Drivers of Refugee Entrepreneurship in the United States: Evidence From Utica, NY. Essay Example

surroundings (Wauters 2006). This study focuses on the factors influencing refugee entrepreneurship in the United States and is structured as follows. Section II examines existing literature on ethnic entrepreneurship and highlights the distinctions between immigrants and refugees, identifying a void in research specifically concerning refugee entrepreneurship. Section III introduces the conceptual framework, Section IV outlines the data used, and Section V presents the empirical strategy employed. Section VI presents the primary findings, while Section VII serves as the conclusion.

Relevant Literature

Ethnic Entrepreneurship

The interest in entrepreneurship among immigrants, also known as ethnic entrepreneurship, has recently increased. Many researchers have focused on understanding the factors that drive immigrants to start their own businesses, resulting in extensive research on the potential and characteristics of ethnic entrepreneurs (Hammarstedt 2001; Waldinger 1990; Borjas 1986; Masurel 2002). Hammarstedt (2001) contributes to this research by examining disparities in self-employment rates between immigrants and natives in Sweden, as well as differences among immigrants from various regions and over time. Using data from the Swedish National Board of Health and Welfare database for the censuses of 1985 and 1990, along with the Income register for the years 1985-1992, Hammarstedt analyzes factors such as marital status, age, gender, education level, and urban residency to determine an individual's likelihood of becoming an entrepreneur.

Based on Hammarstedt's research, it is found that older male immigrants have a higher likelihood of being self-employed compared to younger immigrants. Additionally, immigrant couples who live together also exhibit a greater inclination towards self-employment. Conversely, individuals with a higher level of education are less prone to becoming entrepreneurs. This indicates that self-employment can serve as

an alternative for those facing low income and unemployment. These conclusions coincide with prior economic literature, including Borjas' 1986 notion that marriage signifies stability and self-employed partners jointly bear responsibilities and reap benefits due to their shared motivation of maximizing family income.

The correlation between inclination to self-employment and education being negative is consistent with the disadvantage theory. This theory argues that certain barriers to entry in the labor market, such as low English proficiency or low education level, encourage some groups to become entrepreneurs. Hammarstedt's empirical strategy is also influenced by Borjas's (1986) argument. According to Borjas, individuals choose self-employment by comparing their expected income from self-employment with the market wage. This theory supports two opposing viewpoints. One is that individuals are motivated to become entrepreneurs due to high expected profits from self-employment (demand pull), while the other is that self-employment is seen as a last resort to employment (unemployment push). In his analysis, Hammarstedt includes both pull and push factor motivated entrepreneurs together. However, Verheul, Thurik, Hessels, and Zwan (2010) emphasize the importance of distinguishing between opportunity entrepreneurs (motivated by pull factors) and necessity entrepreneurs (influenced by push factors) as they are inherently different.

Differences Between Immigrants and Refugees

Hammarstedt's (2001) research aligns with other studies on ethnic entrepreneurship that assume refugees are a part of the immigrant population.

Research on refugees is important because they have unique social, economic, and demographic backgrounds and different reasons for leaving their home country (Bernard 1977; Cortes 2004). This study aims to address this research gap by examining self-employment practices among refugees in the United States. Unlike economic migrants, refugees cannot return home due to fear of persecution, so they

strive to establish a new life in their host country. As a result, they are more likely to invest in developing their own human capital through language proficiency, obtaining citizenship, and pursuing education within the host country.

While economic migrants have the freedom to relocate and may opt to return to their country of origin after earning money in their new nation (Cortes 2004), refugees encounter challenges when attempting to go back home for the purpose of gathering funds or finding employment due to their severed connections with their homeland (Kim 1981).

In contrast, refugees are ill-prepared for their new life in the host country. They have limited opportunities to amass financial resources, bring along their educational certificates or training documents, or acquire proficiency in English prior to arrival (Gold 1992). Furthermore, refugee populations consist of individuals who may be too young or elderly for the job market or possess skills that might not be relevant to the U.S. economy (Bernard 1977).

Social networks of refugees in the host country are typically not as extensive as those of immigrants. Refugees tend to have fewer relatives, friends, and ethnic countrymen compared to immigrants. Immigrants benefit from larger ethnic enclaves that provide information to help them integrate into the host country (Bernard 1977). In contrast, refugee populations like the Soviet Jews and Vietnamese face significant barriers to entrepreneurship, including limited English ability, lack of capital, no credit history, little knowledge of American culture, and few connections compared to the average American business owner (Gold 1992). These barriers and differences highlight the need for refugee-specific research, which this study aims to fulfill.

Refugee Entrepreneurship

After Gold's notable but dated study (1988, 1992)

on small business activities of Soviet Jews and Vietnamese refugees entering the US in 1975, Wauters (2006) redirects attention towards refugee entrepreneurship by conducting empirical research on its potential and practice in Belgium.

In his study, Wauters examines the factors impacting a refugee's tendency to become self-employed in Belgium. He poses the question "Do you consider starting as a self-employed individual in Belgium?" and employs a cumulative logit model to analyze how demographic characteristics (including role models, gender, and experience) influence a refugee's intention to initiate their own business. His findings support prior research indicating that male refugees are more prone to engaging in entrepreneurship compared to female refugees. Moreover, male refugees with self-employment background, as well as those having self-employed friends and family members, exhibit a 64% higher inclination towards entrepreneurship. Conversely, female refugees lacking experience in self-employment or familial ties to entrepreneurs have a 16% greater likelihood of possessing a strong desire or potential for launching their own business. Given the scarcity of literature on refugee entrepreneurship, Wauters initially explores established theories of ethnic entrepreneurship (such as economic chances theory, reaction model, and entrepreneur model). Subsequently, he investigates which of these theories are applicable within the context of refugee entrepreneurship.

Although the desire for entrepreneurship and being their own boss is highly prioritized, there is limited selection of negative motives, such as using entrepreneurship as a means to escape unemployment, in the survey conducted. The respondents predominantly chose entrepreneurship as a way to integrate themselves into society, supporting Wauters's integration theory, which claims that refugees establish their own businesses in order to merge with their host society. However, statistically significant evidence was not found to

support the economic chances model, which asserts that ethnic entrepreneurs provide specialized goods and services to members of their own ethnic community.

The study's conceptual framework aims to test two theories regarding ethnic entrepreneurship and its applicability to refugee entrepreneurship in the United States: the ethnic economic enclave model and the disadvantage theory. The ethnic economic enclave model encompasses factors like community strength and geographical proximity, where individuals have friend groups composed mainly of people from their own ethnic background. The disadvantage theory, also known as the reaction model, includes variables such as education and English proficiency.

Other variables included in the study are demographic factors like age (including Age^2 due to a U-shaped relationship found in some literature) and gender. Perception of financial support is also assessed through questions such as "Who do you most trust when it comes to financial advice?" and "With our current income, does my family live comfortably?".This study aims to investigate the applicability of various theories to refugees in the United States by examining their role models and whether their families own businesses in Utica.

It will also replicate Wauter’s (2006) research strategy but will go beyond the demographic approach and examine how other factors, such as financial literacy and community presence, affect a refugee's inclination towards entrepreneurship.

References

1. Borjas, G. J. (1986). The self-employment experience of immigrants. Journal of Human Resources, 21, 487–506.
2. Gold, S. J. (1992). The employment potentials of refugee entrepreneurship: Soviet Jews and Vietnamese in California.

< p >
Policy Studies Review, 11, 176–186.
< li > Gold, S. J. (1988). Refugees and small business: The case of Soviet Jews and Vietnamese Ethnic and Racial Studies, 11,

411–438. < /li >
< li > Hammarstedt, M. (2001). < /li >
< /p >

This paragraph presents a summary of the discussion on immigrant self-employment in Sweden, encompassing its diversity and possible factors influencing it. It also makes reference to a research study investigating self-employment among Turkish immigrants in Germany. Additionally, it cites a study carried out by van der Zwan, Thurik, Verheul, et al.

Eurasian Bus Rev (2016) 6: 273. https://doi.org/10.1007/s40821-016-0065-1.

The text includes a citation from a research article on refugee entrepreneurship in Belgium (Wauters & Lambrecht, 2006) and a book reference from Newbury Park, CA: Sage (pages 13-48).

509-525. 10.1007/s11365-006-0008-x.

Acs, Zoltan ; Szerb, Laszlo. (2019). The Global Entrepreneurship and Development Index (GEDI).

Domingo Ribeiro-Soriano (2017) Small business and entrepreneurship: their role in economic and social development,Entrepreneurship ; Regional Development, 29:1-2, 1-3, DOI: 10.1080/08985626.2016.1255438

Forsman, H. 2011. “Innovation Capacity and Innovation Development in Small Enterprises.

A Comparison between the Manufacturing and Service Sectors.” Research Policy 40 (5): 739–750.

Thurik (1999) explores the relationship between entrepreneurship and economic growth in the article "Linking Entrepreneurship and Economic Growth." The study is available in Small Business Economics, volume 13, issue 1, pages 27-55.

Wong, Ho, and Autio (2005) provide evidence of the correlation between entrepreneurship, innovation, and economic growth by using data from the Global Entrepreneurship Monitor (GEM). Their research is published in Small Business Economics, volume 24, issue 3, pages 335-350.

Retrieved from http://www.jstor.org/stable/40229427

Frattini, T and Minale, L. 2018. '(The Struggle for) Refugee Integration into the Labour Market: Evidence from Europe '. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12718

(1977). Immigrants and refugees: Their similarities, differences, and needs. International Migration, 14 (4), 267-281.

The Center for Labor Economics at the University of California, Berkeley, has conducted a research paper that delves into the differences between refugees and economic migrants in the United States. The study highlights the diversity within immigrant groups.