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nternational Journal of Entrepreneurial Behaviour & Researchmerald Article: Business practices within South Asian family andon-family firms:: A comparative study

Mark McPherson

rticle information:

o cite this document: Mark McPherson, (2010),"Business practices within South Asian family and non-family firms:: A comparative

udy", International Journal of Entrepreneurial Behaviour & Research, Vol. 16 Iss: 5 pp. 389 - 413

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p://dx.doi.org/10.1108/13552551011071878

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at their disposal (Blackburn and Curran, 1993; Rosa, 1993). Unlike their first-generationcounterparts of 1970s and 1980s where entering self-employment was a result ofprevailing economic push and pull factors, and the only level of primary support wasfrom family and friends. Recently, ethnic entrepreneurs are better placed to ponder atrade off between the expected net benefit of entrepreneurship versus the expectedgains from paid employment (Campbell, 1992).

Although this may appear to be a simple contrast between first-generation migrantsand their offspring (the hardships faced by first-generation migrants during theirsettlement within the UK is acknowledged), the second-generation however are startingfrom a platform different to that experienced by their parents. For instance, issues that

impact on the future stability of the second-generation, come from the first-generationspre-occupation with financial security via the family business (FB) or paid employment(Chan and Lin Pang, 1998). Needless-to-say, emphasis on the achievement of a highersocial status for first-generation means someform of investmentin the education of theirchildren. Such an investment would then make it easier for the offspring (unlike theirparents) to consider careers outside low order retailing, the catering trade, low paidunskilled manual work, etc. (Chan and Lin Pang, 1998). Janjuha-Jivraj and Wood (2002)subscribe to such a view whereby they suggest that the second-generation are notrestricted in terms of careeroptions in theway their parents were, education has exposedthem to many more opportunities for employment and entrepreneurship (Janjuha-Jivrajand Wood, 2002). For example, many second-generation South Asian children ofpharmacists seek careers as a pharmacist, whereas others see pharmacy as astepping-stone into medicine (Tann, 1998).

Even instances where entrepreneurship is actively sought, Peters (2002) suggests anoverwhelming majority of second-generation ethnic entrepreneurs are located in newdynamic low-risk firms that rely more on class resources than ethnic resources tooperate. Moreover, despite the fact that such firms require additional capital atstart-up, they are less labour intensive than businesses established by theirfirst-generation counterparts (Peters, 2002). All this, as noted by Peters, is attributed tothe changing nature of:

. cultural;

. social-economic and politico-institutional environments; and

. opportunity structures within many developed economies.

Advancing the discussion, second-generation offspring find entrepreneurship less asource of economic survival, but more a source of economic advancement. For instance,the second-generation like the first-generation, learn to survive within conflicting

environments. However, in order to increase the chance for social mobility and reducethe effects of social stigma, the second-generation unlike the first-generation, have totheir advantage a thorough grasp of the English language and knowledge of Britishnorms, values and behaviour the way of doing things. More importantly,second-generation are always mindful that such an advantage, along with ethnicityand culture, are on the one hand resources to be used to overcome the un-officialdiscriminatory barriers imposed by those hostile towards social advancement ofminority groups (Modoodet al., 1997). On the other hand, such resources are used tonavigate a path through the socio-economic and politico-institutional environments,and opportunity structures in the UK. As Wilpert (1988) purports, the place of

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second-generation offspring in the UK economy demonstrates the extent and nature oftheir involvement in mainstream society, which in turn determines their societalintegration and their social mobility.

To that end, the focus of the paper is upon key factors recognised within emergenttheory as those being relevant to second-generation entrepreneurial experience. Forinstance, Peters (2002), Collins (2002), Pang (2002) and Leung (2002) suggest theories ofethnic small business activity must explain diverse, uneven and changing patterns ofentrepreneurship. For that reason, investigation is needed into the changing groupcharacteristics of different cohorts of ethnic entrepreneurs over time, their ethnicbusiness activity, and ethnic and class resources (including education) such cohorts

have at their disposal (Peters, 2002; Collins, 2002; Pang, 2002; Leung, 2002). Theseaforementioned factors will be applied to the situation of London based South Asiansentrepreneurs. Such a perspective would then aid the development of our ownunderstanding of second-generation South Asian business practices in the UK.

The paper is structured accordingly: the literature review discusses social capitaland business practices from both a theoretical and ethnic perspective. The researchmethodology and findings sections follow, respectively, with conclusions bringing thepaper to a close.

Literature reviewSocial capitalMenzieset al. (2007) note, social capital includes:

. the use of co-ethnic employees/markets/suppliers;

.

community sources of capital;. advice and information (banks/accountants/lawyers/small business advisors);. competitors;

. local and central government institutes; and

. membership of ethnic community organisations.

At the core of social capital, is the family unit. This unit may represent a strategicresource in immigrant adaptation to a new society when faced with uncertainties andchallenges (Sanders and Nee, 1987). The strength of family bonds allows kinship ties tobe used for economic adaptation. Moreover, reliance on the family and extended familyunit intensifies the quality and solidarity of the actors involved. It becomes thehallmark of both the family and co-ethnic community as it gathers momentum in thedevelopment of formal and informal links between themselves and the host society

(Sanders and Nee, 1987).In this context, social capital is considered a source of strong or weak ties/linkages

within horizontal and vertical social resource networks/associations. Theseties/linkages help one understand why a new business is started, its chance ofsurvival, and in particular why some ethnic groups are more successful than others inbusiness (Flapet al., 1999; Deakins et al., 2005; CEEDR, 2007; Menzies et al., 2007).

A measure of how well connected individuals of a given social group are to boththeir respective communities and wider society, is seen through bonding social capitaland bridging social capital (Woolcock, 1998; Cabinet Office, 2003). The former linksindividuals of a given social group with one another. The latter consists of networks

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that link individuals of a given social group with the wider society (Woolcock, 1998;Cabinet Office, 2003). This reliance on embedded social networks is found in the factthat informal social networks are built on concepts of trust and obligation by familyand community to assist one another. In other words, reciprocated community support(Donckels and Lambrecht, 1997; Kilkenny et al., 1999). Therefore, reciprocatedcommunity support is a non-market based exchange, and is classified as a form ofsocial capital based on positive relationships the stock of goodwill, between theentrepreneur and his/her immediate community. Support must be reciprocated (givenand received) between business and community, thus the stronger the relationship, thegreater likelihood of business success (Kilkenny et al., 1999).

However, as Bieler (2000) points out, while the internal relations within an ethnicallydefined group may be characterised as strong ties, relations with social networks thatare external to the group, may remain underdeveloped at best, or non-existent. Thisaspect of embedded social relations provides the possibility of a negative, constrainingor destructive influence on business development (Woolcock, 1998; Bieler, 2000). Ifthese influences are evident, the preference for dealing with fellow co-ethnics may failto materialise, as ethnic networks become rife with interethnic competition andfactionalism (Sanders and Nee, 1987; Waldinger, 1995; Flap et al., 1999; Smith andWistrich, 2001).

The ethnic dimension strong and weak tiesFadahunsi et al. (1999) note that informal co-ethnic networks may represent a poolfrom which essential resources are mobilised, and a cushion in terms of the support

received from the community. Through such usage, ethnic entrepreneurs are able toovercome resource constraints, for instance, the ability to:

. raise capital;

. seek out and utilise materials;

. identify suppliers and customers/markets; and

. recruit and manage labour (Ram and Holliday, 1993; Ram et al., 1998; Fadahunsiet al., 1999; Deakins et al., 2005).

In this context, South Asians in the UK are able to provide for themselves a highlyeffective bonded insider network through communal and family solidarity.Moreover, the importance of familial labour, the role of the community, culturalvalues, advice, inter-firm linkages and other competitive assets are emphasised (StoyHayward Report, 1989, 1990; Ram and Holliday, 1993; Joneset al., 1994a, b; Ram, 1994;

Srinivasan, 1995; Basi and Johnson, 1996; Ramet al., 1998; Woolcock, 1998; Dana, 2000;Janjuha-Jivraj and Wood, 2002; Cabinet Office, 2003).

Within an international context, informal networking by UK-based ethnicentrepreneurs generally and South Asians specifically, are in the main directedtoward country of origin of the business owner. The potential for success in accessingthese overseas markets is increased on account of the language skills, extended familyand the global trade links of the entrepreneur in question (Fadahunsiet al., 1999; Bankof England, 1999, 2000; Crick and Chaudhry, 2000).

With regards to formal network usage (weak ties/bridging social capital), there isevidence to suggest sectoral factors, not ethnicity, are the main drivers for such usage

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attitude towards business strategies, but also the maintenance/continued security,stability and familiarity within their social networks and co-ethnic markets(Froschauer, 2001).

In terms of the second-generation, two developments are evident. First, as anexample, Chan and Lin Pang (2002) identify a number of young Chinese aspro-mainstream whereby business success and growth is achieved by seeking andaccepting expert assistance from mainstream sources, as well as breaking away fromtraditional business activities, family and community networks (Chan and Lin Pang,2002). Barclays Bank (2001) also acknowledged noticeable differences in businesspractices of young ethnic minority entrepreneurs generally. For instance, of those

surveyed by the bank, 80 per cent were pulled into entrepreneurship citing a wish totake control of their lives and to create their own wealth (Barclays Bank, 2001). Theimplications of this level of motivation on business practices suggests, unlike theirfirst-generation counterparts noted earlier, second-generation ethnic entrepreneurs seebusiness planning and obtaining advice as being key components to business growthand survival (www.businesspark.barclays.com/reviews/ethnic.htm).

With regards to the second key area, noticeable are changes pertaining tosecond-generation South Asian entrepreneurs within FBs. Here, Janjuha-Jivraj andWood (2002) observe that a South Asian FB transforms as it progresses along its lifecycle when transferred from founder to second-generation, or even second- to third-generation offspring. For example:

. internal structures are formalised;

. job responsibilities are clarified and reinforced among family and non-family

members;. loyal non-family members are rewarded with senior positions;. planning becomes a regular feature of the management team;. strategies are developed for the future expansion of the business, which

incidentally, entails an increase in the employment of non-family members andprofessional managers from outside the co-ethnic community;

. succession planning and implementation is formalised; and

. strategies are developed to separate family ownership from family management,so allowing greater responsibility and accountability for non-family seniormanagers (Janjuha-Jivraj and Wood, 2002).

The discussion thus far has explored a number of culturally embedded factors shapingentrepreneurial behaviour, access to resources, employment of family labour, formal

and informal networks. These factors should not be considered in isolation, but viewedinstead as a series of interrelated elements, which in their entirety impact on themanagement ability of the entrepreneur, and ultimately on the performance of thebusiness. To understand this, the discussion draws upon the theoretical underpinningoffered by Glancey et al. (1998) (Figure 1).

Essentially, influences can be seen through the entrepreneurs personal attributes,which determine his/her motivation and objectives. In turn, this determines the firmsperformance. The process is mediated through the market/environment in which theentrepreneur operates, and the managerial practices that s/he employs (Glancey et al.,1998). The objectives of a small firm tend to be synonymous with those of the owner,

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and entrepreneurial characteristics and behaviour are displayed in the managerialpractices employed in running a firm particularly in the case of family-owned smallbusinesses (Glanceyet al., 1998).

From an ethnic dimension, the first-generation ethnic entrepreneur, the family andthe resulting FB is seen as a bastion for ethnic self-employment, ostensibly thefounders baby and an extension of which s/he stands (Stoy Hayward Report, 1989,1990; Ram and Holliday, 1993; Ram, 1994). Moreover, the founders perceived internalpaternalistic managerial style reflects values, rigidity, and tight control of the business.Consequently, the firm becomes bound in culture, values and traditional attitudesthrough the founders influence. Any change made to the FB by younger generations

may be interpreted as a lack of respect for the older generation, not to mention theimage of the family as a whole (Stoy Hayward Report, 1989; Ram and Holliday, 1993;Cromie et al., 1995; Westhead and Cowlin, 1997; Fletcher, 1998; Janjuha and Dickson,1998a, b; Ram et al., 1998).

Contributions to success within ethnic FBs are a result of culturally transmittedskills and characteristics/behaviour, value systems and cultural norms (Srinivasan,1992, 1995; Dana, 2000). For many first-generation ethnic entrepreneurs, the value of aFB is considered more than a commercial asset, but rather a family heritage. Suchheritage satisfies any material desire for the family because it offers them a sense ofstatus within the eyes of their particular ethnic community. Moreover, the wish to passon a profitable FB to the next generation is a strong motivating factor for the founderin both the development and growth of the business (Stoy Hayward Report, 1989). Inthis context, strong ties thesis ensures that the founder and family maintain their lackof trust in non-family members to safeguard the familys wealth (Stoy Hayward

Report, 1989).

Managerial skills class resourcesShepherd and DeTienne (2005) suggest that individuals have at their disposal(transferable) skill-sets developed through experiential learning (EL) and priorknowledge. These skill-sets are based on work experience, education, incorporatingintentional or unintentional knowledge taken from direct experience and vicariouslearning and/or through second-hand-experience, which will be directly or indirectlyrelevant to the entrepreneurial experience (Shepherd and DeTienne, 2005). Deakinset al.(2005) add to this and draw an association between:

Figure 1.Key factors and influences

Source:Glancey et al. (1998)

Markets in

which firms

operate

Entrepreneurs

characteristics

Entrepreneurs

objectives

Business

performance

Managerial

practices

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(1) age of the respondent;

(2) the level of management training/education the individual may have receivedprior to and during entrepreneurship; and

(3) the impact of points (1) and (2) on firm performance and entrepreneurialmotivation.

Here, the debate focuses on what Gilmore and Carson (1996), Carson and Gilmore(2000), Verheulet al.(2002), Jamal (2005) and Shepherd and DeTienne (2005) describe asEL. Essentially, EL is built on four existing personal/managerial competencies that

contribute to the development of established practices and customs of decision makingfor individual managers, and the common sense knowing. Specifically, the width anddepth of EL is seen through:

(1) Knowledge (K). Clear understanding of the specific details and requirements ofthe job, the firms markets, competitors and customers.

(2) Experience (E). Based on years working within the same environment,transferring the experience to other situations, and building general familiaritywith the industry/situation/market.

(3) Communications (C). Knowing which communications work best, the rightaudience, when and how to communicate, and how/where to obtain information.

(4) Judgement ( J ). The ability to pull all features of K E C together, judge howbest to make a decision, and which decision is best in specific circumstances.

(Sources:Gilmore and Carson, 1996; Carson and Gilmore, 2000; Verheulet al., 2002;Jamal, 2005; Shepherd and DeTienne, 2005).

As literature notes, key influences shaping the entrepreneurial experience and thedevelopment of management skills of second-generation entrepreneurs in comparisonto their first-generation counterparts, include class resources (behaviour impliedthrough education, skill-sets, experience) and sectoral composition (East MidlandsObservatory Final Report, 2001; Smallboneet al., 2001; Ramet al., 2002; Deakinset al.,2005). However, Mourouti (2004) suggests that there is a lack of agreement as to thevalue of education on small firm performance. Under scrutiny is functional educationin areas such as marketing, finance, HRM, operations management, and the like, andtechnical versus non-technical knowledge (Mourouti, 2004).

To close, issues pertaining to family obligation, management control, economicrationality and class/resource mobilisation via strong/weak ties are the focus of

investigation throughout this paper. As such, differences/similarities between ethnicentrepreneurs within family and NFBs will be highlighted.

Research methodologyAim of the researchThe aim of this paper is to investigate differences/similarities in business practices ofsecond-generation South Asian entrepreneurs within family-owned firms, incomparison to their second-generation counterparts managing and running theirown business. To achieve this the following methodology was employed.

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The research designInvestigation was conducted within a phenomenological paradigm for two reasons.First, to tweak out similarities and differences within ethnic minority enterprises fromthe participants own frame of reference. Second, to unravel the complexities of social,cultural and generational change in order to understand how internal and externalfactors impact on the effective operation of an ethnic minority business (Chan and LinPang, 1998).

Justification for the use of a phenomenological paradigm is in reaction to thepositivistic paradigm. For instance, Hussey and Hussey (1997) consider positivism andphenomenology paradigms as two extremes with a continuum of core ontological

assumptions that underline the notion of reality and being. A positivists view noteresearchers legitimately impose their operationalisation of social reality upon theirsubjects in a way that such stimuli can be measured in one form or another (Gill and

Johnson, 1991; Easterby-Smith et al., 1991). This approach reinforces one of the keyprinciples of positivism in that, a study of society and human behaviour should bescientific in the mode of natural sciences (Walker, 1985). A phenomenologicalparadigm, however, involves itself not only with exploring the relationship betweenvariables being studied, but the context of the setting also. This allows much morecomplicated situations to be examined (Remenyi, 1995).

Research instrumentsResearch instruments used to carry investigation for this paper were semi-structuredinterviews (with accompanying prompts), and case-study methods (semi-structured

interviews, observer-as-participant and documentary evidence). The researchinstruments were developed, tested and re-assessed before being used. In addition,various documents had been developed and used in order to record and cross-referencemany aspects of the world under investigation.

Sample sizeRespondents were selected from a variety of industrial sectors situated within theGreater London area. In total, 48 entrepreneurs (representing 33 firms) wereinterviewed using a semi-structured approach. Respondents consisted of ten first- and38 second-generation Sikh, Hindu and Pakistani Muslim entrepreneurs from bothfamily and non-family owned businesses (NFB). To complement the interview process,the study selected nine businesses (three from each ethnic group) to make up themultiple comparative case-study stage.

Within the FB context, the rationale for the inclusion of first-generation South Asian

entrepreneurs was to understand whether the father figure and family informedbusiness practices adopted by the said second-generation entrepreneurs. This notionwas also explored with second-generation respondents from NFB backgrounds inorder to establish whether the lack of influence by father and family had a detrimentaleffect on business practices.

Given the nature of the study, access to various respondents was negotiated via acombination of purposive sampling, snow balling sampling, referrals and/or someform of exchange process. In terms of the interview process, on average each interviewlasted 90-120 minutes, with two interviews lasting over two hours 30 minutes.Duration of case studies ranged from seven to 20 months.

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Generational differences and religionFirst-generation (n 10), respondents identified themselves as male Sikh, Hindu orPakistani Muslim, approximately 50 years of age or above, and residing within the UK.Owing to push factors respondents had established the FB within the UK, andmaintained direct control over the business. The age of businesses ranged from eightyears to 40 years. Respondents operated within low order catering and retailing, and allemploy immediate family members. This employment situation was consistent withethnic FB literature.

Sikh, Hindu and Pakistani Muslim second-generation male entrepreneurs (n 38),aged between 20 and 40 years old, and who either were born in or moved to the UK

were interview also. Respondents born overseas were included as migration occurredbefore the ageof 12 years( Janjuha andDickson, 1998a,b; Chan andLin Pang, 1998; Andall,2002; Waldinger and Feliciano, 2004; Porteset al., 2005; Portes and Rumbaut, 2005).

For the purposes of comparison and discussion the paper identified and used twoclusters of second-generation respondent:

(1) In total, 15 respondents were involve with the family-owned business (FB), andworked alongside the founder (father).

(2) In total, 23 respondents were from a NFB background and managing a businessestablished by himself and/or with a business partner. Parents of theserespondents were not involved with self-employment, instead worked in paidemployment or otherwise.

The aspects noted above were important because people with successfully

self-employed parents have to their advantage access to financial resources andskills directly relevant to starting a business (Rosa, 1993). An advantage, it could beargued, that offspring from FB backgrounds have over those offspring frombackgrounds where their parents are in paid employment or otherwise. However, anissue does remain whether offspring from FB backgrounds are able to capitalise on thisadvantage by displaying the range of skills necessary to develop a business further.

Finally, the inclusion of culture and/or religion was to provide insight into the extentto which these aspects inform business practices on a personal and professional level.

Business sectorAs noted, the first-generation (n 10), operated within low order catering and retailingand all employed family members. The second-generation (n 38) were foundoperating businesses across a number of sectors. For instance, low order catering andretailing (confectioners/tobacconists/newsagents, clothes, specialist outlets computers sales, electrical goods/services), professional services (employmentagencies and business/management consultancies), and IT/high technical services.Working within the parameters pertaining to firm size, levels of in/formality, andstrategic fit, businesses were arranged by sector, FB and NFB, then separated into twokey headings:

(1) Traditional firms. Low order retailing, catering and the like.

(2) Emergent firms. IT, communications and so forth (Ram and Holliday, 1993;Edelmanet al., 2002; Marlow, 2002, Leung, 2003; Bacon and Hoque, 2005; Koteyand Slade, 2005; Harney and Dundon, 2006).

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To support these categories, the paper identified the number of employees perbusiness, and age of business as additional influences.

The rationale behind categorisation was to understand/determine whether suchfactors informed business practices adopted by those within the research frame.

Data analysisTo analyse data pertaining to business practices the paper employed a techniqueknown as key-words-in-context (KWIC). KWIC finds all the places in a text where aparticular word or phrase appears, then prints it out in the context of a some of wordsbefore and after the phrase (Ryan and Bernard, 2000). At the heart of this technique iscoding tags or labels for assigning units of meaning to the descriptive or inferentialinformation compiled during a given study (Miles and Huberman, 1994). Therefore, asthis paper wished to retain as much detail as possible (Malholtra, 1996), codes wereattached to chunks of text of varying sizes (whole sentences) to connected orunconnected key words or phrases within specific settings/context.

Limitations of the studyGiven the opportunity structures and socio-economic environment of the study area,namely Greater London, findings may not be generalisable to other parts of the UK.This may be of concern particularly in areas that yield low propensity for businessactivity for embedded ethnic communities, and where such areas inform businessand/or managerial behaviour.

FindingsThe family businessTo understand the influence of second-generation respondents on business practiceswithin family firms, it is important to appreciate the circumstances that led to his entryinto the FB. Moreover, this appreciation will add context in terms of a point ofdeparture between the said respondent and his NFB counterpart. In essence, entry intothe business resulted from one of four situations:

(1) Natural progression in terms of succession. The founder (father of a respondent)is reaching retirement age therefore, systems and plans are being developedfor the offspring to take over the business. Although the procedure is veryinformal, the move is seen as positive and welcomed by the variousstakeholders, family, and respondent.

(2) Parents acting as role models. As one respondent noted, by observing hisparents run their own business, he was encouraged to enter the FB. As therespondent reflects: By watching my parents, I was attracted toentrepreneurship with the freedom of being my own boss.

(3) Family/cultural obligation and sense of fairness felt towards helping theirfather. This sense of duty displayed by respondents was a reaction to thebehaviour of other family siblings who, not being attracted to the FB, pursuedtheir own interests.

(4) A lack of education and limited possibilities to explore other employmentopportunities. As one respondent confessed I will be honest with you; I didntstudy so I neverthoughtaboutdoing anything else otherthan being my own boss.

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Further analysis revealed the development of two contrasting clusters resulting fromentry. Each cluster, with its own particular attitude and behaviour, appears to impacton business practices in both a positive and negative way. In addition, the study foundsuch attitude and behaviour led to situations of conflict or compromise between fatherand son. Exploring further, the paper noted second-generation respondents hadresigned themselves to work within a number of self-imposed coping strategies:

. adaptation;

. compromise/accommodate; and

. no-go.

The first cluster of nine respondents, enjoy their role within the FB having returned toit under their own volition (after obtaining a college/university education respondents entered the business due to natural progression or their parents acting asrole models). These respondents appear to be highly motivated and were attracted tothe FB by:

. the freedom that it appears to offer;

. the potential to make money rather than earn money;

. for the drive to be financially independent; and

. the potential to free up ones time in order to support a desired lifestyle.

Equally, respondents espouse a healthy business relationship with their respectivefathers based on adaptation, and compromise/accommodation of ideas and dialogue:

Sikh Retail Chain:

Right from an early age, I have always been involved in coming to the family business,running around and it has been in my blood and in my family.

Hindu Catering:

Working the in the family business was my first preference. Really because of what itrepresents the highs, the low, the tears, the joy. I couldnt imagine myself doing anything else.

Although respondents had grown up within the environment of the FB, theirinvolvement however was on either a casual or a full-time basis. Equally, suchinvolvement found respondents having to work up the ranks or placed within aposition of prominence from the outset:

Pakistani Restaurant:

I used to help out two to three years ago with bits and pieces, getting to know the businessthat sort of thing. And when I finished college, things were formalised and I became assistantto the my uncle, thats how it all started.

Sikh Restaurant:

I have this position in the family business where it is very senior, behind the scenes, it is nottaxing, it is not thinking, which I love.

Influence on business practice adaptation and compromise/accommodate. A featurepertaining to this particular cluster is the fact that in one way or another fathers of the

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respondents have redefined their approach to business. By this it is meant, in anattempt to respond to consumer preferences, the son has influenced the father in termsof modernising/updating products/service offering, and/or refurbishing theshop/restaurant. Therefore, the son has acted as an internal driver for change, withthe father reassessing his own management style in response. For instance:

. Business planning. Attempting to develop more formalised business plans.

. Employee relationships. Ensuring employment rights/protection/benefits areadhered to, and investing in employee development.

. Command and control.Attempting to create a working environment that is less

formal and more open, so espousing a healthy boss/worker relationship.. Improvements in the quality of products/service.The quality of delivery becoming

the norm, wanting to create a unique offering/ambience/style, and attempting todifferentiate the business from competitors (more so within catering where theindustry is reaching saturation point).

Another noticeable area of second-generation influence on the first-generation islabour. Of those businesses that employ five to 32 workers, other than nuclear familymembers, staff turnover is quite high. This ever-increasing problem has placedconstraints on owners in terms of pressure to recruit/replace staff with limitedexperience or inadequate skills. Despite this, a minority of founders still expectemployees to deliver services/products without proper/minimal training. Whereas,other entrepreneurs realise the need for suitably trained staff, so actively set to address

the problem. For those founders who gravitated toward this latter notion, the son hasbeen instrumental in the development of an infrastructure to help reduce labourturnover and increase efficiency. For example, in-house employee training range fromfood etiquette, service delivery, to staff developing the ability to sell food (explainingto customers the exact consistency of a particular dish and how to select a combinationof dishes that are complementary with each other).

More importantly, founders who invest time and effort in training, cite the fact thatto create a good dining experience, it is vital to know customer expectations and howthose expectations could best be managed. With this attitude, founders are not onlyrunning a continuous in-house employee training programme, but also monitoringstaff performance and stay-ability. What is of particular interest with this approach isthat both founder and son work to one anothers strengths. The founder uses hisexpertise in terms of product knowledge, whereas the son develops the systemsnecessary to help improve the business.

As one founder put it:

I do a lot of things the way he wants whether I like it or not [father talking about his son]because through all these things everybody has got something to give (Sikh RestaurantOwner).

In general, fathers responding to change demonstrate awareness for a moreprofessional approach to managing the business. Therefore, the business image hasbecome an increasing factor in terms of how consumers perceive and interact with thebusiness. Moreover, such factors are starting to play a role within decision making.This notion is supported by the fact that the father and son are developing a reputation

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for quality (seen as crucial in creating differentiation), and fairness as an employer (the

owner must be seen to be honest, pay well and treat staff accordingly).

Interestingly, where the son believes taught management training and skills is a

reflection of his credibility to run a business, for the father, the personal touch in every

aspect of the business is perceived as an important element of his management ability.

Therefore, friendly interaction by the father with customers is seen as important in

enhancing the dining/shopping experience. This approach as all owners agree comes

with life experience and not with a university degree.

This positive approach noted above is in contrast to the attitude found amongst the

six remaining second-generation respondents. Here, entry into the business resultedfrom limited opportunities or reluctant obligation. This shift in emphasis demonstrates

entrepreneurial weariness whereby respondents feel the FB along with its

constraints have become a burden, and working within the FB does not offer the

rewards it once did.

Evidence notes these respondents feel their own role within the father-son

relationship is restrictive, confrontational and at times stressful. So much so,

respondents do not challenge or question the authority of the father. Owing to this

breakdown of the father-son relationship, a majority of respondents have expressed a

desire to leave the business either to seek paid employment or go it alone. This

mind-set is quite interesting particularly when respondents have not worked elsewhere

since leaving full-time education (the average time spent by respondents working

within the FB is 14 years).

This overall attitude toward the FB has been reinforced by the fact that

respondents:

. Claim entrepreneurship nowadays is much harder than it once was. As one

respondent remarks: Being your own boss, the profit is always there, but like I

said, the work is a lot harder now than what it used to be ten years ago.

. Have noticed their peers do not get involved with the FB, particularly if that

business is a low order retail outlet. As Sikh Furniture remarks:

They (second-generation) see their mums and dads now, they look at them going to thecash and carry, loading and unloading, and that is all they (parents) are doing for the

rest of their lives. Well they (second-generation) dont want to do that.

. Have grown increasingly aware that their peers are able to find employment

within sectors such as IT with its salaries in excess of 40,000 a year or even

30-40 an hour. As one respondent pointed out, They would rather do that, it isan easier life for them.

Despite this desire by respondents to leave the FB, it is difficult for them to

contemplate an alternative. Fear of the unknown and the loss of independence are the

entrepreneurial shackles that keep respondents in their current situation. However,

respondents admit that even if they were able to work for a company, they would like

to do something on the side for themselves. The ideal would be to have two part-time

jobs, one within entrepreneurship and the other working for a company thereby

retaining the best of both worlds.

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Influence on business practice no-go. Given the dominance of the father, evidencesuggests the offspring have developed coping strategies when dealing with thefather-son relationship. However, the lack of comprise between father and son as:

. resulted in deficiencies within the business;

. led to reactive management; and

. caused firms within this cluster to lag behind the cluster noted earlier.

For example, inadequate infrastructure and operating systems for stock ordering,accounting, sales monitoring/forecasting/planning have meant these particular first

and second-generation respondents are unable to plan for growth or take advantage ofopportunities.

In addition, second-generation respondents cite other areas of businessmanagement wherein they have no influence, and which they consider constrainbusiness growth:

. planning lack of regularity, purpose and rigour;

. a lack of open and constructive business dialogue;

. a lack of regularity, purpose and monitoring of action points;

. a reluctance by the father to delegate essential tasks, and monitorbusiness/employee performance;

. an insistence by the father for short to medium term business thinking anddirection;

. the inability of the father to deal with confrontation/difficult situations betweenfamily members and/or the management team; and

. a lack of willingness to change.

Similarities between clusters. Interesting, there is a point whereby both clusters appearto reflect one another. For instance, both clusters suggest the father places reliance oninformal networks, and wherein he exerts full control. As far as the father is concerned,networking via the use of family, friends and co-ethnic community is an importantfactor within the business, and trust is a vital component of any such relationship. A

justification of network usage is seen through the range of activities such informalnetworks provide:

. Intelligence gathering questioning community members in an attempt tounderstand the activities of business competitors.

. A resource pool for recruitment. As far as immediate/extended family membersand friends are concerned, more often than not, employment is based onobligation rather than individual skills sets. Outside this circle other staffmembers are recruited using word of mouth techniques via personal contactswithin the same trade or people known socially.

. Access to finance finance for start-up/investment/growth/modernisation andthe like remain the sole domain of the father.

. Obtaining new business clients via word of mouth advertising seen as veryimportant.

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Non-family businessSecond generation entrepreneurs business practices (my way). A point of departurebetween second-generation entrepreneurs from FBs and those second-generationrespondents from NFB backgrounds, suggests the latter are entering entrepreneurshipfrom a different frame of reference and with different skill-sets compared with that ofthe former. Thus, irrespective of religious background these remaining 23 respondentshave established businesses that are akin to occupational skills developed whilst inmainstream employment. Moreover, these particular respondents gravitate towardsknowledge-based activities, and are pulled and motivation towards entrepreneurshipdue to the intrinsic rewards. For instance, respondents believe entrepreneurshipprovides them with an ideal opportunity to retain such occupational skills, whilst at thesame time allowing them to escape the pressures of working for multi-nationalorganisations/blue-chip companies.

Interestingly, respondents suggest that they have had enough of the corporate life,and felt they could no longer increase their earning potential and/or progressprofessionally. On a personal level, respondents felt they were:

. not able to achieve a work-life balance due to working long hours;

. experiencing-work related stress; and

. not in control of their lives.

Consequently, respondents point to opportunity combined with fatigue as the reasonfor entering entrepreneurship. Opportunity in this instance is about meetinglike-minded people who are at the same stage in their thinking or who are willing to

take risks. Fatigue on a professional level refers to working for other people and thefrustration of not being able to explore ideas, business opportunities, and take chances.

With regards to skill-sets and experience brought to entrepreneurship byrespondents, the following became evident.

Sectoral experience. A majority of respondents had established knowledge-basedbusinesses, particularly professional services, and IT/management. Here, respondentsespouse high financial returns to be made from consultancy type work. Equally,respondents indicate that their positive motivation towards entrepreneurship isattributed to the sector in which they operate. These respondents have learned tonavigate their way around the various institutions, form their own networks, andrespond to competitive pressures.

Experiential influences. Here, respondents place reliance on occupational andmanagerial skills. For instance, a majority of respondents admit that prior to

self-employment they had held positions either as senior managers or consultants.Because of this, many felt such experience had been fundamental in:

(1) gaining the level of confidence needed to enter entrepreneurship; and

(2) preparing them for the eventual running of their own business.

Thus, points (1) and (2) provided the strongest influence on the development of theirmanagement skills and motivation toward entrepreneurship.

Owing to the self-assurance and lessons gleaned from prior occupations/sector,respondents now feel they have a wealth of experience to draw upon. Naturally thisnot only dictates their particular approach and attitude towards their respective

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businesses (compared to their counterparts within FBs), but also allows them to makedecisions in ways that they consider to be much clearer.

Educational influences. Findings reveal that a high proportion of respondents aresuitably qualified, with a number holding qualifications relevant to their chosenbusiness activity, particularly those within professional service and IT. Equally,approximately 14 respondents had participated in a number of formal in-companyand/or external short-management courses in order to enhance their knowledge andgeneral business skills. Interestingly, although education espouses credence andcredibility for the respondents, in reality they prefer prior experience and sectoralknowledge (respondents advocate their corporate background as a marker of ability,professionalism and credibility) as an influence on their performance as entrepreneurs.

With regards to influences of the above on business practices, the following becameevident:

(1) Customers/clients respondents dislike doing business solely with South Asianconsumers irrespective of ethnic/religious affiliation. Therefore, respondentstend to have a mixed co-ethnic or mainstream client base the latter being themain. Reasons put forward suggest:

. a dislike and annoyance felt by respondents in having to give way tocultural/religious obligation and pressure, as well as, association throughfamily ties by way of obtaining favourable trading terms/deals/discounts;

. attempts by South Asian consumers to reduce the selling price on goods andservices through bartering;

.

respondents feel South Asian consumers undermine them and theirbusiness; and

. South Asian consumers on the whole are considered difficult to please.

(2) Professionalism/customer care/product knowledge are considered byrespondents as key attributes for business success.

(3) Maintaining a good image of the brand/product/service in the minds eye of thecustomer is a very important aspect of all marketing activities.

(4) The need by respondents to emphasise previous professional employmenthistory and connections when dealing with customers/clients. This approach isseen as a key attribute in overcoming barriers of age and business credibility.

(5) A desire by respondents to remove the ethnic business tag. However, a minorityof respondents talk non-ethnic but work and act ethnic.

(6) Religion has not helped or hindered the type of business entered, marketsserved or products/services offered.

(7) In terms of multiple business ownership (common amongst respondents withinemerging high tech industries), respondents identify businesses that require noinfrastructure, very little financial start-up, and that is virtual (web-basedfirms).

Finally, although respondents express a desire to have present in the business a fatherwho is self-employed, or a figure head to help, advise and guide them. This lack of afather figure however, does not appear to have hampered the respondent in any way.

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Employee relations. When dealing with issues of employee relations, evidencesuggests respondents adopt a different approach. Here, respondents do not enter thenotion of recruitment via obligation as demonstrated by the first-generation. Instead,respondents are more willing to employ a mixed workforce (black, white, etc.) ratherthan a predominant co-ethnic workforce (just because they are from the sameethnic/religious group) or relying upon family labour.

The attitude towards employing family members has raised an interestingsituation. Essentially, although there is agreement amongst a majority of respondentsas to the benefits of employing family members, in reality, respondents do not entertainthe idea. The rationale suggests respondents feel they are dealing with the familyrelationship on an emotional level and not from a business perspective. As respondentspointed out, emotion and business become clouded as time is wasted trying to dealwith what is emotional and what is business, thus neither creates transparency withinthe business.

In essence, regardless of ethnic, religious affiliation, colour or relationship,respondents focus on the skill-sets of individuals more than anything else. Therefore,ability, skills level, expertise and know-how to perform the job are seen as prerequisitesto employability, coupled by the need for the respondent to reduce training costs andthe learning curve effect.

Networking. Here, respondents are engaged in the extensive use of networks:formally, informally and virtual (web-based). All three types of networks consist ofbusiness contacts, and to a lesser extent friends, rather than family/community.Exploring a little further, with regards to informal networks, respondents appear more

willing to move outside the community for labour, resources, businessadvice/expertise, finance and help to gain access to markets. Moreover, there is littlereliance on established first-generation contacts/networks. Interestingly, althoughrespondents do not mix religion/community with business (all areas are kept firmlyapart), respondents are willing to help/mentor co-ethnics entrepreneurs in terms ofbusiness advice/achieving representation within the general business community.

With regards to formal networks, there is evidence to suggest that respondents havenot heard of or have little need for the support services such as business link and thelike. However, unlike a many of their first and second-generation FB counterparts, amajority of respondents are members of some form of trade association or networkingorganisation. Finally, despite respondents espousing a very good working relationshipwith their particular banks/accountants and suppliers, a number of respondents alsoinclude venture capitalists and business angles as part of their search to raise finance.

There is strong evidence to suggest that a majority of respondents within high tech

firms have developed virtual networks (web-based) consisting of suppliers, clients,business contacts and other business stakeholders. In essence, respondents feel suchvirtual communities are dynamic, flexible and offer the ability to tap into expertswithin particular business sectors. For the respondents, connectability (who knowswhom) is a vital component of any such relationship within his network of contacts.

Finally, in addition to the three forms of networking noted above, an areaoverlooked is the notion of international links. As findings note, very manyrespondents utilise international links: family/friends/business contacts todevelop/access overseas markets or source raw materials, but not labour (unliketheir first-generation counterparts).

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ConclusionsThis paper has provided insight to the behaviour and business practices ofsecond-generation South Asian entrepreneurs. Evident are similarities and differencesbetween respondents from FBs and NFBs. For instance, the paper found entry intoentrepreneurship by the second-generation differs on two levels. In terms of similarities,a majority of the respondents from FBs and NFBs consider entrepreneurship assomething to embrace, and/or to be used as a vehicle to increase social standing andeconomic fulfilment and not as a means of economic or personal survival.Interestingly, whatever the rationale for entry by respondents within FBs, there is eithera positive or negative an impact on the father-son relationship. To counter this,respondents have developed a number of self-imposed coping strategies:

. adaptation;

. compromise/accommodate; or

. no-go.

These strategies reflect the level of power the respondent has within the FB in terms ofdecision-making, control and autonomy. An extreme situation finds respondentswithin FBs being pushed into entrepreneurship, and working within the business isconsidered a necessity. Here, respondents develop a negative attitude and resistancetowards entrepreneurship. Consequently, hostility is evident within the father-sonrelationship as the former is likely to impede the latter in terms of businessdevelopment, autonomy, or decision making.

The importance of EL and transferable skills should not be under-estimated, or

under-valued. Therefore, regardless of any decision to enter entrepreneurship a complexarray of factors based upon personal and professional experience, education and sectoralknowledge were evident. These factors were not only central to the development of aparticular attitude and behaviour of the respondent, but dictated his approach tomanaging the business and making it succeed. Again similarities and differencesbetween respondents were evident. The paper found respondents from FBs locatedwithin traditional sectors, were moving back into the said business, with many bringingtheir educational experience with them, but nothing beyond this. Whereas, respondentsfrom NFBs developed ventures more akin to their prior employment experience:

. technical skills, knowledge/expertise and competencies;

. managerial competencies; and

. autonomy, independence and entrepreneurial creativity.

Respondents here were gravitating toward emergent sectors/knowledge-basedbusinesses such as professional and IT high technical services. This self-assuranceresulting from prior occupation and related business sector, meant respondents had awealth of experience to draw upon in order to develop the business.

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About the authorMark McPherson is a Principal Lecturer in Marketing at Middlesex University Business School,and teaches marketing strategy, services marketing, small firms marketing, branding and buyerbehaviour. His research interests focus on ethnic entrepreneurship and marketing to ethnicminority groups. Mark McPherson can be contacted at: [email protected]

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