business and then how the
business developed. Against a sounder initial background, this was likely to result in the
greater stability (including lower decline) of Indian businesses.
African-Asians were a more heterogeneous group in terms of qualifications and seemed
to exhibit a mix of the circumstances and attitudes of both Pakistanis and Indians. A
large minority escaped into self-employment but cultural values on self-employment and
family standing also pushed some into self-employment. They shared the business-orientation of Indians, but were more likely to develop business around their skills rather
than buy existing businesses. African-Asians did not appear to have good access to
capital. This background meant that African-Asian businesses were amongst the most
likely to grow, but also amongst those likely to decline.
Success and satisfaction
Overall, most South Asians felt they had been successful in business. Not surprisingly,
given the worse performance in terms of turnover, Pakistanis were least likely to feel they
had been successful. This was also seen in terms of views about income. Nearly half of
Pakistanis felt their income was low, whereas practically no Indians or African-Asians
did.
Business also brought feelings of self-worth, standing with the family and independence.
As with business success, Pakistanis were least likely to achieve the satisfactions sought
in these areas.
Self-employment as a vehicle for employment
An important issue is the extent to which South Asian businesses were developing to
provide a new source of employment and the extent to which such businesses relied on
or sought to provide family employment.
One quarter of businesses expanded employment (paid or unpaid) and few declined. In
total, employment (paid or unpaid) grew from 362 to 576. Pakistani businesses were
more likely to increase in size. As businesses developed, they increasingly employed
people outside the family. In total, from initially employing 248 non-family workers, by
the time of the survey, 454 were employed, with much greater growth in Indian
businesses. At the same time, the number of family workers increased from only 92 to
145, with most growth in Pakistani-owned business.
The future of South Asian self-employment
A major issue is whether the high incidence of self-employment amongst South Asian
immigrants will continue. Whilst there is some evidence that self-employment
contributes to the economic advancement of some groups, the study found little to imply
a predisposition to self-employment as such amongst any of the three South Asian ethnic
groups. Self-employment was sought to increase standing with the family for African-Asians and Pakistanis and the family was an important resource especially for Indian
entrepreneurs. Yet poor, labour market prospects and racism had played a major role in
the decision of Pakistanis (and a lesser role in the decisions of African-Asians) to enter
business. As evidence suggests this is reducing, the circumstances precipitating greater
self-employment amongst these groups seems to be waning. Moreover, most of the self-employed did not want their adult sons to work in the business and the second generation
may have quite different expectations and sources of family and community support to
those of immigrants. These findings suggest that the continuation of current rates of
Asian self-employment cannot be taken for granted.
Policy implications
The research had important implications for policy. Whilst the need for education and
advice in respect of taking a business-orientation towards self-employment is well-recognised and that access to capital is often a problem, the research showed difference
in need for this across ethnic groups and that assistance should therefore be targeted. To
improve success in business the research also showed the need to reduce negative push
factors pressurizing people into self-employment, particularly poor employment prospects
and racism in the labour market.
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