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Financing small business creation: The case of Chinese and Korean immigrant entrepreneurs

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  • Bates, Timothy

Abstract

Prevailing scholarly literature misrepresents the realities of how immigrant Korean and Chinese entrepreneurs finance entry into small business. Supportive peer and community subgroups are not major sources of startup capital; the majority of all loan funds are raised by borrowing from financial institutions. The major single funding source is equity capital, which derives almost entirely from family household wealth holdings. Controlling for firm and owner traits, comparison groups of nonminority and Asian American nonimmigrant self-employed borrowers are shown to have greater access to loan sources than Korean and Chinese immigrants. High equity capital investment offsets this disadvantage. Absent rotating credit associations, and other minor debt sources, the average Korean/Chinese startup possesses substantially more financial capital than its nonminority counterparts.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Business Venturing.

Volume (Year): 12 (1997)
Issue (Month): 2 (March)
Pages: 109-124

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Handle: RePEc:eee:jbvent:v:12:y:1997:i:2:p:109-124

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Web page: http://www.elsevier.com/locate/jbusvent

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References

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  1. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 72(4), pages 551-59, November.
  2. Alfred R Nucci, 1992. "The Characteristics of Business Owners Database," Working Papers, Center for Economic Studies, U.S. Census Bureau 92-7, Center for Economic Studies, U.S. Census Bureau.
  3. Frank Fratoe, 1986. "A sociological analysis of minority business," The Review of Black Political Economy, Springer, Springer, vol. 15(2), pages 5-29, September.
  4. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," NBER Working Papers 1942, National Bureau of Economic Research, Inc.
  5. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 21(4), pages 485-506.
  6. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 519-35, June.
  7. Bates, Timothy, 1995. "Self-employment entry across industry groups," Journal of Business Venturing, Elsevier, Elsevier, vol. 10(2), pages 143-156, March.
  8. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(4), pages 808-27, August.
  9. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 32(4), pages 1667-1717, December.
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Cited by:
  1. Honig, Benson, 2001. "Human capital and structural upheaval: A study of manufacturing firms in the west bank," Journal of Business Venturing, Elsevier, Elsevier, vol. 16(6), pages 575-594, November.
  2. Enno Masurel & Peter Nijkamp & Murat Tastan & Gabriella Vindigni, 2001. "Motivations and Performance Conditions for Ethnic Entrepreneurship," Tinbergen Institute Discussion Papers, Tinbergen Institute 01-048/3, Tinbergen Institute.
  3. Enno Masurel & Peter Nijkamp, 2002. "Motivations and Performance Conditions for Ethnic Entrepreneurship," Growth and Change, Gatton College of Business and Economics, University of Kentucky, Gatton College of Business and Economics, University of Kentucky, vol. 33(2), pages 238-260.
  4. Chand, Masud & Ghorbani, Majid, 2011. "National culture, networks and ethnic entrepreneurship: A comparison of the Indian and Chinese immigrants in the US," International Business Review, Elsevier, Elsevier, vol. 20(6), pages 593-606.
  5. Mediha Sahin & Alina Todiras & Peter Nijkamp, 2011. "Colourful Entrepreneurship In Dutch Cities: A Review And Analysis Of Business Performance," Regional Science Inquiry, Hellenic Association of Regional Scientists, Hellenic Association of Regional Scientists, vol. 0(2), pages 179-197, December.
  6. Neville, François & Orser, Barbara & Riding, Allan & Jung, Owen, 2014. "Do young firms owned by recent immigrants outperform other young firms?," Journal of Business Venturing, Elsevier, Elsevier, vol. 29(1), pages 55-71.
  7. Chua, Jess H. & Chrisman, James J. & Kellermanns, Franz & Wu, Zhenyu, 2011. "Family involvement and new venture debt financing," Journal of Business Venturing, Elsevier, Elsevier, vol. 26(4), pages 472-488, July.
  8. Ebbers, Joris J. & Wijnberg, Nachoem M., 2012. "Nascent ventures competing for start-up capital: Matching reputations and investors," Journal of Business Venturing, Elsevier, Elsevier, vol. 27(3), pages 372-384.
  9. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Factor Markets Working Papers, Centre for European Policy Studies 123, Centre for European Policy Studies.
  10. Baycan Levent, Tuzin & Masurel, Enno & Nijkamp, Peter, 2002. "Entrepreneurial process and performance: the case of the Turkish female entrepreneurs in Amsterdam," ERSA conference papers, European Regional Science Association ersa02p397, European Regional Science Association.
  11. repec:hrs:journl::v:3:y:2011::i:2:p:179-197 is not listed on IDEAS
  12. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Working Papers, Factor Markets, Centre for European Policy Studies 122846, Factor Markets, Centre for European Policy Studies.
  13. Cassar, Gavin, 2004. "The financing of business start-ups," Journal of Business Venturing, Elsevier, Elsevier, vol. 19(2), pages 261-283, March.
  14. Claudio Mancilla & Yancy Vaillant & Esteban Lafuente, 2011. "HOW ENTREPRENEURIALLY INFLUENTIAL SOCIAL TRAITS AFFECT BUSINESS CREATION AMONGST RURAL IMMIGRANTS: Evidence from Spain," ERSA conference papers, European Regional Science Association ersa10p1464, European Regional Science Association.
  15. Liliana Sousa, 2013. "Community Determinants Of Immigrant Self-Employment: Human Capital Spillovers And Ethnic Enclaves," Working Papers, Center for Economic Studies, U.S. Census Bureau 13-21, Center for Economic Studies, U.S. Census Bureau.
  16. Fairchild, Gregory B., 2010. "Intergenerational ethnic enclave influences on the likelihood of being self-employed," Journal of Business Venturing, Elsevier, Elsevier, vol. 25(3), pages 290-304, May.
  17. repec:dgr:uvatin:2099059 is not listed on IDEAS
  18. Anderson, Alistair R. & Miller, Claire J., 2003. ""Class matters": human and social capital in the entrepreneurial process," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 32(1), pages 17-36, March.
  19. Hadewijch van Delft & Cees Gorter & Peter Nijkamp, 1999. "In Search of Ethnic Entrepreneurship Opportunities in the City - A Comparative Policy Study," Tinbergen Institute Discussion Papers, Tinbergen Institute 99-059/3, Tinbergen Institute.
  20. Simoes, Nadia & Moreira, Sandrina B. & Crespo, Nuno, 2013. "Individual Determinants of Self-Employment Entry – What Do We Really Know?," MPRA Paper 48403, University Library of Munich, Germany.
  21. Fairchild, Gregory B., 2008. "Residential segregation influences on the likelihood of black and white self-employment," Journal of Business Venturing, Elsevier, Elsevier, vol. 23(1), pages 46-74, January.

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