Contribution of different fields

Basu (2006:581) asserts that ethnic entrepreneurship has been studied from several different perspectives which include the disciplines of anthropology, sociology, geography, politics, strategic management, economics, as well as psychology. The three mostly used, in the fields of sociology, anthropology and economics, are discussed below.

Sociology

Weber (1930) points out that one of the issues that is central to the definition of ethnic groups "is a subjective belief in their common descent", even though "it does not matter whether or not an objective blood relationship exists". In sociological literature, ethnicity is often referred to in terms of kinship, group solidarity, common culture, and self- identification (Basu, 2006:582). Schermerhorn (1978:12) defines an ethnic group as "a

collectivity within a larger society having real or putative common ancestry, memories of shared historical past, and a cultural focus on one or more symbolic elements defined as the epitome of their peoplehood". The sociological approach is most often traced to the work of Max Weber. He analysed religion and its impact on economic organisation of society. Weber (1947) argues that religious beliefs are the driving or restraining force for generating entrepreneurial activity. These beliefs, he asserts, play a crucial role in determining economic behaviour or actions of the entrepreneur towards the generation or limitation of profit. Although many researchers have used this approach to explain entrepreneurship among groups and individuals, others argue that ethical values are not the only aspects that explain entrepreneurship.

Cochran (1968) uses another perspective in sociology which focuses on the role of cultural values, role expectations and social sanction to explain entrepreneurship. He posits that entrepreneurship should be seen in relationship to prevailing childhood practices. He adds that entrepreneurs are the ‘model personality’ of the society. Values and role expectations of a particular social group, which can be an ethnic group, can be the most important determinants in the performance of business entrepreneurial roles.

Another theory from the sociological perspective that has been used to explain ethnic entrepreneurship is what is often termed the ‘disadvantage theory’, which suggests that most ethnic and immigrant groups experience significant disadvantages which sometimes direct their behaviour. Volery (2007:32) argues that factors such as the lack of human capital, including language skills, education and experience, prevent immigrant and minority groups from securing salaried jobs, which then leaves self-employment as the most viable alternative. He adds that other major factors that impact negatively on immigrant and minority ethnic groups, which force them to resort to entrepreneurship and self-employment, include poverty, discrimination, and, for immigrants, the limited knowledge of the local culture.

Anthropology

Anthropologists use cultural factors to explain entrepreneurship. In his work “Protestant Ethic and the Spirit of Capitalism”, Max Weber considers the main elements of modern entrepreneurship. Based on the teachings of Calvin, Weber shifts the need for profit and survival to the issue of salvation of the individual. This ethic emphasises that new forms of production are based on hard work, frugality, individual accountability and reliability, restraint and personal drive.

Another anthropological argument examines entrepreneurship from non-economic factors such as social networks. It has been argued that some ethnic groups are endowed with social institutions and cultural norms (ethnic resources) that foster or limit entrepreneurial talents. Anthropologists consider that entrepreneurship, as well as other social processes, have cultural undertones. The crucial role of norms and traditions has been demonstrated, which, although they generally do not inhibit entrepreneurship, can do (Thornton, Ribeiro-Soriano & Urbano, 2011:109). The concept of ethnic resources is much related to some aspects of social capital according to Basu (2006:589). The notion of social capital takes into account the importance of social structure and framework (Lassalle, 2008). He adds that an individual is “embedded” in a web of social networks, providing resources or constraints to start up a business. Deakins et al. (2007) support the views of Lassalle (2009) of social capital as social networks in the form of family, community, and business clubs for example. Webner (1990) attests that social networks provide flexible and efficient possibilities for the recruitment of personnel, acquisition of capital and exchange of information on the basis of mutual trust among the members of the network.

Labour economics

There are several viewpoints that have been used to explain the economic theories of entrepreneurship in general and ethnic entrepreneurship in particular. Labour economics

in the field of entrepreneurship research focuses on the product market as well as the labour market. Parker (2006:435) notes that Knight (1921) pointed out that:

The labourer asks what he thinks the entrepreneur will be able to pay, and in case will not accept less than he can get from some other entrepreneur, or by turning entrepreneur himself. In the same way the entrepreneur offers to any labourer what he thinks he must in order to secure his services.

Parker (2006) identifies two main ways in which the entrepreneur engages in the labour market, firstly, participation in entrepreneurship (occupational choice); and, secondly, as an employer. Knight uses the utility expectancy theory to explain entrepreneurship. This theory suggests that individuals enter into self-employment only if the utility value exceeds paid employment or unemployment as the case may be. The utility value here can be pecuniary or non-pecuniary. Another explanation for an entrepreneur choosing self- employment is the occupational switching costs in the analysis of occupational choices (Parker, 2006). Parker (2006:435) avers that individuals to a large extent balance risks and returns when choosing to become entrepreneurs. He adds that higher returns, and/or lower income risk in entrepreneurship, increases the propensity for individuals to choose entrepreneurship instead of paid employment, all things being equal.

The entrepreneur as an employer argument by Jefferson (1997) proposes a credit- rotating system that suggests that individuals become entrepreneurs if they are non- rationed, and would like to lend to, and work for entrepreneurs if they are not entrepreneurs. Entrepreneurs are able to employ those who are not entrepreneurs by offering them returns that are lower than their output. Parker (2006) maintains that rationed individuals choose to be unemployed rather than work for entrepreneurs.

The author is of the view that both the perspectives above hinge on the returns the entrepreneur anticipates and this influence his decision to either become an entrepreneur

himself or to employ labour as one of the factors of production, if he/she can earn more than what he would as employee.