Immigrant Entrepreneurship and Business Patterns: A Comparison of Koreans and Iranians in Los Angeles

Abstract

There are currently two theoretically controversial issues concerning immigrant and ethnic entrepreneurship in the literature, one on its causes and the other on its consequences. The first is the debate about whether ethnic or class resources are more central to the establishment of immigrant/ethnic businesses. The second issue is whether there is a causal connection between ethnic business and ethnic solidarity. Based on a comparison of the two most entrepreneurial immigrant groups in Los Angeles (Koreans and Iranians), this article addresses both issues. Korean immigrants rely more on ethnic resources, whereas Iranians depend more on class resources. Relative utilization of class vs. ethnic resources determines the patterns of immigrant/ethnic businesses rather than their development in the first place. Korean businesses on average are smaller, more concentrated, and serve more co-ethnic and low-income minority customers, while Iranian immigrants are larger, more dispersed, and largely serve white customers. As a result, Koreans have encountered severe intergroup conflict, whereas Iranians have sidestepped it. Our comparison of these two groups suggests that only middleman businesses strengthen ethnic solidarity, although all types of immigrant/ethnic businesses may contribute to ethnic attachment. Paying special attention to business patterns (e.g., size, type, and location) — much neglected variables in research on immigrant/ethnic entrepreneurship — helps in resolving both theoretical issues.