From 'Break Out' to 'Breakthrough': Successful Market Strategies of Immigrant Entrepreneurs in the UK

INTRODUCTION It is, by now, widely acknowledged that ethnic minority immigrants have a high propensity towards entrepreneurship and contribute positively to economic development. Recent studies have highlighted the significant contribution made by immigrant entrepreneurs from India, China, and other countries, to innovation and job creation in the US (Anderson & Platzer, 2006; Fairlie, 2008; Wadhwa, Saxenian, Rissing, & Gereffi, 2008). Ethnic minority entrepreneurs, many of whom are immigrants, are overrepresented among the population of entrepreneurs in the Netherlands (Kloosterman, 2003) and the UK (Levie, 2007). Although entrepreneurship has been the route to upward economic and social mobility for some ethnic minority immigrant entrepreneurs, for others it has been an economic dead end (Barrett et al., 2001). Much of the literature on ethnic minority immigrant business owners, especially in Europe, focuses on the disadvantages faced by them and the small average size of the firms they own, and neglects to analyze how and why a significant number of ethnic minority immigrant entrepreneurs have succeeded in expanding their businesses. In recent years, the term 'break out' has been used in the context of ethnic entrepreneurs who break with the exclusive reliance on ethnic markets (Ram & Jones, 1998). However, there are few scholarly accounts of the process of 'break out', the nature of marketing strategies developed by successful immigrant entrepreneurs and the underlying factors that enable some immigrant entrepreneurs to implement these strategies and overcome existing market barriers. What are the market barriers and opportunities facing ethnic minority immigrant entrepreneurs? How do they negotiate those market conditions? How and why do entrepreneurs facing similar market structures adopt different market strategies? What are the key features of 'break out' strategies and do they relate to product markets or factor markets? What are the factors that support or obstruct entrepreneurs in adopting 'break out' strategies? Is 'break out' necessary or sufficient or is 'breaking through' into new markets equally important? This paper aims to shed light on the above questions. It also attempts to provide a taxonomy of the alternative market strategies that immigrant entrepreneurs might adopt. It goes on to explore the characteristics of 'break out' and 'breakthrough' strategies, and the personal and contextual characteristics of the entrepreneurs that implement them. LITERATURE REVIEW: SOME KEY ISSUES Many of the market barriers facing ethnic minority immigrant entrepreneurs are similar to those facing small businesses in general. These include the difficulties of attracting initial customers, competing with entrenched competitors and building a reputation in the marketplace. Securing formal financing is also a challenge for a newly started small business (Storey, 1994). While the foregoing challenges are common to all small and newly started businesses regardless of ethnicity, they are likely to be exacerbated in the case of immigrant entrepreneurs who are less familiar with the host country market in terms of prevailing supply and demand conditions, the nature of competition, business culture and business practices, and government regulations. The lack of fluency in the host country's language among some ethnic minority immigrants adds to their difficulties of negotiating market barriers. These problems are captured by the concept of ethnic disadvantage, which asserts that immigrants are at a relative disadvantage in the labor market since they often lack language and career-related skills, which blocks their market opportunities (Mason, 2003). Due to their lack of appropriate educational qualifications and lack of capital, immigrants tend to establish businesses at the lower end of the opportunity structure. Previous research suggests that ethnic minority entrepreneurs face greater market barriers because they tend to be located in inner city areas characterized by low effective demand, poor infrastructure and above-average crime rates (Aldrich et al. …