Int Entrep Manag J (2007) 3:69–85
DOI 10.1007/s11365-006-0023-y
Filipino ethnic entrepreneurship: An integrated review
and propositions
James P. Johnson & J. Mark Muñoz & Ilan Alon
Published online: 29 November 2006
# Springer Science + Business Media, LLC 2006
Abstract With a large percentage of its population as overseas workers or
emigrants, a number now in the millions and likely grow even larger, an examination
is appropriate of the entrepreneurial challenges and opportunities faced by emigrants
from the Philippines. This study explores the factors that shape entrepreneurship
among emigrants in general and, in particular, among Filipinos in the United States
of America. Integrating literature from a variety of sources relating to the migration
of Filipinos and the creation and management of new ventures by ethnic
entrepreneurs in the United States, it proposes a general model of ethnic
entrepreneurship, develops propositions relating to the propensity of Filipino
emigrants to establish entrepreneurial ventures, and concludes with suggestions for
future research.
Keywords Ethnic entrepreneurship . Philippines . Migration
The global environment has provided opportunities for intensive migrant flows and
cultural propagation across countries. Cohen (1997) alluded to the existence of a
contemporary society offering unending streams of destinations resulting in the
convergence of national frameworks, yet Brah (1991) argued that, within this
J. P. Johnson (*)
International Business, Crummer Graduate School of Business, Rollins College,
1000 Holt Ave-2722, Winter Park, FL 32789-4499, USA
e-mail: jpjohnson@rollins.edu
J. M. Muñoz
International Business, Tabor School of Business, Millikin University,
1184 West Main Street, Decatur, IL 62522, USA
e-mail: jmunoz@mail.millikin.edu
I. Alon
Jennifer J. Petters Chair of International Business, Rollins College,
1000 Holt Ave-2722, Winter Park, FL 32789-4499, USA
e-mail: ialon@rollins.edu
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Int Entrep Manag J (2007) 3:69–85
landscape, economic placements remain shaped by ethnicity and related factors.
Nevertheless, in cities around the world, ethnic immigrant communities have been
empowered to polish their entrepreneurial craft and make a significant impact on
their adopted home countries; according to Cui (2001), the involvement of ethnic
entrepreneurs in the local economy appears to be expanding on a worldwide scale. In
the case of the USA, data from the US Census Bureau (1997) indicated that out of
21 million firms in the country, 3 million are minority-owned, and about one third of
the minority-owned ventures are operated by Asians and Pacific Islanders. Saxenian
(1999) indicated that in 1998 businesses operated by immigrants in Silicon Valley
alone contributed over $16.8 billion in sales and accounted for close to 60,000 jobs.
Ethnic minorities are expected to comprise over half of the US population by
2060 (J. R. Feagin & C. B. Feagin, 1996). Kurklantzick (2004) cited the
importance of minority entrepreneurship in the USA and characterized the process
to be: (1) evolving and growing as more women-owned and minority-owned
ventures are expected to be created by 2010; (2) spurred by changes in the
demographic composition; (3) perceived favorably, due to the existence of
successful role models; and (4) increasing in visibility and involvement in
community affairs. In the case of Asian immigrants in the US, Le (2004) attributes
the expansion of entrepreneurial propensities to: (1) labor market penetration
challenges; (2) cultural factors and work ethic; (3) resource availability in the form
of capital and skill sets; and (4) economic opportunities derived from support from
the ethnic community, location, and venture availability. In addition, Tienda (2001)
observed that Asian entrepreneurs perceive business ownership as a way to generate
more income and to achieve prosperity.
The Philippines is one of the most active participants in international labor
mobilization and migration. Located in Southeast Asia, in an archipelago between
the Philippine Sea and the South China Sea, the Philippines has a population of
around 86 million and, with a total land area of 300,000 km2, is slightly larger than
the state of Arizona (CIA World Fact Book, 2004). Mercado (2002) depicted the
Philippines as the largest labor exporter in Asia, having sent over 7.4 million people,
or 22% of its entire labor force of 30 million, to over 120 countries. The Philippines
has a long history of worker migration, starting shortly after independence from
Spain in 1898, with laborers harvesting pineapples in Hawaii, picking fruit in
California, and canning fish in Alaska (Morada, 2004). Over one million Filipinos
have emigrated from the Philippines in the past 20 years and more than 70% of these
headed to the United States; in 2000, the US Census Bureau reported 1,850,314
ethnic Filipinos residing in the United States, a figure that includes US-born children
of Filipino immigrants. Crane (2004) pointed out that emigration has been socially
accepted in the Philippines society and has been viewed as a means towards the
attainment of economic prosperity.
Here, we explore the dynamics of ethnic entrepreneurship. We draw upon the
literature from two streams of research, migration and entrepreneurship, dividing it
into five themes on the topic of ethnic entrepreneurship: description, antecedents,
consequences, the challenges of entrepreneurship, and the connection between
culture and entrepreneurship. Building upon these five themes, we then develop a
general model of cultural entrepreneurship and seek to understand its implications
Int Entrep Manag J (2007) 3:69–85
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Table 1 Philippine emigrants according to occupational groups (1981–2001)
Occupational group
Employed
Professional, technical and related workers
Managerial, executive and administrative workers
Clerical workers
Sales workers
Service workers
Agriculture, animal husbandry, forestry workers,
and fishermen
Production process, transport equipment operators,
and laborers
Members of the armed forces
Unemployed
Housewives
Retirees
Students
Minors (below 7 years old)
Out of school youth
Refugees
No occupation reported
Total
Number
Percentage
118,185
11,849
48,276
47,035
28,623
26,762
10.50
1.05
4.29
4.18
2.54
2.38
46,124
4.10
3,868
0.34
240,867
36,690
272,979
89,288
1,908
3
153,620
1,126,077
21.39
3.26
24.24
7.93
0.17
0.00
13.64
100
for one of the largest migrant communities in the world, Filipino migrants in the
USA. We conclude by offering several research propositions that focus on the
Filipino community. This study contributes to the literature in three important ways.
First, it seeks to develop a general model of ethnic entrepreneurship that can be used
as a basis for research on a wide range of ethnic groups. Second, it integrates
research on Filipino ethnic entrepreneurship through an extensive literature review.
Third, it extends the current literature on Filipino emigrants by developing research
propositions that can be examined subsequently by empirical data. Like most of the
substantive research on Filipino immigrants and entrepreneurs, this study is USbased, which is understandable given that over two-thirds of the expatriate Filipino
population resides in the USA (see Table 1).
Research themes
In this section, using data from secondary research, including multi-disciplinary
peer-reviewed journals, books, working papers, government reports, trade journals,
and websites, we review the extant literature on the topic of ethnic entrepreneurship.
We first provide a definition of the term, and we then examine its antecedents and
consequences. We discuss the challenges of ethnic entrepreneurship and investigate
the relationship between national culture and entrepreneurship. We develop a general
model of ethnic entrepreneurship, based on this literature review that will guide the
subsequent discussion of Filipino entrepreneurship in the USA, which, in turn, forms
the basis for the propositions that are presented in a later section.
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Description of ethnic entrepreneurship
In order to understand ethnic entrepreneurship, the concepts of both entrepreneurship and ethnicity need to be clarified. Entrepreneurship is defined as the creation of
an innovative economic organization for the purpose of gain or growth under conditions
of growth and uncertainty (Dollinger, 2003). This definition includes not only highrisk, high-growth ventures but also the small, family-owned businesses that are typical
of those established by immigrant communities. Cohen (1997) defines ethnicity in the
context of shared history arising from the divergence of cultures, politics and
economics among groups in a society, and Yinger (1985) characterizes members of an
ethnic group as persons associated with a group through a commonality of culture and
origin. Ethnicity in this sense is not necessarily connected to race; for example, a
Filipino of Spanish descent and a Filipino of Malayan descent would both be regarded
at ethnic Filipinos, just as a white Jamaican of British descent and a black Jamaican of
African descent would both be viewed as ethnic Jamaicans.
Ethnic groups within a society who are engaged in the practice of entrepreneurship may be viewed as ethnic entrepreneurs. Within a broader international context,
ethnic entrepreneurs are in a unique position to make an impact. Basch, Glick-Schiller,
and Blanc-Szanton (1994) pointed out the concept of “transnationalism,” where immigrants build upon multi-faceted social networks between their country of origin
and country of residence, while Saxenian (1999) noted the expanding entrepreneurial
role of highly skilled immigrants and their ability to establish business ties between
domestic and foreign enterprises. However, ethnic ventures tend to be more common
in industries such as restaurants, personnel services, and retailing, due to the fact that
entry barriers are lower (Butler & Greene, 1997); Ibrahim and Galt (2003) suggest that
this group of ethnic entrepreneurs is largely heterogeneous due to differences in
economic class, educational attainment, and cultural influences.
Antecedents of ethnic entrepreneurship
Propensity for entrepreneurship Immigrants in the contemporary US society are
socio-economically diverse (Min & Bozorgmehr, 2000), and levels of performance
tend to be different among ethnic groups (Masurel, Nijkmamp, Tastan, & Vindigni,
2002). Yet in starting new ventures, certain ethnic groups appear to face more
obstacles than others (Robb, 2002). Basu and Altinay (2002) ascribed these differences
to cultural attributes such as family tradition, motives for migration, religion, family
linkages, entrepreneurial experience, and educational background. A range of other
economic, business, and cross-cultural factors also affects self-employment propensities
among ethnic minorities. For example, Razin and Light (1998) pointed out the role of
location and ethnicity on entrepreneurship, self-employment, industry preferences, and
competitive approaches, and Light and Bonacich (1988) cited resources such as
wealth, values, and knowledge as drivers of ethnic entrepreneurship. Chrisman, Chua,
and Steier (2002) highlighted the impact of family involvement on venture
performance among ethnic groups, while Rasheed (2004) observed the confluence
of factors such as gender and education on capital access and market penetration. In
essence, then, certain ethnic groups appear to have a higher entrepreneurial
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73
predisposition than others since some cultures produce individuals with a greater
propensity for entrepreneurial activity (Busenitz & Lau, 1996).
Culture and ethnic entrepreneurship There is a growing body of literature that
examines the cultural antecedents of entrepreneurship (e.g., Basu & Altinay, 2002;
Busenitz & Lau, 1996; McGrath, McMillan, & Scheinberg, 1992; Mueller &
Thomas, 2000; Portes & Bach, 1985; Portes & Rumbaut, 1990; Reynolds, Storey, &
Westhead, 1994; Robb, 2002). Hofstede (1980) defined cultures in terms of values,
and values play an important role in venture formation and entrepreneurial activity
(Bryan, 1999; Lipset, 2000). Research suggests that, in terms of Hofstede’s
dimensions of culture, entrepreneurial activity is associated with low Uncertainty
Avoidance (UA), high Power Distance (PD), Individualism (IND), Masculinity
(MAS), and long-term orientation (LTO). Furthermore, Mueller and Thomas (2000)
found that cultures with high individualism and low uncertainty avoidance created a
succeeding generation with stronger entrepreneurial attributes. The cultural
antecedents of ethnic entrepreneurship, along with other personal and family-related
antecedents, are reflected in the top box in Fig. 1.
The external environment However, Van de Ven (1993) has argued that the study of
entrepreneurship should not focus just on the characteristics and behaviors of
individual entrepreneurs; he maintained that an explanation of entrepreneurship
should include a social systems perspective that also examines the external
environment. Studies (see Gnyawali & Fogel, 1994 for an overview) have
investigated the relationship between environmental conditions and such phenomena
as the creation of new businesses (Reynolds et al., 1994), business survival
PROPENSITY FOR
ENTREPRENEURSHIP
• Cultural values
(Low UA, High PD, MASC, IND, LTO)
• Education, Skills
• Wealth
• Family Business Tradition
• Entrepreneurial Experience
MOTIVATIONS FOR
EMIGRATION
• Poor economic environment
• Unemployment
• No economic/social safety net
• Domestic corruption
• History of labor migration
• Ethnic/religious discrimination
Ethnic Entrepreneurship
TYPE & LEVEL OF
ENTREPRENEURIAL
ACTIVITY
(+) CONSEQUENCES
• Community building
• Cultural assimilation
• Intra-cultural diversity
• New professions
• Economic clusters
• Economic emancipation
Fig. 1 A general model of ethnic entrepreneurship
HOST COUNTRY
ENVIRONMENT
• Access to capital
• Entrepreneurial opportunities
• Institutional support
• Ethnic community/network
• Barriers to employment
(language/skills/ discrimination)
• Survival
(-) CONSEQUENCES
• Cultural segregation
• Intra-cultural diversity
• Inter-racial tension
• Business failure
• Loss of wealth
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(Romanelli, 1989), and business failure (Keeble & Walker, 1994). A prominent
social systems perspective that emphasizes the significance of social and cultural
aspects of organizational environments is institutional theory (Oliver, 1991),
according to which a firm’s behavior mirrors societal norms and traditions. This
view of the firm sees it embedded in a broader institutional context (Oliver, 1991;
Powell & DiMaggio, 1991; Scott, 1995) and emphasizes the limits of rational
maximizing behavior in the light of pressures from other institutional participants.
Thus, the behavior of firms, including entrepreneurial ventures, is examined from a
sociological point of view.
Motivations for emigration In addition, for ethnic entrepreneurship to occur, there
must first be an incentive for migrants to leave their home country. Historically,
natural disasters such as drought, earthquakes and famine, and man-made disasters
such as wars and pogroms have triggered vast waves of emigration, More recently, a
poor domestic economy, perceived opportunities abroad and ease of international
travel have triggered migrations from eastern Europe, east Asia and Latin America.
Some of the factors that trigger migration are shown on the left side of the model in
Fig. 1.
There is, then, a confluence of factors that affect entrepreneurial propensities
among immigrants. For instance, Waldinger, Aldrich, Ward et al. (1990) highlighted
the interplay of characteristics relating to pre-migration conditions, migration
circumstances, and the post-migration situation that leads to variations among ethnic
enterprises. In addition, Portes and Rumbaut (1990) assert that entrepreneurship
propensities among immigrants are shaped by environmental factors in the host
country, such as human capital access, community integration, economic opportunities, and government policies. Similarly, Busenitz, Gomez, and Spencer (2000)
argue that a country’s institutional profile for entrepreneurship, consisting of
regulatory, cognitive, and normative dimensions, contributes to different levels and
types of entrepreneurship, and they develop a scale for measuring this profile.
Ethnic entrepreneurship is driven by either proactive or reactive factors. As
Aldrich and Waldinger (1990) observed, the interconnection of social characteristics
inevitably impacts behavior, relations, and economic advantages among immigrants.
Proactive factors refer to underlying circumstances or conditions that favorably
encourage immigrants to engage in entrepreneurship in order that an economic
advantage may be gained. The presence of support networks in the host country, as
well as prior business experience, further encourages migrants to engage in
entrepreneurial activities (Massey et al., 1994; Portes & Bach, 1985). In addition,
emerging opportunities may open up as immigrants see avenues to bridge trade gaps
across regions (Saxenian & Edulbehran, 1998). In contrast, reactive factors are
circumstances or conditions that force immigrants to engage in entrepreneurship as a
means of survival and in coping with a new environment in the country of
destination. Portes and Rumbaut (1990) pointed out that some immigrants pursue
entrepreneurial activities in order to survive or to improve their economic situation,
while Mata and Pendakur (1999) noted that immigrants tend to undertake
entrepreneurial activities due to constraints in social status, language, and human
capital. Economic growth and institutional factors such as governance (Scott, 1995)
Int Entrep Manag J (2007) 3:69–85
75
can motivate immigrants to strive towards new directions (Frey & Stutzer, 2002).
According to Tienda (2001), when educated immigrants are hindered by a lack of
language proficiency they are more likely to engage in entrepreneurship; in contrast,
as Crane (2004) noted, familiarity with the language and culture of the country of
destination can lead to easier absorption of immigrants into the job market. Hostcountry environmental factors are depicted on the right side of the model in Fig. 1.
Entrepreneurial firms frequently lack the resources needed to start new operations
and enter new markets, so they turn to their network of relationships to access both
opportunities and resources. For individual entrepreneurs, their personal network
may be an important source of key resources for success. For example, Ahmadi
(2003) reports that while 25% of small start-ups in southern Sweden had received
some government support, none of the immigrant-owned companies—almost one
quarter of the sample—had received such support. Ahmadi concluded that
immigrant entrepreneurs lacked the contacts among the Swedish business community that would have given them access to the information needed. Furthermore, he
suggested that many immigrants come from societies that lack a social safety net, so
they are both used to taking care of themselves and, at the same time, wary of
involving public bodies in their business initiatives. For these reasons, immigrants
may prefer to develop their personal networks and to cooperate with family
members, friends, and fellow countrymen. In some cases, immigrants create selfhelp organizations to facilitate the exchange of information, advice, finance, capital
or even labor (Ahmadi, 2003).
Consequences of ethnic entrepreneurship Entrepreneurial activities pursued by
ethnic minorities pave the way for domestic and international trade expansion.
Galster, Metzger, and Waite (1999) pointed out that ethnic entrepreneurs have the
ability to prosper in their host countries by capturing local market niches, engaging
in trade arbitrage between the host and home countries, and establishing ventures in
enclaves in the host country. In the context of the host country, ethnic
entrepreneurship can be practiced in “enclaves” consisting of co-ethnic members
that serve as avenues for economic improvement (Portes, 1995). These communities
stimulate self-employment, work flexibility, and training (Zhou, 1992). In addition,
skilled immigrants are in the position to engage in corporate entrepreneurship; for
example, Saxenian (2002) observed that in 1998, approximately 25% of the senior
engineering executives in Silicon Valley were Asian immigrants of Chinese and
Indian origin.
The academic literature highlights numerous benefits arising from the pursuit of
ethnic entrepreneurship. Zhou (2002) pointed out that ethnic entrepreneurship
facilitates community building and information flow, and enhances relationships.
Eaton (1998) suggested that, in the case of smaller cities, immigrants take up
professions that would not have been filled in their absence. In addition, informal
networks contribute to business success (Masurel et al., 2002), and through the
strategic use of support networks, knowledge is gained in industry practice and
management, capital acquisition, and human resources development (Smart, 2003).
Ethnic support networks expand entrepreneurial contacts and facilitate not only
training and business advice but also access to loans and credit, including money
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pools and loan clubs (Chotigeat, Balsmeier, & Stanley, 1991; Ginsberg, 2003).
Support from other members of the ethnic community is gained due to trust, ease of
communication, credit privileges, and cultural compatibility (Tienda, 2001), and
ethnic networks support the formation of economic clusters that reinforce cultural
value systems (Portes & Zhou, 1992). The positive consequences of ethnic
entrepreneurship are depicted in the bottom left box of Fig. 1.
Challenges of ethnic entrepreneurship In the course of immigrants’ assimilation
into a new society, their cultural identities may be challenged. Thompson (2003)
noted that in the case of Malay men, the intersection of socio-cultural forces such
as ethnicity, gender, religion, and class has a profound effect on their lives.
However, despite the risk of facing cultural adaptation, ethnic entrepreneurship
can actually strengthen intra-cultural bonds. Waldinger (1986) suggested that
social formations among ethnic groups strengthen relationships and can contribute to
firm competitiveness.
Ethnic entrepreneurs may also face formidable environmental and institutional
barriers, such as limitations on class resources (Ram, Sanghera, Abbas, & Barlow,
2000); non-usage of formal business loans and tax credits from the government
(Ahmadi, 2003; Ginsberg, 2003); language barriers (Tienda, 2001); the existence of
quasi-legal structures and taxation challenges (Ginsberg, 2003); poor personnel
practices and low rate of utilization of institutionalized training programs (Ram et al.,
2000); non-transferability of degrees and professional qualifications acquired in their
home countries (Tienda, 2001); lack of awareness of government support programs
and benefits for new venture (Ahmadi, 2003; Tienda, 2001); insufficient capitalization (Kurklantzick, 2004; Louie & Ong, 1995); segregation in certain locations
(Louie & Ong, 1995); and the existence of internal diversity (Crane, 2004).
Lucas (1978) highlighted the importance of managerial ability in the practice of
entrepreneurship. In many cases, however, immigrants were previously unemployed
and so they are unlikely to possess business skills; as noted in the previous section,
this is particularly true of Filipino emigrants. Furthermore, previously unemployed
spouses (predominantly female) are likely to be financially dependent on their
husband. In general, ethnic minorities have limited ability to provide for personal
collateral (Bates, 1997). For women in particular, their quest for venture capital may
be hindered by higher interest rates and collateral requirements (Coleman, 2000).
Depending on their country of origin, Asian women business owners may face
additional challenges within the business environment and in the framework of
society as they balance role expectations in their families and communities (Wright,
Martin, & Stone, 2003). Women-owned firms are more prevalent in the retail and
service industries and also tend to have higher incidences of closure and lower
survival rates (Boden & Nucci, 2000; Robb, 2002; Srinivasan, Woo, & Cooper,
1993). In addition, immigrants need time to become acclimatized culturally and
economically before venture opportunities are identified and pursued. While striving
to understand the new environment better, immigrant entrepreneurs are challenged in
their acquisition of relevant business and economic data that will help gauge the
attractiveness of the market (Wright et al., 2003). Operational hurdles also need to be
addressed. Le (2004) identified some of the challenges of Asian immigrant ventures
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in the US as: (1) having overworked owners putting in long hours; (2) being exposed
to inter-racial tension; (3) experiencing low profit margins; and (4) undergoing a
high rate of failure. Some of the negative consequences of ethnic entrepreneurship
are shown in the bottom right box of Fig. 1.
So far, we have discussed ethnic entrepreneurship in broad terms in order to
construct a general model. In the following section, we focus on how this general
model of ethnic entrepreneurship can be applied to a specific ethnic group, Filipino
emigrants to the USA, and we draw upon the general model in order to develop
testable propositions about Filipino ethnic entrepreneurs.
Filipino ethnic entrepreneurship
A scarcity of jobs at home and higher income abroad has triggered a mass exodus
from the Philippines, resulting in a scenario where the total number of overseas
Filipinos exceeds 10% of the total population (Mercado, 2002; Ravanilla & Robleza,
2003). In a study of Filipino immigrants in Italy, Crane (2004) observed that
Filipinos migrated to that country in the 1970s and 1980s as a result of economic
difficulties experienced during the regime of President Ferdinand Marcos, and in the
1990s as a response to the proliferation of intermediary labor agencies. A number of
other reasons may be cited for the intense Filipino migration, including enhancement
of socio-economic position in relation to another location (Stark & Bloom, 1985),
optimization of investment in education (Tan & Canlas, 1989), and diversification of
income streams (World Bank, 1995). Consistent with the motivations for emigration
in Fig. 1, the flow of emigration from the Philippines will likely continue because of
two persistent phenomena: the country’s poor economic conditions, and the
corporate and business success achieved by many Filipino emigrants. The economic
environment of the Philippines is exacerbated by several factors: (a) a drastic
currency devaluation over the past 10 years; (b) a $3.5 billion annual government
budget deficit (Daily Times, 2004); (c) significant socio-political risks due to law
and order concerns and allegations of bribery (DiCarlo, 2003); (d) the highest level
of unemployment in Asia at 13%, and difficulties in providing jobs for about
300,000 graduates each year (Daily Times, 2004); and (e) the prevalence of labor
migration (Leung, 2003). Indeed, the extent of migration may even be driven by past
migration and can lead to a “migration chain.” (Stark & Bloom, 1985; Tan, 2000),
and the challenges listed above might spur even greater migration in the future. As
emigration is likely to continue, tough entrepreneurial challenges face those
emigrants who lack skills and resources. As indicated in Table 1, 70% of the
Filipinos who departed the country in the period 1981–2001 were unemployed and
most of these were students and housewives. Furthermore, a large proportion of
these emigrants (47%) had limited knowledge about their country of destination
(Commission on Filipino Overseas, 2004). Their average age was 32 years, and most
of the emigrants were female, a number of whom left the country for family reasons
or as a spouse of a foreign national (Commission on Filipino Overseas, 2004).
The data in Table 1 indicate that Filipino immigrants to the USA who were
unemployed when they left their homeland included students who were heading to the
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USA to complete their education. Because of the high cost of education in the USA, it
is likely that most of these students were either from well-to-do Filipino families, and
thus could afford to pay for their education, or were students on scholarships. In either
case, this number would have included students who remained in the US after their
studies were complete in order to optimize their investment in their education (Tan &
Canlas, 1989). Tan (2000) observed that Filipino migrant workers tend to have more
years of education than the non-migrants in the country. Therefore:
Proposition 1 Ethnic Filipino entrepreneurs in the USA will have a level of
education that is significantly above the Filipino average.
Hofstede (1991) has indicated that the Filipino culture has high power distance,
high masculinity, and low uncertainty avoidance, and these attributes have been
identified by McGrath et al. (1992) as traits typically present among entrepreneurs in
various cultures. Thus, from this perspective, the Filipino culture seems to be
favorably disposed towards entrepreneurship, except on the dimension of individualism.
As shown in Hofstede’s (1991) study, Filipinos scored low on individualism; in contrast,
a high individualism rating typically characterizes entrepreneurs (McGrath et al., 1992).
The low level of individualism in the Philippines may adversely impact entrepreneurial
tendencies (Mueller & Thomas, 2000). For instance, the value of sharing among
Filipinos can curtail business propensity and efficiencies, and Szanton (1998) claims that
the moral pressure of obligatory sharing has hindered entrepreneurial Filipinos from
engaging in commerce.
The Philippines also scored low on long-term orientation (Hofstede, 1991). A
short-term rather than long-term focus translates into the immediate desire for
financial gains that are not often attainable in self-employment or in start-up
entrepreneurial ventures. Additionally, many Filipinos view their immigration as a
temporary period and eventually dream of returning to their home country (Crane,
2004). This perspective discourages the formation or acquisition of a concrete and
long-term business infrastructure in foreign locations. The entrepreneurial predisposition among Filipino immigrants can also be dampened by the culture’s fatalism, an
extreme form of low uncertainty avoidance. Sison (2003) has pointed out the
Filipinos’ short-term perspective and fatalistic or “bahala na” attitude, where fate is
ultimately left to God. This is distinct from the low uncertainty avoidance found in
cultures such as Hong Kong, which have a high propensity for risk-taking.
From an institutional perspective, the Philippines has a long tradition of powerful
social institutions—the Catholic Church, a bureaucratic government, the military—
that were imported by the Spanish colonizers and that persisted long after
independence from Spanish rule. Furthermore, the Philippines ranked 117 out of
159 countries in the 2005 Corruption Perceptions Index published by Transparency
International (2005), with a score of 2.5; a score of 3.0 or below indicates that
corruption in the public sector is endemic in a country. ‘Corruption’ in this context is
defined as the abuse of public office for private gain, and institutional corruption can
serve as a formidable barrier to establishing entrepreneurial ventures. In the Philippines,
there are strong institutional barriers to the development of entrepreneurial ventures,
most notably the degree of bureaucracy in the country and the high degree of
institutional corruption (Transparency International, 2005). At the same time, McGrath
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et al. (1992) state that several traits of Filipino culture, such as high power distance,
high masculinity, and low uncertainty avoidance, are associated with entrepreneurship.
We postulate, then, that there may be a self-selection process among Filipino emigrants,
such that those with a strong entrepreneurial tendency may prefer to seek their fortune
overseas, in locations such as the USA, where immigrants can improve their socioeconomic position (Stark & Bloom, 1985) in a climate that is more transparent and
more accommodating to entrepreneurs.
Proposition 2 The percentage of entrepreneurs among Filipino immigrants to the
United States is significantly greater than the percentage of entrepreneurs in the
domestic population of the Philippines.
Nevertheless, the data from Table 1 indicate that 70% of the Filipinos who
emigrated between 1981 and 2001 were unemployed and were mostly students and
housewives. The gender and educational background of the majority of Filipino
immigrants to the USA may therefore pose some limitations to capital access and
market penetration (Rasheed, 2004). Furthermore, most of these emigrants were
female, many of whom left the country for family reasons or as a spouse of a foreign
national (Commission on Filipino Overseas, 2004); as dependents, they would need
the approval and support of their husbands in order to undertake a business
venture. Indeed, 45% of the Filipinos who were granted permanent resident status
in the USA in 2003 were immediate relatives of US citizens, suggesting that their
emigration was motivated more by family reasons than by a desire to become
entrepreneurs.
According to Crane (2004), familiarity with the language and culture of the
country of destination makes it easier for immigrants to find work. The Filipinos’
history and culture allows them to draw upon a wealth of strong base of knowledge
and multi-cultural orientation. The Philippines has been exposed to Asian, European,
and American cultural influences throughout its history. The country has traded with
China since 960 A.D., was under Spanish rule for over 300 years, and was a US
colony for about 50 years (Sison, 2003). Min (1986) pointed out the Filipinos who
emigrate to the USA benefit from: (1) proficiency in English, (2) commonality with
US educational approaches, (3) a high level of cultural integration. There has long
been a close association between the Philippines and the USA, with educated
Filipinos having a good command of English, so it would be easier for Filipinos than
for many other Southeast Asian immigrants to be absorbed into the US job market
upon arrival or, for students, after concluding their course of study. In addition, as we
noted above (Sison, 2003), the low uncertainty avoidance index (Hofstede, 1980)
attributed to the Philippines can be ascribed to a sense of fatalism among Filipinos,
rather than the propensity for risk-taking that is indicative of low uncertainty
avoidance among entrepreneurs. Given these characteristics, we propose the
following:
Proposition 3 The level of entrepreneurial activity among Filipino emigrants to
USA will be low in comparison with other Southeast Asian immigrants.
Notwithstanding the daunting challenges facing ethnic entrepreneurs that were
outlined in the previous section, the opportunities that are available apply equally to
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Filipino immigrants in the USA, who provide value to their adopted country.
Specifically, advantages may accrue to Filipino entrepreneurs from co-ethnic support
networks, acquisition of business advice, training, and loan or credit access
(Chotigeat et al., 1991; Ginsberg, 2003; Masurel et al., 2002; Smart, 2003) and
participation in activities in economic clusters (Portes & Zhou, 1992). The path
toward self-employment may be the way to overcome obstacles in job acquisition
and financial improvement (Srinivasan, 1992). In addition, Ahmadi (2003) suggests
that when immigrants originate from societies that lack a social safety net, they are
less likely to seek assistance from public institutions in their new homeland when
trying to establish a business venture, relying instead on their personal networks of
family members, friends, and fellow countrymen who can help them establish and
maintain their business. Although the Philippines has had a social security system,
modeled on US lines, since 1947, participation in the system is still far below
western levels. In 2004, it was estimated that 47% of the labor force was employed
in the informal sector and therefore neither contributing to nor covered by social
security (Friedrich-Ebert-Stiftung, 2004). Thus:
Proposition 4 When establishing a new business overseas, ethnic Filipino
entrepreneurs are more likely to seek assistance from their informal network of
relationships than from public institutions.
Henderson (1999) depicted the key attributes of traditional Philippine management
as: formality (need to use titles, formal names, and handshakes); punctuality (need to
prepare for delays due to traffic congestion); social (allow time for small talk);
sensitivity toward others (avoid raising voices or implication of incompetence);
paternalistic; dense with close work networks; strong group loyalty and social
harmony; indirect and elusive in communication (executives tend to use a variety of
approaches to say “no” to soften the refusal and prevent embarrassment); leave
projects uncompleted (“ningas cogon”); and anchored on trust building (“tiwala”), a
key ingredient in building a successful relationship. Andres and Ilada-Andres (2001)
cited the Philippine culture as possessing attributes such as personalism, familism,
and particularism, while Mendoza (2001) pointed out that these attributes are
misaligned with certain Western values that emphasize objectivity, professionalism,
and goal orientation. These cultural differences can lead to misunderstandings and
work conflicts with employees, business partners, and other stakeholders in the host
country. Therefore, these cultural differences between Filipino immigrants and the
host culture are likely to spur budding Filipino entrepreneurs to seek close ties with
fellow Filipinos (Andres & Ilada-Andres, 2001; Henderson, 1999; Mendoza, 2001).
Filipinos have strong sense of group loyalty and social harmony, and emphasize
reciprocity (Henderson, 1999; Timbermann, 1995) so, like many immigrants they
seek support from the same social networks that existed in the home country
(Massey et al., 1994; Portes & Bach, 1985). Crane (2004), for example, found that
Filipino immigrants in Italy closely collaborated with both the Catholic Church and
co-ethnic members. These are pragmatic approaches that they can exploit in order to
initiate or grow their ventures. Therefore:
Proposition 5a Ethnic Filipino entrepreneurs will focus on establishing businesses
that serve the immigrant Filipino community.
Int Entrep Manag J (2007) 3:69–85
81
Proposition 5b Ethnic Filipino entrepreneurs will utilize social networks to grow
their businesses.
Discussion and conclusion
We have examined the phenomenon of ethnic entrepreneurship, both in general and
in the context of emigrants from the Philippines, with a focus on those who chose to
migrate to the USA. We noted the burgeoning role of ethnic minorities in the US
economy and, drawing upon literature streams in entrepreneurship, migration, and
culture, we discussed in detail the factors that affect the likelihood of emigrants
becoming entrepreneurs in their adopted homeland. Based on the literature review,
we developed a general model of ethnic entrepreneurship and propositions about the
characteristics of ethnic entrepreneurs in the emigrant Filipino community. These
propositions serve as a guide for further investigation of the numbers and types of
ethnic entrepreneurs among Filipino emigrants, and more specifically those in the
USA. Some of the data that is needed to test these propositions, such as the number
and types of business ventures established by Filipinos, might be available in public
records. Other data, however, will not be so readily available and may have to be
estimated via representative sampling. In either case, the results provided by such
further research should provide valuable insights about the nature, motivations and
dynamics of ethnic entrepreneurs in the emigrant Filipino community.
Although we have focused here on Filipino immigrants in the USA, future research
should explore the similarities and differences between Filipino entrepreneurs in the
USA and those in Canada, Australia and Japan—the three other main destinations for
Filipino emigrants. To what extent do environmental differences account for the
variance (if any) in the number and type of Filipino enterprises and the characteristics
of Filipino entrepreneurs in those countries? Ethnic entrepreneurs from other source
countries and in other destinations should also be studied. For example, there is a large
population of immigrants from the Indian subcontinent that has developed a strong
presence in the hotel and convenience store industries in North America. Why did they
choose to come to the USA and Canada instead of other countries that attract
entrepreneurial investors? What motivated them to seek opportunities in these
particular industries and in particular regions of the USA and Canada? In Europe,
too, greater labor mobility in the European Union (EU), especially between the ten
new members and the three (UK, Ireland and Sweden) that were the first to permit
unrestricted entry to the new members, has opened up new possibilities for budding
entrepreneurs from former Communist countries. To what extent are migrants from
Central and Eastern Europe capitalizing on this opportunity? Is there a typical profile
of the migrant entrepreneur in the EU? What are the factors that impel migrant
entrepreneurs in the EU to seek their fortune abroad rather than at home? To what
extent is a more favorable institutional profile in the destination country capable of
unlocking or promoting latent entrepreneurial propensities among ethnic immigrants?
As the demographic tail of the developed economies gets longer, there will be a
growing shortage of labor and a need to import workers from the developing world.
Combined with the predicted expansion of free trade areas in the eastern and western
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hemispheres, this suggests that labor migration is set to increase in the coming
decades, bringing more opportunities for immigrants to become entrepreneurs in
their adopted countries. It is clear that there is still much that we do not know
about ethnic entrepreneurs, their characteristics, and the business ventures that they
undertake, and it is our hope that this study, although a small contribution to the
literature, will stimulate greater interest in this topic.
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