Immigrant Entrepreneurs, the Ethnic Enclave Strategy, and Venture Performance

Abstract

This study argues that first- and second-generation immigrant entrepreneurs’ endowments of economic, human, and social capital, together with their degrees of social identification with their ethnic community, affect their elemental strategic choice to pursue a venture strategy focused either on their ethnic enclave or the dominant market. The authors then propose that this choice affects venture performance indirectly, depending on how well the entrepreneur’s capital endowment allows the chosen strategy to be executed. The authors test these ideas via a field study of 103 first- and second-generation immigrant-owned ventures in a U.S. Midwest state. The findings indicate that immigrant entrepreneurs’ capital endowments and social identities influence their choice of an enclave versus dominant market venture strategy. Moreover, it is the particular alignment of entrepreneurial capital and strategy that ultimately shapes venture performance.