Sociology 121: Innovation and Entrepreneurship

1. An ethnic enclave is a localized concentration of an ethnic, immigrant group in a defined area.  An ethnic enclave is characterized by a fully functional and independent market. This ethnic group organizes various enterprises, which aim at serving their own markets. As a result, some of the immigrants opt to live and work in these closed societies. Ethnic enclaves have similar attributes to the primary market; therefore, employers have access to a unique market. The quality of the labor available in this market is perceived as critical to the extent that employers are willing to incur extra labor costs. Meanwhile, workers in ethnic enclaves have exceptional opportunities to succeed in their business or personal goals within the enclave.

While it is significantly difficult to secure a well paying job for immigrants or to succeed as an entrepreneur in contemporary America, ethnic enclaves aspire to change this perception through enforcement of ethnic solidarity; where immigrants are provided with the opportunity to rise in the job or market hierarchy. As a result, it is observed that ethnic enclaves extend solidarity to new immigrants who are helped to secure jobs and are promoted to higher ranks in the job environment. The employers in these regions show a significant interest in the farewell of their employees. Consequently, employers take the initiative to train and help their employees to start their own enterprises; hence, providing direction and guidance towards the employee’s independence. Ethnic enclaves integrate all immigrants within the enclave, including those who have developed or joined the mainstream networks and markets however, as Portes observes, “Immigrant workers are not restricted to the secondary labor market”.

Therefore, when vacancies arise in their enterprises, they are reserved for other immigrants within the enclave. Victor Nee argues that ethnic enclaves have a tendency of benefitting the employers while subjecting employees to exploitative and harsh working environment. However, Portes observes that since employers profit from “willing self exploitation of fellow immigrants, they are obliged to reserve for them those supervisory positions that open in their firms”. Consequently, there is synergy between these enterprises and the enclave, where the enterprises provide job opportunities while the ethnic enclave provides labor. As a result of promotions within the ethnic enclave, there is significant mobility of employees in contrast to other mainstream labor markets. Alejandro Portes observes that “enclave firms are compelled to rely on ethnic solidarity which cuts both ways creating opportunities for mobility”. When these succeed they employ other immigrants and help them to start up their own enterprises and the cycle continues, making the ethnic enclave to be a self-sustaining economy.

Silicon Valley ethnic enclaves were a consequence of failure to recognize and appreciate ethnic workers as capable to act in managerial capacities. Unlike other traditional ethnic enclaves, the Silicon Valley ethnic enclaves are unique in their creation and composition. AnnaLee Saxenian observes that ethnic workers in the Silicon Valley are highly skilled and of varied qualifications. AnnaLee analyses the levels of education as depicted by the various ethnic groups predominant in the Silicon Valley. As a result, it is observed that Indians and Chinese workers have 55% and 40% respectively of the total higher degrees in the Silicon Valley, while the white workers are represented by 18 % of the total higher degree holders. This indicates that ethnic workers have more education attainment in contrast to the white workers.

While, ethnic worker have higher education attainment, their representation in the managerial capacities are not proportional to their educational attainment. As a result, only 15% and 16% of the Indian and Chinese workers hold managerial positions respectively. Meanwhile, 26% of the white workers hold managerial positions. These facts indicate that in spite of ethnic workers holding higher education attainment, they are underrepresented in the managerial capacities. However, 45% and 41% of Indian and Chinese workers hold professional capacities respectively while only 27% of the white workers hold professional positions. These trends where racial factors bar the upward mobility of an individual characterize Glass ceiling. It is evident that while ethnic workers are highly educated and qualified for managerial capacities, their rise in the organizational structures is significantly limited to professional capacities. Meanwhile, there is an observed increase in the number of ethnic workers migrating into the Silicon Valley; 11% of Indian and 13% of Chinese workers that migrated to the Silicon Valley in 1970. Meanwhile 60% of Indians and 41% of Chinese workers migrated to the Silicon Valley in the period between 1980 and 1989; indicating a rising number of immigrant workers in the Silicon Valley. Ethnic enclaves in the Silicon Valley emerged significantly as a result of less qualified individuals being appointed to higher positions. These individuals were preferred over qualified ethnic workers who felt that they were being discriminated against; therefore, they opted to start their own companies or businesses. For instance, David Lee started Qume after leaving Xerox where a less qualified individual was hired as his superior. However, similar to the traditional ethnic enclaves, Silicon Valley ethnic enclaves developed as a result of the collective need to rise above the economic and social barriers that prevented upward mobility in the work place and creation of entrepreneurial opportunities for immigrant workers.

2. The emergence of entrepreneurs extends across the American community and cultures. However, while some entrepreneurs in the mainstream markets are considered to be legitimate and lawful, those in the segregated communities comprising minority ethnic groups do not integrate legal legitimacy in their entrepreneurial endeavors. It is significantly difficult for individuals in segregated regions, such as ghettos to secure a decent job. Meanwhile, racial and ethnic discrimination in the job environment has led many to abandon hope of gaining decent employment. Therefore, analysis of drug dealers and ghetto entrepreneurs being two forms of underground entrepreneurs is essential.

As a result, these entrepreneurs have emerged in an attempt of creating a means in which their survival depended. For instance, drug dealers have emerged as a result of high unemployment rates, racial discrimination in employment and the lack of adequate capital to invest in legitimate business ventures. These factors have essentially driven the majority of residents to abuse drugs. Thus, an entrepreneurial opportunity presents itself to an individual who has the appropriate ghetto and streets credibility. While the drug dealing trade has inherent risks, street credibility is critical for successful functioning of the drug enterprise.

Therefore, the street respect tradition becomes a contributing factor to the success of these entrepreneurs. Contrary to the formal economic culture, where a business grows due to strategic marketing initiatives, the ghetto culture requires an entrepreneur to be significantly feared in order to command a degree of competitive advantage in the market. As a result, violence is the sole means in which power and social position are acquired. ‘Respect’, a term referencing significant control and command of the inner city environment, is only realized through displays of ruthless violence. However, while these underground entrepreneurs attempt to acquire respect, they face a persistent challenge in the form of the law.

Consequently, given the illegal nature of their entrepreneurial ventures and the violence associated with creating street credibility or protecting their tuff, these individuals are often arrested and jailed, either ending their entrepreneurial ventures or strengthening their street credibility. While the law is against underground business ventures, they are left with violence as the only viable option in which to assert themselves in their respective markets and assert their dominance in the trade. Therefore, due to the precarious nature of the trade, competitors, employees or customers are prone to attempt to cheat the entrepreneur at one point or another. Hence, the entrepreneur’s capacity for violence will determine the extent in which his or her business will succeed and survive. Meanwhile, violence characterizes the only means in which an entrepreneur can realize upward mobility, through effective and systematic application of violence against all stakeholders in the drug trade.

While, drug dealers are identifiable with inner city communities, they are only a part of a complex entrepreneurial cadre in the ghetto. It is a common assumption that given the high poverty levels, ghettos are disorganized while people wait idly for aid. This assumption is misrepresented given the numerous entrepreneurs in the ghettos. While these may not represent conventional entrepreneurs, their activities are nevertheless entrepreneurial in nature. Additionally the ghetto environment is characterized by an innovative, highly organized underground economy. Ghetto entrepreneurs have no defined business function. However, they undertake multiple ventures.

This aspect of ghetto entrepreneurs is premised on the fact that ghetto dwellers have no defined source of income, and cannot rely on a single venture as their sole source of income. While economic activities in the ghetto are numerous, they neither have decent payments nor do they last for long periods. Therefore, ghetto entrepreneurs can undertake various tasks in which they define their entrepreneurial capacity. For instance, a ghetto entrepreneur can paint houses, wash cars, clean gutters, and peddle drugs or collect garbage. These aspects of the ghetto entrepreneur define them as off the book entrepreneurs since they have no defined business undertaking and cannot afford to be selective in their ventures, meanwhile they have no need to record their transactions, since their income is never reported to the tax authorities.

This cadre of entrepreneurs relies on the ghetto networks, more so, family members and friends who offer startup capital and act as agents seeking opportunities on behalf of the entrepreneur, and depict themselves as a reliable support base for the entrepreneur. Meanwhile, the drug dealing culture develops into a governing system where drug barons, such as the black kings, are essentially the law keepers in these segregated regions. The black kings are the economic and security agents in these regions, substituting the government which has failed to enforce the rule of law or to provide substantive economic capital. It is evident that in the absence of the government’s intervention into the inner city communities, chaos and anarchy would prevail, leading to significant losses in human capital. However, the prevalent drug culture has created a governing system where the black kings enforce harmonious coexistence, prevent crimes from occurring in their territories and provide substantive economic opportunities.

3. The pursuit of the American dream is an endeavor that all Americans aspire to emulate. For instance, in 2005 “13% of individuals between the ages of 18 and 74 were in the process of starting a new business”. Meanwhile, “40% of Americans are or will be self employed at some point in their lives”.  In as much as employment offers significant opportunities, a large number of Americans are unwilling to serve others or to be accountable to other people but themselves. While, the pride of Americans’ is in their self-sufficiency, they tend to ignore the obvious high economic pressures and plunge themselves in entrepreneurial ventures. Thus, the perception of entrepreneurship as the basis in which innovation is created and jobs are created is to some extent unrealized. However, there are few instances where successful entrepreneurs are able to create job opportunities.

The premise of American society being entrepreneurial is asserted by the creation of policies that encourage such enterprises. The provision of tax benefits, subsidies, loans, tax benefits and exemptions for new entrepreneurs are intended to encourage more entrepreneurs in an attempt at creating job in an economy faced with high rates of unemployment. The entrepreneurial culture in America has developed as a result of the abandonment of the corporate America oriented thought. It is evident that, as a result of the economic crises that have engulfed America partly as a result of corporate impunity and ineffective economic policies, a large number of previously employed individuals are left without employment.

In light of this, a large percentage of Americans have sought to be self reliant through entrepreneurial activities. Consequently, Americans must find the means in which to meet their needs and those of their dependants. As a result, a high number of all forms of entrepreneurs have emerged in an attempt to find a means of earning for a living given the ever increasing living costs. However, while these entrepreneurs continue to emerge, they are incapable of starting substantial businesses. Therefore, a large number of small-scale enterprises are emerging in America.

The idea that there is an increase in the number of entrepreneurs in America is misconstrued. While it is true that a large number of Americans are self employed or at one point of their lives, have been self employed, the total number of entrepreneurs in America has continued to decline from 14.2% in 1983 to 11.5% in 2004. Thus, the perception of America being in the entrepreneurial era is immature. While Americans aspire to be entrepreneurs, the costs of sustaining new enterprises are significantly high, and they may never be recouped if the business fails to succeed. America is among the top developed countries in the world. Therefore, the wage rate of workers is significantly higher in contrast to developing countries whose wages are low.

As a result, the premise that America is the Land of Entrepreneurship in an Entrepreneurial Era is NOT true. As OECD statistics indicate it is four times likely to start a business in turkey than in the United States and three times likely to start a business in Poland than the US. On the other hand, to high start up costs, the third world countries have a higher chance of starting a business in contrast to the United States.  For instance, 40 people in every 100 people in Peru have started their own businesses in contrast to the US where 5 people in every 100 people have attempted to startup their own businesses.

While, the developing world has indicated high entrepreneurial rates across the economic divide, American entrepreneurs have significantly confined themselves to the service industry, which does not require large amounts of capital and is an already established market.

Order now

Related essays