karima kourtit and peter nijkamp antechnology
TRANSCRIPT
THE CREATIVE URBAN DIASPORA ECONOMY: A DISPARITY
ANALYSIS AMONG MIGRANT ENTREPRENEURS
Karima Kourtit and Peter Nijkamp
ANTECHNOLOGY
Purpose of our empirical research
To explore and trace the opportunities and
barriers for migrant entrepreneurs, and the
critical success conditions of the highest
performing migrant entrepreneurs (‘business
champions’) in the innovative and creative sector
To analyse the differences in performance of
second-generation migrant entrepreneurs from
Moroccan origin in Dutch cities
To test the usefulness of DEA and SOM tools
Transition in the profile of migrant entrepreneurs, especially those
belonging to the 2nd generation of migrants
Migrant entrepreneurship oriented towards creative industries in urban
areas in the Netherlands (breaking-out approach)
Clear drastic transformation and re-positioning of migrant
entrepreneurship
TRENDS ENTREPRENEURSHIP
NEW TRENDS IN ETHNIC ENTREPRENEURSHIP
4 Migrant entrepreneurship business growth strategies
Source: Ansoff Matrix (1957), adjusted by authors
• Systematic strategic framework of migrant entrepreneurship that is helpful for mapping out new
business growth strategies and opportunities of migrant firms derived from the Ansoff (1957)
Model
STEP TOWARDS MIGRANT ENTREPRENEURSHIP:
SURVIVAL VS. SUCCESS
‘A Theory of Human Motivation’ (A. Maslow 1943 ) The Achievement Motive (Maslow 1943 ;
McClelland, 1953)
• Tradition motives (e.g, social exclusion, weak position in the labour market) are replaced by
entrepreneurial motives (e.g., profit-making, ambitious, social esteem)
Migrant Entrepreneurship: Motives
Business activities undertaken by migrants of a specific socio-cultural and ethnic
background or country of origin
In the past, self-employment: a source of economic survival
lifeboat economies (Garrett Hardin's Lifeboat Ethics ,1974)
Start-up business within the ethnic community (traditional markets):
A possible solution to their unemployment situation
A response to specific needs and demands for ethnic products and
services by their own ethnic groups
NEW ENTREPRENEURSHIP Migrant entrepreneurs become a source of new
economic opportunities for regions and cities:
Contribute to new job creation
Introduce new products and processes in the market (their diversity
leads more to new and innovative combinations)
Contribute to ‘citymarketing’ ‘creative city’ to attract visitors,
talent, innovative companies and new residents than ever before to
creative areas
Strengthen the urban social economy
Provide a major challenge (serious competitors) to established firms
and encourage them to improve their product quality and service
or to reduce prices
Research Approach 1ST RESEARCH QUESTION:
What are the critical success conditions for migrant entrepreneurs?
Step 1: Structured interviews with higher-educated young Moroccan
entrepreneurs in high-tech and innovative sectors in the Netherlands
Step 2: Statistical indicators to identify the critical success conditions and failures
2ND RESEARCH QUESTION:
Are there differences in economic performance of various migrant entrepreneurs?
Step 3: ‘Power Performance Pentagon model’ (Triple-P model)
Step 4: Tools:
- Data Envelopment Analysis (DEA), to judge the
comparative achievement of migrant entrepreneurs and to obtain insight
into the relative efficiency of a firm performance, as compared with others
- Self-Organizing Maps (SOMs), (algorithm) visualization of the
relative differences in the performance of migrant entrepreneurs
in four Dutch cities, namely Amsterdam, Rotterdam, The Hague and
Utrecht
Step 5: Lessons
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Personal and Business Characteristics • Need for Achievement (Maslow 1943 ; McClelland, 1953)
• Locus of Control (Rotter, 1966)
• Risk-taking Propensity (Brockhaus, 1980)
Motivation and Driving Forces • Experience, Innovation, Personnel, Funding & Business Strategy (Basu,
1998)
Participation and Social Support Networks • Formal Networks
• Informal Networks
Composition of Employees and Clients
Strategic Business Performance • Financial and non-financial results
Theoretical Framework
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1ST RESEARCH QUESTION:
What are the critical success conditions for migrant entrepreneurs?
Step 1: Structured interviews with
young Moroccan entrepreneurs in the
creative sectors in the Netherlands
Step 2: Statistical indicators to identify
the critical success conditions
and failures
Summary 1st results Business Characteristics (BC) • Majority of the Moroccan businesses is small-sized (< 5 employees (71%)) • Entrepreneurs are active in the ICT, and Consultancy and Research sectors • Moroccan businesses are relatively young (54% of the entrepreneurs started after 2006); 8% are older than 2001
Personal Characteristics (PC)
• Majority of the entrepreneurs falls between the age of 25-39 (83%)
• Majority of the entrepreneurs was born in Morocco and more than 50% of them came between 1971
and 1980 to the Netherlands (< 12 years)
• Most of them achieved their highest level of education in the Netherlands (92%): higher vocational
education, University and Post-doc (79%); and speak Dutch fluently
Motivation and Driving Forces (MDF) • Majority of the entrepreneurs wasstudent (67%) and active part-time as an entrepreneur in their previous position and in the same sector (83%) • The main reasons to become an entrepreneur were to be independent and own boss (80%) in the same sector (attractive and growing market opportunities • Previous position and experience in the same sector create a pull affect on self-employment • Most of them used their own savings (67%) to set-up a business, no detailed financial plan and no support from formal institutions, obtained information from their own experience and family and friends Factors such as capital and information sources show that the new generation Moroccan entrepreneurs are quite independent of their family, friends and others
Summary 1st results Composition of Employees & Clients (CEC)
Majority of the firms serves Dutch clients; they are not dependent on customers and labor source from their own ethnic group (84%)
Participation and Support Social Capital (PSSC)
The majority of the firms (84%) participates in social networks and have received support and additional information from their social networks (e.g. family & friends)
However, almost 60% of the firms have not obtained financial, managerial (84%) or operational (63%) support from family
Family and social networks contribute to the independence of Moroccan entrepreneurs, while supporting their personal and human development
Summary 1st results
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Strategic Business Performance (SBP)
Most of the migrant entrepreneurs have experienced a positive development in last years business
performance
Financial advantages:
Majority of the entrepreneurs has experienced an increase in sales (71%) and profit (67%)
Non-financial advantages:
- Majority of the entrepreneurs (63%) is more innovative and offers high quality products at a
competitive price (better quality of the organization)
- Most of the entrepreneurs (79 % ) has established a good strategic marketing/promotion
Success Variables facing Moroccan Entrepreneurs
Strong motivation, enthusiasm and persistence
Strong reputation of the business firm as a quality-based and honest firm with personality and expertise
Higher result orientation consists of variables, which have to do with improving the quality of management and internal business processes on achieving higher business results
Problem Variables facing Moroccan Entrepreneurs
Common problems similar to Dutch firms: overregulation, concrete their strategies and formulate
related strategic objectives, business administration, attract loyal and well-skilled employees, strong competition/financial crisis, reduce the overall costs
2ND RESEARCH QUESTION: IN SEARCH OF BUSINESS CHAMPION
Are there differences in economic performance of various migrant
entrepreneurs? Step 3: ‘Power Performance Pentagon model’ (Triple-P model).
Step 4: Tools:
- Data Envelopment Analysis (DEA), to judge the
comparative achievement of these ethnic firms and to obtain insight into the relative efficiency of a firm performance, as compared with
others
- Self-Organizing Maps (SOMs), an algorithmic tool, visualization of
the relative differences in the performance of migrant entrepreneurs
in four Dutch cities, namely Amsterdam, Rotterdam, The Hague
and Utrecht
‘Power Performance Pentagon model’ (Triple-P model of the complex force field
of business performance)
MAIN CATEGORIES INDICATOR GROUP NR INDICATORS
OUTPUTS
Financial business performance (FBP1&2)
1
2
Sales
Profit
Non-financial business performance (NF-BP3) 3
4
Higher orientation
Higher quality
INPUTS
Human Capital (HC) 5
6
7
8
9
10
11
Age
Education level
Education place
Educational level
Language ability (e.g. Dutch, English, French)
Country birth
Arrival years in the Netherlands
Reasons to start up a business
Social Capital (SC) 12
13
Network participation
Support from social network
Entrepreneurship Capital (EC) 14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Starting situation firm
Problems startup
Sector choice
Situation sector
Present situation sector
Market competition in sector,
Attractive market
Diversity in clientele
Number of clientele
Strategic segmentation
Marketing strategies and efforts
Managerial support
Operational support
Vision and business strategies
Professionalization and market expansion
Creative Capital & Knowledge Capital (CC&KC) 29
30
31
32
33
34
35
Foundation year of enterprise
Position before start-up
Previous experiences
Business plans for start-up
Informal and formal information sources
Diversity in employees
Number of employees
Financial Capital (FC) 36
37
Formal capital sources
Informal capital resources
GEOGRAPHIC LOCATION Four largest Dutch cities (G4) 38
39
40
41
Amsterdam
Rotterdam
The Hague
Utrecht
List of input and output indicators of Moroccan entrepreneurs
Illustration of a set of CSFs and conditions 5 INPUTS:
1. Human Capital: e.g., education level, education country, language Dutch,
language English, country birth, arrival year, reasons to start up a business
2. Social Capital: e.g., network participation, support from the social network
3. Creative Capital and Knowledge Capital: e.g., foundation firm, previous
postition, previous experience, plans for start, info sources, diversity employees
4. Entrepreneurial Capital: e.g., starting situation firm, problems start up, sector
choice, situation sector, present situation sector, attractive market, diversity
custom, focus group, marketing efforts, mangerial and operational support,
vision, strategies
5. Financial Capital: e.g., capital source, finanial support
OUTPUTS: Business Performance:
Financial Outputs: e.g., development sales, profit, reduction costs lastyear
Non-financial Outputs : e.g., higher quality, more innovativeness, higher pro-
activity
Self-Organizing Map (SOM):
• Data-reduction technique (based on neural network analysis)
• Visualization of differences through the detection of particular patterns that would
otherwise remain hidden
Data Envelopment Analysis (DEA):
• Comparative analysis of efficiency of firms (benchmarking) through a study of
outputs in relation to inputs (CCR-I focus on the inputs (standard model))
• Identification of efficient firms in a standard DEA model (all efficient firms get the
score 1)
Super – efficient DEA
• Are all firms equal when their efficiency rate = 1? Can efficient firms be ranked?
Need for refined analysis
SUPER-EFFICIENCY
To discriminate between efficient migrant entrepreneurs, in order to arrive at a ranking
– or even numerical rating – of these efficient firms, without affecting the results for the
non-efficiency (see Andersen & Petersen,1993; Tone, 2001, 2002)
(I) number of doctors
(I) number of nurses
O
Hospital A
C
B
D
E
Hospital Doctors Nurses
A 1 3
B 3 1
C 4 5
D 2 5
E 5 2
Efficiency frontier
ILLUSTRATION
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Firm
1
Firm
2
Firm
3
Firm
4
Firm
5
Firm
6
Firm
7
Firm
8
Firm
9
Firm
10
Firm
11
Firm
12
Firm
13
Firm
14
Firm
15
Firm
16
Firm
17
Firm
18
Firm
19
Firm
20
Firm
21
Firm
22
Firm
23
Firm
24
Super-Efficiency Score CCR Score
Efficiency scores for super-efficiency and CCR-I
• The rankings of the super-efficiency values for 19 of the
24 Firms were identified on the basis of their high Super-
Efficiency score.
• “Firm 15” is the ‘Exceptional Firm’ based on the Super-
Efficiency model.
A new Super-Efficiency DEA based on a
Distance Friction Minimization (DFM)
for inefficient firms
In this approach, a generalized distance friction is
employed to assist a firm to improve its efficiency
by a movement towards the efficiency frontier
surface.
The direction of efficiency improvement depends,
of course, on the input/output characteristics of
the firm.
Efficiency-improving projection based on SE and
SE-DFM (Distance Friction Minimization) models
DMU Score DMU Score
Difference % Difference % Difference % Difference %
d iox*
-s-**
d iox*
-s-**
d roy*
+s+**
d roy*
+s+**
Firm 7 0.750 Firm 18 0.889
(I)HC 3.000 -0.8 -25.0% -0.7 -31.7% (I)HC 3.000 -0.4 -14.8% 0.0 0.0%
(I)SC 5.000 -2.0 -40.0% -1.6 -52.4% (I)SC 3.000 -0.3 -11.1% 0.0 0.0%
(I)CCandKC 4.000 -2.0 -50.0% -1.7 -85.7% (I)CCandKC 2.000 -0.2 -11.1% 0.0 0.0%
(I)EC 4.000 -1.0 -25.0% -0.6 -19.0% (I)EC 4.000 -0.4 -11.1% -0.2 -6.6%
(I)FC 4.000 -3.0 -75.0% -2.9 -285.7% (I)FC 3.000 -1.2 -40.7% 0.0 0.0%
(O)sales 4.000 0.0 0.0% 0.6 14.3% (O)sales 4.000 0.0 0.0% 1.0 25.5%
(O)profit 4.000 0.0 0.0% 0.6 14.3% (O)profit 2.000 1.6 80.6% 0.0 0.0%
(O)HR and Q 5.000 0.0 0.0% 0.7 14.3% (O)HR and Q 5.000 0.0 0.0% 0.0 0.0%
Firm 8 0.750 Firm 22 0.765
(I)HC 3.000 -0.8 -25.0% -0.7 -31.7% (I)HC 4.000 -1.1 -27.9% 0.0 0.0%
(I)SC 5.000 -2.0 -40.0% -1.6 -52.4% (I)SC 5.000 -1.2 -23.5% 0.0 0.0%
(I)CCandKC 3.000 -1.0 -33.3% -0.7 -35.7% (I)CCandKC 2.000 -0.5 -23.5% 0.0 0.0%
(I)EC 4.000 -1.0 -25.0% -0.6 -19.0% (I)EC 4.000 -0.9 -23.5% -0.5 -17.4%
(I)FC 3.000 -2.0 -66.7% -2.9 -285.7% (I)FC 5.000 -2.2 -44.7% 0.0 0.0%
(O)sales 4.000 0.0 0.0% 0.6 14.3% (O)sales 1.000 2.2 217.7% 3.6 114.0%
(O)profit 4.000 0.0 0.0% 0.6 14.3% (O)profit 1.000 2.5 252.9% 0.0 0.0%
(O)HR and Q 1.000 3.0 300.0% 4.7 117.9% (O)HR and Q 5.000 0.0 0.0% 0.0 0.0%
Firm 17 0.818
(I)HC 5.000 -2.5 -50.9% -2.3 -93.7%
(I)SC 3.000 -0.5 -18.2% 0.0 0.0%
(I)CCandKC 3.000 -0.5 -18.2% -0.6 -24.4%
(I)EC 4.000 -0.7 -18.2% -0.4 -12.2%
(I)FC 4.000 -2.5 -61.4% -2.2 -142.4%
(O)sales 4.000 0.0 0.0% 0.8 20.0%
(O)profit 4.000 0.0 0.0% 0.2 5.0%
(O)HR and Q 1.000 3.3 327.3% 3.8 88.9%
SE model SE-DFM model
Score(θ**) Score(θ**)
I/O Data
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
SE model SE-DFM model
Score(θ**) Score(θ**)
I/O Data
Results The SE projection shows that, for instance, Firm18 – in order to achieve a super-efficiency state
should reduce its input volumes SC, CC&C and EC by 11.1 per cent, and HC by 14.8 per cent,
and FC by 40.7% and increase in the profit of 80.6 per cent in order to become efficient.
On the other hand, the SE-DFM (Distance Friction Minimization) projection results show that a
reduction in the EC of 6.6 per cent and an increase in the sales of 25.5 per cent is required to
become efficient.
A comparison of the projection results of Firm18 . This result clearly shows that a different –
and more efficient and effective – solution is available than the SE projection to reach the
efficiency frontier.
(I)HC (I)SC (I)CCandKC (I)EC (I)FC (O)sales (O)profit(O)HR and
Q
SE Projection -14.8% -11.1% -11.1% -11.1% -40.7% 0.0% 80.6% 0.0%
SE-DFM Projection 0.0% 0.0% 0.0% -6.6% 0.0% 25.5% 0.0% 0.0%
-60.0%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
SOM RESULTS: Statistical analysis of the disparities among
migrant firms
Main objective of this mapping is to identify
possible interesting profiles and patterns in the
performance that emerge among the
observations of migrant entrepreneurs
SOM RESULTS: Topological virtual map obtained from a SOM network
Distribution of migrant firms across statistical space with a focus on topological similarities and
dissimilarities
• Figure 4(a) shows that the distribution of migrant firms across the input and the global score
SOMs is better spread across the networks suggesting larger degree of diversity
between the observations as well as more particular and unique combinations of characteristics
• Figures 4(b) show two clear large clusters of migrant firms, suggesting that these are similar
groups of the observed migrant firms
Large clusters
SOM RESULTS: geographical location in the Netherlands relates to their performance
• Figure does not show clear patterns, neither in the geographical location scores nor in the
efficiency score
•
SOM RESULTS: • Additional tool Component Planes to better understand the location patterns of
migrant firms
• Component planes for each of the specific performance variables in which the values
are displayed on a gradient from white (lowest levels of that factor of performance)
to dark blue (always implying a better performance)
have very high scores
Lessons What are the critical success conditions for migrant
entrepreneurs? The younger generation of Moroccan entrepreneurs is very well
educated, and integrated in the Dutch community; and through their human capital and motivation and driving forces they have the ability to be involved in all areas of business activities; they are more open and look for new opportunities outside the ethnic group
Are there differences in economic performance of various migrant entrepreneurs?
These results offer a meaningful contribution to decision support and planning for the efficiency improvement of strategic firm. And therefore, tools may become a policy vehicle that may have great added value for operational decision making and planning in firms. Clearly, firm have the possibility to increase their potential. This improvement potential differs for each firm, but our results offer operational guidelines on a case-by-case firm basis
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GENERAL CONCLUSION
MIGRANT ENTREPRENEURS ARE
CHARACTERIZED BY A HIGH DEGREE OF
HETEROGENEITY
IT IS THEIR CAPACITIES AND RESOURCES AND
NOT THEIR ETHNICITY THAT INFLUENCE
BUSINESS PERFORMANCE AND SUCCESS!
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Thank you!