Fulfilling the need of business advisory services among Swedish immigrant entrepreneurs. An ethnic comparison
| DOI | https://doi.org/10.1108/JEPP-03-2015-0017 |
| Published date | 07 November 2016 |
| Pages | 343-364 |
| Date | 07 November 2016 |
| Author | Anna Kremel |
| Subject Matter | Strategy,Entrepreneurship,Business climate/policy |
Fulfilling the need of business
advisory services among Swedish
immigrant entrepreneurs
An ethnic comparison
Anna Kremel
The School of Business, Society and Engineering, Mälardalen University,
Västerås, Sweden
Abstract
Purpose –Taking the entrepreneur’s perspective and a broad view of business advisory services, the
purpose of this paper is to examine to what degree the need of business advisory services among
Swedish start-ups, first-generation immigrants compared to non-immigrants, is fulfilled.
Design/methodology/approach –The sample data consist of a unique and comprehensive
firm-level database and contain telephone interviews with 2,800 Swedish start-up entrepreneurs.
The study examines 20 different kinds of business advice services, in terms of both need and use.
Statistical methods such as Mann-Whitney test and regression analysis are used while controlling for
entrepreneurial characteristics.
Findings –The findings suggest that immigrants’compared to non-immigrants’need for business
advisory service was not fulfilled. Of the 20 different business advices, ten were fulfilled and ten were
not fulfilled. Both strategic advice and operational advice were fulfilled as well as unfulfilled. Apart
from ethnicity, other variables did influence the need of business advisory services.
Research limitations/implications –The author was not able to make comparisons between
different immigrant groups.
Practical implications –This study offers an explorative approach that contributes on how
business advisory services are differentially tailored between start-ups by immigrants and those by
non-immigrants. It illustrates to what extent public- and/or private-funded organizations contribute to
fulfilment of the needs of immigrant and non-immigrant start-ups.
Originality/value –Few studies take the entrepreneur’s perspective and from such a perspective
examine the fulfilment of needs of advice regarding both private and public organizations role in the
area. Both the need and the use of business advisory services are studied as well as the kind of
business advice that is needed.
Keywords Immigrants, Entrepreneurship, Start-ups, Business advisory service
Paper type Research paper
1. Introduction
In recent decades, thousands of migrants and refugees from Asia, Africa, Latin
America, and Eastern Europe have immigrated to western countries, including
Sweden. According to Statistics Sweden (SCB) 2013, about 21 per cent of the people in
Sweden are of foreign origin. It is expected that this percentage will increase in future
years (SCB, 2013). In Sweden, as in other western countries, considerable effort is taken
to integrate new arrivals into society, especially into the labour market. One way the
governments try to reduce unemployment among immigrants is to create opportunities
for starting up new businesses (Assudani, 2009; Kloosterman, 2003; Slavnic, 2013).
Many European countries, including Sweden, have started programmes and adopted
policies that encourage entrepreneurship (Lundström and Stevenson, 2005), especially
among ethnic minorities (Dhaliwal, 2008; Ram and Smallbone, 2003).
Journal of Entrepreneurship and
Public Policy
Vol. 5 No. 3, 2016
pp. 343-364
©Emerald Group Publis hing Limited
2045-2101
DOI 10.1108/JEPP-03-2015-0017
Received 30 March 2015
Revised 5 February 2016
Accepted 5 February 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2045-2101.htm
343
Business
advisory
services
Ethnic minority communities and ethnic businesses, which are important change
agents in regional development (Ma et al., 2011), contribute significantly to the
economic growth of society and to the employment rate (Dhaliwal, 2008). According to
an investigation by Tillväxtverket (2013)[1], immigrants are more inclined than
non-immigrants to start a business. The explanation is usually attributed more to
structural push factors (lack of suitable and attractive jobs in the labour market) than
to pull factors such as free choice (Bates, 1999; Dhaliwal, 2008). Whatever the reason,
starting a business is almost never easy, especially for immigrants. The failure rate for
new ventures is very high (Hormiga et al., 2010; Kess, 2014).
Immigrants who start a business face more challenges than other entrepreneurs.
Besides having to learn a new language and adapt to a new environment, immigrants
often lack the social as well as the mainstream business networks that can provide
financing, information and advice (Basu, 1998; Light and Gold, 2000; Light and
Rosenstein, 1995; Rezaei, 2007; Sequeira and Rasheed, 2006). As Nilsson (1997) observes,
access to an external advisor is one of the new entrepreneur’s most essential resources.
Furthermore, immigrants are in a situation similar to that of emerging market firms
that have to overcome the “Liability of foreignness”(LOF) –a concept frequently
discussed in the literature on internationalization. LOF arises from firms’unfamiliarity
with the culture, politics and economics of new environments (Zaheer, 1995). In such
environments, firms that operate outside their home countries incur costs that local
firms do not. Thus, foreign investors need a firm-specific, competitive advantage when
they enter a foreign market ( Johanson and Vahlne, 2009; Sethi and Guisinger, 2002).
In particular, access to knowledge, particularly experiential knowledge ( Johanson and
Vahlne, 1977), about the new society and culture is essential.
Researchers have associated economic growth and earnings growth with immigrant
self-employment (Hammarstedt, 2001; Joona, 2011), although some studies claim that self-
employment is not a good proxy for entrepreneurial growth (Autio and Acs, 2010;
Henrekson and Johansson, 2010). However, statistics reveal the large economic potential
for immigrant self-employment for several reasons: a higher rate of unemployment than
native-born individuals, lower incomes ( Joona, 2011) and lack of knowledge and skills
(Hammarstedt, 2001). Nylin (2014) finds that even immigrants who have lived for many
years in Sweden still have a higher rate of unemployment than the native population.
Entrepreneurs are inclined to seek outside advice when they lack certain knowledge
within their companies. Both social and business networks can be sources of such
information (Watson, 2007). In some cases, the sources are informal (Aldrich and Ruef,
2006), while in other cases, they are formal networks (public and private advisory
services). Both sources are recognized as important for small business growth
(Schoonjans et al., 2013) and business expansion (Larsson et al., 2003). Although
researchers describe mixed results (both positive and negative) from publicly funded
business advisory services as far as turnover and job creation (Chrisman et al., 2005;
Greene, 2009; Rotger et al., 2012) and productivity (Rotger et al., 2012) are concerned.
Because the rate of company failure is high in the start-up phase (Cressy, 2006),
advice in the early stages of a company’s life can be especially helpful (e.g. Chrisman
and McMullan, 2000; Fertala, 2008; Kirk and Belovics, 2006; Larsson et al., 2003;
McMullan and Long, 1990). The advice that is most useful at this early stage is likely to
concern such areas as planning, management, finance, accounting and marketing
(Chrisman and Leslie, 1989; Kalleberg and Leicht, 1991; Van Auken and Horton, 1994).
For minority ethnic start-up companies, with their distinctive support needs, such
advice is especially important (Ram and Smallbone, 2003).
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