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INTRODUCTION

The purpose of this paper is to examine the relationship between wealth building and ethnic enterprise. Research in the area of ethnic entrepreneurship has shown that groups which establish themselves in America through the entrepreneurship process tend to have higher incomes and wealth building than groups which incorporate as workers (Bonacich & Modell, 1980; Portes & Bach, 1985). This paper extends this analysis by concentrating on the wealth building process of the Pakistani/Ismaili community of a Southwestern city as data.

Our paper approaches the wealth creation process through two research questions. First, how do the demographics of the community respondents compare to the limited set of demographics collected through U.S. Census data? The community level involvement in the business creation process of these particular community members has already been established (Greene & Butler, 1996). We consider what types of differences that involvement may produce when opposed to the more aggregate measure of ethnically owned businesses reported by the government. We then consider the theoretical framework in which most ethnic entrepreneurship behavior is analyzed and test the facets of that theory with the data from the community members.

Theoretical Considerations

Studies of immigrant entrepreneurship, and the economic security which it produces, have a long intellectual history. This history is grounded in attempts by scholars to understand how new members of host societies develop economic stability. The earliest literature conceptualizes ethnic entrepreneurs as "strangers" (Simmel, 1950). This concept emerged when communities were evolving from traditional to modern societies. In the former, trade and the people who brought it were not welcomed; strangers were seen as being only interested in the pursuit of money, a phenomenon which was considered negative in traditional societies. It was a time when subsistence agriculture and home crafts were in decline in traditional societies. New traders, or strangers, represented the city, cosmopolitan values, and a different way of life (Butler & Greene, 1996). We also learn from this literature that economic stability through entrepreneurship was found in societies covering all continents (Butler & Greene, 1996).

The revitalization of a concern with immigrant entrepreneurship in America was initiated by scholars who connected early theoretical ideas of the stranger with the experiences of immigrant groups in the United States. Light (1972) compared the entrepreneurial behaviors of Chinese, Japanese, and Blacks. Bonacich and Modell (1980) reconstructed the entrepreneurial history of Japanese in California and showed how small enterprises impacted the success of future generations. Portes and Bach (1985) detailed how Cuban refugees build an entrepreneurial enclave in southern Florida and Zhou (1995) analyzed data from immigrant Chinese in New York, concentrating on how they managed an entrepreneurial community. The literature has become very extensive and expansive, including the entrepreneurial experiences of many other groups in cities across the United States (Butler & Greene, 1996). Although all of the studies do not concentrate on wealth building, they point to the importance of entrepreneurship for immigrant populations as they enter host societies.

Two theories have emerged which allow scholars to make predictions about the creation, maintenance and management of ethnic enterprises. Enclave theory concentrates on geographically self–contained ethnic communities within metropolitan areas. The enclave, which is a community composed of both residences and business enterprises, produces a segmented economy composed of both primary and secondary jobs. Business owners are able to reproduce the segmented labor market of the larger society, with primary jobs in the enclave providing benefits and advancement to the members of the immigrant community. Primary jobs have been defined as those that provide significant "perks" for employees, including reasonable wages, employee benefits, and opportunities inherent in a career ladder. Secondary jobs, on the other hand, do not provide perks or benefits. The significance of enclave theory is that the immigrant can remain with a self–segregated community and realize a sense of strong economic security (Portes & Bach, 1980; Zhou, 1992).

Unlike enclave theory, middleman minority theory is concerned with the development of enterprises throughout the metropolitan area; there is no concern paid to where enterprises are located. As the term suggests, studies concentrate on how ethnic groups act as middlemen in the movement of goods and services. Historically members of these groups concentrated in self–employed areas as labor contractors, lenders, brokers, and rent collectors. Playing the middleman position mean that they negotiate products between producer and consumer owner and renter, elite and masses, and employer and employee (Zimmer, 1991; Bonacich & Modell, 1980). Essentially these businesses are found in the retail and service industrial sectors.

The glue which holds ethnic enclave and middleman minority theories together is the opportunity structure in the larger society. The defining constructs of both theories include, 1) movement into an area in which 2) levels of discrimination restrict access to economic opportunities in the primary labor market. Because they are new comers, they are less likely to have the experience necessary to find excellent work. Fluency in English may be limited and even when they come with academic credentials, these credentials are not recognized by the host society and economic returns to the credentials are limited (Light & Rosenstein, 1994). Therefore, to avoid falling to the "bottom of the economic barrel" the recent arrivals 3) create new and small businesses of the type described above, those which require little capital to enter and which could be closed quickly if the need or the desire to move returns.

One outcome of the type of studies organized around these theoretical frameworks is a construct definition of ethnic entrepreneurship, "a set of connections and regular patterns of interaction among people sharing common national background or migration experiences" (Waldinger, Aldrich, & Ward, 1990, p. 33). The connections and patterns of interaction are as critical to the concept as is the shared national background and these criticalities are represented in most community level studies of the entrepreneurial behaviors of ethnic groups (Light, 1972; Bonacich & Modell, 1980; Portes & Bach, 1986; Zhou, 1992, and others). However, information on business ownership of those with ethnic surnames is collected and reported upon by the U.S. government and is also used as a point of reference for ethnic entrepreneurship. Therefore, in this paper we examine the characteristics of business owners and firms of the described ethnic community and compare these findings with the data collected for the U.S. Economic Census Data.

South Asian Indians as a Topic of Research and Research Propositions

As noted earlier, our research is on the Pakistani/Ismaili community of a Southwestern city. Within the ethnic entrepreneurship literature there is literature which is specific to the population of South Asia. A large portion of this research has been done in England as these groups have become highly visible as shop owners. In the 1980s research showed that the proportion of retail and service enterprises owned by South Asians had shown a steady increase (Aldrich, Cater, Jones, & McEvoy, 1983; Mars & Ward, 1984). Much of this research is concerned with how South Asian enterprises grow as residential areas switch from being white English to minority occupied.

The research reported in this paper is a natural extension of work done by Greene and Butler (1996) of one Pakistani/Ismaili community in the U.S. Thus we set the stage for our present analysis by presenting a brief overview of this research. Both the ethnicity (Pakistani) and the religion (Ismaili) is relevant for the consideration of this community as the Ismailis have traditionally lived as a minority within a minority. Greene and Butler, building from a concern with how various types of incubators provide a nurturing environment for the development of enterprise, compared the business efforts of the Pakistani community with those undertaken within a formal business incubator.

Formal business incubators provide space, assistance, and a general nurturing environment for the development of new ventures (Allen & McCluskey, 1990). Incubators are created to help general economic development and job creation, the commercialization of research and the transfer of technology into new commercial applications, and the enhancement of small business success. They are designed to be the site of the initial stages of enterprise development and have been described as "change agents" in the overall process of economic development. They address marketplace failures, including problems of high information costs, low service levels, difficulties in obtaining services, and capital shortage (Campbell, 1989).

The literature on formal incubators questions the low level of minority participation in incubator facilities throughout the country (Campbell, 1989). However, as noted by Greene and Butler, the literature on business incubators is separate from that recognizing the historical fact that immigrants and other non–white groups who are interested in starting enterprises have developed their own methods to provide for the capitalization and success of enterprise (Butler, 1991). These methods guide what they call natural incubators (Greene & Butler, 1996) and have been studied for years by scholars in the fields of Anthropology and Sociology.

In America, the ethnic enterprise research has developed a literature which examines the economic behavior of immigrant groups. As noted earlier, this research activity is being guided by middleman and enclave theory. Greene and Butler utilized these theories to account for the development of the natural incubator within the Pakistani community. They concluded that the Pakistani/Ismaili business community performs the same nurturing function in the process of business formation as the formal business incubator. Both incubators can be viewed as institutions with a common desired outcome—the creation of new enterprises. The major differences in service offerings that they found are the lack of designated physical space and administrative support services in the natural incubator. The businesses initiated by the natural business incubator are not based in a common facility and, in fact, are not necessarily located in a geographical area defined by minority group membership. Instead, in the tradition of middleman theory, they are located all over the city and are guided by market considerations (Greene & Butler, 1996).

The previous case study defining the business creation process of the community combined with survey data from community members provides the opportunity to test the critical components of the guiding theoretical frameworks. First, are immigrant members of the community more likely to create business enterprises. Second, is discrimination a factor in the entrepreneurial decision? And third, are the businesses more likely to be in industrial sectors with low barriers to entry?

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