The Bases of Chinese and South Asian Merchants' Entrepreneurship and Ethnic Enclaves, Toronto, Canada

Professor Mohammad Qadeer
School of Urban and Regional Planning
Queen's University

CERIS Working Paper No. 9

Abstract

The visibility of ethnic business in contemporary North American cities has sparked a lively debate about (some) immigrants and ethnic groups’ entrepreneurial behaviour. Is this entrepreneurship fostered by cultural and social resources of these ethnic groups; or is it the result of class and individual characteristics? All in all, the debate revolves around the question of the relationship between ethnicity and entrepreneurship.

This question has been empirically probed in this paper through an analysis of the social background, business strategies and entrepreneurial decisions of two groups of merchants in Toronto, namely Chinese and South Asians. By comparing two different ethnic groups of similar small business, an attempt has been made to identify common and different elements contributing to their entrepreneurship. From this limited study of the low-order business in ethnic spatial enclaves, it appears that the class and individual characteristics of these merchants were more important in prompting them to start business than their ethnic resources. At this level of enterprise, the idiomization of ethnic business incubated in enclaves facilitates starting new businesses. The idiomization of business is how ethnicity comes into play in entrepreneurship. This analytical abstraction and the comparative study of two groups of ethnic merchants are the contributions of this paper.

Social Determinants of Ethnic Entrepreneurship

The Chinese restaurateur, Italian baker or Pakistani grocer are some of the stereotypical ethnic merchants in Western cities. Public perceptions about their economic and social status have changed considerably in recent times. From being viewed as "shop keepers" in immigrant neighbourhoods, they have been elevated to the status of entrepreneurs who produce new goods and services, gainfully employ themselves and others, diversify local economies and revitalize old neighbourhoods (Winnick 1991, Kotkins 1993, Mullar 1993). Ethnicity, in North America particularly, is a badge of immigrants. It is synonymous with immigrants. The "new" status of immigrant businessmen is essentially a reflection of emerging social trends towards multiculturalism, self-employment and entrepreneurship. The immigrant businesses and foreign investors have become assets in the transformation of cities to global cities (Sassen 1994).

Cubans in Miami, Koreans in Los Angeles, and Chinese in Vancouver are celebrated examples of immigrant entrepreneurs in USA and Canada. The entrepreneurial behaviour of these and other communities is documented in a growing body of literature spanning almost all parts of the USA and Canada (Portes and Bach 1985, Light and Bonacich 1988, Waldinger 1986, Kallen and Kelner 1983). Bonacich (1973) discovered a community-oriented welfare capitalism among Japanese produce growers of California. Portes and Bach (1985) documented how Cuban business revived Miami’s economy. Werbner (1990) found cultural and social bonds among immigrant Pakistanis contributed to their dominance in the garment trade of Manchester.

The nexus of ethnicity and business entrepreneurship raises the question: Are all ethnic groups or immigrant communities equally enterprising? Obviously, some do better than others. Kotkins, for example, singles out the Jews, Chinese, Japanese, British and Indians as the universal "tribes" demonstrably successful in business enterprises (Kotkins 1993). In Canada, Chinese, South Asians (Indians, Pakistanis and Bangladeshis) and (recently) Vietnamese are believed to be more business oriented than Carribean blacks and Latin Americans. Whatever the veracity of such observations, they bring out the underlying notion that entrepreneurial behaviour is nurtured in certain social milieux. Some ethnic groups are "endowed" with social institutions and cultural norms that breed entrepreneurial talent, which have been called "ethnic resources".

The counterpart to this hypothesis is the notion that entrepreneurial behaviour is a function of personal goals, beliefs, education and assets. This notion has been given the name "class resources". There are, of course, other factors such as structural conditions that are responsible for fostering entrepreneurship. The search for explanations of (some) ethnic groups’ entrepreneurship is framed by these notions.

Yet there is a spatial dimension to ethnic business enterprises. They take the form of an ethnic enclave defined as "a distant economic formation, characterized by spatial concentration of immigrants who organize a variety of enterprises to serve their own ethnic market and the general population" (Portes and Bach 1985: 203). Undoubtedly the concept of ethnic market enclave is a bit imprecise and fluid and its liberal use has turned it into a "rubber yard stick or stew" (Logan and Abba 1994: 69). Yet Chinatowns, Indian bazaars or Greek villages are "distinct economic formations" articulating, expressing and fostering ethnic business through spatial concentration. This conjunction of spatial arrangements, social institutions, cultural norms, and individuals’ talent and background as explaining ethnic entrepreneurship in the form of immigrant business is particularly relevant for urban economic analysis. These theoretical notions are the starting point of the present article.

Broadly, this article aims at finding out factors promoting entrepreneurial behaviour among Chinese and South Asian merchants in Toronto, Canada. (Footnote 1) There is a new twist to this otherwise well-researched question. It lies in the fact that this article examines the two groups in parallel with each other, thereby probing for common as well as divergent factors between the two groups. Most of the studies so far have focussed on one ethnic group. This article, thus, compares two distinct groups of ethnic merchants whose business and spatial settings are similar. By controlling characteristics of business and comparing owners’ social background, entrepreneurial behaviour and business strategies, it is expected that the respective roles of ethnic or class resources as well as other factors promoting business entrepreneurship will be sorted out. The article attempts to answer the question: who are these businessmen and how do they come to be entrepreneurs? It further examines the role of ethnic commercial (spatial) enclaves in prompting and sustaining these businesses. The article focuses on the relatively low end of business enterprises, namely on retailers and small businessmen in the most common form of immigrant business.

Explanation of Ethnic Entrepreneurship

Ethnicity has come to be associated with entrepreneurship on account of the observed concentration of Lebanese, Jews, Cubans, Koreans, Chinese and Indians, for example, in businesses in many parts of the world. Weber’s thesis of protestant ethics fostering capitalism laid the groundwork for linking cultural values, such as thrift, risk taking and religious ethos, with business pursuits.

Since the l960s, the discourse about the basis of entrepreneurship has shifted away from socio-psychological characteristics to the social institutions and economic organization of a community. Yet culture remains a critical factor in that it breeds some sort of group solidarity and shared goals and values conducive to entrepreneurship.

Presently in the U.S. and Canada, ethnic entrepreneurship as a phenomenon refers to immigrants’ and minorities’ propensity to establish businesses and gainfully employ themselves. Why do some ethnic groups manifest greater propensity to start businesses and be self-employed than others? This question has prompted much theorizing in recent times.

Aldrich and Waldinger (1990) divide factors promoting entrepreneurial behaviour into three categories. First "opportunity structures" refer to external conditions faced by a group, including market situation, competition and state policies. A demand for ethnic goods, arising from the increasing population of new immigrants or from a geographic concentration of co-ethnics, is the most common form of opportunity calling for entrepreneurial behaviour

among ethnic minorities. Light has called it "protected market" conditions (Light 1988). Yet this protected market can also turn into a trap confining businesses to low-level segmented markets (Bates 1994) or what in Britain has been called an "economic dead-end" (Bose l982). Bonacich’s concept of "middleman minority" highlights another type of opportunity whereby some ethnic groups are especially favoured by the elite to organize trade with the masses (Bonacich 1973). Such opportunities are cited as an explanation of the ethnic predominance of non-black ethnic merchants in poor areas of inner cities. Apart from these positive opportunities, racial discrimination, inaccessibility to jobs and residential segregation are negative influences driving minorities towards self-employment through businesses.

The second set of factors is called "group characteristics", and is comprised of social networks, an ethos of mutual support, shared language, community orientation, brotherhood of employers and employees, residential clustering and population size. These are factors "internal" to a group and are commonly referred to as ethnic resources. They serve as resources in economic pursuits, particularly for immigrants and minorities whose common identities and social position foster mutual trust and a pooling of labour, capital and information to start businesses. Ethnic groups capable of mobilizing these internal resources are relatively more entrepreneurial. Cuban bankers in Miami, for example, gave character loans to co-ethnics, thereby turning social solidarity and the potential for community ostracism into collateral for finance (Portes and Stepwick 1992: 132-136). Werbner refers to Asians’ way of living that is supportive of entrepreneurs (Werbner 1984).

Most theoretical formulations lay emphasis on ethnic resources for explaining the entrepreneurial success of various immigrant and minority groups. Yet other cultural and material factors simultaneously present in some groups are increasingly recognized as being promoters of entrepreneurship. Among such group characteristics are family assets, education, social status, business experience and knowledge, and human capital (Light and Bonacich l988:18). These are class resources that are not equally available to all ethnic groups or all members of the same group, Probably ethnic and class resources complement each other and come into play at different stages of business development. Yoon concludes that ethnic resources are more critical in the early stages of business development, but class resources come into play as business flourishes (Yoon 1991:328).

The third set of factors affecting entrepreneurial behaviour of a group has been called "ethnic strategies". These are plans and actions forged by members of an ethnic community to take advantage of their group characteristics and opportunity structures (Aldrich and Waldinger 1990:114). Implicit in this category is the assumption that an ethnic group’s entrepreneurial propensity also depends on its capacity to formulate effective strategies for fulfilling their economic goals. Ethnic communities differ in terms of their capacity to forge strategies. The Japanese in California, Italians and Jews in Toronto, Cubans in Miami, and Chinese in Vancouver, for example have forged ethnic enclaves as bases of their business entrepreneurship (Reitz 1990, Light and Bonacich 1988). Other strategies include utilizing public programs and developing community organizations to share information, knowledge and connections for promoting businesses. Although paths charted through ethnic strategies have many similarities, most groups rely on some unique institution, practice or structural opportunities to forge a particular strategy. It could take the form of social networks and complementarity of roles, pooling of information, or organization of what Jones calls local ethnic space (Jones 1992:797).

The foregoing discussion of the theoretical explanations of ethnic entrepreneurship suggests that it is partially a creative response to opportunities and obstacles in the market and, in part, a manifestation of individual class and ethnic resources of a particular group or individuals. There is no single and overarching theory explaining the entrepreneurial behaviour of immigrant and other ethnic minorities. The entrepreneurial success of a group is the following set of factors which purportedly help us in observing and analysing the entrepreneurial behaviour of an ethnic group.

Chart 1

- demand for ethnic goods                      - family support                 - socio-economic status

  and services                                        - social network                - assets and income

- concentrations of ethnic                       - community orientation in  - occupation

  populations pooling of knowledge,         - education and training

- ease or difficulty of capital and labour    - goals and beliefs

  entering the market                             - social institutions             - family structure

- labour market and                               - cultural values                 - human capital

  opportunities for jobs                           - geographic concentrations

- state policies (immigration                   - business traditions

  and citizenship, taxes,                         - population size

  licences, mobility,

  community and individual

  rights, etc.)

- local area economy

Chart 1 does not specify how a particular factor affects the propensity for entrepreneurship, but it does serve as an observational tool. Factors listed in this chart undergird the analysis reported in this article.

Among immigrants in contemporary cities, these factors are catalysed by the spatial dimension. The concentration of ethnic businesses at a specific location and the consolidation of an ethnic commercial market in a particular locale help create idioms or models of business enterprises. The forging of these idioms is the contribution of spatial enclaves. This is how Chinatowns or Greek villages become business incubators.

The current discourse about ethnic entrepreneurship arises from Western experiences of recent immigrants’ efforts to employ themselves. It is also framed by evolving national attitudes and policies towards immigrants. Up to the middle of the 20^th century, most of the immigrants were skilled and unskilled workers who came from Europe to North America to labour in mills, mines and farms. They lived in crowded tenements of old neighbourhoods in central cities. Their businesses largely consisted of restaurants, sausage shops and bakeries, etc., catering to the daily needs of the ghetto population in accordance with "back-home" tastes. These businesses were seldom viewed as expressions of ethnic entrepreneurship.

Since the 1960s, national immigration policies have been revised to attract a trained workforce and to draw persons with business skills. The Civil Rights Movement and Human Rights legislation in Western countries have reduced overt discrimination. The rise of international travel and the consumerism of post-industrial societies have fostered tastes for a variety of cuisines, clothes, music and furnishings. Ethnic foods and dress have become a part of daily fare for the mainstream public. All those social changes have increased demand for ethnic goods and services and lent a new status to ethnic business. Chinatowns, for example, have evolved in the public view from unhygienic and dangerous ghettos of quixotic Orientals to festival places to be proudly promoted by boosters of the city’s economic development. The celebratory note in the current literature about immigrant businesses is both an acknowledgement of ethnic entrepreneurship and a reflection of changing social values and tastes. An ethnic spatial enclave is an embodiment of immigrant and minority entrepreneurship on the one hand, and an expression of the new social economy of Western cities on the other. Let us briefly elaborate on its structure and scope.

Portes and Bach formalized the concept of an ethnic enclave through their study of Cubans in Miami. They attribute the formation of ethnic enclaves to (i) "presence of immigrants with sufficient capital", and (ii) the "extensive division of labour" (Portes And Bach 1985:203). An enclave is also a distinct labour market in which co-ethnics are both employees and employers, and their social bonds underlie its economic organization. Reitz has described such segmented labour markets as "segregated work settings" (Reitz 1990: 154-156). Although initially an ethnic enclave was expected to have a spatial concentration of ethnic businesses, lately other elements have been added to its definition, stretching the concept to the point where it is almost synonymous with the term "ethnic economy": co-ethnics as sellers, suppliers, employers and employees.

Logan et al. maintain that an enclave is a specific type of ethnic economy. It has four features: (1) co-ethnicity of owners and employees, (ii) spatial concentration, (iii) sectoral specialization in four or five types of activities where ethnics have advantages of talent and knowledge, and (iv) functional linkages among ethnic firms (Logan et al. 1994:693-695). Often the term now is also used to refer to dispersed but loosely linked ethnic businesses in a metropolitan area; its spatial concentration as a condition has been interpreted liberally. All in all, spatial and/or sectoral concentrations of ethnic businesses, with distinctness of the labour market, are critical elements of an enclave.

Undoubtedly the term "ethnic enclave" is imprecise, not unlike the informal sector of an economy, yet it is a phenomenon concretely observable in the economic organization of North American cities. For our purposes, it is the spatial concentration of ethnic businesses and their "incubatory" role that makes enclaves significant. This study focusses on merchants in Indian bazaars and suburban Chinese malls, which represent ethnic entrepreneurship in its most elemental form.

The new city of Toronto (pop.2.27 M) [formerly a regional municipality comprised of five cities and a borough] is at the core of the Greater Toronto Area (GTA) of 4.23 million people, which is the city and its four surrounding regions. The City of Toronto has always been a destination of choice for immigrants to Canada. Since 1970, immigrants have come to Toronto in large waves heading directly into suburbs and making the whole of Metro Toronto a multi-cultural and multi-racial community. In 1991, 42.1% of Metro’s population were immigrants. Immigrants have also spread out in outer suburbs of the GTA, making up 29.2% of the population.

The most striking impact of recent immigration is on the racial composition of the population. Non-whites, politely called visible minorities in Canada, comprised of Blacks, Chinese, and South Asians, were about 15% of the total population in 1991 - a dramatic increase over the last twenty years. The visibility of non-whites has restructured public discourse (and policies) about ethnicity in Toronto. The salience of race has emerged as the divide between "old" and "new" ethnicity. It also undergirds current discussions about the role of immigrants in the local economy. Therefore, a focus on Chinese and South Asian entrepreneurs in this study has helped frame the question of ethnic entrepreneurship in contemporary idiom.

Metro Toronto now has the largest Chinese community in Canada. There are three "Chinatowns", two in the City of Toronto and one in the suburban idiom of a constellation of Chinese shopping malls and strip plazas. South Asians (Indians, Pakistanis, Punjabis and Bangladeshis) have two Indian bazaars in Metro - one in the city on Gerrard Street East and the other on Albion Road in the suburban northwestern periphery. These are ethnic commercial enclaves: spatially concentrated, operating in the ethnic market and employing co-ethnics. Almost all businesses in these enclaves trade in ethnic goods and services of daily need. They function at three levels: (i) selling low order goods of daily use for ethnic communities; (ii) serving as variety and specialty centres for the general population, and (iii) attracting tourists and visitors.

In probing for factors contributing to ethnic entrepreneurship, I have drawn non-probabilistic samples of merchants from Chinese malls and plazas in suburban Scarborough and from two Indian bazaars, one in the central city and the other suburban, along with some dispersed businesses near these areas. (Footnote 2) This choice is deliberate. It allows me to observe the entrepreneurial behaviour of recent immigrants in newly formed ethnic enclaves.

An interview schedule was drawn-up, incorporating questions about class and ethnic resources as well as opportunities and business organizations as outlined in Chart 1. Merchants selected for interviewing were chosen to maintain an approximate quota of types of stores, i.e., groceries vs restaurants, etc. Although I do not claim that the sample drawn is statistically representative, it recapitulates the full spectrum of businesses found in these enclaves.

All in all, 45 South Asian and 36 Chinese merchants were individually interviewed in the language of the respondent’s choice by respective co-ethnic interviewers. Merchants are busy, hardworking persons. They are suspicious of interviewers asking about their businesses, and as ethnic minorities are reluctant to expose their background and feelings. These factors make the task of surveying merchants doubly difficult. The choice, therefore, was to have a small sample but to probe deeply. My sample size is comparable with similar studies (Marger 1989, Yoon 1991). The information obtained from these interviews, tabulated and analysed, provides empirical evidence for examining the entrepreneurial behaviour of the two groups.

Overall, the design of this study may be viewed as "case studies" of two groups of ethnic merchants.

Table 1

- Total sample (N) = 45                                                     - Total sample (N) = 36

- Age (median) = 44.9 yrs (8.9)*                                         - Age (median)     = 39.7 yrs (8.2)*

  Above 55 yrs. = 11%                                                       Above 55 yrs.      = 8.3%

- Education (bi-Modal)                                                       - Education (Mode)

  graduates college/professional                                           graduates college/professional

  studies from home countries/ High                                     studies from home countries = 25%

  School Diploma        = 23.3% each

- US/Canadian degree = 14.0%                                          - US/Canadian     = 16.6%

- Never married = 15.6%                                                    - Never married    = 11.1%

- Live with nuclear                                                             - Live with nuclear

  family only = 79.5%                                                          family only        = 80.6%

- Birthplace - Birthplace

    India = (45.4%)                                                               Hong Kong       = (80.6%)

    Pakistan = (22.7%)

- Immigrants = 95.6%                                                        - Immigrants       = 100.0%

- Year of migration                                                             - Year of migration

        (median) 1973-1974                                                         (median) 1982-1983

- No. of years this                                                             - No. of years this

  business owned business owned

                  mean = 6.8 yrs.                                                               mean = 6.0 yrs.

                  st. dev. = (4.9)                                                                 st. dev. = (5.7)

* Source: Author’s Surveys

South Asian and Chinese merchants from Indian bazaars and suburban Chinese malls are, by and large, young males in "early" middle age and recent immigrants. The South Asian group of the sample are slightly older (median age 45 years) and are immigrants of relatively long standing, i.e., 1970's on the average. They came from India, Pakistan, Bangladesh and a few from the Caribbean Islands or Africa of sub-continental extractions. Educationally, they would rank among semi-professionals - a majority have some college/professional education or degree from their home countries. An overwhelming majority (84.4%) have been or are married and most (80%) live with a nuclear family only. It is worth noting that these entrepreneurs did not live with relatives, a fact indicating their conformity to the mainstream social norm in household structure.

The sampled Chinese merchants resemble South Asians in many demographic and social characteristics. Though slightly younger (median age 39.7 years), they are mature adults, living with their nuclear families (80.6%). All are recent immigrants of about 10 years standing, on the average, predominantly from Hong Kong (80.6%). They represent the new wave of Chinese immigrants in contrast with Chinese of the old Chinatown. Both groups are comprised of established merchants who have owned their current businesses for six or more years on the average.

There are differences between the two groups: South Asians are slightly better educated and are immigrants of longer standing. Yet both groups of merchants are in a similar stage of life - early middle age. Of course, all are owner/partners in their stores.

The above data combined with descriptive comments and observations drawn from interviews suggest the following thumbnail sketches of three types of ethnic merchants.

1. Graduate-Retailer: In his late 30s or early 40s, this prototype merchant has a degree in engineering, commerce, science or law, often from the home country. He is a disillusioned professional, having worked for 5-10 years with little fulfilment and unpromising prospects, who now turns to a small business in pursuit of independence and security. (See Box 1)
2. Technical-Entrepreneur: Relatively young in his early 30s, this businessman is a trained mechanic, electrician, or bookkeeper, etc. After a few years of dead-end jobs, he decides to plunge into business and be his own "master". The business often requires some manual skills, such as an auto garage, home repairs, household goods or a butcher shop. (See Box 2).
3. Worker-Partners: Either young in his early 30s or retired in his late 50s or 60s, this entrepreneur has a modest education but strong motivation. Initiated into the business as a partner or manager of a store or workshop started by a relative or friend, he may even have a job along with the business to help build up capital. (See Box 3).

TABLE 2

Type of Business

                                                                            South Asian                    Chinese

Food and Catering                                                 18   40.0                             12   33.3

(grocers, restaurants, bakers, meat suppliers)

Personal goods                                                     11   24.4                               6   16.7

(clothes, jewellery, gifts, books, utensils,

hairdressers, travel agents)

Household goods, sales & repairs                           12   26.7                             12   33.3

(auto repair, furniture, photo,

electronics, machines), etc.

                                                                            45 100                                36 100

Source: Author’s Surveys

These merchants are primarily store owners and managers operating in respective ethnic markets, largely engaged in the retailing of goods and services. None of these businesses is incorporated. Groceries, restaurants and food distribution, processing and catering establishments predominate –40% of South Asian and 33% of Chinese business. Given substantial ethnic populations and an increasing demand for ethnic foods and cuisine in the mainstream population, food business are an obvious choice of immigrant entrepreneurs.

Household goods and services such as furniture, electronics, photo processing and auto repair are the second category of retailer activities in which sample entrepreneurs specialized. These are not purely ethnic products, but are goods and services of uniform qualities for all segments of the population. Yet there is a demand for them among co-ethics. Ethnic factors come into play in terms of brand tastes or convenience and services provided by a store. Businesses in our sample are all owner-operated. Some are franchises (Japan Camera) and a few involve production or manufacturing to cater ethnic tastes, such as furniture stores.

South Asian women usually wear saris and shalwar-kameez and also have characteristic tastes for gold jewellery. These preferences have spawned specialized clothing and jewellery businesses. Among Chinese, packaging, production and retailing of herbal medicines and foods (tofu, soya sauce, for example) as well as porcelain vases and rattan furniture are businesses of ethnic interests. Such activities are included in household goods as well as the personal goods and services categories of Table 2.

By and large, the sampled businesses are relatively small, though there are subtle differences in size between South Asian and Chinese sectors.

Table 3

South Asian           Chinese

Floor Area                             mean 1040 sq. ft             2314 sq. ft

                                  st. dev 587 sq. ft             2595 sq. ft

Number of full-time                 mean         0.5                          0.9

unrelated employees              st. dev       0.8                          0.6

Businesses without                             54.0%                       17.1%

any full-time employees

Source: Author’s Surveys

The mean floor areas of South Asian and Chinese businesses are 1040 and 2314 square feet, respectively. They are close to the size of main street stores and workshops, parallelling small retail establishments. Yet South Asian stores are smaller; they are less than half the average size of Chinese businesses. The variation in the floor area of Chinese businesses is also wider, as indicated by the standard deviation, than in the space for South Asian establishments. Similarly, the mean number of full-time (unrelated) employees is minuscule in both sectors, but among South Asian businesses, the average is about half of what it is for Chinese entrepreneurs. About 54% of South Asian and 18% of Chinese businesses in our samples did not have any employees unrelated to owners. Of course, in each case there were spouses, children and relatives working in these businesses, and the mean number of relatives working part-or full time in South Asian businesses was 0.6 and for Chinese 0.5. All in all, these are small family businesses. The Chinese stores are relatively larger and on the average have more employees.

Table 4

Percentage of co-ethnic

customers                                         mean     43.1                                 74.0

                                                        st. dev    43.4                                 21.3

Ethnic businesses nearby                                70.7                                 97.2

Nearby ethnic businesses                                55.1**                              54.2**

are mutually suitable

Nearby ethnic businesses                                82.7**                             68.5**

draw customers

Special services offered-                                  59.1                                77.8

products culturally suitable

Customers’ spoken language                           56.8                                88.9

* Overlapping, not mutually exclusive, responses. Column or row totals do not add up to 100%

** These percentages have been computed only for businesses (N=29 and 34, respectively) located in close proximity to co-ethnic stores.

An ethnic enclave is simultaneously a protected market, an incubator of entrepreneurs and an organization that transforms social networks into economic resources. Portes and Bach observe that "entrepreneurial activities can thrive in this situation because they are able to reproduce on a local scale some of the features of monopolistic control that account for successful firms in the wider economy" (Portes and Bach 1985: 205). The spatial concentration is a necessary condition for the function of ethnic enclaves. It promotes agglomeration economies and interlinkages among ethnic businesses. These effects are evident in the case of our sampled groups.

Businesses sampled for this study are not free-standing individual enterprises. They are surrounded by ethnic businesses in spatial concentrations loosely forming a distinct cluster. Table 4 indicates that three-fourths of South Asian and almost all of the Chinese businesses in the samples are located near other co-ethnic enterprises. They mostly trade in ethnic goods fulfilling needs of the ethnic clientele, while catering to speciality needs of the mainstream population. Their largest (modal) group of customers are ethnic, though in the case of Chinese, this group make up to 74% of the clientele, indicating relatively greater self-containedness of Chinese malls. Table 4 also suggests that ethnic businesses are interlinked and produce a cluster effect. Most of this effect appears in the form of externalities. About 55% of both South Asian and Chinese business owners felt that ethnic businesses are mutually supportive by pulling customers to the area and serving culturally and linguistically relevant fare.

Chinese businesses, being located mostly in enclosed malls and plazas, tend to measure high on the above indices. Their suburban enclave is bigger and more defined ethnically than that of the South Asians. Partially, the self-containedness of the Chinese enclave may be the result of the residential concentrations of Chinese households in and around malls and plazas.

South Asians are residentially dispersed all over the metropolitan area and are not concentrated in any neighbourhoods. In their case, business enclaves function as pivots of community life, drawing customers from wider areas and catering to other ethnic groups also. The differences in residential patterns of the two groups in the Toronto area have structured the economic organizations of their respective commercial enclave.

Overall, ethnic enclaves help draw customers, provide bases for the cultural imagability of a commercial area and invest an economic value in social and linguistic characteristics. Among our respondents, they have helped nurture the "first" attempt to start small businesses.

Age, marital status and even education or occupation are the obvious indicators of individual and class resources. On these characteristics, the sampled entrepreneurs show considerable uniformity. What may distinguish them are family background, goals and beliefs, and value-orientation. Our interview schedule probed for these variables through a series of questions. Table 5 highlights respondents’ standing on these measures. Overall the table shows a cluster of mutually reinforcing personal qualities, beliefs and goals that characterize these entrepreneurs. The modal group of South Asian (42.2%) and Chinese (69.4%) respondents came from business families; though personally a majority had not engaged in businesses previously, most had worked. Relatively more significant indicators of their socio-psychological make-up are their goals and values. Out of a range of possible occupational goals and values, a majority of both groups indicated that they "wanted to be independent" and "always aspired to have a business". More than half and up to three-quarters of the respondents picked these from a list of values and goals.

Table 5

Came from a family of businessmen                                     42.2                         69.4

Always had a business                                                       34.9                         13.9

Always aspired to have a business                                       66.7                          51.4

Wanted to be independent and not                                      71.1                          58.3

an employee

Present business started anew                                           79.5                          52.8

No. of hours worked per week mean                                    56.7                          58.9

                                                                            st. dev.  21.8                         19.3

High satisfaction with time and work                                    70.7                         52.9

requirements of the business

Plan to keep and expand this business                                77.7                        47.2

Immigrated as a member of a family (modal)                         37.2                       38.9

Immigrated as an entrepreneur                                            11.7                       13.9

Source: Author’s Surveys

These values and goals evidently found expression in the respondents’ actions. Almost 80% of South Asian merchants and 53% of Chinese started their current business anew. The rest bought the business from previous owners/partners. A remarkable similarity in South Asian and Chinese respondents’ hard work and commitment is indicated by the mean number of hours worked per week (about 57 to 59), and the wide range of long working hours is reflected in high values of standard deviation. Despite long hours, 71% of South Asian and 54% of Chinese respondents were "highly satisfied" with their work situations – an indication of their fulfilment and commitment. Almost similar proportions of respondents plan to keep and develop their business. The salience of entrepreneurial (family) background and business-oriented values and goals is evident in this table. These individuals qualities, categorized as class resources, stand out as significant influences on the entrepreneurial behaviour of Indian and Chinese merchants.

Two further points need to made. First, only a small minority of the surveyed South Asian and Chinese respondents entered Canada as entrepreneurs. The modal groups in both cases (about 38%) were "family-class" immigrants. Young persons coming as members (dependents) of migrating families have grown up to be entrepreneurs among sampled merchants. This is the case for our respondents. Second, overall, Chinese respondents measure comparatively lower than South Asians on indicators in Table 5. Yet they have bigger businesses and are members of a larger and more established entrepreneurial community. Chinese expectations are probably greater than those of South Asians and that is one possible explanation of comparatively less strong commitment and satisfaction in the current business by our Chinese respondents.

Ethnic resources include population size, community orientation, mutual support within an ethnic group in the form of pooling of capital, labour, and information, and an interlinking of businesses through forward and background linkages, as well as business traditions. The literature gives prominence to these factors in determining the propensity to entrepreneurship among immigrants and minorities. Questions incorporating indications of ethnic resources were included in the interview schedule of this study. Table 6 reports significant measurements on these indices.

Table 6

Parents/siblings live in Canada                                   64.4%                     66.7%

Primary source of capital –personal savings                95.6%                      91.7%

Received help in setting up business                          60.0%                     16.7%

Co-ethnics as main suppliers                                     66.7%                     52.8%

Competition from co-ethnic business                          11.1%                     22.2%

Satisfied with the reputation of business                     84.2%                     75.8%

Source: Author’s Surveys

For immigrants, the presence of close relatives, other than wife and children, is one indicator of the potential source of help and solidarity. Among our respondents, about two-thirds of each group have parents or siblings in Canada though an overwhelming majority live in nuclear family households. Yet an overwhelmingly majority (90-95%) depend on "personal savings" for capital to start their business. There is an indirect connection between the two factors. The "savings" are facilitated at least in early stages by living together or through looking after each other. The support, direct or indirect, of the broader family is an ethnic resource that was available aplenty to respondents. Yet family and friends were not a source of capital in the direct form. The family may have sustained them in the beginning by their living together and saving their expenses.

Both South Asians and Chinese businesses of our sample have "ethnic" suppliers. Partially, this backward linkage confers some advantage in that language difficulties are eliminated and transactions are based on mutual trust allowing, perhaps, fewer or smaller payments. "Reputation" is the overall indication of social standing conferred by a business on entrepreneurs in a community. On this criteria, Table 6 shows that both South Asians (84%) and Chinese (76%) overwhelmingly felt satisfied.

On some criteria, South Asians and Chinese respondents diverged: 60% of South Asians acknowledged receiving help (from co-ethnics) in setting up the business, but only about 17% of Chinese indicated getting any advice or assistance. A counter-indication of community support is internal competition. A low percentage of respondents indicating co-ethnic competition as a problem suggests a greater autonomy and/or support. On this measure, proportionally fewer South Asians (11.1%) and Chinese (22%) felt that co-ethnic competition poses a problem for their business. All in all, again an aura of "comfort" with co-ethnics pervades this measure.

Ethnic resources are a source of strength for sample entrepreneurs. Particularly the availability of relatives for help and advice and the business linkages within the enclosures of ethnic market were contributing factors. Yet ethnic resources for these entrepreneurs were not the defining elements. There were no formal ethnic associations or organizations. Our survey did not reveal the institutional structures found by Portes and Bach among Cubans in Miami and Werbner among Pakistani rag traders in Manchester. By and large, ethnic resources facilitated and stimulated entrepreneurial behaviour, without being primary contributors.

Most of the sampled businesses were, by and large, new enterprises. More than three-fourths of the businesses in each of the two ethnic sectors were located in rented premises. Almost all are small, family-run stores. These stores are open almost all seven days (mean days stores open: 6.3-6.4), and owners are present almost all the time. Table 6 showed both South Asian and Chinese owners of the sampled business typically work 57 to 59 hours per week on the average with wide variation around these means, suggesting that 15-20% of owners may be spending as much as 80 hours a week on work. The strategy of substituting personal (and family) labour for capital and wage labour is the key to their businesses. This is how immigrants and minorities have historically found a foothold in the business sector. Our respondents conform to this model. These businesses open on weekends, which are the busiest days for the majority in both Chinese (64%) and South Asian (68%) sectors, respectively.

Table 7

Started business in vacant premises                         46.3                                     41.7

Business premises rented                                        88.4                                     72.2

No other location considered for                                74.4                                     38.0

this business

No. of days store operates per week                 mean  6.3                                       6.4

                                                                    st. dev. 0.8                                       0.5

No. of hours store open per day                        mean  9.5                                       9.9

                                                                    st. dev. 1.8                                       2.5

Plan to continue and expand this business                77.7                                      47.2

Employee turn-over a problem                                    2.6                                        8.2

Racial problems not encountered                              81.4                                      83.3

Source: Author’s Surveys

South Asians and Chinese have remarkably similar values with various indices listed in Table 7, except for two that relate to business development strategies. About 75% of South Asian respondents considered no other option in choosing the premises of their current business, whereas a minority (about 39%) of Chinese respondents acted that way. Similarly regarding future plans, about 78% of South Asian and 48% of Chinese respondents would continue and expand the current business. The Chinese come out a bit ambiguous and less satisfied with the state of the current business, though they have larger stores in new shopping plazas and malls.

Finally, an indication of the social environment for business is given by the fact that an overwhelming (81 to 83%) proportion of respondents in both sectors say that they have not encountered any racial problems in their business, despite their manifest racial and cultural differences. It may, partially, be the result of the enclave effect. Among problems cited by respondents are usual ones encountered by small businesses – taxes, parking, excessive regulations. All in all, our respondents’ entrepreneurial strategy is to identify an opportunity in an ethnic market, trade in goods and services in which they have an advantage due to their occupational or family background, work hard and take risks.

This article has probed the factors underlying the entrepreneurial behaviour of two groups of ethnic merchants. Their entrepreneurship is already demonstrated in their businesses. Therefore, the search is focussed on their social background, family and community structures, personal characteristics, and market opportunities for explanations of their entrepreneurship. This search is grounded in the current theories of ethnic entrepreneurship.

Merchants interviewed for this study own stores, restaurants, garages and video stores, for example. They would rank in the lower strata of Canadian entrepreneurs, though among immigrants these are the most common forms of entrepreneurship, at least for beginners. Another distinguishing characteristic of this study is that it compares two ethnic groups, Chinese and South Asians, whose businesses are similar. This comparison is meant to illuminate common and differentiable factors between the two groups. Many merchants are trained professionals and technicians, who have opted for business to be "independent and not an employee", as have so well endowed educationally. By the conventional measures of social class, i.e., occupation, education, and income, they fall into the lower-middle strata, but as immigrants they stand somewhere among the working class in the Canadian mosaic. Their social standing, per se, holds little specific promise of entrepreneurship. It is the combination of their beliefs, values, family structure and opportunities that explains their entrepreneurship. The individual characteristics and class resources lay the groundwork for their entrepreneurship predispositions. Marger also found that class resources were the "compelling factors in the participation of East Indians in independent enterprises" (Marger 1989: 558). The nurturing of this entrepreneurial talent and its fulfilment are matters influenced by business opportunities, particularly within the ethnic market.

Ethnicity nourishes entrepreneurial disposition by providing a ready market for some goods and services – a market where culture, language and social networks confer an advantage. South Asian and Chinese merchants in our sample struck out to trade in goods and services most familiar to them. There are striking similarities between the two groups. All in all, it is not the "ethnic network" and resources that are the predominant factors underlying their entrepreneurship, though they have some supportive role. The characteristics that explain their entrepreneurship and resources are universal among entrepreneurs, i.e., class and personal resources. The ethnicity comes into play through "opportunity structures" - the market for ethnic goods and services. It must be borne in mind that these observations are essentially generalizable only to these low-end ethnic merchants.

A Chinese restaurant, an Indian snack shop, or an Asian grocery are businesses easily understood by prospective entrepreneurs. Protected markets for ethnic goods and services all arise from shared needs and common culture and language. Businesses in such markets are cast in entrepreneurial idioms that are easy to follow. A Chinese restaurant, an Indian snack shop or an Asian grocery are fashioned into "formula" business or an entrepreneurial idiom. Once struck, these idioms are easy to follow. The information about how to establish such businesses is widely available in a community that forges these idioms. This is where the spatial enclave has a role. It acts as an incubator. A new entrepreneur thus plugs into a well-laid path. This is how ethnicity facilitates entrepreneurship. Our sampled merchants bear out this conclusion within the limits of evidence. Their individual predispositions toward business were triggered by opportunities or dissatisfaction with employment.

For merchants in our sample, ethnic solidarity did not operate as a source of capital or formal advice or even an organized mutual help. Rather it was a source of opportunities and support. It functions somewhat like the informal sector in promoting and sustaining businesses.

The most direct influence of ethnicity in the case of sampled merchants was in the form of ethnic enclaves. The spatial concentration, arising incrementally, of ethnic businesses precipitated external economies and lent new significance to individual businesses, turning them into elements of an economic sector or specialized activity. Ethnic enclaves provide an infrastructure of information, concentrated market and linked activities, thus nurturing new business. For South Asian and Chinese merchants, ethnic enclaves helped in consolidating their business. Yet it is hard work, perseverance and personal as well as family resources of an individual that make an entrepreneur. This is the conclusion of the study.

Despite the limited scope of this study, it casts doubt about the role of ethnicity as the defining characteristics of entrepreneurship. It supports Barrett et al.’s conclusion that the lesson learnt is "the danger of over-arguing cultural-behavioural explanations of ethnic business process" (1966: 799). Their conclusion is modified to the extent that the "ethnic enclave" is the catalyst to help realize entrepreneurial inclinations at low risk, at least, for low-level small businesses.

The observation that ethnicity may not be associated with entrepreneurship gets further support from the 1991 census data on individual files for the Toronto Census Metropolitan Area on self-employed workers, which is an indicator of independent business as an occupation.

Table 8

Class of             British            Canadian            South Asian            Chinese

Workers

                          No.     %             No.     %              No.    %                   No.    %

Paid workers     12971    91.7         4606     92.7         3136    93.1              3458   90.3

and unpaid

family workers

Self-employed       453     3.2            143      2.0           101      3.0                191    5.0

incorporated

Self-employed       522     3.7            153      3.0             83      2.5                111    2.9

unincorporated

without paid

help-include

piece-workers

Self-employed       205     1.4              68     1.4              49     1.4                  68     1.8

unicorporated

with paid help

Total                 14151 100.0           4970  100.0           3369  100.0              3828  100.0

Source of Data: 1991 census PUMF Individual file.

Table 8 shows that there are relatively minor differences in the population of "self-employed" between the two mainstream groups, namely persons of British and Canadian origins, and the two ethnic groups, i.e., Chinese and South Asians. Chinese stand out as proportionately more self-employed (9.7% all three categories) than British (8.3%) and Canadian (7.3%), whereas proportionately fewer South Asians are self-employed (6.9%). Recent Chinese immigrants are predominantly from Hong Kong and Taiwan and they are particularly recruited as investors and businessmen. Taking into account this condition, we can conclude that the above table implies a relatively poor relationship between ethnicity and entrepreneurship.

I will conclude this discussion with the observation that:

Small entrepreneur, whether Chinese, Indian or whatever,

is not homo-economics, the rational seeker after maximum

material returns. On the contrary, the fulcrum of his/her

moral economy might be rendered as ‘tolerable survival

on my own terms’, a maxim which explains entrepreneurial

attitudes far more penetratingly than national origins

(Barrett et al. 1996: 799).

Interestingly, my observations were derived from surveys of both Chinese and South Asian merchants. They are applicable across the two cultures, suggesting that cultural, linguistic and probably racial distinctions by themselves may not be significant. The minority status and the distinctness of an ethnic group are challenges prompting an entrepreneurial response. Yet the two groups differed a bit in their business strategies and ambitions. Overall, South Asian merchants have smaller stores, slightly more education, and looser community bonds but they show greater satisfaction with their businesses. Chinese merchants, though more concentrated in ethnic malls with larger stores, were relatively dissatisfied. Perhaps this difference in business expectations reflects divergent entrepreneurial norms.

Before concluding this paper, a brief comment on the role of ethnic businesses in the commercial structure of the Metropolitan Toronto area is worth mentioning. Ethnic stores and enclaves are emerging in suburban and exurban parts of the metropolitan area. They are emerging as poles for organizing retailing activities of ethnic populations. Furthermore, they are becoming a significant element in the local commercial structure. The small business sectors of ethnic businesses are one of the lead sectors. Ethnic businesses can be a significant force in local economic development. This proposition needs to be further investigated. As the drive to self-employment gains momentum in present times, the "idiomized" business, whether ethnic or otherwise, may become a common route to job creation through entrepreneurship.

ENDNOTES

1. Chinese and South Asians can be, like most ethnic groups, further differentiated along regional and linguistic lines. Yet as immigrants in Canada, they have functioned and are viewed as singular groups. Entrepreneurs, particularly Chinese and South Asians manifest fair degrees of uniformities in the Canadian urban markets. Both have singular trade directories and undifferentiated (in regional sub-groups) market presence. Canadian census categorizes them in singular groups.

2. Scarborough Chinese enclave is a unique suburban idiom. It is made up of 12 Chinese shopping malls dispersed across the Agincourt neighbourhoods. Whereas South Asian stores are more conventional clusters of stores lined along streets. There are two distinct clusters at different locations.

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