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5 Immigrant Entrepreneurship and the Enclave Economy The Case of New York City’s Chinatown E thnic entrepreneurship as a social phenomenon has long fascinated social scientists and stimulated considerable research and debate. Ethnic entrepreneurs are overrepresented among first-generation immigrants . These entrepreneurs are often referred to simultaneously as owners and managers (or operators) of their own businesses. Their chosen occupations are tied to their ethnic group membership, and they are often known to outsiders as having a cultural inclination for business ownership. More importantly, they are embedded in particular social structures that constrain individual behavior, social relations, and economic transactions.1 To the lay person, the idea of an ethnic entrepreneur often evokes images of petty traders , merchants, dealers, shopkeepers, or even peddlers and hucksters, along with their restaurants, sweatshops, laundries, greengrocers, liquor stores, nail salons, newsstands, swap meets, taxicabs, and so on. Indeed, few would regard Computer Associates International (a large public firm specializing in computer technology based in New York) and Watson Pharmaceuticals (a large public firm based in Los Angeles) as ethnic businesses and their founders , Charles B. Wang, an immigrant from mainland China, and Allen Chao, an immigrant from Taiwan, as ethnic entrepreneurs. These immigrants appear to have successfully shed their ethnic distinctiveness and incorporated their businesses into the center of the mainstream economy. It is generally known that certain immigrant or ethnic minority groups are more entrepreneurial and more likely than others to adopt self-employment as a strategy to achieve socioeconomic mobility, and that some immigrant groups are more successful than others in utilizing this strategy both for 100 / Chapter 5 individual success and for community building.2 In this chapter I aim to document how ethnic entrepreneurship affects individual and collective outcomes. In so doing, I first present the enclave economy theory and then illustrate it with a case study of New York City’s Chinatown. Conceptualizing Immigrant Entrepreneurship and the Ethnic Enclave Middleman-Minority Entrepreneurs versus Ethnic-Enclave Entrepreneurs The literature of immigrant entrepreneurship analytically distinguishes two main types: middleman-minority entrepreneurs and ethnic-enclave entrepreneurs . “Middleman minorities” are those entrepreneurs who trade between a society’s elite and the masses. Historically, middleman-minority entrepreneurs are like sojourners: interested in making a quick profit from their portable and liquifiable businesses and then reinvesting their money elsewhere, often implying a return home.3 Therefore, they most commonly establish business niches in poor minority neighborhoods or immigrant ghettos in urban areas deserted by mainstream retail and service industries and business owners from a society’s dominant group. Typical examples of middleman-minority businesses would include a Jewish shop in a Puerto Rican neighborhood, a Korean grocery store in a black neighborhood, or a Chinese restaurant in a Latino neighborhood. Middleman-minority entrepreneurs have few intrinsic ties to the social structures and social relations of the local community in which they conduct economic activities. Ethnic-enclave entrepreneurs, in contrast, are bounded by coethnicity and the coethnic social structures of a particular ethnic community. In the past, they typically operated businesses in their own, often self-sustaining, ethnic enclave. Today, as ethnic enclaves evolve into multiethnic neighborhoods and new ones develop in affluent middle-class suburbs, those who run businesses in a particular location may simultaneously play a double role—as both middlemanminority and ethnic-enclave entrepreneur. For example, a Chinese immigrant who runs a restaurant in Chinatown is an enclave entrepreneur. But to his or her Latino clients who live in Chinatown, he or she would be a middlemanminority entrepreneur. The analytical distinction is sociologically meaningful because the economic transactions of these two types of entrepreneurs are conditioned by different social structures and relations. For example, the stone face of a Chinese restaurant owner in a Latino neighborhood may be taken as rude or even racist, its effect exacerbated by a lack of Spanish- or English-language proficiency. But the same facial expression is likely to be taken matter-of-factly by the Chinese in Chinatown, where a common language often eases potential anxiety. Immigrant Entrepreneurship and the Enclave Economy / 101 The Ethnic Economy versus the Enclave Economy The sociologists Edna Bonacich, John Modell, and Ivan Light were among the first to theoretically develop the concept of the ethnic economy, which broadly includes any immigrant or ethnic group’s self-employed, employers, and coethnic employees.4 Light and his colleagues later rearticulated the concept to a higher level of generality.5 The reconceptualized ethnic economy includes two key components: one is “ethnic ownership economy...

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