Migrant entrepreneurship in the contemporary city

Migrant entrepreneurs are a very diverse group. They may come from different countries, have different educational backgrounds, be characterised by different gender, family situations and types of migration status (more or less secure), and most importantly they may have different motivations. Some migrants become entrepreneurs out of necessity because they are unable to secure a salaried job, some chose to migrate because they already intend to start a business at their destination, while others may seize the opportunity to open a business when it is presented to them.

As early as 1993, North American sociologists Alejandro Portes and Min Zhou, while studying second generation Hispanics in the USA, argued that migrants have important features that potentially help them succeed in business. These include community networks and ethnic resources. Migrants, in fact, can mobilise their special skills or services to cater for their own community or to offer services and products that are appreciated in the city where they have settled. In either case, migration and transnational links can contribute to success.

The elements that are important in shaping migrant entrepreneurship include (a) the individual resources that migrants can mobilise in terms of money, time, skills; (b) the community resources, in terms of family and kinship networks, institutional community networks, transnational links as well as institutional networks in the host society; (c) the opportunity structure within which they are embedded: notably the legal, social, and economic context (their migration status, the legal and financial requirements for starting a business, access to credit, the overall market situation in the host society, public attitudes and demand for certain services or products).

As already argued in step 2.2, cities present very specific socio-economic features that can be conducive to migrant entrepreneurship as they offer a high density of migration related resources, a potential ethnic market, and a potential wider market that is interested in and in search of ‘ethnic’ products or services.

Cities tend to have higher levels of migrant populations: it may thus be easier for migrant entrepreneurs to mobilise financial resources from family and kinship networks to start a business as well as offer a service that is needed in the community. Such businesses can range from hairdresser salons and restaurants, to the import of food items or other goods from the country of origin. These are typically the type of shops that we find in central areas of large cities like London, Paris or New York.

Through their networks migrants may be able to form work-teams and become small employers. This is typically the case in the construction sector, as well as in transport businesses. A migrant from a particular country recruits fellow young men and they form a small company that performs various types of jobs. They share a higher level of trust given the ethnic channels of recruitment and may also enjoy a positive reputation if their sector of activity is an ethnicised one. The examples of Polish plumbers, Albanian builders and Romanian truck drivers are well known across a range of countries in southern and northern Europe.

However, migrant entrepreneurship in cities need not always be confined to ethnic sectors. It can also use the special skills of the migrants and their transnational knowledge to boost innovation. Thus, Indian IT experts, Chinese engineers, or software developers from Chile can come together in multicultural city environments – whether in the universities of large urban centres or in the offices of multinationals or start-up hubs – and come up with innovative business ideas precisely because of their different backgrounds and their different sets of skills.

Such innovation need not always be in the high tech industry. More traditional sectors can also benefit, such as the food or textile industry. Thus, for instance, Pakistani or Indian entrepreneurs can forge the necessary global production chains in the textile industry, while Turkish or Korean entrepreneurs can come up with innovative products in the food industry. Further below we look at the example of Chinese entrepreneurs in the fashion industry in the city of Prato in central Italy (step 2.5).

Cities usually enjoy a vibrant cultural life that benefits from the cultural diversity of their resident population. Thus cities may also foster migrant entrepreneurship in the cultural sector, music production, artistic creation and related exhibitions, as well as in performing arts.

Having said this, of course we should not forget that migrant entrepreneurship may also stem from the impossibility of finding a legal and stable job. This form of entrepreneurship is often that of individual firms in the cleaning or catering sectors where people set up small businesses in order to ensure they have a legal status and social insurance. This is what has been called ‘entrepreneurship by necessity’ and is in contrast to those ‘by opportunity’ described earlier.

The relationship between migrant entrepreneurship and cities on the whole tends to be one of mutual benefit. Cities offer a pool of resources for starting a business and finding a market, and migrants tend to cross-fertilise the resources that exist in cities regardless of whether they develop ethnic-enclave-type businesses (businesses of migrants serving principally their own community) or mainstream ones (serving the wider market).

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This article is from the free online course:

Migration and Cities

European University Institute (EUI)