International Journal of Entrepreneurial Behaviour & Research

Emerald Article: Business practices within South Asian family and non-family firms:: A comparative study Mark McPherson

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To cite this document: Mark McPherson, (2010),"Business practices within South Asian family and non-family firms:: A comparative study", International Journal of Entrepreneurial Behaviour & Research, Vol. 16 Iss: 5 pp. 389 - 413 Permanent link to this document: http://dx.doi.org/10.1108/13552551011071878 Downloaded on: 15-05-2012 References: This document contains references to 95 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 1200 times.

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Business practices within South Asian family and non-family rms:

A comparative study
Mark McPherson
Middlesex University Business School, Hendon, UK
Abstract
Purpose The purpose of this paper is to investigate differences/similarities in business practices of second-generation South Asian entrepreneurs within family-owned rms, in comparison to their second-generation counterparts managing and running their own business. Design/methodology/approach The paper draws its theoretical underpinning via a number of concepts relevant to the South Asian business experience. To understand this, investigation was conducted within a phenomenological paradigm. In total, 48 semi-structured interviews were carried out with three South Asian groups. Namely, rst- and second- generation Sikh, Hindu and Pakistani Muslim entrepreneurs from both family and non-family owned micro-small businesses situated within the Greater London area. In addition, nine businesses from all three ethnic groups were selected to complete the multiple (comparative) case-study stage of the research. Findings Similarities and differences between second-generation entrepreneurs within family and non-family businesses (NFBs) are evident. For instance, a majority of the respondents (from family and non-family businesses) considered entrepreneurship as something to embrace, and not as a means of economic survival. A minority of the respondents within FBs were pushed into entrepreneurship, as such, this has had an impact on the father-son relationship in a negative way. Second-generation respondents from FBs, in comparison to their counterparts within NFBs, were more likely to have decision-making pertaining to the business impeded by the father. Furthermore, respondents from FBs were moving back into the said business, whereas, respondents from NFBs were developing businesses more akin to their prior employment experience. Practical implications The paper offers insights into the behaviour and business practices of second-generation South Asian entrepreneurs from family and non-family, so adding a further dimension to our understanding of this particular group. Originality/value The paper will be of value to policy makers, practitioners and researchers alike, is it sheds light on motives, prior experience and class resources the second-generation bring to entrepreneurship. Keywords Family rms, Small enterprises, Entrepreneurs, Business policy, Ethnic groups, United Kingdom Paper type Research paper

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Introduction Inuences that have shaped ethnic entrepreneurs, is due in part to the exposure of an ever-present enterprise ideology (Goffe, 1996). Consequently, such entrepreneurs are better informed and educated, and have a wide range of resources, support and advice
The author would like to extend his heart-felt gratitude to all those within this paper for allowing him access to their time, businesses and busy lives. Without their support, co-operation and invaluable contributions a deeper understanding of ethnic entrepreneurship would not have been realised.

International Journal of Entrepreneurial Behaviour & Research Vol. 16 No. 5, 2010 pp. 389-413 q Emerald Group Publishing Limited 1355-2554 DOI 10.1108/13552551011071878

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at their disposal (Blackburn and Curran, 1993; Rosa, 1993). Unlike their rst-generation counterparts of 1970s and 1980s where entering self-employment was a result of prevailing economic push and pull factors, and the only level of primary support was from family and friends. Recently, ethnic entrepreneurs are better placed to ponder a trade off between the expected net benet of entrepreneurship versus the expected gains from paid employment (Campbell, 1992). Although this may appear to be a simple contrast between rst-generation migrants and their offspring (the hardships faced by rst-generation migrants during their settlement within the UK is acknowledged), the second-generation however are starting from a platform different to that experienced by their parents. For instance, issues that impact on the future stability of the second-generation, come from the rst-generations pre-occupation with nancial security via the family business (FB) or paid employment (Chan and Lin Pang, 1998). Needless-to-say, emphasis on the achievement of a higher social status for rst-generation means some form of investment in the education of their children. Such an investment would then make it easier for the offspring (unlike their parents) to consider careers outside low order retailing, the catering trade, low paid unskilled manual work, etc. (Chan and Lin Pang, 1998). Janjuha-Jivraj and Wood (2002) subscribe to such a view whereby they suggest that the second-generation are not restricted in terms of career options in the way their parents were, education has exposed them to many more opportunities for employment and entrepreneurship (Janjuha-Jivraj and Wood, 2002). For example, many second-generation South Asian children of pharmacists seek careers as a pharmacist, whereas others see pharmacy as a stepping-stone into medicine (Tann, 1998). Even instances where entrepreneurship is actively sought, Peters (2002) suggests an overwhelming majority of second-generation ethnic entrepreneurs are located in new dynamic low-risk rms that rely more on class resources than ethnic resources to operate. Moreover, despite the fact that such rms require additional capital at start-up, they are less labour intensive than businesses established by their rst-generation counterparts (Peters, 2002). All this, as noted by Peters, is attributed to the changing nature of: . cultural; . social-economic and politico-institutional environments; and . opportunity structures within many developed economies. Advancing the discussion, second-generation offspring nd entrepreneurship less a source of economic survival, but more a source of economic advancement. For instance, the second-generation like the rst-generation, learn to survive within conicting environments. However, in order to increase the chance for social mobility and reduce the effects of social stigma, the second-generation unlike the rst-generation, have to their advantage a thorough grasp of the English language and knowledge of British norms, values and behaviour the way of doing things. More importantly, second-generation are always mindful that such an advantage, along with ethnicity and culture, are on the one hand resources to be used to overcome the un-ofcial discriminatory barriers imposed by those hostile towards social advancement of minority groups (Modood et al., 1997). On the other hand, such resources are used to navigate a path through the socio-economic and politico-institutional environments, and opportunity structures in the UK. As Wilpert (1988) purports, the place of

second-generation offspring in the UK economy demonstrates the extent and nature of their involvement in mainstream society, which in turn determines their societal integration and their social mobility. To that end, the focus of the paper is upon key factors recognised within emergent theory as those being relevant to second-generation entrepreneurial experience. For instance, Peters (2002), Collins (2002), Pang (2002) and Leung (2002) suggest theories of ethnic small business activity must explain diverse, uneven and changing patterns of entrepreneurship. For that reason, investigation is needed into the changing group characteristics of different cohorts of ethnic entrepreneurs over time, their ethnic business activity, and ethnic and class resources (including education) such cohorts have at their disposal (Peters, 2002; Collins, 2002; Pang, 2002; Leung, 2002). These aforementioned factors will be applied to the situation of London based South Asians entrepreneurs. Such a perspective would then aid the development of our own understanding of second-generation South Asian business practices in the UK. The paper is structured accordingly: the literature review discusses social capital and business practices from both a theoretical and ethnic perspective. The research methodology and ndings sections follow, respectively, with conclusions bringing the paper to a close. Literature review Social capital Menzies et al. (2007) note, social capital includes: . the use of co-ethnic employees/markets/suppliers; . community sources of capital; . advice and information (banks/accountants/lawyers/small business advisors); . competitors; . local and central government institutes; and . membership of ethnic community organisations. At the core of social capital, is the family unit. This unit may represent a strategic resource in immigrant adaptation to a new society when faced with uncertainties and challenges (Sanders and Nee, 1987). The strength of family bonds allows kinship ties to be used for economic adaptation. Moreover, reliance on the family and extended family unit intensies the quality and solidarity of the actors involved. It becomes the hallmark of both the family and co-ethnic community as it gathers momentum in the development of formal and informal links between themselves and the host society (Sanders and Nee, 1987). In this context, social capital is considered a source of strong or weak ties/linkages within horizontal and vertical social resource networks/associations. These ties/linkages help one understand why a new business is started, its chance of survival, and in particular why some ethnic groups are more successful than others in business (Flap et al., 1999; Deakins et al., 2005; CEEDR, 2007; Menzies et al., 2007). A measure of how well connected individuals of a given social group are to both their respective communities and wider society, is seen through bonding social capital and bridging social capital (Woolcock, 1998; Cabinet Ofce, 2003). The former links individuals of a given social group with one another. The latter consists of networks

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that link individuals of a given social group with the wider society (Woolcock, 1998; Cabinet Ofce, 2003). This reliance on embedded social networks is found in the fact that informal social networks are built on concepts of trust and obligation by family and community to assist one another. In other words, reciprocated community support (Donckels and Lambrecht, 1997; Kilkenny et al., 1999). Therefore, reciprocated community support is a non-market based exchange, and is classied as a form of social capital based on positive relationships the stock of goodwill, between the entrepreneur and his/her immediate community. Support must be reciprocated (given and received) between business and community, thus the stronger the relationship, the greater likelihood of business success (Kilkenny et al., 1999). However, as Bieler (2000) points out, while the internal relations within an ethnically dened group may be characterised as strong ties, relations with social networks that are external to the group, may remain underdeveloped at best, or non-existent. This aspect of embedded social relations provides the possibility of a negative, constraining or destructive inuence on business development (Woolcock, 1998; Bieler, 2000). If these inuences are evident, the preference for dealing with fellow co-ethnics may fail to materialise, as ethnic networks become rife with interethnic competition and factionalism (Sanders and Nee, 1987; Waldinger, 1995; Flap et al., 1999; Smith and Wistrich, 2001). The ethnic dimension strong and weak ties Fadahunsi et al. (1999) note that informal co-ethnic networks may represent a pool from which essential resources are mobilised, and a cushion in terms of the support received from the community. Through such usage, ethnic entrepreneurs are able to overcome resource constraints, for instance, the ability to: . raise capital; . seek out and utilise materials; . identify suppliers and customers/markets; and . recruit and manage labour (Ram and Holliday, 1993; Ram et al., 1998; Fadahunsi et al., 1999; Deakins et al., 2005). In this context, South Asians in the UK are able to provide for themselves a highly effective bonded insider network through communal and family solidarity. Moreover, the importance of familial labour, the role of the community, cultural values, advice, inter-rm linkages and other competitive assets are emphasised (Stoy Hayward Report, 1989, 1990; Ram and Holliday, 1993; Jones et al., 1994a, b; Ram, 1994; Srinivasan, 1995; Basi and Johnson, 1996; Ram et al., 1998; Woolcock, 1998; Dana, 2000; Janjuha-Jivraj and Wood, 2002; Cabinet Ofce, 2003). Within an international context, informal networking by UK-based ethnic entrepreneurs generally and South Asians specically, are in the main directed toward country of origin of the business owner. The potential for success in accessing these overseas markets is increased on account of the language skills, extended family and the global trade links of the entrepreneur in question (Fadahunsi et al., 1999; Bank of England, 1999, 2000; Crick and Chaudhry, 2000). With regards to formal network usage (weak ties/bridging social capital), there is evidence to suggest sectoral factors, not ethnicity, are the main drivers for such usage

amongst a majority of ethnic entrepreneurs generally (Ram and Smallbone, 2001). However, the frequency of access to support services differs between ethnic groups, and male and female ethnic entrepreneurs (Linehan and Sosna, 2004; Small Business Service, 2004). Nevertheless, a consistent nding in the literature note, South Asian entrepreneurs, unlike the Afro-Caribbean community, display a low propensity to use formal providers of small business support (Ram and Smallbone, 2001). Instead, such entrepreneurs gravitate toward informal networking for resource mobilisation (Ram and Smallbone, 2001; Deakins et al., 2005; CEEDR, 2007). A number of reasons for this low take up may be identied. First, size of business/market, sector, heterogeneity and culturally specic issues (language, religion, gender aspects, etc.) compel ethnic entrepreneurs, particularly rst-generation South Asians, to question the effectiveness of formal versus informal network support as means of help, assistance, advice and ability to access nance/labour/overseas markets (Ram and Holliday, 1993; Jones et al., 1994a, b; Ram, 1994, 1997; Ford and Ram, 1995; Phizacklea and Ram, 1995; Deakins, 1996; Ram et al., 1997; Basu and Goswami, 1998; East Midlands Observatory Final Report, 2001; Ram and Smallbone, 2000, 2001; Linehan and Sosna, 2004; Deakins et al., 2005; Berry and Sweeting, 2006; CEEDR, 2000, 2007). Second, ethnic small rms generally, and second-generation South Asian entrepreneurs specically, question whether their needs are similar to, or different from, other mainstream family or non-family small medium enterprises (SMEs) (Chua et al., 1999; Ram and Smallbone, 2000). Therefore, ethnic entrepreneurs express a desire not to be classied as a special case or treated preferentially as they feel they face similar constraints to that of any mainstream SME (CEEDR, 2000; East Midlands Observatory Final Report, 2001). Such constraints include: . lack of knowledge pertaining to core management competencies sales, marketing and human resources; . myopic management practices; . employee and recruitment issues; . nancial management the inability to raise appropriate levels nance; . inability to access new markets within/outside of the UK; . negative consequences of business location, and the inability to secure suitable business premises; and . local authority bureaucracy (Curran and Blackburn, 1993; Barrett, 1999; Bank of England, 1999, 2000; Crick and Chaudhry, 1996, 1997, 2000; Ram and Smallbone, 2001; Deakins et al., 1996, 1997; Deakins et al., 2005; Berry and Sweeting, 2006; CEEDR, 2000, 2007). In essence, entrepreneurs wish support agencies would show an awareness of and sensitivity to minority cultures by simply treating them equal to any other business (Ram and Smallbone, 2000; NatWest Small Business Services, 1997). Behaviour management practices Chan and Lin Pang (2002) argue rst-generation ethnic entrepreneurs have not adapted well to changes in market and social trends, preferring instead to adopt a myopic style of management. This view of such entrepreneurs not only reects their low-risk

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attitude towards business strategies, but also the maintenance/continued security, stability and familiarity within their social networks and co-ethnic markets (Froschauer, 2001). In terms of the second-generation, two developments are evident. First, as an example, Chan and Lin Pang (2002) identify a number of young Chinese as pro-mainstream whereby business success and growth is achieved by seeking and accepting expert assistance from mainstream sources, as well as breaking away from traditional business activities, family and community networks (Chan and Lin Pang, 2002). Barclays Bank (2001) also acknowledged noticeable differences in business practices of young ethnic minority entrepreneurs generally. For instance, of those surveyed by the bank, 80 per cent were pulled into entrepreneurship citing a wish to take control of their lives and to create their own wealth (Barclays Bank, 2001). The implications of this level of motivation on business practices suggests, unlike their rst-generation counterparts noted earlier, second-generation ethnic entrepreneurs see business planning and obtaining advice as being key components to business growth and survival (www.businesspark.barclays.com/reviews/ethnic.htm). With regards to the second key area, noticeable are changes pertaining to second-generation South Asian entrepreneurs within FBs. Here, Janjuha-Jivraj and Wood (2002) observe that a South Asian FB transforms as it progresses along its life cycle when transferred from founder to second-generation, or even second- to thirdgeneration offspring. For example: . internal structures are formalised; . job responsibilities are claried and reinforced among family and non-family members; . loyal non-family members are rewarded with senior positions; . planning becomes a regular feature of the management team; . strategies are developed for the future expansion of the business, which incidentally, entails an increase in the employment of non-family members and professional managers from outside the co-ethnic community; . succession planning and implementation is formalised; and . strategies are developed to separate family ownership from family management, so allowing greater responsibility and accountability for non-family senior managers (Janjuha-Jivraj and Wood, 2002). The discussion thus far has explored a number of culturally embedded factors shaping entrepreneurial behaviour, access to resources, employment of family labour, formal and informal networks. These factors should not be considered in isolation, but viewed instead as a series of interrelated elements, which in their entirety impact on the management ability of the entrepreneur, and ultimately on the performance of the business. To understand this, the discussion draws upon the theoretical underpinning offered by Glancey et al. (1998) (Figure 1). Essentially, inuences can be seen through the entrepreneurs personal attributes, which determine his/her motivation and objectives. In turn, this determines the rms performance. The process is mediated through the market/environment in which the entrepreneur operates, and the managerial practices that s/he employs (Glancey et al., 1998). The objectives of a small rm tend to be synonymous with those of the owner,

and entrepreneurial characteristics and behaviour are displayed in the managerial practices employed in running a rm particularly in the case of family-owned small businesses (Glancey et al., 1998). From an ethnic dimension, the rst-generation ethnic entrepreneur, the family and the resulting FB is seen as a bastion for ethnic self-employment, ostensibly the founders baby and an extension of which s/he stands (Stoy Hayward Report, 1989, 1990; Ram and Holliday, 1993; Ram, 1994). Moreover, the founders perceived internal paternalistic managerial style reects values, rigidity, and tight control of the business. Consequently, the rm becomes bound in culture, values and traditional attitudes through the founders inuence. Any change made to the FB by younger generations may be interpreted as a lack of respect for the older generation, not to mention the image of the family as a whole (Stoy Hayward Report, 1989; Ram and Holliday, 1993; Cromie et al., 1995; Westhead and Cowlin, 1997; Fletcher, 1998; Janjuha and Dickson, 1998a, b; Ram et al., 1998). Contributions to success within ethnic FBs are a result of culturally transmitted skills and characteristics/behaviour, value systems and cultural norms (Srinivasan, 1992, 1995; Dana, 2000). For many rst-generation ethnic entrepreneurs, the value of a FB is considered more than a commercial asset, but rather a family heritage. Such heritage satises any material desire for the family because it offers them a sense of status within the eyes of their particular ethnic community. Moreover, the wish to pass on a protable FB to the next generation is a strong motivating factor for the founder in both the development and growth of the business (Stoy Hayward Report, 1989). In this context, strong ties thesis ensures that the founder and family maintain their lack of trust in non-family members to safeguard the familys wealth (Stoy Hayward Report, 1989). Managerial skills class resources Shepherd and DeTienne (2005) suggest that individuals have at their disposal (transferable) skill-sets developed through experiential learning (EL) and prior knowledge. These skill-sets are based on work experience, education, incorporating intentional or unintentional knowledge taken from direct experience and vicarious learning and/or through second-hand-experience, which will be directly or indirectly relevant to the entrepreneurial experience (Shepherd and DeTienne, 2005). Deakins et al. (2005) add to this and draw an association between:

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Markets in which firms operate Entrepreneurs characteristics Entrepreneurs objectives Business performance

Managerial practices Source: Glancey et al. (1998)

Figure 1. Key factors and inuences

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(1) age of the respondent; (2) the level of management training/education the individual may have received prior to and during entrepreneurship; and (3) the impact of points (1) and (2) on rm performance and entrepreneurial motivation. Here, the debate focuses on what Gilmore and Carson (1996), Carson and Gilmore (2000), Verheul et al. (2002), Jamal (2005) and Shepherd and DeTienne (2005) describe as EL. Essentially, EL is built on four existing personal/managerial competencies that contribute to the development of established practices and customs of decision making for individual managers, and the common sense knowing. Specically, the width and depth of EL is seen through: (1) Knowledge (K). Clear understanding of the specic details and requirements of the job, the rms markets, competitors and customers. (2) Experience (E). Based on years working within the same environment, transferring the experience to other situations, and building general familiarity with the industry/situation/market. (3) Communications (C). Knowing which communications work best, the right audience, when and how to communicate, and how/where to obtain information. (4) Judgement ( J ). The ability to pull all features of K E C together, judge how best to make a decision, and which decision is best in specic circumstances. (Sources: Gilmore and Carson, 1996; Carson and Gilmore, 2000; Verheul et al., 2002; Jamal, 2005; Shepherd and DeTienne, 2005). As literature notes, key inuences shaping the entrepreneurial experience and the development of management skills of second-generation entrepreneurs in comparison to their rst-generation counterparts, include class resources (behaviour implied through education, skill-sets, experience) and sectoral composition (East Midlands Observatory Final Report, 2001; Smallbone et al., 2001; Ram et al., 2002; Deakins et al., 2005). However, Mourouti (2004) suggests that there is a lack of agreement as to the value of education on small rm performance. Under scrutiny is functional education in areas such as marketing, nance, HRM, operations management, and the like, and technical versus non-technical knowledge (Mourouti, 2004). To close, issues pertaining to family obligation, management control, economic rationality and class/resource mobilisation via strong/weak ties are the focus of investigation throughout this paper. As such, differences/similarities between ethnic entrepreneurs within family and NFBs will be highlighted. Research methodology Aim of the research The aim of this paper is to investigate differences/similarities in business practices of second-generation South Asian entrepreneurs within family-owned rms, in comparison to their second-generation counterparts managing and running their own business. To achieve this the following methodology was employed.

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The research design Investigation was conducted within a phenomenological paradigm for two reasons. First, to tweak out similarities and differences within ethnic minority enterprises from the participants own frame of reference. Second, to unravel the complexities of social, cultural and generational change in order to understand how internal and external factors impact on the effective operation of an ethnic minority business (Chan and Lin Pang, 1998). Justication for the use of a phenomenological paradigm is in reaction to the positivistic paradigm. For instance, Hussey and Hussey (1997) consider positivism and phenomenology paradigms as two extremes with a continuum of core ontological assumptions that underline the notion of reality and being. A positivists view note researchers legitimately impose their operationalisation of social reality upon their subjects in a way that such stimuli can be measured in one form or another (Gill and Johnson, 1991; Easterby-Smith et al., 1991). This approach reinforces one of the key principles of positivism in that, a study of society and human behaviour should be scientic in the mode of natural sciences (Walker, 1985). A phenomenological paradigm, however, involves itself not only with exploring the relationship between variables being studied, but the context of the setting also. This allows much more complicated situations to be examined (Remenyi, 1995). Research instruments Research instruments used to carry investigation for this paper were semi-structured interviews (with accompanying prompts), and case-study methods (semi-structured interviews, observer-as-participant and documentary evidence). The research instruments were developed, tested and re-assessed before being used. In addition, various documents had been developed and used in order to record and cross-reference many aspects of the world under investigation. Sample size Respondents were selected from a variety of industrial sectors situated within the Greater London area. In total, 48 entrepreneurs (representing 33 rms) were interviewed using a semi-structured approach. Respondents consisted of ten rst- and 38 second-generation Sikh, Hindu and Pakistani Muslim entrepreneurs from both family and non-family owned businesses (NFB). To complement the interview process, the study selected nine businesses (three from each ethnic group) to make up the multiple comparative case-study stage. Within the FB context, the rationale for the inclusion of rst-generation South Asian entrepreneurs was to understand whether the father gure and family informed business practices adopted by the said second-generation entrepreneurs. This notion was also explored with second-generation respondents from NFB backgrounds in order to establish whether the lack of inuence by father and family had a detrimental effect on business practices. Given the nature of the study, access to various respondents was negotiated via a combination of purposive sampling, snow balling sampling, referrals and/or some form of exchange process. In terms of the interview process, on average each interview lasted 90-120 minutes, with two interviews lasting over two hours 30 minutes. Duration of case studies ranged from seven to 20 months.

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Generational differences and religion First-generation (n 10), respondents identied themselves as male Sikh, Hindu or Pakistani Muslim, approximately 50 years of age or above, and residing within the UK. Owing to push factors respondents had established the FB within the UK, and maintained direct control over the business. The age of businesses ranged from eight years to 40 years. Respondents operated within low order catering and retailing, and all employ immediate family members. This employment situation was consistent with ethnic FB literature. Sikh, Hindu and Pakistani Muslim second-generation male entrepreneurs (n 38), aged between 20 and 40 years old, and who either were born in or moved to the UK were interview also. Respondents born overseas were included as migration occurred before the age of 12 years (Janjuha and Dickson, 1998a, b; Chan and Lin Pang, 1998; Andall, 2002; Waldinger and Feliciano, 2004; Portes et al., 2005; Portes and Rumbaut, 2005). For the purposes of comparison and discussion the paper identied and used two clusters of second-generation respondent: (1) In total, 15 respondents were involve with the family-owned business (FB), and worked alongside the founder (father). (2) In total, 23 respondents were from a NFB background and managing a business established by himself and/or with a business partner. Parents of these respondents were not involved with self-employment, instead worked in paid employment or otherwise. The aspects noted above were important because people with successfully self-employed parents have to their advantage access to nancial resources and skills directly relevant to starting a business (Rosa, 1993). An advantage, it could be argued, that offspring from FB backgrounds have over those offspring from backgrounds where their parents are in paid employment or otherwise. However, an issue does remain whether offspring from FB backgrounds are able to capitalise on this advantage by displaying the range of skills necessary to develop a business further. Finally, the inclusion of culture and/or religion was to provide insight into the extent to which these aspects inform business practices on a personal and professional level. Business sector As noted, the rst-generation (n 10), operated within low order catering and retailing and all employed family members. The second-generation (n 38) were found operating businesses across a number of sectors. For instance, low order catering and retailing (confectioners/tobacconists/newsagents, clothes, specialist outlets computers sales, electrical goods/services), professional services (employment agencies and business/management consultancies), and IT/high technical services. Working within the parameters pertaining to rm size, levels of in/formality, and strategic t, businesses were arranged by sector, FB and NFB, then separated into two key headings: (1) Traditional rms. Low order retailing, catering and the like. (2) Emergent rms. IT, communications and so forth (Ram and Holliday, 1993; Edelman et al., 2002; Marlow, 2002, Leung, 2003; Bacon and Hoque, 2005; Kotey and Slade, 2005; Harney and Dundon, 2006).

To support these categories, the paper identied the number of employees per business, and age of business as additional inuences. The rationale behind categorisation was to understand/determine whether such factors informed business practices adopted by those within the research frame. Data analysis To analyse data pertaining to business practices the paper employed a technique known as key-words-in-context (KWIC). KWIC nds all the places in a text where a particular word or phrase appears, then prints it out in the context of a some of words before and after the phrase (Ryan and Bernard, 2000). At the heart of this technique is coding tags or labels for assigning units of meaning to the descriptive or inferential information compiled during a given study (Miles and Huberman, 1994). Therefore, as this paper wished to retain as much detail as possible (Malholtra, 1996), codes were attached to chunks of text of varying sizes (whole sentences) to connected or unconnected key words or phrases within specic settings/context. Limitations of the study Given the opportunity structures and socio-economic environment of the study area, namely Greater London, ndings may not be generalisable to other parts of the UK. This may be of concern particularly in areas that yield low propensity for business activity for embedded ethnic communities, and where such areas inform business and/or managerial behaviour. Findings The family business To understand the inuence of second-generation respondents on business practices within family rms, it is important to appreciate the circumstances that led to his entry into the FB. Moreover, this appreciation will add context in terms of a point of departure between the said respondent and his NFB counterpart. In essence, entry into the business resulted from one of four situations: (1) Natural progression in terms of succession. The founder (father of a respondent) is reaching retirement age therefore, systems and plans are being developed for the offspring to take over the business. Although the procedure is very informal, the move is seen as positive and welcomed by the various stakeholders, family, and respondent. (2) Parents acting as role models. As one respondent noted, by observing his parents run their own business, he was encouraged to enter the FB. As the respondent reects: By watching my parents, I was attracted to entrepreneurship with the freedom of being my own boss. (3) Family/cultural obligation and sense of fairness felt towards helping their father. This sense of duty displayed by respondents was a reaction to the behaviour of other family siblings who, not being attracted to the FB, pursued their own interests. (4) A lack of education and limited possibilities to explore other employment opportunities. As one respondent confessed I will be honest with you; I didnt study so I never thought about doing anything else other than being my own boss.

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Further analysis revealed the development of two contrasting clusters resulting from entry. Each cluster, with its own particular attitude and behaviour, appears to impact on business practices in both a positive and negative way. In addition, the study found such attitude and behaviour led to situations of conict or compromise between father and son. Exploring further, the paper noted second-generation respondents had resigned themselves to work within a number of self-imposed coping strategies: . adaptation; . compromise/accommodate; and . no-go. The rst cluster of nine respondents, enjoy their role within the FB having returned to it under their own volition (after obtaining a college/university education respondents entered the business due to natural progression or their parents acting as role models). These respondents appear to be highly motivated and were attracted to the FB by: . the freedom that it appears to offer; . the potential to make money rather than earn money; . for the drive to be nancially independent; and . the potential to free up ones time in order to support a desired lifestyle. Equally, respondents espouse a healthy business relationship with their respective fathers based on adaptation, and compromise/accommodation of ideas and dialogue:
Sikh Retail Chain: Right from an early age, I have always been involved in coming to the family business, running around and it has been in my blood and in my family. Hindu Catering: Working the in the family business was my rst preference. Really because of what it represents the highs, the low, the tears, the joy. I couldnt imagine myself doing anything else.

Although respondents had grown up within the environment of the FB, their involvement however was on either a casual or a full-time basis. Equally, such involvement found respondents having to work up the ranks or placed within a position of prominence from the outset:
Pakistani Restaurant: I used to help out two to three years ago with bits and pieces, getting to know the business that sort of thing. And when I nished college, things were formalised and I became assistant to the my uncle, thats how it all started. Sikh Restaurant: I have this position in the family business where it is very senior, behind the scenes, it is not taxing, it is not thinking, which I love.

Inuence on business practice adaptation and compromise/accommodate. A feature pertaining to this particular cluster is the fact that in one way or another fathers of the

respondents have redened their approach to business. By this it is meant, in an attempt to respond to consumer preferences, the son has inuenced the father in terms of modernising/updating products/service offering, and/or refurbishing the shop/restaurant. Therefore, the son has acted as an internal driver for change, with the father reassessing his own management style in response. For instance: . Business planning. Attempting to develop more formalised business plans. . Employee relationships. Ensuring employment rights/protection/benets are adhered to, and investing in employee development. . Command and control. Attempting to create a working environment that is less formal and more open, so espousing a healthy boss/worker relationship. . Improvements in the quality of products/service. The quality of delivery becoming the norm, wanting to create a unique offering/ambience/style, and attempting to differentiate the business from competitors (more so within catering where the industry is reaching saturation point). Another noticeable area of second-generation inuence on the rst-generation is labour. Of those businesses that employ ve to 32 workers, other than nuclear family members, staff turnover is quite high. This ever-increasing problem has placed constraints on owners in terms of pressure to recruit/replace staff with limited experience or inadequate skills. Despite this, a minority of founders still expect employees to deliver services/products without proper/minimal training. Whereas, other entrepreneurs realise the need for suitably trained staff, so actively set to address the problem. For those founders who gravitated toward this latter notion, the son has been instrumental in the development of an infrastructure to help reduce labour turnover and increase efciency. For example, in-house employee training range from food etiquette, service delivery, to staff developing the ability to sell food (explaining to customers the exact consistency of a particular dish and how to select a combination of dishes that are complementary with each other). More importantly, founders who invest time and effort in training, cite the fact that to create a good dining experience, it is vital to know customer expectations and how those expectations could best be managed. With this attitude, founders are not only running a continuous in-house employee training programme, but also monitoring staff performance and stay-ability. What is of particular interest with this approach is that both founder and son work to one anothers strengths. The founder uses his expertise in terms of product knowledge, whereas the son develops the systems necessary to help improve the business. As one founder put it:
I do a lot of things the way he wants whether I like it or not [father talking about his son] because through all these things everybody has got something to give (Sikh Restaurant Owner).

South Asian rms

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In general, fathers responding to change demonstrate awareness for a more professional approach to managing the business. Therefore, the business image has become an increasing factor in terms of how consumers perceive and interact with the business. Moreover, such factors are starting to play a role within decision making. This notion is supported by the fact that the father and son are developing a reputation

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for quality (seen as crucial in creating differentiation), and fairness as an employer (the owner must be seen to be honest, pay well and treat staff accordingly). Interestingly, where the son believes taught management training and skills is a reection of his credibility to run a business, for the father, the personal touch in every aspect of the business is perceived as an important element of his management ability. Therefore, friendly interaction by the father with customers is seen as important in enhancing the dining/shopping experience. This approach as all owners agree comes with life experience and not with a university degree. This positive approach noted above is in contrast to the attitude found amongst the six remaining second-generation respondents. Here, entry into the business resulted from limited opportunities or reluctant obligation. This shift in emphasis demonstrates entrepreneurial weariness whereby respondents feel the FB along with its constraints have become a burden, and working within the FB does not offer the rewards it once did. Evidence notes these respondents feel their own role within the father-son relationship is restrictive, confrontational and at times stressful. So much so, respondents do not challenge or question the authority of the father. Owing to this breakdown of the father-son relationship, a majority of respondents have expressed a desire to leave the business either to seek paid employment or go it alone. This mind-set is quite interesting particularly when respondents have not worked elsewhere since leaving full-time education (the average time spent by respondents working within the FB is 14 years). This overall attitude toward the FB has been reinforced by the fact that respondents: . Claim entrepreneurship nowadays is much harder than it once was. As one respondent remarks: Being your own boss, the prot is always there, but like I said, the work is a lot harder now than what it used to be ten years ago. . Have noticed their peers do not get involved with the FB, particularly if that business is a low order retail outlet. As Sikh Furniture remarks:
They (second-generation) see their mums and dads now, they look at them going to the cash and carry, loading and unloading, and that is all they (parents) are doing for the rest of their lives. Well they (second-generation) dont want to do that.
.

Have grown increasingly aware that their peers are able to nd employment within sectors such as IT with its salaries in excess of 40,000 a year or even 30-40 an hour. As one respondent pointed out, They would rather do that, it is an easier life for them.

Despite this desire by respondents to leave the FB, it is difcult for them to contemplate an alternative. Fear of the unknown and the loss of independence are the entrepreneurial shackles that keep respondents in their current situation. However, respondents admit that even if they were able to work for a company, they would like to do something on the side for themselves. The ideal would be to have two part-time jobs, one within entrepreneurship and the other working for a company thereby retaining the best of both worlds.

Inuence on business practice no-go. Given the dominance of the father, evidence suggests the offspring have developed coping strategies when dealing with the father-son relationship. However, the lack of comprise between father and son as: . resulted in deciencies within the business; . led to reactive management; and . caused rms within this cluster to lag behind the cluster noted earlier. For example, inadequate infrastructure and operating systems for stock ordering, accounting, sales monitoring/forecasting/planning have meant these particular rst and second-generation respondents are unable to plan for growth or take advantage of opportunities. In addition, second-generation respondents cite other areas of business management wherein they have no inuence, and which they consider constrain business growth: . planning lack of regularity, purpose and rigour; . a lack of open and constructive business dialogue; . a lack of regularity, purpose and monitoring of action points; . a reluctance by the father to delegate essential tasks, and monitor business/employee performance; . an insistence by the father for short to medium term business thinking and direction; . the inability of the father to deal with confrontation/difcult situations between family members and/or the management team; and . a lack of willingness to change. Similarities between clusters. Interesting, there is a point whereby both clusters appear to reect one another. For instance, both clusters suggest the father places reliance on informal networks, and wherein he exerts full control. As far as the father is concerned, networking via the use of family, friends and co-ethnic community is an important factor within the business, and trust is a vital component of any such relationship. A justication of network usage is seen through the range of activities such informal networks provide: . Intelligence gathering questioning community members in an attempt to understand the activities of business competitors. . A resource pool for recruitment. As far as immediate/extended family members and friends are concerned, more often than not, employment is based on obligation rather than individual skills sets. Outside this circle other staff members are recruited using word of mouth techniques via personal contacts within the same trade or people known socially. . Access to nance nance for start-up/investment/growth/modernisation and the like remain the sole domain of the father. . Obtaining new business clients via word of mouth advertising seen as very important.

South Asian rms

403

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Non-family business Second generation entrepreneurs business practices (my way). A point of departure between second-generation entrepreneurs from FBs and those second-generation respondents from NFB backgrounds, suggests the latter are entering entrepreneurship from a different frame of reference and with different skill-sets compared with that of the former. Thus, irrespective of religious background these remaining 23 respondents have established businesses that are akin to occupational skills developed whilst in mainstream employment. Moreover, these particular respondents gravitate towards knowledge-based activities, and are pulled and motivation towards entrepreneurship due to the intrinsic rewards. For instance, respondents believe entrepreneurship provides them with an ideal opportunity to retain such occupational skills, whilst at the same time allowing them to escape the pressures of working for multi-national organisations/blue-chip companies. Interestingly, respondents suggest that they have had enough of the corporate life, and felt they could no longer increase their earning potential and/or progress professionally. On a personal level, respondents felt they were: . not able to achieve a work-life balance due to working long hours; . experiencing-work related stress; and . not in control of their lives. Consequently, respondents point to opportunity combined with fatigue as the reason for entering entrepreneurship. Opportunity in this instance is about meeting like-minded people who are at the same stage in their thinking or who are willing to take risks. Fatigue on a professional level refers to working for other people and the frustration of not being able to explore ideas, business opportunities, and take chances. With regards to skill-sets and experience brought to entrepreneurship by respondents, the following became evident. Sectoral experience. A majority of respondents had established knowledge-based businesses, particularly professional services, and IT/management. Here, respondents espouse high nancial returns to be made from consultancy type work. Equally, respondents indicate that their positive motivation towards entrepreneurship is attributed to the sector in which they operate. These respondents have learned to navigate their way around the various institutions, form their own networks, and respond to competitive pressures. Experiential inuences. Here, respondents place reliance on occupational and managerial skills. For instance, a majority of respondents admit that prior to self-employment they had held positions either as senior managers or consultants. Because of this, many felt such experience had been fundamental in: (1) gaining the level of condence needed to enter entrepreneurship; and (2) preparing them for the eventual running of their own business. Thus, points (1) and (2) provided the strongest inuence on the development of their management skills and motivation toward entrepreneurship. Owing to the self-assurance and lessons gleaned from prior occupations/sector, respondents now feel they have a wealth of experience to draw upon. Naturally this not only dictates their particular approach and attitude towards their respective

businesses (compared to their counterparts within FBs), but also allows them to make decisions in ways that they consider to be much clearer. Educational inuences. Findings reveal that a high proportion of respondents are suitably qualied, with a number holding qualications relevant to their chosen business activity, particularly those within professional service and IT. Equally, approximately 14 respondents had participated in a number of formal in-company and/or external short-management courses in order to enhance their knowledge and general business skills. Interestingly, although education espouses credence and credibility for the respondents, in reality they prefer prior experience and sectoral knowledge (respondents advocate their corporate background as a marker of ability, professionalism and credibility) as an inuence on their performance as entrepreneurs. With regards to inuences of the above on business practices, the following became evident: (1) Customers/clients respondents dislike doing business solely with South Asian consumers irrespective of ethnic/religious afliation. Therefore, respondents tend to have a mixed co-ethnic or mainstream client base the latter being the main. Reasons put forward suggest: . a dislike and annoyance felt by respondents in having to give way to cultural/religious obligation and pressure, as well as, association through family ties by way of obtaining favourable trading terms/deals/discounts; . attempts by South Asian consumers to reduce the selling price on goods and services through bartering; . respondents feel South Asian consumers undermine them and their business; and . South Asian consumers on the whole are considered difcult to please. (2) Professionalism/customer care/product knowledge are considered by respondents as key attributes for business success. (3) Maintaining a good image of the brand/product/service in the minds eye of the customer is a very important aspect of all marketing activities. (4) The need by respondents to emphasise previous professional employment history and connections when dealing with customers/clients. This approach is seen as a key attribute in overcoming barriers of age and business credibility. (5) A desire by respondents to remove the ethnic business tag. However, a minority of respondents talk non-ethnic but work and act ethnic. (6) Religion has not helped or hindered the type of business entered, markets served or products/services offered. (7) In terms of multiple business ownership (common amongst respondents within emerging high tech industries), respondents identify businesses that require no infrastructure, very little nancial start-up, and that is virtual (web-based rms). Finally, although respondents express a desire to have present in the business a father who is self-employed, or a gure head to help, advise and guide them. This lack of a father gure however, does not appear to have hampered the respondent in any way.

South Asian rms

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Employee relations. When dealing with issues of employee relations, evidence suggests respondents adopt a different approach. Here, respondents do not enter the notion of recruitment via obligation as demonstrated by the rst-generation. Instead, respondents are more willing to employ a mixed workforce (black, white, etc.) rather than a predominant co-ethnic workforce (just because they are from the same ethnic/religious group) or relying upon family labour. The attitude towards employing family members has raised an interesting situation. Essentially, although there is agreement amongst a majority of respondents as to the benets of employing family members, in reality, respondents do not entertain the idea. The rationale suggests respondents feel they are dealing with the family relationship on an emotional level and not from a business perspective. As respondents pointed out, emotion and business become clouded as time is wasted trying to deal with what is emotional and what is business, thus neither creates transparency within the business. In essence, regardless of ethnic, religious afliation, colour or relationship, respondents focus on the skill-sets of individuals more than anything else. Therefore, ability, skills level, expertise and know-how to perform the job are seen as prerequisites to employability, coupled by the need for the respondent to reduce training costs and the learning curve effect. Networking. Here, respondents are engaged in the extensive use of networks: formally, informally and virtual (web-based). All three types of networks consist of business contacts, and to a lesser extent friends, rather than family/community. Exploring a little further, with regards to informal networks, respondents appear more willing to move outside the community for labour, resources, business advice/expertise, nance and help to gain access to markets. Moreover, there is little reliance on established rst-generation contacts/networks. Interestingly, although respondents do not mix religion/community with business (all areas are kept rmly apart), respondents are willing to help/mentor co-ethnics entrepreneurs in terms of business advice/achieving representation within the general business community. With regards to formal networks, there is evidence to suggest that respondents have not heard of or have little need for the support services such as business link and the like. However, unlike a many of their rst and second-generation FB counterparts, a majority of respondents are members of some form of trade association or networking organisation. Finally, despite respondents espousing a very good working relationship with their particular banks/accountants and suppliers, a number of respondents also include venture capitalists and business angles as part of their search to raise nance. There is strong evidence to suggest that a majority of respondents within high tech rms have developed virtual networks (web-based) consisting of suppliers, clients, business contacts and other business stakeholders. In essence, respondents feel such virtual communities are dynamic, exible and offer the ability to tap into experts within particular business sectors. For the respondents, connectability (who knows whom) is a vital component of any such relationship within his network of contacts. Finally, in addition to the three forms of networking noted above, an area overlooked is the notion of international links. As ndings note, very many respondents utilise international links: family/friends/business contacts to develop/access overseas markets or source raw materials, but not labour (unlike their rst-generation counterparts).

Conclusions This paper has provided insight to the behaviour and business practices of second-generation South Asian entrepreneurs. Evident are similarities and differences between respondents from FBs and NFBs. For instance, the paper found entry into entrepreneurship by the second-generation differs on two levels. In terms of similarities, a majority of the respondents from FBs and NFBs consider entrepreneurship as something to embrace, and/or to be used as a vehicle to increase social standing and economic fullment and not as a means of economic or personal survival. Interestingly, whatever the rationale for entry by respondents within FBs, there is either a positive or negative an impact on the father-son relationship. To counter this, respondents have developed a number of self-imposed coping strategies: . adaptation; . compromise/accommodate; or . no-go. These strategies reect the level of power the respondent has within the FB in terms of decision-making, control and autonomy. An extreme situation nds respondents within FBs being pushed into entrepreneurship, and working within the business is considered a necessity. Here, respondents develop a negative attitude and resistance towards entrepreneurship. Consequently, hostility is evident within the father-son relationship as the former is likely to impede the latter in terms of business development, autonomy, or decision making. The importance of EL and transferable skills should not be under-estimated, or under-valued. Therefore, regardless of any decision to enter entrepreneurship a complex array of factors based upon personal and professional experience, education and sectoral knowledge were evident. These factors were not only central to the development of a particular attitude and behaviour of the respondent, but dictated his approach to managing the business and making it succeed. Again similarities and differences between respondents were evident. The paper found respondents from FBs located within traditional sectors, were moving back into the said business, with many bringing their educational experience with them, but nothing beyond this. Whereas, respondents from NFBs developed ventures more akin to their prior employment experience: . technical skills, knowledge/expertise and competencies; . managerial competencies; and . autonomy, independence and entrepreneurial creativity. Respondents here were gravitating toward emergent sectors/knowledge-based businesses such as professional and IT high technical services. This self-assurance resulting from prior occupation and related business sector, meant respondents had a wealth of experience to draw upon in order to develop the business.
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Woolcock, M. (1998), Social capital and economic development: towards a theoretical synthesis and policy framework, Theory and Society, Vol. 27 No. 2, pp. 151-208. About the author Mark McPherson is a Principal Lecturer in Marketing at Middlesex University Business School, and teaches marketing strategy, services marketing, small rms marketing, branding and buyer behaviour. His research interests focus on ethnic entrepreneurship and marketing to ethnic minority groups. Mark McPherson can be contacted at: mark.mcpherson14@btinternet.com

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