WORLD MIGRATION REPORT 2015...2015 WORLD MIGRATION REPORT Immigrant Entrepreneurship in Cities...

2015

WORLDMIGRATION

REPORT

Immigrant Entrepreneurshipin Cities

Katrin MarchandMelissa Siegel

International Organization for Migration (IOM)

Background paper

This paper has been issued without formal editing by IOM.

December 2014

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Background paper

Migrants and Cities: New Partnerships

to Manage Mobility

TABLE OF CONTENTS

1. INTRODUCTION ..................................................................................................................................32. TRENDS IN IMMIGRANT ENTREPRENEURSHIP ...............................................................................43. DRIVERS AND STRUCTURAL OBSTACLES OF IMMIGRANT ENTREPRENEURSHIP IN CITIES .........7 3.1 PersonalBackgroundandCharacterstics .....................................................................................8 3.2 MarketConditions ......................................................................................................................10 3.3 PoliciesandAdministrativeChallenges ......................................................................................124. EFFECTS OF IMMIGRANT ENTREPRENEURSHIP ............................................................................14 4.1EntrepreneurshipandSocioeconomicIntegration ......................................................................14 4.2ContributionofImmigrantEntrepreneurstotheEconomicPerformanceofCities ....................155. SUPPORTING IMMIGRANT ENTREPRENEURSHIP .........................................................................18 5.1 Policies Encouraging Immigrant Entrepreneurship ......................................................................18 5.2SupportProgrammesforImmigrantEntrepreneurs ....................................................................19 5.3Public-PrivatePartnershipsforImmigrantEntrepreneurship ......................................................276. CONCLUSION ....................................................................................................................................27REFERENCES .........................................................................................................................................30

LIST OF TABLES

Table1: MotivationsforBecominganEntrepreneur .........................................................................10Table2: AdmissionCriteriaofImmigrationPoliciesforSelf-Employment and Entrepreneurship in OECD countries .............................................................................12Table3: PoliciesthatmayInfluencetheOpportunityStructureforSmallBusinesses and Immigrant Entrepreneurs ...............................................................................................19

LIST OF FIGURES

Figure1: DifferencebetweenCitizensandNon-CitizensinSelf-Employment asShareofActiveLabourForceinEuropeanCountries(in%),2013 .....................................5Figure2: Self-EmployedasShareofEmployedPopulationbyPlaceofBirth intheUnitedStates(in%),2013 ............................................................................................6Figure3: FactorsInfluencingEntrepreneurialDecision-MakingandSuccess ........................................7Figure4: Typesof(Immigrant)EntrepreneurshipSupportProgrammes .............................................20

LIST OF BOXES

Box1. DublinCityPublicLibrariesBusinessInformationCentre .....................................................21Box 2: PEI Connectors ......................................................................................................................22Box3: MentoringforMigrants ........................................................................................................23Box 4: Ethnic Entrepreneurship Programme ...................................................................................24Box 5: NordHand..............................................................................................................................25Box6: ChancenNutzer .....................................................................................................................26

3Background paper


1. INTRODUCTION

Both,migration and entrepreneurship, are important topics formany countries in terms of potentialdevelopment1impacts.Currentlytherearemorethan232millioninternationalmigrants(UnitedNations,2013)andanincreasingproportionoftheworld’spopulation,includingmigrants,islivinginurbancentresratherthanruralareas.Asmorepeoplemovetocitiesinternallyorfromabroaditisofinteresttoseehowtheymanageinthenewenvironment.Theyfaceanumberofpotentialobstacles,butarealsoconfrontedwithawholenewsetofopportunities.

Entrepreneurs can play a fundamental role in the economic development of a country and also ofindividual cities. Theyare key contributors to jobgrowth, innovationand the shapingof communities(Acs,2006;Naudé,2010). There isnouniversallyagreedupondefinitionofentrepreneurship. For thepurposeof thispaper, the followingdefinitionwillbeapplied:Anentrepreneur isdefinedasapersonperceivingandcreatingneweconomicopportunitiesandintroducingtheirideasintothemarket,inthefaceofuncertaintyandotherobstacles(Wennekers&Thurik,1999).Thisincludesindividualswhotakeupself-employment,createabusinessthatalsoemploysothersaswellastheexpansionofanexistingbusiness(Bosmaetal.,2012).

Thefocusofthispaperistheinter-sectionbetweenmigrationandentrepreneurship,specificallylookingatbusinessactivitiesofimmigrantsincities.Throughentrepreneurshipimmigrantsareabletocreate,atleast,theirownjob(Rath&Kloosterman,2000).Whilesomeimmigrantsmaymovewiththeintentionofbecominganentrepreneurinthecountryofdestination,othersmaymigratewithdifferentpreconditions,e.g.forwagelabourorhumanitarianreasons.Inthedestinationcountry,migrantsmaythenfaceobstaclesintermsofintegration,particularlyalsointothelabourmarketandentrepreneurshipprovidesthemwithawayofovercomingmanyofthesebarriers(Sequeria&Rasheed,2006).Anownbusinessisaperspectiveformany immigrants in terms of gaining an income and achieving socioeconomic integration (Hosler,1996).When immigrant entrepreneurs are successful, they are furthermore able to contribute to theeconomyofthecityandcountrywheretheyreside.Theymayhaveapositiveimpactoneconomicgrowth,innovationandotherareas(Rath&Kloosterman,2000).

“Whilewe often think of immigrants asmoving fromone country to another, really they arrive fromaparticularplaceand settle inaparticular community,usuallyametropolitanarea” (Singer,2012:9).Migrantsareattractedtocitiesbybothopportunities intermsofworkandaccommodationaswellasbyexistingcommunitiesofothermigrants(OECD,1998).It is,therefore,mainlyincitiesthatthepathsofmigrantsandnativescross in theirdaily lives,whether itbeduringwork,educationor leisuretime(Juzwiaketal.,2014).Assuchimmigrantentrepreneurshipalsotendstobeconcentratedinurbanareas.Evenmoreso,many immigrantbusinessescanbefound inspecificareasofcitieswhere it iscommonforethnicminorities tosettle (EuropeanCommission,2008). Largercitiesareoftencharacterizedbyaheterogeneousandinternalsociety.Thisleadstodiversityintermsofbackgrounds,skillsandexperiences,whichmayhavepositiveimpactsoncreativityandinnovation(Pratt,2008).Ingeneral,migrantsareoftenassumedtobemoreentrepreneurialthannatives(Naudéetal.,2014).Thisisbasedontheargumentofpositiveselectionofmigrants.Migrationitself isariskyactivityandreflectsacertainriskattitude,alsoimportantforentrepreneurship(Nevilleetal.,2014).Atthesametime,someonethattookanopportunitytomigrate,mayalsobemorelikelytospotagoodbusinessopportunity(Hart,2009).

1 Developmentisdefinedasaprocessofimprovingtheoverallqualityoflifeofagroupofpeopleandexpandingtherangeofopportunitiesopentothem.Thisincludeseconomicgrowthaswellashumandevelopment.

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It is, however, important to understand that despite these pre-conditions not all immigrants areentrepreneurs.Immigrantsoftenfacediscriminationinthelabourmarketandassuchentrepreneurshipistheironlymeansofgeneratinganincome(Brixyetal.,2012).Andeventhosethatareentrepreneurspursuinganopportunityratherthanbeingdrivenintoit,stilloftenfacesignificantdifficultiesinstartinguptheirbusiness.Accesstocreditforfundingis,forexample,amajorbarrier.Inordertostillencouragethecontributionsofpotentialimmigrantentrepreneurs,actorsatthenationalandlocallevelinmanycountrieshavestartedspecificsupportprogrammesforthisgroup.Asimmigrantentrepreneursarefarfrombeingahomogeneousgroup,awidevarietyofpoliciesandsupportprogrammeshavebeendevelopedtoaddressthedifferentstrengths,weaknessesandneeds.

Theoverwhelmingmajorityoftheliteratureonimmigrantentrepreneurshipisfocusedonthesituationindevelopedcountries.Aneffortwasmadetoalsoanalysecasesofimmigrantentrepreneurshipindevelopingcountries.Whilethereisnodoubtthatthisdoesexist,thereunfortunatelyappearsatthisstageclosetonoevidencewrittenonthetopic.Asaconsequencethispaperfocusesonthecaseofdevelopedcountries.

Thispaperwillprovideanoverviewofthesedifferenttopicsconcerningimmigrantentrepreneurshipincities.Concretely,thispaperisdividedintosixmainsections.Followingthisintroduction,anoverviewofsomeofthekeytrendsinimmigrantentrepreneurshipwillbegiven.Thiswillbefollowedbyanoverviewof themaindrivers andobstacles to immigrantentrepreneurship in section3andanoverviewof theeffectsof it in section4. Section5will thenprovideanoverviewofpossible interventions to supportimmigrantentrepreneursbeforethefinalsection6willconcludethepaper.

2. TRENDS IN IMMIGRANT ENTREPRENEURSHIP

Immigrantentrepreneursareaverydiversegroup.Likeentrepreneursingeneral,eachonehasadifferentbackground in terms of origin, knowledge and skills as well as a different motivation to become anentrepreneur.Inaddition,peoplemigrateformanydifferentreasonsandmaketheirchoiceofwheretheygobasedondifferentfactors.Themotivationformigrationandthelegalsituationaroundthismovementisobviouslyverysignificantwhenlookingatimmigrantentrepreneurs,becauseithasimportantimplicationsforthekindofbusinesssetupanditspotentialformakingcontributionstotheeconomy.Someonethatmigratesoutoffreewillandhaslegalrightsofstayandworkwithanopportunityinsighthasverydifferentpreconditionsthansomeonewhoisforcedtomigrateanddoesnotnecessarilyhavethepowertodecidewheretogoandwhattodowhentheyarrive.

There isaveryprominentdistinction in theentrepreneurship literature,whichhasgained importancesince the implementationof theGlobal EntrepreneurshipMonitor (GEM)2. In this large-scale survey adifferentiationismadebetweennecessityandopportunityentrepreneurs.Whilenecessityentrepreneursengage inentrepreneurialactivitybecause it is thebestoronlyoptionavailable to them,opportunityentrepreneursaretheoneswithpotentialforeconomicgrowth,becausetheyseizeuniqueopportunitiesinthemarket(Reynoldsetal.,2001).Underlyingthisdistinctionisthefactthatnotallformsofentrepreneurshiparegoodforsociety.Destructiveentrepreneurshipoccursifthewrongincentivestructureisinplaceandpeopleutilizeresourcesfortheirpersonalbenefitatthecostofeconomicdevelopmentforthesocietyasawhole(Baumol,1990).

Thedistinctionsbetweenmotivationsinboththemigrationandtheentrepreneurshipliteratureshow,thatwhilethereispotentialfordevelopmentit is importanttounderstandwhatdrivespeopletomakethedecisiontomigrateandtoopenabusiness.Itisknownthatdifferenttypesofmigrantsandentrepreneursresponddifferentlytopolicychangesandincentives.Therefore,properpolicyrecommendationswillonlybepossiblewhenunderstandingtheseentrepreneursandtheirbehaviour(Schoar,2010).

2 TheGEMisasurveythatgathersdataonentrepreneurialactivitiesinmorethan60countries:www.gemconsortium.org

http://www.gemconsortium.org

5Background paper


Itis,however,anoftenstatedstylizedfactthatimmigrantsaremoreentrepreneurialthannatives(Naudéetal.,2014).Andwhiletherearegoodreasonstosuspectthis,thissectionwillshowthatdatadoesnotfullysupportthestatement.First, it is importanttopointoutthat ingeneral there isa lackofreliabledataonimmigrantentrepreneurshipinmanycountries.Thisisespeciallythecaseatthelocallevel(Rath,Eurofund,2011),whichisthepointofreferenceforthispaper.Evenmoreproblematicistheaccessibilityofdataonentrepreneurshipofimmigrantsindevelopingcountries.Additionally,statisticsonlyrepresentthoseentrepreneurialactivitiesthatareformallyregistered,whiletheremightalsobeself-employmentactivitiesgoingonintheinformaleconomy.Allofthesefactorslimitthepossibilitiesforprovidingafullpictureofthetrendsinimmigrantentrepreneurshipincities.Itisstillimportanttoanalysethedatathatisavailabletogainanunderstandingoftheimportanceofthephenomenon.Dataatthenationallevelislargelyused,withtherationalinmindthatimmigrantentrepreneurshipislargelyanurbanphenomenonandtheshareof thoseestablishingtheirbusiness inruralareascanbeassumedtoberelativelysmall(Rath,Eurofund,2011).

AsFigure1shows,Europeancountriesportrayaverydiversepictureofthequestionwhetherimmigrantsaremoreentrepreneurial thannatives. The average shareof people in the activepopulation that areinself-employmentacrossall countries isactuallyhigher forcitizens (12.2%) than it is fornon-citizens(10.5%).However,thelikelihoodofbeingself-employedvariessignificantlybycountryforbothcitizensand foreigners. While in some countries immigrants are much more likely to be self-employed thannatives,theopposite isthecaseinothercountries.Thedifferenceisthelargest inthecaseofGreece,where24.4percentofcitizensareself-employed incontrast toonly6.5percentofnon-citizens.Theoppositeisthecase,forexample,intheCzechRepublicwhere27.8percentofself-employmentofnon-citizenscontrasts15.1percentofcitizens.Overall,itcanbeseenthatimmigrantsaremorelikelytobeself-employedthancitizensintheCzechRepublic,Poland,Hungary,theUnitedKingdom,Germany,MaltaandBelgium.TheoppositeisthecaseintheremainingcountriesintheEuropeanUnion.Itisthereforeobviousthatthesituationdependsontheindividualcountrycontext,includingfactorslikethemigrationtrends,policiesandavailableopportunities.Inadditionthesefiguresdonotprovideapictureofthekindsofself-employment–necessityversusopportunity-undertakenbythecitizensandnon-citizensrespectively.Asaconsequence,generalizationsconcerningtheentrepreneurialnatureofimmigrantsshouldbeavoided.

Figure 1: Difference between Citizens and Non-Citizens3 in Self-Employment as Share of Active Labour Force in European Countries (in %), 2013

Source: DataobtainedfromEurostat,2014.

3 While country of birthwould have been the preferred indicator for immigration, this datawas unfortunately not available. The use ofnationalitymayleadtoslightlybiasedresultsasimmigrantsmaybecomecitizens,especiallyafterresidinginacountryforalongertime.Thismayleadtothemisrepresentationoftheself-employmentrates.OneofthemainimmigrantgroupsinGermanyforexampleareTurks,whichareknowntobequiteentrepreneurial.AtthesametimemanyobtainGermancitizenshipandarehenceexcludedfromtheimmigrantgroupinthesestatistics.

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ForthecaseoftheUnitedStatesofAmerica,dataonimmigrantentrepreneurshipisavailableatthecitylevelforthosecitieswheretheshareof immigrants is largeenoughtobeabletocapturesuchtrends.Figure2showsthesharesofpeopleinself-employmentinanownnotincorporatedbusinessofthetotalcivilian employedpopulation forbothnatives and foreignborn. Thedata is presentedat thenationallevel,forthetenbiggestcitiesintheUnitedStates(populationsbetweenroughly1and8million)aswellasforfiverelativelysmallercities(populationsbetween600,000and650,000)forwhichthisdatawasavailable.Thisallowstoshowavarietyofcitiesacrossthecountrythathavedifferenttypesofimmigrantpopulationsaswellasopportunities inself-employment.Whatthefigureshowsisthatatthenationallevelmoreforeignbornindividualsareself-employed(7.7%)thanarenatives(5.6%).Thistrendappearsto be constant across the cities included in the graphwith the exceptionof Boston.Here natives aremoreoftenself-employedthantheforeignborn,whileoverallself-employmenthereisbelowthenationalaveragewithonly3.4percentfortheforeignbornand5.5percentfornatives.Intheothercitiesincludedinthefiguretheforeignbornaremoreoftenself-employedthannatives,thoughthesizeofthegapvariesquitesignificantly.Itshowsminimaldifferences,forexample,inthecaseofNashvilleandSanJose,whilethegapbetweentheself-employmentratesofnativesandforeignbornaremorethanfivepercentforexampleinLosAngeles,PhoenixandSanAntonio.

Figure 2: Self-Employed as Share of Employed Population by Place of Birth in the United States (in %), 2013

Source: AmericanCommunitySurvey2013.

7Background paper


Previousstudiestryingtoassessthevolumeandcharacteristicsofimmigrantentrepreneurshipcometo similar findings in that the immigrant entrepreneurship trends are diverse across countries andverymuchdependontherespectivecontext(OECD,2010;2011).Itisthereforeimportanttogainanunderstandingofwhatfactorsdriveandhinderimmigrantstobecomeentrepreneurs(incities).

3. DRIVERS AND STRUCTURAL OBSTACLES OF IMMIGRANT ENTREPRENEURSHIP IN CITIES

Inadiscussionofmigrantentrepreneurshiptheconceptofmixedembeddedness iscrucial.Focusedinparticularonimmigrantorethnicentrepreneurship,themixedembeddednessapproachacknowledgesthe interplay between economic factors on the one hand and social and institutional factors on theother.Italsocoversinformaleconomicactivitiesthatareoutsideoftheregular(legal)framework.Thistheoreticalapproachisthereforeverymuchbasedonthelevelofintegrationoftheentrepreneurintermsofeconomic,institutionalandsocialdimensions(Kloostermanetal.,1999).

When using the mixed embeddedness approach it is important to understand the context of eachindividualcase.Ofparticularimportanceherearetheopportunitystructureandthesocialenvironmentoftheentrepreneur.Theopportunitystructurerepresentstheeconomicandinstitutionalenvironmentinplace.Thesecircumstancesareshapedbyhistoricdevelopmentsandlimitpotentialbusinessventurestothosekindsofsectorsthataresupportedbythisenvironment.Forexample,theremightbemarketconditionsthatfavourethnicbusinessesversusthosethatmakethiskindofbusinessveryhardtorun(Aldrich&Waldinger,1990).Whenopportunitiesariseitstillverymuchdependsontheireconomicandsocial statuswhetherapotential (immigrant)entrepreneurscantakeadvantageof them.Herehis/hersocialenvironment-networks,cultureandbackground–arekey.

Thereisawidevarietyoffactorsthatplayaroleinentrepreneurialdecisionmaking.Theycanroughlybedividedintothreecategories:personalbackgroundandcharacteristics,marketconditionsandpolicyandprogrammeframework(seeFigure3).Thefollowingsectionswillpresentanoverviewoftheroleofthesedifferentfactorsintheframeworkofentrepreneurialactivitiesofmigrantsincitiesinmoredetail.

Figure 3: Factors Influencing Entrepreneurial Decision-Making and Success

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3.1 Personal Background and Characterstics

Thereisavarietyofdifferentcharacteristicsandbackgroundfactorsthathaveanimpactonwhomightbecomeanentrepreneur,andasuccessfuloneatthat.Thissectionprovidesinsightsonsomeofthemostcitedandrelevantones.

GenderItisverylikelythatamanandawomanmigratingfromthesamecountryatthesametimetothesamecitywillhaveverydifferentexperiences.Oneaspectthatmightdiffersignificantlyisthatoftheirlabourmarketinteractionandoutcomes.Thiscanbeduetotheculturalbackgroundofthemigrants(seeamoredetaileddiscussionbelow),butalsodependsontheopportunitiesavailableatthenewplaceofresidenceandinhowfartheydifferacrossgender.

Researchhasfoundthatingeneralthetypesofbusinessesstartedbymalesandfemalesdiffer.Femalesoftengointospecificsectorssuchashairdressing,cateringandclothing.Theyarealsomorelikelytosetup home-based andmicro-enterprises thanmales (Dallalfar, 1994; Pio, 2007; Strier&Abdeen, 2009).Maleshavemoreopportunitiestoraisestart-upfundingfromtheirnetworkthanfemales.Thisislargelyduetothekindsofinteractiontheyhave.Whilewomenoftenaremoreinvolvedintheprivatedomain,meninteractmoreinthepublicandthereforetheytendtohavedifferentkindsofnetworks.Alsomalesoftenhavebeeninthehostcountryforalongerperiodoftime,hencehavingbetterchancesofintegrationandmoreexperience(Kerr&Schlosser,2007;WautersandLambrecht,2008).

Educational AttainmentIngeneral,educationandlabourmarketoutcomesarerelatedandmigrantsarenoexceptionhere.Onemajor difference is that they often face difficulties getting their qualifications recognized (see amoredetaileddiscussionofthisinthenextsection).Intermsofimpactsonentrepreneurshipamongmigrants,thislargelydependsonthetransferabilityofknowledgeandskillsacquiredthroughformaleducation(Hay,1980;Robinson&Tomes,1982).Wherethisisthecaseandskillslikemanagerialabilitiesarestrengthenedthrougheducation,thismightleadtoanincreasedprobabilityofanindividualbecomingself-employedinbusiness.Atthesametimeeducationcanleadtobetterchancesintermsoffindingemployment,sothattherelationshipbetweeneducationandentrepreneurshipisnotastraight-forwardone.Thisisalsoreflectedintheempiricalworkonthistopic.Thereisevidenceofapositiverelationshipbetweeneducationandentrepreneurialactivitiesbyanindividual(Borjas,1986;Vinogradov&Kolvereid,2007).Otherstudies(Constantetal.,2007;Evans,1989)showtheexactopposite,inthatahighlevelofeducationleadstoasmallerprobabilityofstartinganownbusiness.

Theeducationlevelalsocorrelateswiththeintentiontore-migrateversusstayinginthesameplaceforalongerperiodoftime.Migrantswithlowereducationlevelsonaveragemovemoreoftenthaneducatedones.Educationhasapositiveeffectontheintentiontostayandmightthereforeleadtomoresustainableentrepreneurialactivities(DaVanzo,1983).

Work and Entrepreneurial ExperienceNexttoeducation,workexperiencesarealsoimportantinthecontextofhumancapital.Priorexperiencescanbeafactorthatdrivesthedecisionofmigrantstobecomeanentrepreneur.Atthesametime,alackofexperiencescandetersomeonefromthisdecision.Morethangeneralworkexperience,previousbusinessexperienceisspecificallyrelevantforentrepreneurs(Brüderletal.,1992).Previousbusinessexperiencehasbeenfoundtohaveapositiverelationshipwiththetake-upofself-employmentofimmigrants(Aliaga-Isla&Rialp,2012).Thepracticalexperienceofstartingandrunningabusinessventureislikelytobethebestwaytolearnmanyoftherequiredskills.Itisthereforealsologicalthatpreviousexperienceinthesamesectorisafactorcontributingtoentrepreneurialsuccess(Basu,2011;Borjas,1986;Chuetal.,2010).

9Background paper


Alackofpreviousentrepreneurialexperienceontheotherhandcanbeanobstacleinsettingupone’sbusiness(Rath,Eurofund,2011).

Besidestheirownbusinessexperience,researchhasalsofoundthatparents’entrepreneurialexperiencesmayleadtopositiveeffectonaperson’slikelihoodofbecomingentrepreneursandincreasingtheirchanceofsuccess(Rueda-Armengot&Peris-Ortiz,2010;Shinnar&Young,2008).

NetworksThesocialnetworkofimmigrantsiscrucialwhenitcomestostartinganewbusiness.AsElfringandHulsink(2003)putit“anetworkisoneofthemostpowerfulassetsanypersonmaypossess:itprovidesaccesstopower,information,knowledgeandcapitalaswellasothernetworks”(p.409).Asaconsequenceitcanbesaidthatsuccessfulentrepreneursusuallydonotactisolated,butrelyoninteractionswithmembersoftheirnetworks.Roleswithinnetworksvaryandwhileamigrantmightbereceivingsupportoneday,he/shemaybegivingadvicetosomeoneelsethenextday(Portes&Zhou,1996).Socialnetworkscanalsoleadtomoreandstrongerbusinessrelationshipsaswellasincreasedtrade.Assuchastrongnetworkcanalsocontributetothesuccessofabusiness(OECD,2010).

CultureThetermculturesummarizesfactorslikevalues,normsandattitudesofagroup.Theculturehasanimpacton theattitudesandbehavioursof themembersof this group indaily life. It also influences the risk-behaviour of individuals, including thedecisionsmade in relation to entrepreneurship (Verheul et al.,2001).Immigrantswithdifferentculturesmay,therefore,haveverydifferentpre-conditionsforstartingabusiness. It is known that somecultures tend tobemoreentrepreneurial thanothers. The start-uprates,typesofbusinessesandsuccessratesconsequentlyvarywidelyacrossdifferentculturalbackground(Jansenetal.,2003).

Ontheotherhand,culturecanalsohaveanimpactonthedemandsideofaproduct.Whenagrouphasastrongpreferenceforaspecificgoodorservice,otherimmigrantsmaybecomeawareofthisandtakeuptheopportunity(Jansenetal.,2003).Forinstance,ademand,whetherbyotherimmigrantsornatives,forspecificethnicfooditemsmayencourageanimmigrantwithlinkstotherespectivecountrytostartimportingthemtothehostcountrytosell.

MotivationThere are several factors which are frequently mentioned in the literature regarding motivation forentrepreneurship.Themotivationcould, forexample,bethechancetotakeupagoodopportunityorthedesireforfinancialgainandindependence.Othersmightchoosetobecomeentrepreneursbasedontheirfamilybackgroundorpracticalexperiences(Basu,2004;Chuetal.,2007).Thismightalsovarybycountry,whichagainstressestheimportanceofthecountrycontext(Benzingetal.,2008).ThefollowingTable1includesanoverviewofthemainpossiblemotivationsofmigrantsforbecominganentrepreneuridentifiedintheliterature.Itisimportanttonotethatthesemotivationalfactorsaredifferentforeverypersonandoftenitisalsonotjustonefactordrivingthedecision,butamixtureofseveralfactors.

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Table 1: Motivations for Becoming an EntrepreneurMotivation Description Source

Extrinsic Rewards Theeconomicreasonsthatmotivateentrepreneurstowork.

Basu,2004;Chuetal.,2007;Li,1997;Lofstrom,2002

Intrinsic Rewards Thereasonsrelatedtoself-fulfillmentandgrowth.

Chuetal.,2007

Independence/Autonomy Thedesiretobeone’sownboss. Basu,2004;Chuetal.,2007;Essersetal.,2010;Khosravi,1999

Family Security Entrepreneurshipisseenasawaytosecureajobforoneselfaswellaspotentiallyforfamilymembers.

Chuetal.,2007

Necessity No/limitedotheroptions. Basu,2004;Bauder,2008;Chavan&Agrawal,1997

Opportunity Takingadvantageofaspottedopportunity.

Shinnar&Young,2008

Upholding Tradition Itisafamilytraditiontorunabusiness. Basu,2004;Chavan&Agrawal,1997

Entrepreneurial QualitiesIn someof theearly literatureonentrepreneurship itwasarguedbyKnight (1921) thatbesides skills,luck isamajordeterminantofbusiness start-upandsuccess.This introduces the idea thatnotall thecharacteristics of a successful entrepreneur and his/her business are directly observable. In a meta-analysisofpersonalitytraitsandbusinesssuccessRauchandFrese(2007)show,thatthepersonalitydoesindeedplayarole.Thesepersonalitytraitsarenotdirectlyobservable,butdoinfluencebusinesscreationandsuccess.Inthespecificareaofimmigrantentrepreneurshipthereiscurrentlyalackofresearchontheroleofentrepreneurialqualitiesandtheirroleinamigrant’sdecisiontoopenabusiness.

3.2 Market Conditions

3.2.1 Labour Market

Oneofthemainproblemsmanymigrantsfaceisthefactthattheyarediscriminatedagainstwhentryingtoaccesstheformallabourmarket(Zhou,2004).Therearethreedifferenttypesofdiscriminationthatmightaffectthem(BruderandRaethke-Döppner,2008):

Structuraldiscrimination:Theneedforavisa,noaccesstocertainjobs.

Tastediscrimination:Abiasonthesideofemployerstowardspeoplewithcertainbackgroundsand/orlanguage skills.

Statisticaldiscrimination:Employersandjobseekershaveasymmetricalinformationabouttheworker’squality,qualificationsmightnotberecognized.

Migrantsfacingdiscriminationmaybepushedintoentrepreneurship,eveniftheywouldotherwisenotconsiderthistheirfirstandbestoption.IntheUnitedStatesforexample,immigrantswhoarenotfluentinEnglishareincreasinglytakingupself-employment,becausenoemployerwillhirethem(MoraandDavila,2007).Migrantentrepreneurshipcanbeusedas“awaytocircumventtheseobstacles”(OECD,2010:9),asawayformigrantstoovercomesocialexclusionandintegratebetterwiththeirhostcommunity(Constant

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etal.,2007)aswellasawaytoimprovetheirsocioeconomicmobility(Zhou,2004).Themajorityoftheseare,however,necessityentrepreneurs,whicharenotlikelytomakesignificantcontributionstothesocietyintermsofsustainableeconomicgrowth.

3.2.2 Product Market

Withmorethan232millioninternationalmigrantsandtheoverallglobalizationtrendofmoremobility,itisnotsurprisingthatthereisanincreasingdemandforethnicfoodproductsandspecificservicesincountriesof destination (Orozco, 2008). As a consequence in many instances, especially for micro-enterprises,the demand for the businesses of immigrant entrepreneurs largely stems from their own immigrantcommunity,whichisusuallyincities.Thisincludesthingslikefooditems,newspapers,books,clothesandjewellery.Tosupplythesekindsofproducts,linkstothecountryoforiginareimportant.Someonefromadifferentethnicgroupwouldhaveamuchhardertimetoofferthesameproducts(Waldingeretal.,1990).

AccordingtoOrozco(2008)thedemandforandconsumptionofethnicgoodsfunctionsasamanifestationof three realities that shape immigrant life: community, identity and transnationalism. This has directimplicationsontheeconomicdevelopmentofhomeandhostcountryalike.Whileexportsofsuchgoodsmightonlybeasmallportionofalltradebetweenthetwocountries,theyimpactdirectlyontheimmigrantandhis/hercommunitiesinbothcountriesonthelocallevel.

Immigrantentrepreneursare,however,ofcoursenotlimitedtosupplyingethnicproductstotheirownethnicgroup.Theymayalsosupplythesamegoodsandservicestothegeneralpublicintheirlocalarea.With globalization,manypeople arebecomingmoreopen in their consumptionbehaviours, includingexotic products from abroad. As such the overall demand for these types of products is significantlyincreasing(Waldingeretal.,1990).

Furthermore, immigrant entrepreneurs can break out of the ethnic market completely and spotopportunitiesthatotherentrepreneursmightnothavetakenupyet.Therearealwaysmarketopeningsandlikeanyentrepreneur, immigrantsmightbetheonetofillthem(Waldingeretal.,1990).Thistypeofentrepreneurismuchmorelikelytogointothedirectionofahigh-growthbusinessandintroducinginnovationsintothemarket(Sanders,2007).

3.2.3 Financial Market

Probably the main obstacle for aspiring entrepreneurs is a lack of start-up funding. For immigrantentrepreneursthisisoftenanevenbiggerproblemthanfornatives.Immigrantsoftendonothaveanyor little savingsorother securities as abasis forobtaininga credit (Evansand Jovanovic, 1989; EvansandLeighton,1989;BlanchflowerandOswald,1998).Inaddition,bankstendtobemoreselectivewiththegrantingofcreditstoimmigrants.Thisis,however,forgoodreasonasthefailureratesofimmigrantentrepreneurs tend tobe significantlyhigher than thoseofnativesandas suchposeahigher risk forbanks.Immigrantsalsousuallyhavelimitedornocredithistoryinthecountryofresidenceastheyhaveonly lived there forapartof their lifeand credithistoriesare seldom transferablebetweencountries(Bruderetal.,2011;Desiderio,2014).

Thereisalsosometimesaselectionbiassolelybasedonethnicityasbankemployeestendtobemorerestrictivetowardsnewclientsingeneralandespeciallythosewithdifferentethnicbackgroundastheylack experience and knowledge of these groups. Thismight go as far as discrimination of immigrantentrepreneursinobtainingcredit(OECD,2011).EvidencefromtheUnitedStatesshowsthatcontrollingforotherfactors,includingcredit-worthiness,ethnicminoritiesfacedenialofcredittwiceasoftenasothernon-minorityapplicants(Blanchfloweretal.,2003).Andevenwhentheydoobtaincredit,interestratestendtobehigher(Albareto&Mistrulli,2010;Blanchflower,2009).

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Asaconsequence,immigrantentrepreneursrelyoninformalsourcesoffundingmuchmoreoftenthannatives. Theyobtainmoney from family, friendsand their extended social networks insteadof formalbanksorothercreditinstitutions.Thisoftenhappenswithintheirownethnicgroup.AgoodexampleofthisisSiliconValley,whereonethirdofimmigrantentrepreneursrelysolelyontheirnetworksforfunding(Saxenian,2002).Strongsocialnetworksmaythereforeenableimmigrantstoovercomecapitalconstraintsand to start-up their business.

This shortageof fundingdoeshowever sometimeshaveeffects on the kindsof businesses immigrantentrepreneursopen.They tendtobe thosewhere initial investmentsare lowerandassuch theentrybarrierisnotashigh.Thisincludessectorslikeconstruction,retailandcatering(Desiderio,2014;Rametal.,2003).

3.3 Policies and Administrative Challenges

3.3.1 National Level

As the link between migration and entrepreneurship receives more attention by policy-makers andentrepreneurship is often linked to growth and development, an increasing number of countries areintroducingspecificpolicymeasuresforthisgroup.Intheprocessofdevelopingmigrantentrepreneurshippolicy,itisimportanttoaddresstwomainpoints.First,themigrationprofileofthecountryneedstobetakenintoaccount.Itisevidentthatmigrantsfromsomecountriesmaybemorelikelytobecomeentrepreneursthanothers.Atthesametimecountriesmightattractdifferenttypesofmigrants,someofwhichmightbemorelikelytostartabusinessthanothers.Ifacountrytraditionallyencourageshumanitarianorfamilymigrationratherthanlabourmigration,itmightbemoreofachallengetointroducespecific,attractivepolicies for immigrant entrepreneurs (OECD, 2010). Secondly, as immigrant entrepreneurship tends tocoveradiversifiedsetoftypesofbusinesses,policiesshouldideallybeequallydiverse(Collins,2003).

Table2presentsanoverviewof thecriteriaOECDcountries introduced in theirpolicies regulatingtheadmissiononthebasisofself-employmentaswellasentrepreneurship.Itisclearthatthesepoliciesareselectiveintermsofadmittingthosemigrantsthatbringsufficienthumanand/orfinancialcapitalandthatarelikelytomakeacontributiontotheeconomyoftherespectivecountry.

Table 2: Admission Criteria of Immigration Policies for Self-Employment and Entrepreneurship in OECD countries

Admission CriteriaCountries Using Criteria

Self- Employment Business Investment

Experience Australia,Austria,Belgium,Canada,Denmark,Finland,Germany,Greece,Ireland,Italy,Japan,Netherlands,NewZealand,Norway,Portugal,Spain,Sweden,Switzerland

Australia,Canada,NewZealand(unlessinvestmentisoverathresholdwherenoexperienceisrequired)

Minimum Investment

CzechRepublic,NewZealand,UnitedKingdom (Generallyitisrequiredtosubmitproofoffinancialresourcesforlivingexpensesandset-upofthebusiness)

Australia,Canada,France,Greece,Ireland,Korea,Netherlands,NewZealand,Portugal,Spain,UnitedKingdom,UnitedStates

Business Plan Austria,Belgium,Denmark,Finland,France,Germany,Ireland,Netherlands,NewZealand,Norway,Poland,Spain,Sweden,Switzerland

Greece,Ireland,Netherlands

Restriction of Field of Activity

Australia,Canada,CzechRepublic,Denmark,Japan Australia,Korea

Show Relevance to Local Economy

Austria,Belgium,Denmark,Finland,Germany,Greece,Ireland,Netherlands,Poland,Switzerland

Greece,Ireland,Portugal,UnitedStates

Source:CompiledbyauthorsbasedongovernmentwebsitesandOECD,2011.

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Itisobviousthatthesetypesofpoliciesattractacertaingroupofimmigrantentrepreneurs.Theyfocusonthosethathavepreviousexperiencesandstart-upcapital,whichtheyarewillingtoinvestinthecountryofdestination.Lookingattheprofileofimmigrantentrepreneurs, it isevidentthatthediversityofthispopulationisnotreallyaddressedbythistypeofpolicy.Alargeshareofimmigrantentrepreneursdonotqualifyforthistypeofvisa,likelyduetoalackofcapitalandexperience,andusuallyentersthecountrythrough another channel. Some of thesemight still migrate with the intention of starting their ownbusiness.However,asdescribedabove,asignificantshareofimmigrantentrepreneursarealsopushedintoself-employmentbyalackofotheroptionsorchoosetogointoitbecausetheyfindanopportunitytheywanttopursue.Theymigrateforotherreasons,likelabourorfamilymigration,andonlyturntoself-employmentonceinthecountry.Particularlyamonghighlyskilledimmigrants,theremayalsobepeoplewithentrepreneurial spirit and ideasand ideally theyare supported inpursuing them. In somecases,however,policyactuallypreventsthis.Migrantsenteringonaworkvisa,forexample,maynotbeallowedtostartabusinesswhileonthisspecificvisa.Thismaybeawasteoftheirpotentialcontributiontothelocaleconomy.For instance, in theNetherlands,“knowledgemigrants’” labour is restrictedtothecompanytheycurrentlyworkforandarenotallowedtostarttheirownbusinessnexttothisemploymentwhileonaknowledgemigrantvisa.ThisseemscounterproductiveasitisespeciallycommonforacademicsatUniversitiestostarttheirownbusinessesnexttotheirUniversitywork(thesealsooftenbeinghighgrowthareas),butthistypeofentrepreneurshipwouldberestrictedinthecaseoftheNetherlands.

3.3.2 Local Level

Ingeneral,forimmigrantsalreadyinthecountryofdestinationthereisanothersetofmorepracticallyorientedpoliciesandprogrammesatamore local level,whicharepresented inmoredetail insection5.Thesesupportprogrammesthatareavailableinmanycitiesaddressthedifferentneedsofpotentialentrepreneursandtrytohelptheminovercomingtheobstaclestheyarefacing.Therearemanyprogrammesthataimgenerallyatsupportingnewstart-ups.Inaddition,somecitiesofferspecificprogrammesfortheimmigrantpopulationinordertoaddresstheirspecificneedsintermsoflanguage,accesstocreditandcountry-andcity-specifichumancapital.Ithas,however,beenobservedthatingeneralimmigrantsaremuchlesslikelythannativestotakeupsuchprogrammes.Thismaybefromalackofknowledgeabouttheseprogramsinthefirstplace.Theyratherturntoinformalkindsofsupportandrelyontheirsocial,oftenethnic,networkswhenopeningabusiness(Deakinsetal.,2007;Lassalleetal.,2011).

Another obstacle potential immigrant entrepreneurs often face is administrative challenges. In theprocessofsettingupabusiness,thereisawidevarietyofproceduresonehastogothroughandcriteriathatneedtobefulfilled.Dependingonthecountrythismight includefinancialobligations,tax-relatedrequirements, labourregulations,socialsecurityregulations,safetyandhealthrequirementsaswellasenvironmentalfactors.Thesefactorsposeachallengetoanynewentrepreneur(EuropeanCommission,2012),butimmigrantsmaybeevenmoreburdenedthannatives.Theyoftenfacelanguagebarriersandaredisadvantaged in termsofcountry-specificknowledge (Desiderio,2014). It is important tosupportimmigrantsinovercomingthesechallengesinordertomaximizethepositiveeffectsofentrepreneurshipbothfortheimmigranthim-/herselfandfortheeconomy.Thiscanbedoneforexamplethroughestablishingahelpdeskorone-stopshopforforeignersatalocalChamberofCommerceoranothercityauthority.Ideally different relevant actors, like immigration and integration authorities, chambers of commerceandeconomic authorities,will cooperate toprovideall relevant information for startingabusiness tointerestedimmigrants.Informationshouldbeprovidedinbothphysicalatawell-accessiblelocationandonline inmultiple languages, includingEnglishandthe languagesof themain immigrantgroups intherespectivecountry.

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4. EFFECTS OF IMMIGRANT ENTREPRENEURSHIP

Immigrantentrepreneurshiphasbeenshowntobeanefficientmeansofsocioeconomic integrationofthemigrantsthemselves,whileatthesametimecontributingtothelocaleconomy.Thissectionthereforelooksatthesetwoaspectsofmigrantentrepreneurship.

4.1 Entrepreneurship and Socioeconomic Integration

Integrationopensdoors formigrants coming to a new country and a communitywithin that country.The process of integration of immigrants is multidimensional. In general, three dimensions can bedistinguished: socioeconomic, cultural and political (Phalet & Swyngedouw, 2003). In the context ofimmigrantentrepreneurship,socioeconomicintegrationisthemostrelevantasitisconcernedwith,amongotherissues,accesstothehostcountrylabourmarket.Asshownintheprevioussection,immigrantsoftenfacedifficultiesandevendiscriminationwhensearching for jobs. In thatsenseentrepreneurshipopendoorsforintegrationofmigrantsinovercomingthisbarrier.Formigrantsarrivingtoacountryspecificallyforentrepreneurship,thisisalsoagoodstepping-stoneforintegration(atthelocallevel).

Ithasbeenshown-forexampleintheUnitedStatesandtheNetherlands-thatentrepreneurshipdoesindeedcontributetothesocioeconomicintegrationofimmigrants(Irastorza,2010;Teder&Golik,2006).This isparticularly thecase for those immigrants that takeupentrepreneurshipoutofnecessityasanalternative to unemployment and bad working conditions. For these immigrants, entrepreneurshipbecomesawaytoadvanceintermsoftheirsocioeconomicintegrationlevel(Constant&Zimmermann2004;Bauder,2005).

Overall,however,theevidenceisstillmixedontheimpactsofentrepreneurshiponimmigrantintegration.Acommonwaytomeasurethisisbylookingatthewagelevel.InthecaseofGermanyandtheUnitedStatesthereisevidencethatimmigrantentrepreneurshavehigherincomesthanemployedimmigrants(Borjas,1986;Constantetal.,2007).InSwedentheoppositeisthecase(Hammarstedt,2001;Hjerm,2004).Itislikelythatthesedifferencesareduetoinstitutionalfactorsintherespectivecountry.Mostimportantlythewelfarestateinplaceislikelytohaveanimpactonwhobecomesanentrepreneurasdoesthelevelofdiscriminationtowards immigrants in the labourmarketand thebureaucracy involved inopeningabusiness(Irastorza,2010).

Thereisalsoevidencethatmigrantsinsmallercitiesareoftenmorelikelytointegrateeconomicallythanthosethatsettleinlargecitiesormetropolitanareas.Whileingeneralmigrantsaremorelikelytomovetobiggercities,labourmarketstendtofunctionbetterinsmallercities:unemploymentratesarelower,labourforceparticipationandincomesarehigher.Inaddition,ithasbeenshownthatimmigrantsassimilatetothewagelevelofnativesfasterinsmallercities(Bernard,2008).

To someextent this is the resultof self-selection,whereonlymigrantswith certain skills andabilitiesmovetothesmallercitiesinthedestinationcountry,becausetheyareconfidenttheywillbeabletofindajobthere.Accordinglytheywillshowbetterlabourmarketperformanceandmoresuccessfuleconomicintegrationthantheircounterpartsinthebiggercities.ThishasbeenshownformigrantslivingoutsidethelargestmetropolitanareasofCanadaandtheUnitedStates(Lo&Li,2011).Itmightalsobetheresultoftheclusteringofimmigrantsinspecificpartsofmostlylargercities.

It isoftenthecasethat immigrantsfindmorebusinessopportunities inareaswheremembersoftheirethnicgrouphavealreadyestablished themselves.Theseconcentrationsofmigrantentrepreneursareknown as ethnic enclaves. The ethnic enclave theory states that members of one ethnic groupmaydominateoneindustry.ThishasforexamplebeenobservedforJewishpeopleinseveralbigcitiesinthe

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UnitedStates,where theyowneda significant shareof tailor shops (Portes, 1995).At the sametime,ethnicenclavesmightalsoexistinonespecificgeographicalareaofacityoracountry(Butler&Greene,1997).FamousexamplesofthisareChinaTowninNewYorkorSanFrancisco.Insuchareasthenetworksbetweenthedifferentmembersoftheenclavetendtobestrongandbuildontrustandsolidarity(Portes&Zhou1992).Withintheselocationsimmigrantsarethenoftenemployedbybusinessownersofthesameethnicity(Lee,2003).

TheethnicenclavetheorywasfirstintroducedbyWilsonandPortesin1980,inadiscussionoftheCubanpopulation inMiami. Inastudybetween1973and1979they foundthatoutof thenewarrivals fromCubaalargepercentagefoundworkinaco-ethnicbusiness.Theytendedtostaywiththeiremployerforsometime,beforetheylearnedtheskillstosetuptheirownbusinessinthesamearea.WilsonandPortes(1980)foundthattheself-employmentrateofCubansincreasedfrom8percentin1973to21percentin1979.Alloftheseself-employed immigrantswerepreviouslyemployedbyanotherCuban inMiami.Forthoseimmigrantswhowerestillemployedbyaco-ethnicbusinessin1979,itwasevidentthattheyweregettingabetterreturnthanCubansworkinginnon-ethnicfirmsinthesecondarysector(Wilson&Portes,1980).SandersandNee(1987)ontheotherhand,didacomparativestudyonChineseandCubanworkerswhoresidedintheenclaveandotherlocations,andfoundthattheimmigrantminorityworkersoutsidetheethnicenclavereceivedhigherreturnsonhumancapital.Theethnicenclavetheorystillholdsforimmigrantentrepreneursthemselvesthough.ThisfindingisconfirmedbyDavis(2004),wholooksattheCubanpopulationintheUnitedStatesmorebroadlyacrossdifferentcities.FindingsshowthatthoseCubanslivinginareaswithlowconcentrationofotherCubanshaverelativelyhigherincomesthanthoselivinginethnicenclaves.WhiletheCubancommunityintheUnitedStatesisthemostcommonexamplefortheethnicenclavetheory, ithasalsobeenanalysed inothercountries.Forexample,the impactoflivinginanethnicenclaveonearningsgrowthofimmigrantsinCanadaisexaminedbyWarman(2007),whofinds thatenclaveshaveanegative impacton theearningsgrowthof immigrants. In the caseofDenmark,Damm(2009)findsthatimmigrantswithunfavorableunobservedcharacteristicsself-selectintoethnicenclaves.Thebiggerthisethnicenclaveis,themorelikelyisanimmigranttohavehigherearnings(onaverage18%)duetothedisseminationofjobinformation,whichpositivelyinfluencesthejob-workermatchqualityandconsequentlythewage.

4.2 Contribution of Immigrant Entrepreneurs to the Economic Performance of Cities

While it is important to lookathowentrepreneurships impacts themigrants themselves, it is equallyas important to lookat thekindofcontributions theymaketo thecountryofdestination.Domigrantentrepreneurscontributetoeconomicgrowthandinnovationinthecountryandcityofresidence?Inhowfardomigrantbusinessescrowdoutnativeones?Anddoesmigrantentrepreneurshiphaveanimpactontraderelationshipswithandforeigndirectinvestmentsfromcountriesoforigin?Thefollowingsectionsprovidesansweredtothesequestionsbasedontheexistingliterature.

4.2.1 Economic Growth and Innovation

Ingeneral,thereisstrongevidencethatentrepreneurshipdoes indeedcontributetoeconomicgrowth(Audretsch& Thurik, 2004; Naudé, 2009a). On the other hand, the absence of entrepreneurship hasnegative implications for the economic growth of the respective area (Audretsch et al., 2002). It isimportantatthispointtomakethedistinctionbetweennecessityandopportunityentrepreneursagain.Whilethoseentrepreneurswhoseendeavoursarebasedonspottingagoodopportunityareindeedfoundtocontributetoeconomicgrowth,thisisnotthecaseforthoseentrepreneursthatarepushedintothiskindofoccupation(Naudé,2009b).

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Itis,therefore,particularlyinterestingtolookatthoseentrepreneursthatmightbemoreabletocontributesomething to the economyof their host society. This is very likely to be the case for high-techfirms,whooftencreateemploymentopportunities,besidesfinancialgainsandbringing innovations.There isevidencethat,at least intheUnitedStates, immigrantsareover-representedamongfoundersofhigh-tech(Saxenian,2002;Wadhwaetal.,2007)andbiotechfirms(Stephan&Levin,2001)aswellaspublicventure-backedUScompanies(Anderson&Platzer2006)andhigh-impactcompanies(Hart&Acs,2011).Hart(2009),findsthataround16percentofhigh-techfirmsinarecentUSAsamplehadamigrantowner,andmoreoveramigrantownerwithskillsinscienceandengineering.Asaconsequenceimmigrantshavealsobeenobservedtobeover-representedamongpatentapplications(Wadhwaetal.,2007).

Moreover,immigrantsmaybringnewideas,skillsandinnovation,fromwhichthecities’andoverallsocietyand economymay benefit (Kloosterman et. al., 1998).Migrants comingwith new and different skills,knowledgeandideas,mayfurthermoreimpactinnovationinaspecificcity,regionand/orcountry.Thereareseveralpossibleexplanationsforthisrelationship(Nathan,2011):

• Positive self-selection of migrants: Migrantsmay positively self-select in terms of their skills andentrepreneurial abilities (Borjas, 1986).Where this is the case theremay be beneficial effects onentrepreneurialbehaviouramongotherthings(Stephan&Levin,2001).

• Social networks:Networksofindividualsfromthesamecountryinacountryofdestinationmayleadtotheformationofplatformsforexchangeandcreationofideas(Docquier&Rapoport,2011).Ingeneral,socialnetworksareimportantfornewentrepreneursandwhenthereisacertainleveloftrustbetweenthemembersofadiasporagroup, thismightbebeneficial in termsof start-upsof innovativefirms(Rodríguez-PoseandStorper,2006;Kaiseretal.,2011).

• Diversity and multicultural cities: Ingeneral,diversityofeconomicagents leads toa largerpoolofknowledge, skills and ideas (Lee et al., 2004).Heterogeneity in backgrounds, skills and culture cantherefore lead to increased generation of ideas through complementarities of individuals comingtogether(BerliantandFujita,2009).FujitaandWeber(2003)arguethatpositivediversityeffectswillbemost likelyobserved in ‘knowledge-intensive’activitiesand industries.Whenavarietyofethnicgroupscometogetherinacity,theybringnewideas,knowledgeandskillswiththem(Kloosterman,etal.,1998).Thisisnotthecasewhenimmigrantsareclusteredinethnicenclavesasdescribedabove(Zenou,2011).

Theevidenceon the relationshipbetween immigrantentrepreneurshipand innovation ismixed.Huntand Gauthier-Loiselle (2009) find that close to a quarter of patent applications in the United Statesweremadeby immigrants.Thisequalsroughlytwicetheirshare inthepopulation.Skilled immigrants,therefore,significantlycontributetoinnovationintheUScontext.Thisisnotbecauseimmigrantsaremoreabletobecomeentrepreneursthannatives,butratherbecauseofthepositiveselectionofmigrants.Incomparisonwiththenativepopulationtheshareofpeopleholdingadegreeinscienceorengineeringismuchhigheramongtheimmigrantpopulation.

Despitetheclearcontributionsthatmigrantentrepreneurshipshavemadeto innovation intheUnitedStates,arecentsurveyofhigh-techentrepreneurship(themostinnovativeformofentrepreneurship)inthe United States concluded that ‘mostpreviousstudieshaveoverstatedtheroleofimmigrantsinhigh-tech entrepreneurship’ (Hart,2009:3orHart&Acs,2011:116).HartandAcs (2011)alsocannotfindevidencethatmigrantownedhigh-techfirmsintheUnitedStatesspendmoreonR&Dorwouldbemorelikelytoregisterpatentsthannativeownedfirms.

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On amore global level the 2012 GEM survey attempted tomeasure the innovation of enterprisesasbythenumberofnewproductsorservicesthey introducedacross69countriesandwhethertheenterprisesinquestionwereownedbyamigrantornon-migrant.Analysesofthesurveyresultscouldnot find significant difference between innovativeness of migrant and non-migrant entrepreneurs(Vorderwülbecke,2012).

ThereissomepreliminaryresearchonthecaseofSouthAfricaintheglobalSouth,whichshowsthatimmigrantentrepreneurshipcreatesopportunitiesthathaveimportant implicationsforthecountry’seconomy.Bycontributingtojobcreationandinnovation,immigrantentrepreneurscanbeoneaspectinreductionofinequalityandpovertyandapositivefactorforeconomicgrowthofSouthAfrica(KalitanyiandVisser,2010;Tengehetal.,2012).However,atthisstagetheresearchisverylimitedandthereisaneedforfurtherandmorerigorousstudies(Fatoki,2014).Thisisalsothecaseforotherdevelopingcountries,whereonecanexpectimmigrantbusinessestoplayarole,butevidencesofarislimitedornon-existent.

4.2.2 Immigrant Entrepreneurs, Trade and Foreign Direct Investments

Trade LinksImmigrantentrepreneursandtheirbusinessesmightalsocontributetothehostcountryeconomythroughincreasedtrade.Throughtheirnetworksinhomeandhostcountry,immigrantsareabletoestablishtradelinksacrossborderseasierthannatives.Theycanutilizethemfortheirownbusinessbyimportinggoodsfromabroadtoselloruseforproduction.Theymayalsoexporttheirownproductsandservicestothehomecountry,increasinghostcountryexports.Inaddition,theymayfacilitatetradebetweenthirdparties,forexamplebusinesspartnersinbothcountries(andinthecitieswheretheyreside).

Evidenceof thepositive effects of immigrant entrepreneurs on exports is found in Rauch andCasella(1998) andRauch and Trindade (2002)who show that co-ethnic networks promote bilateral trade byprovidingmarket informationaswell asby supplyingmatchingand referral services. It is alsoevidentthatthesehigherlevelsofexportsamongimmigrantentrepreneursmayhelpthesefirmsbettersucceedinthelongrun.InthecaseoftheUnitedStates,increasedexportsareimportantforalleviatingthetradeimbalancewiththerestoftheworld(Fairlie&Lofstrom,2013).

Foreign Direct InvestmentWhen lookingat the relationshipbetweenmigrationand foreigndirect investments (FDI), the focus isoftenonthecountriesoforigin.InthatcontextFDIisseenasanotherlinkinthemigration-developmentnexus.ThereisevidencethatmigrationincreasesFDIinflowstocountriesofdestination.Wherethisisthecase,theseincreasedFDIflowsareapositiveeffectofmigrantentrepreneurshipforthecitiesreachedbytheseinvestments.

TheliteratureanalysingtherelationshipbetweenimmigrationandinflowsofFDIis,however,stillrelativelylimitedatthisstage.Themajorityofthestudiesthatdoexistlookataspecificsector,countryand/ortimeperiodandmakesgeneralstatementsdifficult.Nevertheless,theunderlyingassumptionisthatimmigrantscaninfluencewhereFDIisdirectedthroughtheirnetworksbothinthehomeanddestinationcountries.Migrantentrepreneurshaveaninformationadvantageandcanbridgeinformationasymmetriesoneithersideinordertofostermutuallybeneficialinvestments(Javorciketal.,2011).Thisisnotlimitedtohighly-skilledmigrants. Low-skilledmigrants andmigrant entrepreneurs are also able to provide this kindofinformationtocounterpartsintheorigincountryaslongastheyhaveanoverviewoftherelevantfactors,forexampleemployeecharacteristics(Kugler&Rapoport,2011).

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A concrete example of this is presented by Santos-Neves and Rocha-Trindade (2008) describing anincrease of FDI fromChina in Portugal. China, as a rapidly developing economy, is also increasinglyinvestingabroad.PortugalprofitsfromthisbyengagingwithChinesemigrantentrepreneurs.Bytalkingtothemthey,ontheonehand,foundoutwhatthesectorsof interestforChinese investorsareandontheotherhandwereabletodisseminate informationabouttheopportunities in thesesectors inPortugal.What cameoutof thisapproachwas the investmentofaChineseTechnology companyofmorethan200millionEuros inacompany inPortugal,whichsubsequentlycreatedaround580 jobs(Santos-Neves&Rocha-Trindade,2008).

5. SUPPORTING IMMIGRANT ENTREPRENEURSHIP

Itcannotbeignoredthatparticularlyinlargecitiesentrepreneurshipandimmigrationaretwoimportantaspectstobetakenintoconsiderationforlocaldevelopment.Ascountriesarerealizingtheimportanceof entrepreneurship and the potential of immigrants as a pool of entrepreneurs, it is important tooffersupporttothisspecificgroupofthepopulation(e.g.EuropeanCommission,2008).Therearetwodifferent levelsonwhichthiscanbeachieved.One isthepolicy levelatthenationaland local level,whichontheonehandattractspotentialentrepreneursfromabroadandontheotherhandprovidesanattractiveenvironmentforanewstart-upfirm.Second,therearespecifictypesofpracticalsupportprogrammesforpotentialentrepreneursingeneralandspecificallyforimmigrants,whichcanprovidehelptoovercometheobstaclesdiscussedinsection3.Thefollowingtwosectionswillpresentpolicyoptionsforbothoftheselevels.

5.1 Policies Encouraging Immigrant Entrepreneurship

An overview of policies implemented by different countries to attract immigrant entrepreneursis presented in section 3.3 of this paper. In addition to these incentives for coming to a country asan immigrant entrepreneurs, it is important that the infrastructure in the country offers actualopportunities to potential immigrant entrepreneurs. Structural policies aiming at an environmentfosteringentrepreneurshipandinnovationarecrucialtorealizethepotentialbenefitsofnewbusinesses,includingthosestartedbyimmigrants(Desiderio,2014).

In this context, Kloosterman (2003) presents several policy options thatwill provide an increase inopportunities for entrepreneurship in general and specifically also for immigrants, who often faceadditionalchallengesasoutlinedinsection3.Table3presentsthreedifferentpolicyareasandoptionsforhowthesecanbeimprovedthroughdirect,indirectand(non-)enforcementmeasures.Directmeasuresaimtoincreasetheopportunitiesforbusinessesinthisarea,whileindirectmeasuresareaimingatadifferentgoal,butstillhavespillovereffectsontheopportunitiesforentrepreneurs.Furthermoretherearepolicymeasuresconcernedwithenforcementversusnon-enforcement(Kloosterman,2003).Thesearebasedonthepredicamentthatinmoststatesnotalllawsandregulationscanbestrictlyenforced.Enforcementfurthermoreoftenshiftsacrosstimeandplacesasitdependsontheindividualrelevantauthority(vanderLeun,2002).Thisdoeshavedirecteffectsontheoperationsofbusinesses,especiallythose runby immigrant entrepreneurs. As they often rely on informalmarkets, the enforcement ofcertainregulationshasadirectimpactontheiractivities(Kloostermanetal.,1998).

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Table 3: Policies that may Influence the Opportunity Structure for Small Businesses and Immigrant Entrepreneurs

PolicyArea Description Direct Indirect Non-(Enforcement)

Sizeofmarketdomain

The more economic activitiesaretransacted in the marketdomain,theextentofcommodification,the more chances and openings occur forfirms.

Privatization(e.g.byoutsourcinggarbagecollectingtoprivatefirms).

Erodingself-provisionbyfamiliesbyencouragingfemalelabourparticipationand,thuscreatingopportunitiesforfirmstoprovidechild-care and housecleaning.

Turning a blind eyetothetradein products that areformallyillegal(e.g.allowingsmallamountsofsoftdrugs).

Accessibilityofmarkets

Whenopeningsexist,theymaybeblockedbyrequirementsconcerningsettingup a business.

Deregulation(e.g.abolishing certain requirementsregarding educationalqualifications).Regulationstokeeplargefirmsincheck.

Reducing the prices ofresourcessuchascapital and labour andpromotingcommercial premises.

Allowingformsofinformalproduction(e.g.toleratingtheemploymentofillegalworkers).

Growthpotentialofmarkets

Openings should occur in market segments that are accessible but alsooffergrowthpotentialintheforeseeablefuture.

PromotingexportforSMEs.Specificallyregarding migrant entrepreneurship: Contract compliance.

General macroeconomic policies;butalsomeso-levelpoliciesdirected at urban economies or specificsectors.

Byallowingmorefunctionsorfirmsthanthezoningplanstipulatesortypesofdiversificationwhichenablefirmstomovetoothermarket segments.

Source:Kloosterman,2003.

5.2 Support Programmes for Immigrant Entrepreneurs

Consideringthepotentialpositivecontributionsimmigrantentrepreneurscanmaketosociety,itmightbeintheinterestofhostsocietiestosupportmigrantswishingtoestablishtheirownbusiness.Itis,however,importantwhensettingupsuchaprogramme,thatitiskeptinmindthatimmigrantentrepreneursareanextremelydiversegroup.Assuchasuccessfulsupportprogrammewilladdressdifferentmotivations,needsandexperiencesandcarefullyselecttheappropriateparticipantsfortherespectiveprogramme.

It is important to mention that immigrant entrepreneurs can benefit from two different types ofprogrammes:generalonesandthosedirectlyaimingatmigrants(Desiderio,2014).BothofthesekindsofprogrammescanroughlybedividedintosixdifferentcategoriesasshowninFigure4.Fromtoptobottomitcanbesaidthatthelevelofcommitmentbytheserviceprovidertothemigrantentrepreneurandhis/herprojectincreases(Newland&Tanaka,2010).Thefollowingsectionswilldiscussthesedifferentkindsofprogrammesandservicesindetailandprovidepracticalexamplesofeachtypeofprogramme,therebyfocusing on specifically targeting immigrants,while all of these kinds of programmes can also benefitentrepreneursmoregenerally.

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Figure 4: Types of (Immigrant) Entrepreneurship Support Programmes

Source:basedonNewland&Tanaka,2010.

Whatisimportanttomentionbeforedoingsoisthatingeneralitcanbesaidthatimmigrantentrepreneurs,in comparison to theaverageentrepreneur, relymoreon informalnetworksandsupportmechanismsthanonformalones.Thisisontheonehandaninformationasymmetry,whereimmigrantssimplymightnotknowaboutcertaintypesofsupportoptions.Ontheotherhand,itmightalsobeanissueofdistrustinsuchprogrammesandapreferenceforassistancefrompeoplewiththesameethnicbackground. Itis,therefore,importantthatanykindofsupportprogrammeisadaptedtothespecificcontextandtheindividualentrepreneur.Gainingthetrustofcommunityleadersinareasofstrongethnicconcentrationsis important as are other trust-building exercises. One strategy could also be to involve people fromtherespectiveethnicgroupintheset-upoftheprogramme.Inaddition, itshouldbeensuredthattheprogrammes are visible and information on them is readily available to the target group (EuropeanCommission,2008).

5.2.1 Information Provision

This type of support mechanism aims to provide relevant information to potential new (migrant)entrepreneurs.Therearegeneralservicesproviding informationtoallaspiringentrepreneurs,butalsoonesspecificallyfocusingonimmigrants.Theideabehindthisisthatmigrantsmightlackknowledgeoflocal business opportunities and procedures,which in turnmight hinder investments. Immigrants areoftenatadisadvantageintheseaspectsduetolanguageproblemsandnotknowingwheretofindcertaintypesofinformation.Provisionofinformationisespeciallyimportantinthebeginningstagesofabusinessventure,butinformationservicesmayalsoofferinformationinlaterstagesofthebusinesscycle.

Inthelightofencouragingnewstart-ups,manycitiesofferthiskindofservice,oftenforthegeneralpoolofpotentialentrepreneursandinsomecasesalsospecificallyforimmigrants.Ingeneral,differentactorscanbetheproviderofthiskindofservice.Examplesincludeadministrativeunits,chambersofcommerce,businessassociations,labourunionsandprivateorganizations(Desiderio,2014).

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Information can be provided through differentmeans to potential (immigrant) entrepreneurs. A verycommonpractice is the organizationof specific eventswhere relevant information is provided. Thesearesometimesalsogivenforspecifictrades,whichareespeciallycommonstart-ups.Anotherapproachisthedevelopmentofawebsitethatbringstogetheralloftheimportantinformationinoneplacethatiseasilyaccessible.Thiskindofserviceisalsoeasytoprovideinseverallanguagesaimingtoreachawideraudience.Therearealsotelephonehotlinesaswellasinformationsheets,whichareusuallymoregeneralandprovideguidanceonwheretofindfurtherinformation(Rath,Eurofund,2011).

Box 1. Dublin City Public Libraries Business Information Centre

LocationDublin,Ireland

BackgroundTheDublinCityLibrariesfirststartedtodisseminateenterprisestart-upinformationthroughthelibrarynetworkin1996.Librariesareaspaceforeveryoneandthiswasseenasanapproachtoreachpeoplewhomightotherwiselacktheconfidencetoapproachtheformalstart-upofabusiness.

Morerecently,theIrisheconomywasaffectedsignificantlybytheeconomiccrisisandbusinessstart-upsintheDublinareafellby45percentbetween2005and2010.TogetherwiththeDublinCityEnterpriseBoard,thepubliclibrariesaddresstherecession’schallengesbyencouragingself-employmentandprovidingnecessaryinformation.

The ProgrammeThe Business Information Centre is a reference service run by Dublin City Public Libraries,specialisingincompanyandmarketresearchinformation.TheCentreholdsbooks,directories,businessmagazines,databases,IrishCityandCountyCouncilDevelopmentPlans,newspapers,andhasacollectionofIrishcompanyreports.

Inaddition,theDublinCityCouncilCentralLibraryoffersfreelecturesthataredeliveredinsixbranchlibrariesbyexpertsdrawnfromtheprivatesector,areapartnershipsandstateagencies.Thelecturesareheldannuallyinspringandautumnandareforanyone,youngorold,nativeorimmigrant,consideringself-employmentorwhohasrecentlystartedasmallbusiness. The objective is to enable potential entrepreneurs to start a viable business and help existingentrepreneurstoexpandtheirbusinessandcreateemployment.

Type of SupportProvisionofrelevantinformationandfreelecturesontopicssuchas:

• suitabilityforself-employment

• ideageneration

• market research

• financeandbusinessplanning

• ethnic entrepreneurship

Source:DublinCity,2014;Eurocities,2013.

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5.2.2 Networking

Adifferentkindofsupport for immigrantentrepreneurs isprovidedbynetworkingorganizations.Theyofferanopportunityforpotentialandnewimmigrantentrepreneurstomeetother,eitherimmigrantornative,entrepreneurs.Inaddition,theycanprovidecontactswithsuppliersandpotentialcustomers.Inthatsense,networkingorganizationsprovideaplatformtodiscussone’sownideasandchallenges,butalsotodiscusspotentialpartnershipsandfindingrelevantbusinesspartners.Theyalsoofferapossibilitytoestablishlocalconnectionswhichhelpswithreducingcostsanduncertainties,whichwillmakethemmorecompetitiveinthelongrun(Rath,Eurofund,2011).

Thesenetworkingorganizationscanhaveverydifferentforms.Theycanhavemeetingsinpersonorvirtualthroughonlineservices.Physicaleventscanalsobemoreor lessformal,dependingontheorganizers,thesectorand theparticipantsof suchanevent.Oftentheyare focusedonaspecificbusinesssector(Newland&Tanaka,2010).

Box 2: Prince Edward Island Connectors

LocationPrinceEdwardIsland,Canada

BackgroundThe Prince Edward Island (PEI) Connectors Programwas started in 2011 and is run by theGreater Charlottetown Area Chamber of Commerce (GCACC). The aim from the beginningwas to support immigrant entrepreneurs in all parts of PEI. The vastmajority of immigrantentrepreneursinPEIareoriginallyfromChinaandIran,butpeoplefromseveralothercountriesinAsia,Europe,andSouthAmericaarealsopresent.

The ProgrammePEI Connectors offers networking and advisory services to immigrant entrepreneurs. ThemaingoalistofacilitateconnectionsbetweenimmigrantentrepreneursandthePEIbusinesscommunity.

Sofarmorethan300immigrantentrepreneursbenefitedfromtheservicesandmorethan70businesseswerestarted.ThesebusinessesarediverseandcrossallsectorsofthePrinceEdwardIslandeconomy.

Type of SupportPEI Conncetors have a variety of support mechanisms to new and existing immigrantentrepreneursaswellasotherbusiness.Theyinclude:

• Networkingevents

• Advisoryservices

• Research-basedservices

• Workshops,informationsessions

• Guest speakers

Source:PEIConnectors,2014.

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5.2.3 Mentoring/Counselling

MentoringandCounsellingorganizationsusuallyhaveapoolof experiencedbusinesspeople that arewillingtotakeanaspiringentrepreneurundertheirwingandguidethemthroughtheprocess.Thenewentrepreneurismatchedupwithamentorthatisusuallysomehowrelatedtohim/her,mayitbethroughthe samebusiness sector,ethnicbackgroundor languageabilities.Usually the relationshipbetweenamentorandmenteeisforalimitedperiodoftime.Duringthistimeperiod,thereisfrequentinteractiononavarietyof relevant issues.Thesekindsofprogrammesappear tobeespeciallycommontargetingimmigrantentrepreneursorentrepreneursindisadvantagedurbanareas(Rath,Eurofund,2011).

Box 3: Mentoring for Migrants

LocationVienna,Austria

BackgroundAbout1.4millionpeopleinAustriahaveamigrationbackgroundandthetrendisincreasing.Inordertointegrateintosocietyfindingajobisoneofthemostessentialcriteriaandacontinuousdialoguebetweenimmigrantsandthehostsocietyiscrucialforthisprocess.Basedonthis,the“MentoringforMigrants”programmewasestablishedin2008attheinitiativeoftheFederalEconomicChamberincooperationwiththeAustrianIntegrationFundandtheAustrianLabourMarketService.

The ProgrammeTheaimofMentoringforMigrantsistoensurethatwell-connectedmembersofthebusinesscommunitysupportqualifiedpeoplewithamigrationbackgroundintheireffortstoparticipateintheAustrianlabourmarket,whetheraswageemployeeorinself-employment.“MentoringforMigrants”isauniqueprojectintheGerman-speakingregion.Todate,over300mentoringpairshavebeenformed,andnumerousmenteeshavealreadygainedafootholdontheAustrianlabourmarket,notleastthankstosupportfromtheirmentors.

Type of SupportThecentralelementoftheprogrammeisthematchingprocesswhichbringstogetheramentorandamentee.Keyforthesuccessoftheprocessistofindgoodmentorsandtomatchthemto the right person, so that ameaningful relationship can be developed. To obtain a goodmatch, special attention is paid tooccupational (e.g. sector, education) and regional factors(e.g.targetmarketsofthecompany,originofthementee)aswellas languageskills.Onceamatchisestablishedtheprogrammeusuallyrunsforsixmonths,withanaverageoffivehoursofmentoringpermonth.

Source:WirtschaftskammernÖsterreich,2014.

5.2.4 Training

Entrepreneurshiptrainingprogrammesareverycommonandexistfordifferenttargetgroups,onespecificonebeingimmigrants.Theyhelpaspiringentrepreneurstogainrelevantknowledgeandskillsnecessaryforthestart-upofasuccessfulbusiness.Theyoftenincludedifferentcomponents, includingthingslikemarketresearch,businessplandevelopment,administrativesupportandbusinessmanagement.Averyimportantaspectisalsotheprovisionofinformationonpossibilitiesforfinancing.Fundingitselfisusuallynotpartofatrainingprogramme,butisprovidedbydifferenttypesoforganizations.

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Box 4: Ethnic Entrepreneurship Programme

LocationGlasgow,Scotland

BackgroundGlasgowhasthehighestethnicminoritypopulationinScotlandandthenumberoftheethnicminoritieslivinginthecityhasincreasedfrom31,510in2001to68,684in2012.ThecontributionofimmigrantbusinessestotheScottisheconomyoverallandespeciallytoGlasgowissignificant.ResearchshowedthatmanyoftheimmigrantshadpriorrunbusinessesintheirhomecountryandwishedtodothesameinGlasgow.BasedonthistheEthnicEntrepreneurshipProgrammewasestablishedin2005bytheBusinessGateway.

The ProgrammeTheGlasgow Business Gateway has employed a specialist ethnic adviser to investigate andtacklebarrierstoself-employmentandattempttopromotestrategiesforintegrationintowiderScottishsocietythroughbusinesscreation.Thetargetgroupoftheprogrammearerecognizedrefugees,Scots fromethnicminorities,EU immigrantsaswellas individualsonapost-studyvisa.Thoughtheyhaveverydiversebackgroundsthesegroupsfacesomecommonchallengesin entering the labourmarket and self-employment is a viable option formany. The EthnicEntrepreneurshipProgrammeoffersassistanceandtrainingtoputthisintopractice.

Type of SupportThe Ethnic Entrepreneurship Programme offers a wide variety of services all aiming at thesupport and trainingofpotentialnew immigrantentrepreneurs. It is a a low-techapproachwherepersonalrelationshipsandtrustarebuiltupoveranextendedperiodoftime.Thespecificcomponentsoftheprogrammeare:

• Regulardrop-insinthecommunitywhereclientscanspeakdirectlywithanadviserinanon-threateningenvironment

• Attendanceatcommunityeventsdisseminatinginformationandmakingcontacts

• Runningbusinessadviceworkshopsinlocalareastoraiseawarenessofservices

• Ensuringbuy-infromtherangeofcommunityandsocialenterprisesworkingwiththeclient group

• Engagingwithcommunityleaderstogaincredibilityandacceptance

• Workingwithclientsoveralongerperiodandmoreintensivelywiththeaimofenablingthemtojoinmainstreamsupportservices

• Addressing issues regarding business culture and expectations of Scottish businesscommunity

• Providing signposting and supporting clients to access public sector support whereappropriate

• Facilitatingfundingapplications

• Initiatingadialoguewith institutionalbodiestoaddress issuesofperceivedracismorlackofunderstandingregardingtheneedsoftheclientgroup.

Source:PersonalCommunicationwiththeProjectManager,2014.

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5.2.5 Investment

Investmentorganizationspooltogetherprivateandpublicfundsthatarethengiventonewentrepreneursinordertofundtheirbusinessventure.Asaccesstocreditisoneofthemajorchallengesfacedbyaspiringentrepreneurs andespecially immigrants, this typeofprogramme is crucial formanynewbusinesses.Usuallythebusinessplansofpossibleinvestmentsareinspectedcarefullybyateamofexpertswithregardtomultiple factorsthataredeterminedbyeachorganization individually.As funding isusually limited,onlythemostpromisingproposalscanbeofferedmoney.Organizationsoverseetheuseofthemoneydifferently.Whilesomekeepaverycloseeyeonthewaytheinvestmentisused,othersleaveitfullyuptotheentrepreneur(Newland&Tanaka,2010).

Box 5: NordHand

LocationDortmund,Germany

BackgroundTheNorthofDortmundhasthemostdifficultsocio-demographicsituationinthecity:ithasthehighestunemploymentrate(25%),thehighestproportionofmigrants(70%),andthelowestpurchasingpower.Around53,000people live thereand3,500companiesexist,one thirdofwhich are run by immigrants. In 2006, city authorities in Dortmund created the NordHandcreditunionwiththeaimofhelpingtoestablishorexpandsmallbusinessesinthispartoftownspecifically.Itprovidesmicroloanswiththeaimofhelpingentrepreneurstoovercomeshort-termfinancialproblems.

The ProgrammeNordHandisacompletelynewmodelofmicrofinancing,whichwasdevelopedbyDortmund’seconomicdevelopmentagency,takingintoaccountGermany’s legalstructure.Togetherwithpartnersacreditunionthatcouldprovidemicrofinancing to localbusinessewasdeveloped.Loansofupto€20,000for36monthscanhelpentrepreneurswiththeirstart-upfinanceorto avoid insolvency.NordHand is amembership association and its services are open to allmembers. To become amember one has to buy at least one cooperative share and pay amonthlymembershipfeeofatleast5EUR.

Type of SupportNordHandprovidesabroaderportfolioofservicestoitsmember,withthefinancingtoolbeingthe central element:

• Microloans

• Start-upAdvice

• Businessconsulting

• Workshops,guestlectures

• Networking

Source:NordHand,2014;Eurocities,2013.

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5.2.6 Partnership

Afinaltypeofentrepreneurshipsupportprogrammeisthatofpartnershiporganizations.Theygofurtherthanjustsimplyfundingabusinessventure.Theyinvestonlyinprojectsthatpromisetobringrevenues.Toensurethistheorganizationistheninvolvedindevelopingthebusinessprojectandmanagingit,especiallyin theearly stages. This typeoforganizationusuallyhasa strongnetworkofexperts to relyonwhennecessary(Newland&Tanaka,2010).Specifickindoforganizationsthatfitintothiscategoryarebusinessincubators and business angels.

Box 6: ChancenNutzer

LocationFrankfurt,Germany

BackgroundTheshareofpeoplewithamigrationbackgroundinFrankfurtiscurrently42.7percentandisthereforehigherthanthenationalaverage.Amongthepopulationunder25yearspeoplewithmigrationbackgroundarealreadythemajority.Atthesametime,manyofthemaredisadvantagedintermsoflanguageskills,educationlevelandtheiroverallintegration.Asaconsequencetheyfacemuchmoreproblemsintermsoflabourmarketintegrationthannatives.InDecember2013theofficialunemploymentrateofimmigrantsinFrankfurtwasat11.5percentcomparedto7.7percentofGermannationals.

BasedonthisthesocialimpactGmbHstartedaprojectin2013addressingthespecificgroupofyoungimmigrants for theChancenNutzer programmewhichoffers support in becoming self-employed. ThesocialimpactGmbHhadpriorexperienceinthefieldofstart-ups,particularlywithsocialenterprises.

The ProgrammeTheaimofChancenNutzeristoofferyoungpeoplewithanimmigrantbackgroundanalternativewayoutofunemployment.Theprogrammefocusesonthestrengthoftheindividualanddoesthereforenotlimititsactivitiestoonespecificsector,businessideascanbefromawidevarietyoffields.Sofarexamplesincludesatranslator,adelicatessenstoreandafitness,nutritionandlifecoach.

Incaseswhereitbecomesclearintheprocessoftheprogrammethatself-employmentisnottherightpathforaspecificcandidate,s/hereceivessupportinfindingotherlabourmarketopportunities.

Type of SupportThesociallaboffersthepotentialentrepreneursaninspiringlocationwheretheycandevelop,testandrealize theirbusiness ideawith thehelpofcompetentcoachesandmentors. Itoffersanofficespacewith internet access, specialized and individually designed services, group formats to stimulate thecommunicationandcooperationanditopensdoorstootherstakeholdersandpotentialclients.

SpecificallythesupportpackageofferedbytheChancennutzerProgrammeiscomposedof:

• Personal coaching

• Trainings,workshops,seminars

• Expertadvice

• Mentoring

• Freeworkplace

• Microfinance

• Start-up incubator

Source:ChancenNutzer,2014.

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5.3 Public-Private Partnerships for Immigrant Entrepreneurship

Ingeneral,apublic-privatepartnershipisaliaisonbetweenagovernmentauthorityandaprivate-sectorentitywhocome together fora specificpurpose thatwill serve thewiderpublic.Oftenpublic-privatepartnershipsareawayto implementaprojectfasterormake itpossibleatall,whenpublic funding islacking.One strength of this kind of partnership is that different kinds of actors come together for acommongoal. Thisusually leads to strongerprojects (WorldBank,2012).At the sametime,apublic-privatepartnershipalsoimpliesthatrisksaresharedasaretherewardsoftheprojectdelivery.Thedesignofapublic-privatepartnershipsisflexible,whichmakeitpossibletoadjustasnecessarytothenatureoftheinvolvedactorsandthespecifictopicthatistobeaddressed(Juzwiaketal,2014).

Intermsofimmigrantentrepreneurshipactorsonverydifferentlevelsareinvolved.Therearenational,regionalandlocalgovernmentauthorities,agencieslikechambersofcommerceandunions,non-profitorganizationsaswellasprivate-sectorcompanies.Ifthesedifferentactorscometogethertoprovidesomesortofsupportprogrammeforaspiringimmigrantentrepreneursallstakeholdersmaybeabletobenefit.Itdecreasespublicspendingonthiskindofserviceanditmayincreasethequalityofsaidservicebyinvolvingtheexpertiseofthedifferentactorsinitsdesign(Desiderio,2014).Besidesfunding,privatesectorentitiesareabletocontributethroughtheirknowledgeofthelocallabourmarketandbyprovidingtrainingandeducationopportunities thatwill help potentialmigrant entrepreneurs in implementing their projects(Juzwiaket al., 2014).When this is the case the immigrantentrepreneurs also receive themaximizedbenefitsfromthisbettertypeofsupportprogramme(Desiderio,2014).

AstudylookingintotheroleofcitiesandbusinessesinmigrantintegrationfoundthatinChicagointheUnited States of America, political leaders, educational institutions, businesses and rights’ advocatesjointlyrecognizetheroleofimmigrantentrepreneursinthecity(Juzwiaketal.,2014).Asaconsequence,public andprivate-sectorgroupshaveestablished several servicesaimingat the supportof immigrantentrepreneurs.Therearebusiness‘incubators’,sponsorednetworkingopportunitieswithlocalemployersas well as support with administrative procedures, all with the aim of maximizing the contributionsimmigrantentrepreneurscanmaketothecity’seconomy(ChicagoCouncilonGlobalAffairs,2011).

6. CONCLUSION

Immigrantsareoftenperceivedasbeinghighlyentrepreneurialandpotentialcontributorstoeconomicgrowthandinnovationinthehostcountry(andcity).Theimportanceofthisgroupisincreasinglyreflectedinimmigrationpoliciesandthedevelopmentofspecificvisasthataimtoattractimmigrantentrepreneurs.Asaconsequenceofthisincreasedattention,asignificantbodyofresearchonimmigrantentrepreneurshiphasdevelopedovertheyears.Thispaperprovidesanoverviewofthestateoftheartoftheresearchfieldonimmigrationandentrepreneurshipincities.

Whiledataonimmigrantentrepreneurshipisingenerallimited,thereisevidencethatinmanydevelopedcountries immigrants are indeed over-represented among entrepreneurs. At the same time, in othercountriestheyarelesslikelythannativestobeentrepreneurs.Thislargelydependsonthecountrycontext,thebackgroundofthemigrantsandtheopportunitystructureinthecountryofdestination.Thosemigrantsthatareentrepreneursmaybeself-employedorcreatebusinessthatemployothersalso,rangingfromthosethatcreateonlyafewjobstohigh-growthfirms.Theirpotentialofcontributiontotheeconomyrisesinparallelwiththistrend.Ingeneral,migrantsareoftenassumedtobemoreentrepreneurialthannatives.Thisisbasedontheargumentofpositiveselectionofmigrants.Migrationitselfisariskyactivityandreflectsacertainriskattitude,alsoimportantforentrepreneurship.Atthesametime,someonethattookanopportunitytomigrate,mayalsobemorelikelytospotagoodbusinessopportunity.Inreality

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immigrantsoften face labourmarketdiscriminationandarepushed intoentrepreneurship rather thangoingintoitbecausetheyspottedagreatopportunity.

Immigrantentrepreneurshiptendstobeanurbanphenomenon.Evenmoreso,manyimmigrantbusinessescanbefoundinspecificareasofcitieswherecertainethnicgroupsarefound.Thediversitythatcomeswithlargercitycentres,comesadiversityofbackgrounds,skillsandexperiences,whichhasbeenfoundtobeacontributingfactortocreativityandinnovation.

Entrepreneurshipdoeshowever comewith challenges,withoneof thekey challengesbeinga lackoffundinganddifficultiesinaccessingformalcredit.Immigrantentrepreneursaremuchmorelikelytorelyoninformalsourcesoffundingastheyarelesslikelytoobtainformalloans.Theyarefurthermoreoftendisadvantaged when it comes to obtaining information and administrative procedures simply due tolanguageandeducationaldifferencesaswellasinformationasymmetries.

Becauseof thesedifferent challenges and the acknowledged importanceof immigrant entrepreneurs,avarietyofdifferentkindsofsupportprogrammesforpotentialandexistingmigrantentrepreneurshasbeendeveloped inmanycountries(andcities).Theyvary inscopeand intensityfromsimplyprovidinginformationtojoiningintoapartnershipwiththestart-upimmigrantentrepreneur.

Itisimportantthattheopportunitiesthatimmigrantentrepreneurspresentforcitiesarecultivatedmore.Inordertodothatitisimportanttoattracttherightpeoplewithgoodideasandtheskillstoimplementthem.Inaddition,thoseentrepreneurialimmigrantsalreadyincitiesshouldbeactivatedbyimplementingencouragingpoliciesandprogrammes.Forbothgroupsitisessentialthatthegeneralbusinessenvironmentisfriendlyandoffersopportunitiestostartanewbusinesswithouttoomuchadministrativeburden.Takingintoaccountthemainchallengesfacedbyimmigrantentrepreneurs,localauthoritieswantingtomaximizetheircontributionsshouldconsiderthefollowingrecommendations:

•Gainanunderstandingoftheprofileoftheimmigrantpopulationintherespectivecityinordertobeabletodesignpoliciesandprogrammesthatareactuallyattractivetothespecificpopulation.

• Increasecooperationbetweenrelevantactors like immigrationauthorities,chambersofcommerce,economicauthoritiesandfinancialinstitutions,potentiallyintheformofpublic-privatepartnerships,inordertobeabletoprovidecomprehensiveinformationandjoinforcestomakesupportstronger.

•Makesureexistingsupportmechanismsarevisibletothetargetgroupandarecommunicatedclearly,sothattheyareaccessibletoimmigrants.Findwaystoencouragethemtotakeupsupportoffersby,forexample,havingstaffwithamigrationbackground.

•Providesupport for thedealingwithadministrativeprocedures so that theyarenotadiscouragingfactor.

•Access tocredit remainsoneof themainobstacles for startingabusiness. Increasing thisaccess istherefore one of the key factors in increasing immigrant entrepreneurship. This can be done byencouragingbankstoconsidergivingmoreloanstoimmigrantsforbusinessstart-upsorbytheprovisionofmicrocreditsbyothertypesoforganizations.

Itshouldalsobementionedthatwhileresearcheffortsinthefieldareincreasing,thereisstillalottobedone.Onepointisthatalotoftheliteratureisfocusedonalimitednumberofhostcountriesandcities.TheUnitedStates isthemostcommonlyanalysedcountry inthecontextandeventhere isafocusoncitieslikeMiami,NewYorkandLosAngeles.Itwouldbeextremelyinterestingtolearnaboutthetypesofimmigrantentrepreneurship,theirmotivationsforthisdecisionaswellastheircontributionsinawider

29Background paper


rangeofcountriesandcities.Ofparticularimportancewouldbetoalsolookintothisinthecontextofdifferentdevelopingcountries,whereimmigrantentrepreneurshipcertainlydoesexist,particularlyinthegrowingurbancentres,butisatthisstagenotdocumentedintheliterature.

Understanding immigrantentrepreneurship incitiesbetter is important inorder tobeable todevelopeffectivesupportmechanismsandpartnershipstofoster itfurtherandmaximizethepotentialpositivecontributions.

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