A Resource-Based Approach to Ethnic Business Sponsorship: A Consideration of Ismaili-Pakistani Immigrants

Ethnic entrepreneurship is becoming an area of increasing interest in both the academic and practitioner worlds. Recently released statistics from the U.S. Bureau of the Census report that the number of firms owned by those in the combined ethnic category of Asian and Pacific Islanders, American Indians, and Alaska Natives has increased 87.3 percent, almost matching the 87.2 percent increase shown between 1987 and 1992. This trend becomes even more notable when combined with increased business receipts between 1987 and 1992 of 205.9 percent. By comparison, during the same five-year time period, the total number of U.S. firms increased 26 percent with an increase in receipts of 67 percent from 1987 to 1992 (U.S. Dept of Commerce 1996). Although the statistics attached to ethnic entrepreneurship are striking, an exact definition of "ethnic entrepreneurship is wanting. " Waldinger, Aldrich, and Ward define ethnic entrepreneurship as "A set of connections and regular patterns of interaction among people sharing common national background or migration experiences" (1990, p. 33). The emphasis in this definition is on explaining the "ethnic" component, rather than "entrepreneurship. " The definition differentiates between businesses conducted by individuals who share and use ethnically-based connections in their business activities and those business owners who are of a specific ethnic background but do not use any ethnically-based relationship in the operation of the business. However, entrepreneurship is rarely defined in studies of ethnic entrepreneurship, instead taking on the most comprehensive sense of the term with business ownership being the defining construct. The concepts of creation of value and growth orientation, which are commonly particularized as of critical theoretical import to the study of entrepreneurship, have not yet played an explicit or guiding role in the study of ethnic entrepreneurship. The realization of the size and scope of this phenomenon is beginning to generate debate over the role these businesses play in the larger U.S. business creation process. The debate can be approached through four primary questions. First, is the process of business creation in ethnically-owned businesses distinct from the creation for other businesses? Second, does ethnic community sponsorship play a significant role in the creation process of ethnic businesses? Third, do any differences in the creation process between ethnic and non-ethnically owned businesses offer important lessons for a better general understanding of business creation or growth? And fourth, what areas of ethnic business ownership need further study from a management perspective? To explore these questions, a framework drawn from resource-based theory is used. The first section briefly surveys how ethnic entrepreneurship has been studied, recognizing the interdisciplinary nature of research on this phenomenon. Then both general and ethnic community sponsorship from a resource-based perspective is discussed, presenting an exploratory case study of a specific ethnic community. And finally, a research agenda based on the four primary research questions is suggested. Interdisciplinary Literature on Ethnic Entrepreneurship Little is currently known about the actual process of business creation within ethnic communities. Although ethnic entrepreneurship as a cultural phenomenon has received much attention in sociology and anthropology, it has generally been relegated to the periphery of management and entrepreneurial studies, and the existing literature reflects this condition. There are several useful lines of research from both within and without the business arena which help us better understand ethnic entrepreneurship, providing the answers to such questions as why members of some ethnic communities are more prone to business creation, what ethnic businesses look like, and what is the nature and level of resources received from the ethnic community? …