Determinants of successful immigrant entrepreneurship in the Federal Republic of Germany

Abstract

Self-employment and entrepreneurship are economic phenomena of significant importance, which are increasingly addressed in the social science research and, on the other hand, in the mass media. Governments all over the world extol its benefits and implement policies designed to promote the venturing activities in their respective countries. There are several reasons for this interest in, and enthusiasm for, entrepreneurship. Owner-managers of small enterprises, for instance, run the majority of businesses in most countries. These enterprises are credited with providing specialised goods and services that are ignored by the largest companies. In addition, they intensify competition, thereby growing economic efficiency. Some entrepreneurs pioneer new markets for innovative products and services, creating job opportunities and enhancing economic growth. But only in a few cases, today’s small owner-managed enterprises do grow to become tomorrow’s industrial giants. Even those that do not may create positive externalities, like the development of supply chain that help attract inward investments, or greater social inclusion. It is often claimed that the decentralisation of economic production into a large number of small firms is good for society and democracy, as is the fostering of a self-reliant and hardy entrepreneurial spirit. When we add to the aforementioned migration as an essential component of the ongoing globalisation process, the entrepreneurship as a subject of research becomes even more complex. The increase in numbers of immigrants in most advanced economies, including Germany, in the last decade of the twentieth century, has also led to an increase in the immigrant entrepreneurship. More precisely, the self-employment structure of immigrants to Germany changed tremendously since the 1970s. For instance, in the early 1970s only 40,000 immigrants were registered performing self-employment activities, and their businesses were tied to restaurant or to cater to the need of their compatriots. Overall, the absolute number of self-employed foreigners developed more dramatically than the number of the self-employed Germans. The stock of self-employed foreigners rose by 23.6 per cent between 1992 and 2001, while the increase in total self-employment was 17.0 per cent. In this context, this dissertation investigates the determinants of successful immigrant entrepreneurship for whole Germany as well as for some particular regions characterised by high fraction of immigrant population and venturing activities. The objective of the thesis is to answer the research questions: (i) Which factors contribute to the explanation of the observation that some immigrant groups in Germany have the opportunity and willingness to become an entrepreneur and others do not?, and (ii) Which factors contribute to the explanation of the observation that some immigrant entrepreneurs are more successful than others? The potential determinants of successful immigrant entrepreneurship are derived from theory and existing empirical evidence. They include financial variables, risk attitude, psychological, human capital, macroeconomic and background variables. As a main result, we uncovered that legal regulations with respect to the founding process do impact considerably the immigrant’s propensity to engage in entrepreneurial activities besides other significant factors taken into account. Therefore, for the sake of entrepreneurship growth in Germany, it is imperative that immigrants, in particular the non-EU nationals, have unfettered access to the formal labour market, and they be given the opportunities to implement their venturing endeavours. Moreover, we shed light on the survival of immigrant entrepreneurs in Upper Bavaria. Although the survival performance of immigrant entrepreneurs is by 1.24 years shorter compared with Germans, we found based on the estimated hazard model that Asians account for the highest survival (4.20 years on average) among all immigrants venturing in Upper Bavaria. Finally, every study is by nature limited. Although I provided considerable insights regarding the determinants leading to successful immigrant entrepreneurship in Germany, there is still enough space for future investigations in this area. A concluding research issue is that there are few German academics working and exploring the phenomenon of immigrant entrepreneurship, although immigrants establish more companies and employ more co-workers on average than Germans do. For instance, the start-up activities in year 2002 indicate that immigrants (5.4 per cent) compared with Germans (2.1 per cent) consider more often self-employment as occupational choice. Although immigrants feature more commonly funding obstacles prior to establishing an own company, they hire twice and a half more staff members on average. If the concerns identified above were to be conquered, then it would be appropriate for more German scholars to get involved, and to help understand the significance of that phenomenon, as Germany was and is among the countries attracting immigrants since the 1950s.

Obwohl der Migrationpolitik sowohl in der allgemeinen Diskussion als auch in der wissenschaftlichen Fachdebatte enorme Bedeutung zugesprochen wird, ist kaum etwas über den betriebswirtschaftlichen Erfolg von Immigranten-Unternehmern in Deutschland bekannt. Während die Selbständigenquote im Lande im internationalen Vergleich bereits eher gering ist, ist diese unter den Immigranten noch niedriger. Allerdings ist zu erwähnen, dass die unternehmerischen Aktivitäten von Immigranten eine dynamischere Entwicklung als diese der Deutschen aufweisen. Somit stellt sich berechtigt die Frage nach den Einflussfaktoren von Unternehmensgründungen durch Immigranten in Deutschland sowie auch nach den Erfolgsbedingungen solcher Gründungen nichts zuletzt angesichts der Hoffnung, welche die Arbeitsmarktpolitik auf eine zunehmende Selbständigkeit und Gründungsaktivität setzt. Die vorliegende Dissertationsschrift erarbeitet verschiedene theoretische und empirische Modelle, um die sozioökonomischen Faktoren zu identifizieren, welche sich auf das Entscheidungskalkül eines Immigranten, selbständig zu sein oder nicht, auswirken. Darüber hinaus wird untersucht, ob Investitionen in Human- und Sozialkapital den betriebswirtschaftlichen Erfolg positiv beeinflussen, und wie sich die Zusammensetzung von Belegschaften innerhalb der Unternehmen auf deren Erfolg auswirkt. Im Ergebnis wurde festgestellt, dass die gesetzlichen Rahmenbedingungen, signifikant die Wahrscheinlichkeit ein Unternehmen zu gründen, beeinflussen. Immigranten aus dem EU-Raum weisen deutlich höhere Neigung im Vergleich zu diesen stammend aus dem Nicht-EU-Raum, eine selbständige Tätigkeit auszuüben. Abschließend wurde mit Hilfe des Hazard-Modells herausgefunden, dass die Überlebenschancen der Immigranten-Unternehmen um 1,24 Jahre kürzer als diese der deutschen Unternehmen sind. Diese Unterschiede sind branchen- und nationalspezifisch.