Overcoming the Liability of Foreignness: A Typology and Model of Immigrant Entrepreneurs

Author:Călin Gurău, Leo‐Paul Dana, Ivan Light
Publication Date:01 Sep 2020
Overcoming the Liability of Foreignness:
A Typology and Model of
Immigrant Entrepreneurs
Montpellier Business School MontpellierResearch in Management 2300 Avenue des Moulins 34185, Montpellier, France
University of California 264 Haines Hall 375 Portola Plaza, Los Angeles, CA, 90095-1551, USA
This study addresses the diversity of extant models and theoretical interpretations of the immigrant
entrepreneurship phenomenon. Combining an extensiveliterature review with the use of Bourdieustheoryofsocial
practice, we develop a general model of immigrant entrepreneurship that identifies four different entrepreneurial
paths, each characterised by a specific combination of personal resources, network embeddedness, individual
habitus, and targeted opportunities. Through the interpretative lens of this model, foreignness can represent either
a liability or a competitive advantage for the immigrant, depending on the entrepreneurial context and strategy.
The proposed model provides useful insights into the phenomenon of immigrant entrepreneurship for academics,
entrepreneurs and policy makers, offering a comprehensive framework which does not invalidate the extant models,
but rather integrates them into a larger perspective.
Keywords: immigrant entrepreneurship; model; typology; liability of foreignness; competitive advantage
Liability of foreignness (LOF) is a major barrier
experienced by immigrants (Fang et al., 2014; Irastorza
and Peña, 2014). Extant studies (Irastorza, 2006, 2010;
Brekke and Mastekaasa, 2008; Millar and Choi, 2008;
Constant et al., 2009) indicate that, in comparison with
locals, immigrants face additional difficulties when
entering the job market or starting up a business, largely
due to poor language skills, discrimination, and the lack
of relevant labour experience, resources or social
embeddedness. Despite these challenges, immigrants are
often more likely to become self-employed than locals
(Levie, 2007; Desiderio and Salt, 2010; Contreras-Sweet,
2015). Due to their disadvantaged status in the labour
market (Light, 2004; Parker, 2006), immigrants may use
entrepreneurship as a survival option (Levie and
Smallbone,2006; Chrysostome, 2010);however, this only
partially explains their entrepreneurial propensity and
success, since LOF can significantly limit their access to
business resources or customers (Nestorowicz, 2012;
Irastorza and Peña, 2014).
The heterogeneity of resources, strategies and forms
used by immigrants to develop entrepreneurial ventures
raise important research challenges (Nee and Sanders,
2001; Brzozowski, 2017). As many studies focus on a
specific immigrant group or business initiative (Aliaga-
Isla and Rialp, 2013), the literature is highly fragmented
and contextual: a lack of synthesized and integrated
models has [] led to [a] fragmented understanding of
the true drivers of immigrant entrepreneurship,
thus making it difficult to repeat the success of
immigrantsentrepreneurial activities(Sundararajan and
Sundararajan, 2015, p. 30). Extant models attempting to
provide a structured overview of this phenomenon either
failed to explai n some entrepreneurial paths ( Brzozowski,
2017) or reached a level of generality that eliminates the
distinctiveness of immigrant entrepreneurship (Bailetti,
2018); notably, none of the current perspectives accounts
for why there is so much diversity in the kinds of
incorporation experienced by contemporary immigrants
(Nee and Sanders, 2001, p.387). Globalisation has also
changed the structure of resources, networks and markets,
creating new, alternative opportunities for immigrant
entrepreneurship (Light, 2007; Nazareno et al., 2019).
Our study attempts to address this knowledge
fragmentation, having as research objective to develop a
Correspondence: Călin Gurău, Montpellier Business School Montpellier
Research in Management 2300 Avenue des Moulins 34185 Montpellier,
France. E-mail: c.gurau@montpellier-bs.com
European Management Review, Vol. 17, 701717, (2020)
DOI: 10.1111/emre.12392
©2020 European Academy of Management
comprehensive model of immigrant entrepreneurship that
can provide a clear typology of various entrepreneurial
paths and profiles. To achieve this, we follow a three-step
procedure: first,we realise an extensive literature analysis
regarding the characteristics of the LOF, as well as
extant conceptualisations and models of immigrant
entrepreneurship; second, analysing these models, we
identify the most relevant criteria that define and
determine immigrantsentrepreneurial activities and
profiles; and third, we apply these criteria, developing a
general model of immigrant entrepreneurship
and presenting a clear typology of entrepreneurial
paths/profiles. This approach reinterprets the elements
developed in extant immigrant entrepreneurship studies,
integrating them in an interpretative framework based on
Bourdieus social practice theory. We explain the
variability of different entrepreneurial paths and profiles
as an organic combination of personal resources (defined
as various forms of capital), network embeddedness,and
individual habitus (i.e., behaviours and strategies used
by immigrant entrepreneurs to fully develop and usetheir
personal resources within the specific context of multiple
networks). These elements are combined and used by
immigrants to overcome the LOF and exploit
entrepreneurial opportunities in host countries or at
transnational level.
The proposed model is supported by empirical
evidence obtained from analysing secondary and primary
data regarding the profile and activities of 84 immigrant
entrepreneurs. To evidence the specific characteristics of
the main entrepreneurial paths included in our typology,
four representative case studies of immigrant
entrepreneurs are selected from this database, being
presented, analysed and discussed in our paper.
Our study is structured as follows. In the literature
review, we present the conceptual labels and models of
immigrant entrepreneurship, and we discuss the concept
and the manifestations of LOF. After explaining the main
tenets of Bourdieus theory of social practice, we provide
information regarding the methodologyapplied to collect,
code and analysesecondary and primary data. Toillustrate
the variability of entrepreneurial paths we present four
mini-case studies, each representing a specific type of
immigrant entrepreneur. These cases are then discussed,
representing the basis for developing a general model of
immigrant entrepreneurship, and leading to propositions
for future research. The paper concludes with a summary
of our main contributions.
Immigrant entrepreneurship is known under many
different labels, each outlining a part of its multifaceted
manifestation.Immigrants can create ventures thatservice
their ethnic group or serve as middlemen between
different ethnic communities. Because of their reliance
on co-ethnic networks, the first category is known as
ethnic migrant entrepreneurs (Changati and Greene,
2002; Koning and Verver, 2013), while the second is
considered a middleman minority (Bonacich, 1973).
Globalisation has created favourable conditions for
immigrant entrepreneurs who do not integrate fully in a
host countrys society, using their foreignness as
a competitive advantage and source of business
opportunities. They are characterised either as sojourners
(Robertson and Grant, 2016) if the main accent is on their
reluctance tointegrate the host society, or as transnational
entrepreneurs (Light,2014), considering their capacityto
leverage opportunities that arise fromtheir dual fields and
networks, optimizing resources where they may be most
effective.(Drori et al., 2009, p. 1003). These concepts
share common elements with middlemen minorities: for
example, transnational entrepreneurs represent a
middlemen minority positionedand active at transnational
level, while sojourners mentality is a defining
characteristic of middlemen minorities. Finally, some
researchers evidence the existence of a specific category
of immigrant entrepreneurs, labelled as returnees (Dana,
1996; Liu et al., 2010) or new argonauts (Saxenian,
2007), who use the knowledge, skills and resources
developed abroad to develop entrepreneurial activities in
their home country, sometimes applying a strong
transnational orientation (Lin and Tao, 2012).
Another important definitional issue is the unit of
analysis considered in immigrant entrepreneurship
research: although most authors (Brzozowski, 2017;
Dana, 1996; Drori et al., 2009; Robertson and Grant,
2016) focus on the individual immigrant, as main founder
and actor of the entrepreneurial venture, other studies
argue for a family business approach in which the
immigrant family is viewed as a key social institution
providing the basis for trust and collective action(Nee
and Sanders, 2001, p. 388), while other researchers
position their analysis at ethnic group level, considering
that ethnic strategies emerge from the interaction of
opportunities and group characteristics, as ethnic groups
adapt to their environments(Aldrich and Waldinger,
1990, p. 114). Although these various levels of analysis
create a richer perspective on immigrant entrepreneurship
phenomena, in this paper we analyse the individual
immigrant, considering his/her family and group as social
resources that provide specific competitive advantages.
To avoid these conceptual controversies and include in
our analysis vario us forms of immigrant entrepre neurship,
we define immigrant entrepreneurs(Aliaga-Isla and Rialp,
2013) as individuals who have been outside their country
of origin for at least 12 months (Sasse and Thielemann,
2005) and who sta rt a business in a host coun try (Chaganti
and Greene, 2002).This definition includes both necessity
702 C. Gurăuetal.
©2020 European Academy of Management

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