The motivation and behaviour of European expatriate business owners in Thailand: lifestyle migrants in search of innovation.

• Author: Egan, Victor

1. INTRODUCTION

   Entrepreneurship has received widespread acceptance as an important mechanism for sustainable national economic growth by way of innovation of products and services, job creation, and increased productivity (Brautigam 1998; Hisrich et al. 2008; Salgado-Banda 2007; Tan 2004). Consequently, the nature of the entrepreneur, and what he or she does, has received considerable academic attention in recent times (Busenitz et al. 2003; Shane and Venkataraman 2000). On the other hand, expatriate entrepreneurs (that is, those who migrate to another country and engage in business opportunities) have received relatively scant attention in the academic literature. Stone and Stubbs (2007: 433-434) described the phenomenon of the migrant entrepreneur driven by lifestyle aspirations as a "relatively recent pattern", and suggested that more research is required on the "link between lifestyle migration, entrepreneurial activity and the specificity of the location".

   The present study was, hence, conceived to add to the extant empirical evidence by investigating the motivations and behaviours of European expatriate entrepreneurs engaged in business ventures in the regional tourist resort city of Pattaya, Chonburi Province, Thailand. The timing of the study was such that it also enabled an exploration of the coping strategies employed by the expatriate entrepreneurs to deal with the global economic downturn which commenced in mid-2008.

   In terms of structure, the paper starts by providing a review of the literature on entrepreneurship, in general; entrepreneurship in Thailand; and, migrant entrepreneurship. The business and lifestyle contexts of Thailand and Pattaya are then examined to indicate the research situation in which the European expatriate entrepreneurs were embedded. This is followed by an explanation of the demographics of European aliens who live in, or visit, Pattaya. The grounded theory approach to the study, and the convergent interviewing method, are then outlined. The results are presented before the discussion and conclusions section highlights the core findings. The paper concludes with implications for policy.

2. ENTREPRENEURSHIP

   Entrepreneurship has been defined as "the process of creating something new and assuming the risks and rewards" (Hisrich et al. 2008: 8); "the process, brought about by individuals, of identifying new opportunities and converting them into marketable products or services" (Schaper and Volery 2007: 4).

   Similarly, Burns (2007: 11) suggested that "entrepreneurs use innovation to exploit or create change and opportunity for the purpose of making profit". Consequently, creativity and innovation of products, processes, and services is at the core of the sort of entrepreneurial activities that foster sustainable national economic growth (Bannock 2005; Brautigam 1998; Cressey 2006; Daniels & Mead 1998; Hew 2004; Kuratko and Hodgetts 2007; Longenecker et al. 2003; Salgado-Banda 2007; Shepherd and Wiklund 2005; Tan 2004; UNDP 2004).

   The option to engage in entrepreneurship emerges from two factors; firstly, "opportunity entrepreneurship" (Schaper and Volery 2007: 16) pulls entrepreneurs into exploiting market opportunities; and secondly, "necessity entrepreneurship" (Schaper and Volery 2007: 16), or "forced entrepreneurship" (Richtel and Wortham 2009: 11) pushes entrepreneurs into alternative income generating activities when there is no other means of making a living. A major motivator for opportunity entrepreneurship (apart from personal wealth creation) is the desire to be one's own boss; to be independent, and hence, in control of one's own financial destiny (Burns 2007; Kuratko and Hodgetts 2007; Schaper and Volery 2007; Stokes and Wilson 2006).

   In Thailand, entrepreneurship is promoted by conducive public attitudes. For example, a high rating is placed on business start-ups as a desirable career choice, and an equally high status value seen in doing so (Emerging entrepreneurship in Thailand 2009; GEM: Thailand 2007). However, while public attitudes support entrepreneurs, the Thai cultural and educational milieu is not as conducive. Lack of creative thinking skills tends to undermine Thai entrepreneurial activities (OSMEP 2005). While Thai people may have a great ability to adapt and adopt (Cohen 1991; Sheehan and Egan 2006), their propensity to innovate something new is less clear (Chulavatnatol 2005; GEM: Thailand 2007; Hunt 2006; Somjai 2002). Consequently, Thai entrepreneurs generally choose to operate their businesses in markets of many competitors offering non-innovative products and services with little value creation (GEM: Thailand 2007). Competitive strategy is, therefore, stifled, and niche market opportunities often missed.

   In the case of expatriate entrepreneurs, prior research is relatively scant. One such study, however, was that of Stone and Stubbs (2007: 439-442), who explored British expatriate entrepreneurs in France and Spain. They found that the expatriates' primary motivation for the decision to migrate was climate and location, and in almost all cases, the catalyst for the migration was an initial visit as a tourist. Their findings suggested that the motivation for entrepreneurial activity was a mechanism to continue to live in the chosen location; the business became "a diversion, source of fulfilment and a part of lifestyle itself". The British expatriates tended to be drawn to industries where their "skills, knowledge and contacts gave them a competitive advantage over local businesses". Diversification was also evident, in that the majority of British expatriate entrepreneurs had more than one business. The research overall found that "shortterm horizons dominated; future business plans were only vaguely formulated and ambition limited".

   Befus et al. (1988) provided another insight into expatriate entrepreneurs with their study of Americans and Europeans operating businesses in Honduras. Almost 50 percent of the respondents reported no prior experience of the industry in which they entered. For nearly 90 percent of the respondents, the motivation to migrate was related to profit potential, amidst a business context largely devoid of competitive pressures.

   Eaton's (1995) study of British expatriates in Spain's Costa del Sol revealed 60 percent had previous experience in the particular industry they had entered. The businesses predominantly serviced "national enclaves" (1995: 258). Motivation to migrate and start a business was climate related. Blackwood and Mowl (2000) explored success and failure of small businesses operated by British expatriates also on the Costa del Sol. They found significant correlations between success and previous operation of a business in a similar industry, and also between success and diversity of investments. Importantly, they also found no significant difference in survival between those motivated by lifestyle aspirations, and those motivated by financial reward. From a different perspective, Huber and O'Reilley (2004) investigated the migration of British and Swiss retirees to the Costa del Sol. They reported a low level of integration, particularly for the British, preferring to remain largely embedded within their own national enclave; hence, the strong demand for nationality-based products and services to create familiarity and security in an alien environment.

   In summary, entrepreneurs are generally motivated by personal wealth creation, and the desire for independence. Some are pulled into entrepreneurial activity by opportunity; others pushed by necessity. Similar dynamics are also enacted by Thai entrepreneurs, but in their case, lack of creative thinking skills often masks niche market opportunities. In contrast, expatriate entrepreneurs offer alternative motivation for their enterprise; 'lifestyle migration' for reasons of climate, location, and lack of competitive pressure dominates their mindset to the detriment of ambition. The expatriate entrepreneur typically innovates by serving a niche market selling home-country products and services to home-country compatriots; what Astley (1985: 224) referred to as the filling of "unfilled ecospaces". Survival then rests more on prior industry knowledge and diversification strategy than entrepreneurial ambition. The next section presents the business context of Thailand and Pattaya within which the respondent European expatriate entrepreneurs were embedded at the time of the study.

3. BUSINESS CONTEXT

   Thailand's economy has been one of substantial growth in recent years. Since 2000, the average annual rate of growth of gross domestic product (GDP) has been 4.4 percent, with a peak of 6.7 percent in 2004 (Thailand--GDP real growth rate 2009). However, over 70 percent of Thailand's GDP is derived from exports (Arunmas 2009), making the economy extremely vulnerable to external shocks, such as the severe acute respiratory syndrome (SARS) outbreak which led to GDP growth of 1.4 percent in 2002 (Thailand--GDP real growth rate 2009), and the global economic downturn which commenced in mid2008.

   The International Monetary Fund (IMF) warned in March 2009 that the world's advanced economies would suffer a "deep recession", with the US economy declining by 2.6 percent and Japan's by 5.8 percent in 2009 (IMF Slashes Global economic forecast 2009). This warning would have been of particular concern for Thailand, since the US and Japan are ranked as the country's most important markets, and consume nearly 25 percent of exports (CIA Factbook--Thailand 2009). The IMF further suggested that developing economies, such as Thailand's, would grow by 2.5 percent in 2009 at best (IMF Slashes Global economic forecast 2009). Thailand's vulnerability was apparent by February 2009, at which time exports had fallen by over 19 percent compared to the same period the previous year (Arunmas 2009).

   As an export industry, tourism in Thailand is of major significance, usually...