Successful migrant entrepreneurs in Copenhagen
1. Focus and aim of the report
The report focuses on successful immigrant entrepreneurs in Greater Copenhagen, Denmark. 30 immigrant businesses / entrepreneurs, all from non western countries, have participated in the empirical research which has been a combination of a survey and personal in depth interviews. The main research questions which the report tries to answer have been: 1) Can any general characteristics concerning successful immigrant entrepreneurs’ praxis and placement in the possibility structure be traced? 2) In which ways and to which degree do successful immigrant entrepreneurs stand apart from less successful immigrant entrepreneurs concerning prior socioeconomic conditions as well as ways of running a business? 3) To what degree are the successful immigrant entrepreneurs creating jobs with good working conditions and personal development possibilities for employees, and 4) can a positive relationship between economic consolidation and the creation of good working conditions in immigrant businesses be traced?
The deciding criteria for ‘successful entrepreneurs’ have mainly been related to their businesses which should:
- have existed in a minimum of 2 years
- have a growing or stabile turnover
- generate an annual income for the owner on at least 35.000 euros (before tax)
- be legal following official rules and labour market agreements.
Furthermore the entrepreneurs have been asked what their own criteria for success is, and if they consider themselves successful.
The aim of the report is to gather new empirical knowledge on how immigrant entrepreneurs in Denmark become successful and to put in focus the fact that many immigrant entrepreneurs are succeeding in creating well run businesses which, by generating income and many good jobs, are beneficiaries to Danish society. All entrepreneurs, their life stories and personalities are, off course, different from each other, and a precise recite on how to become ‘a successful entrepreneur’ does not exist. But knowledge about possible ways to success and about the skills and strategies used by successful entrepreneurs can be used to help and advise the many less successful immigrant entrepreneurs.
Research and report has been carried out by EVU’s Knowledge Centre for Ethnic Trade and Industry Development and is a part of the European Socialfund’s Equal-program ‘Integration and Development of Immigrant Businesses in Aarhus, Odense and Copenhagen’. The report has been financed by RAR which is a part of the Public Employment Agency of Greater Copenhagen (AF-Storkøbenhavn).
The results presented in the report are mainly based on survey and in depth interviews with immigrant entrepreneurs. In addition interviews have been carried out with employees, relevant authorities, with EVU’s outreach business advisors in Copenhagen, who are specialised in advising immigrant entrepreneurs, and with other key persons such as leaders of immigrant (business) associations.
Size and sector
The report documents the existence of several medium sized immigrant businesses in Greater Copenhagen employing up till 50 people and with annual turnovers reaching 20 million euros. Research also shows that no immigrant business so far has been able to grow to a size that matches big Danish companies (more than 250 employees). This is probably mainly due to the fact that non western immigrants first started arriving in Denmark during the 1970’s. Therefore immigrant businesses are all rather young compared to most of the big Danish companies which have often existed for at least 50 years.
The participating businesses are operating in many different sectors, which indicate that advising immigrant entrepreneurs to start up in other sectors than the traditional retail and small restaurants is not only a good idea - it is also a realistic one. Especially in the wholesale and service sectors research found many successful immigrant entrepreneurs and the sectors also seem to contain many future possibilities for this group. The report also shows that it is possible to become a successful entrepreneur operating in the traditional immigrant sectors (minor retail shops and small restaurants) even though these sectors are characterized by an extreme degree of competition and very small profit margins. Several immigrant entrepreneurs have created successful businesses in theses sectors by offering a more unique and collaborated product or business concept than the major group of immigrant entrepreneurs in Copenhagen do. Basically most of the entrepreneurs participating in the research are pioneers, saying they have concentrated on developing creative and to certain degrees unique business concepts.
Education and prior work experience
The successful immigrant entrepreneurs are typically well educated and more than 30 % responded in the survey to having completed a higher education – majority of these a master from university. More important is the fact that their educational background most often matches the sector they are operating in, so they are able to use their educational skills and knowledge in the daily management of their businesses. Most of them also had relevant work experience as employees prior to starting up their own businesses which have equipped them with important business skills, knowledge about the sector and have placed them in a broad network of potential customers and suppliers.
A few had neither education nor relevant work experience before becoming self-employed. Still they have managed to become successful, but typically they have had to work hard more years to consolidate and develop their businesses compared to the well educated entrepreneurs.
Class based vs. ethnic resources
All of the participating successful entrepreneurs seem well integrated in mainstream Danish society concerning language, social network, and knowledge and appreciation of Denmark and Danish society and culture. Only one does not speak Danish. Their businesses are also mainstreamed, and in the managing of their businesses the successful entrepreneurs mostly utilize class based skills and resources such as education, work experience, and mainstream business skills. However in the start up period many of the entrepreneurs have relied heavily on their ethnic resources where family and ethnic networks have been the most important sources to labour, loans and for some also customers and suppliers. Common for most of them is their use of their ethnic background in the business concept. All this indicates that success for most immigrant entrepreneurs is achieved through the right combination of class based and ethnic resources and through an active use of their ethnic background in the business concept combined with a mainstream management and company structure.
For immigrant entrepreneurs who both have co-ethnic as well as Danish customers and suppliers, the degree of success furthermore depends on their ability to manoeuvre in two different kinds of business relations when it comes to trust. Among many ethnic minorities in Denmark trust can only be personal, saying that trust and confidence are always firmly related to an actual person and can not be build on a company’s or Institution’s brand or good reputation. At the same time these entrepreneurs have to be able to manage professional relations with a Danish codex of trust. Here it is more often taken for granted that you could and should, at least as a starting point, trust public institutions, authorities and well reputated companies.
Networks, advise, and start up capital
It seems as if the successful immigrant entrepreneurs are more likely to participate in and utilize professional business oriented networks compared to their less successful colleges. This means both utilizing their business networks in doing daily business as well as when seeking advice. Furthermore more than 90 % have responded that they have employed one or more native Danes. To have Danish employees gives the entrepreneurs an enhanced possibility to extend their Danish network, and can supply the company with special skills and knowledge about cultural and commercial matters a non native entrepreneur does not posses to the same degree. At the same time many of the successful entrepreneurs have underlined the fact that their dense ethnic networks have been the most important factor in their ability to start up a business for the first time.
A little less than half of the participants have responded not to have received any form of advice at all. Many have expressed that professional advice would have saved them from many stupid and expensive mistakes especially during start up. Some have later on chosen to use the free business advice given for example by EVU.
The sources from where successful immigrant entrepreneurs get start up capital does not seems to be that different to capital sources used by immigrant entrepreneurs in general. Many have combined own savings with minor loans from friends and relatives. But regarding own savings it is most likely that the successful immigrant entrepreneurs have been in more fortunate economically situation compared to many other immigrant entrepreneurs when starting up since many of them came from well paid jobs.
When first in business non of the entrepreneurs have faced any particularly hard difficulties getting capital to develop or extend their businesses, but many of them calls for more and better opportunities for entrepreneurs to loan money during start up, and think that lack of access to capital is one of the major barriers for immigrant entrepreneurs in general.
The biggest barriers are the mental ones
The interviewed entrepreneurs all expressed that, from their knowledge about other immigrant entrepreneurs and immigrants in general it seems that the biggest barriers for immigrants becoming successful entrepreneurs are mental. Too few immigrants have the courage and self-confidence to start up businesses outside the typical immigrant sectors or to try developing a unique and creative business concept. Most immigrants simply do not believe that it is possible to become successful as an immigrant entrepreneur in Denmark.
In this light it will be necessary to change the often negative focus media puts on immigrant businesses in Denmark, and to bring into focus the many successful immigrant entrepreneurs and well run immigrant businesses which generate big incomes and many good jobs. However when using immigrant entrepreneurs as role models and best practice cases it is important to have in mind the envy and jealousy that is so easily created in the often small and dense ethnic network. Some of the participating entrepreneurs asked not to be used as role models to other immigrants, since earlier they had experienced their success resulting in envy from some co-ethnics and hereby loss of customers or/and suppliers.
The report shows that working conditions in the successful immigrant businesses seems to be good and of a similar standard as many similar Danish companies. Also there seems to be a positive interrelationship between growth and the improvement of working condition in immigrant businesses. Most employees have in interviews expressed great satisfaction with their jobs concerning tasks, salary, physical and mental working conditions and future carrier possibilities. Many have also underlined good atmosphere, good possibilities for taking responsibility, and that critique or new ideas from employees are taken serious by the owner/manager of the company.
Several of the participating immigrant entrepreneurs had many immigrants employed and these often with different national, ethnic and religious background. Some employees mentioned the international atmosphere as a very positive aspect of their work, and characterised the owner/manager as open minded and sympathetic and felt sure that this partly was due to the owners own immigrant background.
Furthermore results from the survey show that:
- Employees in the successful immigrant businesses stay more years compared to immigrant businesses in general. 60% of the successful entrepreneurs have responded that employees mostly stay more than 3 years.
- 84% of the successful entrepreneurs think they are good or really good at creating good physical as well as mental working conditions in their companies.
- Only 13% think that they have not got the necessary skills and knowledge concerning administration of personnel and creation of proper working conditions.
- Around 90% of the successful entrepreneurs have employed native Danes. This means that employees with an immigrant background get enhanced possibilities to practice Danish, to get more knowledge about Denmark, Danes and Danish culture and to extend their Danish network, things which are often very important for future career possibilities.
The interrelationship between growth and mainstreaming
So far research points towards a positive interrelationship between growth (and / or consolidation) and mainstreaming and hereby the creation of good working conditions among immigrant businesses.
The successful immigrant entrepreneurs’ ability to actively use their ethnic resources combined with use of mainstream Danish management methods improve their possibilities of manoeuvring in existing market structures and herby make consolidation and growth more likely to happen than in the case of most immigrant entrepreneurs. Consolidation of the business will again disengage resources which are often used at further mainstreaming, development of products and business concepts and improvement of working conditions. At the same time several of the interviewed entrepreneurs stated that their success is among other factors due to the fact that they, in contrary to many other immigrant entrepreneurs, right from the beginning focused on starting up fully mainstream businesses following Danish norms and standards.
As we see, growth and the creation of good working conditions is closely connected in a synergetic interrelationship. For Danish or big international companies there is probably nothing new or surprising in this fact. The positive thing is that this pattern of growth also exists among immigrant businesses.
Authorities have also reported that immigrant businesses are mainstreamed and get better at observing laws as they grow in size. Furthermore they find that well educated entrepreneurs are better to observe laws and more keen to cooperate with authorities than less educated ones. The ability and willingness of a business to observe laws’ also varies a lot in different sectors. According to authorities problems mostly concentrate in sectors as wholesale, restaurants and minor retail regardless of owners/managers nationality or ethnic background. All this saying that many of the problems which the majority of immigrant entrepreneurs and businesses faces are not just cultural or ethnic but are problems closely connected to sector and size of business.
Contact Shahriar Shams Ili email firstname.lastname@example.org