“Breaking out”: exploring the diversification process among ethnic minority entrepreneurs

Lassalle, Paul and Scott, Jonathan (2015) “Breaking out”: exploring the diversification process among ethnic minority entrepreneurs. In: 38th Annual Institute for Small Business and Entrepreneurship Conference 2015, 11-12 November 2015, Glasgow.

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Abstract

Objectives - This paper focuses on the specific business development activities pursued by Polish Ethnic Minority Entrepreneurs (EMEs) in Glasgow at later stages of their business lifecycles. Thus the paper analyses the process by which Polish EMEs are broadening their market base and their product and services offerings. Based on phenomenological analysis of empirical data, the paper proposes a new theoretical framework and makes recommendations for policy-makers and practice.

Approach - The paper utilizes semi-structured interviews with 21 Polish migrants who arrived following the 2004 enlargement of the European Union (EU) and who started their businesses in Glasgow subsequently. Following a phenomenological approach, the paper explores Polish EMEs' idiosyncratic sense-making of their own business development activities in greater depth including how they broadened their market and product/services offerings and thus achieved breakout.

Results - The paper highlights Polish EMEs’ incremental and ad hoc process of broadening their clientele and product and services offerings. Since EMEs primarily target their ethnic community as a market at the start-up phase, the limited potential of these saturated market niches can lead to low levels of business survival at worst or weak growth at best. Of particular relevance to academic theory and policymakers, Polish EMEs are able to recognise opportunities to overcome this potential threat to survival or growth either by (1) broadening their client base; (2) introducing non-ethnic product or services offerings; and/or (3) extending the enclave. However, this process of 'breaking-out' from the co-ethnic niche market is incremental (i.e. step-by-step, undocumented, and based on idiosyncratic perceptions of opportunities). Subsequently, the paper makes a novel theoretical contribution by proposing a diversification process of EMEs’ activities as an indirect route to break out into the mainstream market that is grounded in both empirical evidence and the extant literature. This framework captures the dynamic and incremental nature of EMEs’ business development activities.

Implications - This paper enhances and refines our understanding of the business development activities undertaken by Polish EMEs to ensure survivability of their business and to achieve growth. It also informs policy-makers about the challenges faced by EMEs to raise the resources required to break out from niche markets. Access to support and finance is limited by the Polish EMEs' lack of awareness, understanding, language skills, and of access to wider social and business networks.

Value - This paper makes a valuable contribution to the field of research on EMEs. It stresses the incremental nature of the process of broadening market base and product or services offerings as a route to break out from the saturated, hypercompetitive ethnic niche market. Hence, the paper contributes to debates on breaking-out to new markets and networks, and on barriers to growth for EMEs. It then proposes the diversification process as a useful theoretical framework to analyse EMEs' business development activities.

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