The impact of social capital and cultural knowledge on setting-up and operating a transnational business in Australia

Best, Simon (2017) The impact of social capital and cultural knowledge on setting-up and operating a transnational business in Australia. ISBE Conference 2017 conference proceedings. In: ISBE 2017: 40th Institute for Small Business and Entrepreneurship Conference, 08-09 Nov 2017, Belfast, Northern Ireland. ISBN 9781900862301. [Conference or Workshop Item]

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Abstract

Topic
It is widely acknowledged that migrants find themselves barred entry to the labour market due to language and work skills not being recognised by their adopted country (Azmat, & Fujimoto, 2016; Model, & Lapido, 1996). As a result, it is not unusual for migrants to be pushed/pulled into self-employment and entrepreneurship (Andrejuk, 2016; Azmat, 2009; Colic-Peisker and Tilbury 2006; Hulten, & Ahmed, 2013).

One area of entrepreneurship that is attractive to migrants is to become transnational entrepreneurs and supply their fellow migrants with the products and services that meet the cultural and social needs they miss from their home country. This is because is a demand for these products and services as migrants often retain a strong desire to recreate their own culture in their adopted country (Guarnizo 2003; Santamaria-Alvarez, & Śliwa, 2016).

Undertaking the development of a business opportunity that extends across the border of the home country and adopted country is recognised as transnational entrepreneurship (Drori, Honig et al, 2006; Santamaria-Alvarez, & Śliwa, 2016; Lin, and Tao, 2012). To achieve this, the transnational entrepreneur needs to utilise the connections between the two countries to access resources, and the connections are seen as a type of social capital (Bagwell, 2015). However, there is the notion that there is a degree of homogeny between entrepreneurship and social capital that does not stand up in practice. Social capital is widely accepted as being a contributing factor to the success of small business and entrepreneurship, including transnational entrepreneurship (Beuving, 2006a; Bagwell, 2015; Jansen, Curşeu, et al 2013; Westlund and Bolton 2003). Furthermore, social capital may build strong cohesion within a group that shares social and cultural mores, but this often comes with the price of exclusion to outsiders (Fukuyama, 2001, Gedajlovic, Honig, et al, 2013). While there is no doubt the transnational entrepreneurship and social capital are linked, what is not widely researched is the how they are linked and what are the consequences for the entrepreneurs (Gedajlovic, et al, 2013) particularly transnational entrepreneurs.

Aim
This study looks at how a small group of African women in Australia were pushed/pulled into entrepreneurship because of not being able to find appropriate work due to either language or work experience skills not being recognised; and how they used their connections to set up and develop their businesses. The aim of this study is to identify the subtle social and cultural differences between the women, and look at how they influence each participant’s business.

Methodology
What makes this paper unusual is that the data used was not collected in a traditional research context. The data was collected as part of a process that was targeting a specific migrant community with the aim of providing business support services. Essentially, we were looking to understand the participant’s businesses and how they arrived at their position at the time of the interviews. Approximately 50 businesses were approached and offered a free consultation. Our data collection process is strongly reflected in Smith and McElwee’s (2015) framework for qualitative research. We want our participants to tell us what life as an entrepreneur is like (Cope, 2005). We need to know all the twists and turns, plots and sub-plots that influence the way they do business (Galloway, Kapasi, et al, 2015). The accuracy of the data collected can be demonstrated by the fact that if we misunderstand the participants’ needs, it could be catastrophic for them.

Contribution
In the process of understanding the businesses, it emerged that 13 of the businesses were transnational entrepreneurs (Guarnizo 2003; Light, 2010; Portes, Guarnizo et al. 2002); they were pushed/pulled into entrepreneurship as a result of not finding appropriate employment and the businesses focused on a specific cultural need within their community. Their stories about their businesses caused us to rethink our approach as it was clear that the idea that there is consistency between entrepreneurship and social capital was 3 questionable. In order to support this particular group of people we felt we need to understand the influences of social capital, both in their home country and their adopted country.

This is very much a practioner paper. Although we have worked with other migrant business owners, the discovery of how social capital plays out amongst this group was something profound. By understanding the various networks and liaisons became a decisive factor when working with the participants, and has since led to a change in the way we collect data about potential and current clients and how we work with them. It highlights how in practical terms social capital can both open and close doors to business opportunities. From a research perspective, it highlights some subtle issues that affect the value or lack of value that social capital brings to a business.

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