Indian businesses and entrepreneurship globally
Chapter 2: Literature Review 文献综述
Indian traders and merchants have migrated to Southeast Asia since at least the third century (Sandhu, 1969). The South Indians traded food and spices, where else the North Indians, specifically the Gujeratis, Sikhs and Sindhis traded textiles (Brown, 1994). Later, during the British rule, Indians were brought in as labourers.
Initially, immigrants travelled to host countries as temporary migrants. However, over time, the once immigrant population settled in these host countries, such as in Malaya. With the experience from their homeland, they began small businesses to meet the demands of their co-ethnic members. This allowed them to move away from the lowly paid wage-earning occupations to profit-making enterprises such as manufacturing, business and trade (Sandhu, 2006, p. 782).
Entrepreneurship has been a well-known route of upward mobility for many immigrant groups throughout the modern history of advanced capitalist societies. Ethnic entrepreneurship is also increasingly recognized as an important vehicle for economic growth and the regeneration of economies (Assudani, 2009).
A business group, according to Khanna and Rivkin (2001, p.47) is “a set of firms which, though legally independent, are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated action”. Business groups also tend to fill up the institutional voids created by imperfect capital, labor, and product markets. Scholars also observe that group ties enable the affiliated members to reap distinct benefits that are normally not possible by similar non-group firms (Bertrand, Mehta, & Mullainathan, 2002; Kali & Sarkar, 2005; Khanna & Palepu, 2000).
According to Logan et. al (1994, p.693), ‘an ethnic economy could be defined as any situation where common ethnicity provides an economic advantage’. Light and Gold (2000) defined an ethnic economy as an economy where all personnel are of the same ethnicity. Zhou (2004, p. 1040) mentions that ‘ethnic entrepreneurs are often referred to as simultaneously owners and managers of their own businesses, whose group membership is tied to a common cultural heritage or origin and is known to out-group members as having such traits; more importantly, they are intrinsically intertwined in particular social structures in which individual behaviour, social relations, and economic transactions are constrained’.#p#分页标题#e#
The Indian business group (IBG) setting is noteworthy for several reasons. Firstly, India is the second largest emerging economy with its growth rate second only to China (World Bank Report, 2005), and, therefore, any focus on the India experience may help throw light on the competitive dynamics of business groups in other economies. Secondly, India’s role and significance in the world economy is increasing. Hence, an improved understanding of IBGs can prove fruitful for firms that aim to compete against or establish alliances with Indian groups (Kim, Kandemir, & Cavusgil, 2004).
2.1 A Global Review of Indian Businesses
Indians have migrated to various parts of the world, and consequently started their own businesses in these host countries. However, literature shows that a large portion of research on Indian businesses has only been done in the United Kingdom, the United States of America (Mogenlonsky, 1995; Borjas, 1986; Chand and Ghorbani, 2011; Bhatt, 2003; Khairullah and Khairullah, 1999), Africa and New Zealand. Scant research has been done in Singapore and Australia and almost none in Malaysia. Hence, it is urgent and important to study the development of Indian businesses in Malaysia. (Babe, can u help me elaborate some point here? I want to say that it is important to study Indian businesses in Msia. Tq)
2.1.1 Indian Businesses in the United States of America
According to Mogelonsky (1995), the Indian immigrants are the fastest growing group of immigrants in the USA. The Indian population is approximately 815,500, an increase by 111 percent since 1980. The number of these immigrants grew after 1965, when the immigration and nationality Act made amendments to allow Indians with professional degrees to migrate to the United States of America (USA). According to Borjas (1986), self-employment among immigrants is higher than among native-born Americans and more recent waves of immigrants have higher rates of self-employment. This was also confirmed by a recent Kauffman Foundation
(2009) report, which found that migrants tend to have higher entrepreneurial activity rates compared to native born Americans.
Migration of the Indians into Malaysia is far removed from to the situation in the USA, as the USA is still very much open and lax to the inflow of Indians into the country. Hence, the ethnic enterprises studies in Malaysia will definitely take a different path, emphasizing change in traditional Indian businesses. (B, do u understand what I am saying?)
Chand and Ghorbani (2011) who explored several bodies of literature noted that Indians in the USA are very tight-knit and are constantly helping one another. They also found that Indian hotel owners have used their businesses as a way to bring in family members and provide them with jobs as they increase the number of properties they own-thereby linking business to immigration and to kinship networks. Some will even loan money to other family members interest-free to get them started, relying on the fact that their kinsmen are trustworthy and will work as hard as they did. It is also mentioned that one could look at the entire phenomenon as a business corporation built on community and kinship links. Still, in the context of Malaysia, due to the changes in generation, this may not be the case. As culture and identity changes amongst the Malaysian Indians, these kinship links may not be of much help in the growth and development of the enterprises.#p#分页标题#e#
The Indian and Chinese communities, in terms of educational attainment and income, represent two of the most successful and fastest growing ethnic communities in the USA (US Census, 2007; USINPAC, 2008). Asian Indians in the USA represent a model minority who migrated to follow the American dream. These Indians came from the wealthy upper echelons of Indian society, many had studied in English medium schools in India and they migrated for increased economic prosperity and in search of world-class education (Bhatt, 2003). Through a quantitative study with 629 respondents, who are first generation Indian business owners in the urban areas in USA, Khairullah and Khairullah (1999) found that younger migrants acculturate better due to their proficiency in the English language, which assists in the development of their businesses.
In Malaysia, the descendants of the migrants are fluent in the Malay language, commonly known as Bahasa Malaysia. Since this language is a compulsory subject in the national schools in Malaysia, it is natural that the second and third generation of Indians and Chinese are fluent in this language. Could this be a turning point where non-Bumiputeras see a decline in cultural identity and inversely see an increase in national identity? Does this affect Indian businesses in Malaysia? (B, can u make this sound better?)
2.1.2 Indian Businesses in the United Kingdom
Minority ethnic businesses are an integral part of the United Kingdom (UK) economy. The ethnic minority community and the range of ethnic businesses play an influential role and make a significant contribution to the competitiveness of the local community and employment. The minority ethnic business (MEB) community has been noted for its contribution to the UK economy. This vibrant sector of the small and medium enterprise population serves to illustrate diversity in terms of spanning sectors and also crosses from first through to the second and third generations (Dhaliwal, 2008).
Minority ethnic businesses have been of academic interest since the late 1970s, many of the initial debates evolving around the disadvantages of belonging to a racial minority but also its entrepreneurial success, particularly amongst the Indian community (Jolly, 2004). In Malaysia, these similar debates are just beginning to spark.
The South Asian entrepreneur was held up as a role model and several studies (Dhaliwal and Amin, 1995) emerged highlighting the ‘rags to riches’ story. Other research, however, has questioned the image of South Asian entrepreneurs (Jones and McEvoy, 1986). In reality, a few high fliers masked a proliferation of firms concentrated in sectors with low barriers to entry, and a struggle for survival. These firms were often dependent on long working hours, unpaid or poorly paid family labour and with an over-reliance on co-ethnic customers (Barrett et al., 1996). Dhaliwal (2008) who interviewed fifty business owners in the UK concluded that South Asian businesses tend to rely heavily on informal support from their co-ethnic members. However, this may not the case in Malaysia as the Indian ethnic entrepreneurs in Malaysia are now also relying on the inter-ethnic networks and customers.#p#分页标题#e#
In their study conducted in UK, Ram and Smallbone (2001) found that South Asians were strongly represented in catering, retailing and food retailing sector. Barrett et al. (2001) on the other hand, found that people of South Asian origin were represented in a broad range of self-employment. The dominant forms included Indian restaurants, outlets selling saris and other items of traditional women’s dress. They had a very strong presence in the manufacture and distribution of textiles and clothing, products with a long history of expertise in South Asia. Besides that, Barrett et al. (2001) found ethnic minority businesses to be typically small, to compete in saturated spatial markets and to be concentrated in economically vulnerable sectors. They also suffered from heavy co-ethnic competition. This is yet to be studied in Malaysia.
The great mass of Indian entrepreneurs is still confined by a lack of access to the kind of resources which would enable them to operate in higher-level markets. According to Trevor et al. (2012) of these resources, financial capital is of unrivalled importance and, until this is unlocked, the potential of the Indian entrepreneurial transition will remain largely unrealised. Much controversy has focused upon the issue of access to finance by ethnic minority businesses. It is widely recognized that the process of raising external finance is difficult for many small firms, regardless of the owner’s ethnicity, for a combination of demand and supply-side reasons (Storey 1994).
Continued political enthusiasm for encouraging entrepreneurship in the UK is beginning to influence business support policy towards MEBs. The Small Business Service (SBS) has an explicit remit to cater for entrepreneurs from all sections of society. This context can be very different across countries especially in countries like Malaysia, where the New Economic Policy and the National Development Policy positively show favouritism in favour of ethnic Malays, thus putting the Indians and Chinese at a comparative disadvantage.
Mascarenhas-Keyes’ (2008: 33) found that UK-born Indian graduates have a much lower self-employment rate than their white counterparts, suggesting somewhat surprisingly that the apparent retreat from enterprise is led by the most educationally qualified, in principle the very people best equipped for business success. Once renowned for their conspicuous business presence, Indians are now no more entrepreneurial than the rest of the British population. Perhaps even more striking is, while Indians certainly are being pushed out of their traditional business niches, far more important are the pull effects, the lure of new opportunities in both employment and self-employment. This sharp rupture with the past expresses itself the most graphically on the inter-generational dimension.
2.1.3 Indian Businesses in the Africa#p#分页标题#e#
The origin of South African Indians can be traced back to the agricultural labour requirements of colonial Natal in the mid-19th century. In order to meet the need for labour in the sugar-growing colonies of the British and the French empire, the indentured system was first used in Mauritius in 1834, then in the West Indies (Srebrnik, 1999). This is similar to the Malaysian situation.
Almost a decade later, a second class of Indians, known as passenger
Later, Indians began migrating to South Africa, on their own in search for better economic prospects. These immigrants paid their own fares and came to Natal in search of trading opportunities. Most of these Indians originated from the western parts of India, such as Gujarat and Maharastra (Bhana and Brain, 1990). Historically, the settlement of Indians within South Africa remained largely confined to Natal and, particularly, to the cities of Durban and Pieterrnaritzburg.
For those who were ex-indentured labourers, established trade was harder to penetrate particularly since this group of Indians had no formal education and access to capital resources (Tomaselli, 1983). This poorer group of Transvaal Indians, therefore, often resorted to informal sector employment activities such as hawking (Tomaselli, 1983). It is safe to say that, even in Malaysia, the ex-indentured labourers chose low-risk, low capital entrepreneurial activities. (Correct ah b?)
In the rapid growth and development of this business community (Bhana and Brain, 1990), Indians were prepared to work hard and for long hours, even selling their goods at a far lower cost than the white counterparts. Many of the larger Indian merchants in South Africa imported goods from India for specialized local markets and continued to network with business associates in India and East Africa (Bhana and Brain, 1990).
Despite the limited property and economic rights held by Indian businessmen, this group of businesses has not only survived but prospered, thanks to its "consistent creativity" and "sheer determination" (Patel, 1989). Indeed, Hart and Padayachee (2002) contend that the Indian business community in South Africa built up a commerce that thrived within the limits of an inward-looking apartheid economy.
According to Oonk (2006), the South Asians started with a far more favourable socioeconomic position as their African counterparts. Unlike the Indians who arrived at Malaya, the Indians that arrived in East Africa, were accustomed with a money economy and the concept of interest. Many were able to read and write and freely communicated with local rules, which placed the South Asians in superior socioeconomic position. Through trial and error, the South Asians developed local trading and business acquaintance and business networks. They also developed, partly with money from Asian business families, their own education network in East Africa. The level of education of Asians in East Africa was much higher than that of their African counterparts which gave the South Indians an edge.#p#分页标题#e#
The outstanding business success among South Asians in East Africa is often contrasted with the poor economic performance of Africans. A main argument to explain the performance of Asians in East Africa is that ‘outsiders’ are in a better position to enact their business context. Once again, this is dissimilar to the Malaysian scenario.
The Indians in East Africa used their ethnic resources, such as kinship, business skills, networks and educational experiences to raise capital and management capacity in a far more profitable way than their African counterparts (Oonk, 2006). Similar to events in the USA and UK, gaining knowledge by working for family and community members as well as gaining credit through the same network was the most important source Asian migrants had, even in Africa. Access to credit and informal institutions was not unconditional but based on a person’s reputation rather than physical securities.
According to Jain (2011), Indians in South Africa are now of fourth or fifth generation descent. Perhaps the defining characteristic of Indian South Africans today is their talent in business. A good proportion of Indians in Africa make their living in the business world as entrepreneurs and traders. In fact, given the proportion of the Indian population, they are over-represented in the country’s business community as compared to other ethnic groups. If this is the situation in South Africa, it is only reasonable to ponder why this similar scenario does not occur in Malaysia, where the Indian in Malaysia are already of the third generation descent. Grammar correct ah b?
2.1.3 Indian Businesses in the New Zealand
In the population of approximately four million, the indigenous people the Maori form 14.6 per cent of the population, the New Zealand Europeans are 67.6 per cent, Asians 9.2 per cent, Pacific people 6.9 per cent (Statistics New Zealand, 2006). In the Asian category are Indians who form the second largest ethnic group within this category, after the Chinese) and consist of 104, 583 people (Statistics New Zealand, 2006).
Historically, the Asia-Pacific region has been an area of both trade and migration, for Asia spelt empires, spices, great wealth and ancient civilizations. The colonization of the Asia-Pacific region (inclusive of Australia and New Zealand) by Europeans led to the movements of Asian workers as indentured workers for plantations in various parts of the world (Toro-Morn and Alicea, 2004). Hence, for example Indian labour was taken to the plantations in Fiji, resulting in a people known as Fiji-Indians many of whom now live in New Zealand. Such migrations need to be understood “within the framework that saw Asian as expendable and easily exploitable workers” (Toro-Morn and Alicea, 2004, p. 27).
Indians were British subjects and were free to enter New Zealand till the end of the nineteenth century (Beaglehole, 2005). The early Indian migrants in New Zealand were flax workers, bottle collectors, road builders, brick-makers, drain diggers and scrub-cutters in rural areas, whereas in urban locations they tended to work as hawkers of fruit and vegetables (Swarbrick, 2005; Tiwari, 1980). These migrants intended to be sojourners rather than settlers, with the hope of bettering their lot and then returning to India.#p#分页标题#e#
According to de Vries (2010), who analysed case studies of Indian businesses in New Zealand, identified many of the common Indian ethnic minority traits such as adaptability, strong work ethic and predisposition for employment; and barriers such as discrimination and job dissatisfaction. Indian businesses involved with the ethnic food industry stated that they catered for a general market. These Indian entrepreneurs also expressed a desire to grow their businesses in New Zealand (de Vries, 2010).