According to Portes (1981), an enclave consists of “immigrant groups which concentrate in a distinct spatial location and organize a variety of enterprises serving their own ethnic market and or the general population”. A good proportion of work force in the ethnic enclave works in enterprises that are owned by other immigrants. This group of immigrants concentrates on a distinct spatial location with sharing same ethnic interests. This group is socially and culturally distinct from the local social lifein that region. Therefore, ethnic enclaves have distinct economic activities and organized enterprises that serve their own ethnic market and thus employ most workers from their own group. Some immigrants live and work in the ethnic enclave the whole of their life and avoid entering the host society. Examples include: Little Italy, Japan-town and Chinatown in San Francisco.
Ethnic enclaves support each other through employment and provision of supervisory skills and knowledge. Ethnic enclaves also form associations that address the issues of discrimination from the locals. Employees have privileged access to a special labor force and are also willing to pay for this. In this ethnic enclave, workers have a unique opportunity to make it with employers support in their effort to become independent. Supervisory positions within the ethnic enclave are preserved for the workers and have an opportunity for upward mobility. Alejandros Portes indicated that Cuban employees do. This is because employees in the ethnic enclave are compelled to rely on ethnic solidarity and this cuts both sides which creates an opportunity for upward mobility for the workers. According to Victor Lee, this is unlike in Asian American enclaves that provide their employees with harsh and exploitative work environment.
Ethnic enclaves in America help immigrant workers to succeed by offering them support in management and business. They also offer opportunities for their members to interact with each other through associations and other seminars that provide training in communication skills. Additionally, they have organized themselves into groups that enable them to share common concerns and give advice on career paths and thus help them overcome the challenges of discrimination and fear of heating back by the white entrepreneurs. They also provide channels for labor markets and therefore present a privileged access to labor force.
According to AnnaLee Saxenian, the Silicon Valley ethnic enclaves a distinctive economy and a source of solidarity provide as opposed to other ethnic enclaves. They also face glass ceiling but members of the ethnic enclave such as the Indians and the Chinese form ethnic association, building social immigrant network, forming role models, and star-up own entrepreneurship in a bit to break the glass ceiling. The ethnic enclaves in Silicon Valley also do not exploit workers (Victor Nee) but train them with a view of enabling them to improve their lives. Finally, the ethnic enclaves provide reservation of supervisory positions for ethnic employees and therefore provide them with opportunities for upward mobility in their economic activities.
These entrepreneurs are normally homeless, poor, uneducated, and low skilled people who are unable to access the formal labor markets because the opportunities in the formal economy are blocked for them. Street vendor business is thus suitable for these entrepreneurs because it requires little or no capital to start, has very low or zero investment, and can be done by people with no skills. The street vendors like book vendors start their business by obtaining their merchandise through donations, employees of publishing houses, and scavenging. They also work together with other street vendors or homeless people to benefit each other. The street vendor businesses serve the purpose of creating a social order among other poor and homeless people by division of labor. For example, they cooperate with homeless people, and allow them to hold the better location for the book vendor. Street vendors benefit by collaborating with homeless people may help them move the goods to the storage place. The storage place may be provided by one of the street vendors. The security of the merchandise is also provided by one of the homeless people. Also the street vendors help to keep an eye on the security of the communities, because they are relatively the most direct eyewitnesses.
The reason why ghetto entrepreneurs started their businesses is because the formal economic activities in ghetto communities are normally poorly regulated and poor people wait to be saved. The idle poor are also isolated by the dangerous environment and a lack of social capitals. The ghetto communities therefore turn to underground economy for their own interests and necessities.
Ghetto entrepreneurs started their businesses through embedded social network within their communities. They also use their innovative skills to come up with their business. Since most of them hang around the neighborhood and serve different kinds of works regardless of illegality or legality of the work. They also do not care to observe law and regulations. Some of the works that ghetto entrepreneurs do include are: picking of garbage, buying beers for teenagers, sell hard drugs, wash cars, and do house painting, among others. They have sort of entrepreneurial innovativeness and therefore they are encouraged to do whatever they can to gain what they need. This saves them from having to wait for help. Without the familiarity to the community and neighborhood’s trust, ghetto entrepreneurs are sometimes not able to sustain their activities for a long time.
Ghetto entrepreneurs usually receive social and financial support from family and friends to support their business. For instance, most ghetto entrepreneurs have friends who introduced them to their work as employees or entrepreneurs. The advantage of such social networking is that it relatively regulates members in the communities to follow “norms”. For example, if you cheat at your boss’ investment once, other entrepreneurs in the communities will not employ you anymore. This type of underground entrepreneurial economy helps in creating a relatively easy and convenient community life.
To say that America is the Land of Entrepreneurship in an Entrepreneurial Era is not absolutely correct. Although many Americans are interested in starting up a business is due to strong individualism and the lack jobs. In the recent past, America has witnessed increasing number of people who are willing to start their own businesses. Several factors have contributed to the increase in the business start-ups including high rate of unemployment, and the need for people to occupy the corporate places. With studies indicating that over 11.3 percent of American household own businesses, this number might look high but a comparison to the statistics from other countries reveal to the contrary. Further statistics indicate that 40 percent of the America population is likely to be self-employed at some point in their lives. The American spirit thus espouses risk taking and do-it-alone kind of business.
According to Bruce Kirchoff, the last decade has seen more American citizens starting their own businesses. The significant growth in the entrepreneurial business has made the small entrepreneurs to provide a pillar for the country’s economy. Paul Reynolds (2010) indicates that studies comparing US economy with other countries show that American people are more willing to start their businesses. Phillip Kim argues that America as a nation is in the midst of entrepreneurial surge in the history of the country.
However, a closer look at the statistics reveals that the surge in the number of entrepreneurship is a result of high unemployment among the American citizens. Similarly, most entrepreneurship businesses in the country are started by people who have lost their jobs. For instance, the popularity of Etsy online warehouse is an evidence entrepreneurship is not on the rise in the country. The online warehouse is mostly used by people who have lost their jobs and are trying to sell some of their personal properties.
Moreover, statistics by OECD Labor Force indicate that it is harder to start an entrepreneurial business in the US than in other countries. For instance, people in Turkey are four times more likely to start businesses than their counterpart in the US. Peruvians are also 3.5 times more likely to start their own businesses than the US citizens. The existing evidences indicate that Americans are not among the most likely to start business in the world. Other statistics indicate that most entrepreneurial activities do occur in the developing countries.
Some of the reasons that might be contributing the lagging in the entrepreneurial activities in the US might include heavy taxes on the small businesses from the government and a lack of capital for many people who are unemployed to start businesses. People cannot access loans from the banks to start their own businesses. Another reason is that the American economic system does not support the growth and development of entrepreneurial businesses and those that were started are dying out because of unfavorable economic conditions. The other reason is that it is more expensive to start a business in a wealthy country than in a developing country because the capital investment involved in the start-up is high. The entrepreneur needs to purchase machines for the business. Most people who would like to start businesses do not have that kind of money. The final reason is that most people who are employed are unwilling to give up their high salaried jobs to start their own businesses.