When certain conditions are met, networks potentially benefit immigrant
entrepreneurs by extending credibility, promoting goods and services and providing
information regarding market opportunities (Boissevan, et al., 2006). However,
networked relationships demand time and energy to establish and maintain (Portes &
Sensenbrenner, 1993) expending limited resources for those who have newly arrived
on time-constrained visas. In addition, networked relationships impose obligations on
the participants which immigrant entrepreneurs might initially find too onerous to
support. According to Portes and Sensenbrenner (1993), networked social capital
relies on the development of trust, shared norms and values, reciprocity4 and the
influences of social exclusion on a network’s social cohesion.
Trust is a necessary condition for the development of social capital as the basis of
co-operation between people who share norms and values (Fukuyama, 2001).
Trusting, networked relationships provide individual and collective access to both
information and resources through coordination and cooperation for mutual benefit
(Putnam, 1995). The level of trust enables complex services to be more efficiently
controlled through internalised professional standards rather than contracts, as trust
lubricates cooperation and collaboration. Conversely, a lack of trust results in higher
financial transaction costs incurred by monitoring, negotiating, litigating and
enforcing formal agreements (Fukuyama, 2001; Putnam, 2000). Fukuyama (2001)
coined the term ‘radius of trust’ to define and confine the extent of reciprocal dealings
within families, tribes, clans, villages or religious groups based on shared norms and
4
co-operative behaviour. Immigrants without connections must rely on the residual
trust in networks while they establish their own credentials. Later, in the data analysis
chapters, I examine how immigrant entrepreneurs use not only ethnic, but professional
and hobby affiliate cultural capital, to quickly establish trust. In small ethnic and
regional markets, if trust was perceived to have been broken, negative perceptions
could circulate through local community networks constraining an immigrant’s ability
to establish a business for lack of customers. Passive community exclusion might
naturally occur until community members are sufficiently confident of the integrity of
the person they are doing business with.
This section considers Portes and Sensenbrenner’s (1993) expanded concept of social
embeddedness by introducing three network dimensions of value introjection,
reciprocity and bounded solidarity or social cohesion. The first network dimension,
value introjection describes the norms and values, such as ethnic, professional and
religious factors, underpinning a network initiation process. Newly arrived immigrants
and network members need time to embark on the development of social capital by
exploring the compatibility of value sets during the process of socialisation (Portes &
Sensenbrenner, 1993, p. 1323). The desire to network might be driven by survival
requirements, selfishness, greed, or a desire to contribute to the development of the
community’s social capital resource appropriable by others. Where value sets align,
there is a greater opportunity for access to existing networks. Immigrants often rely on
affiliated ethnic value sets but less well explored are the value sets offered by
professional training and hobby backgrounds. In networked relation situations,
individuals forego their immediate interests for a longer term return for the group
good. This contrasts with formal transactions based on norms of open exchange where
the strength of their values (Portes & Sensenbrenner, 1993). IWR immigrant
entrepreneurs might develop such relations in order to undertake business
transactions. New entrants who do not initially share the same norms and values as the
network they wish to access, might over time become acculturated and accepted, as
both individuals and networks modify their cultural perspectives. The strength of the
values held might influence the outcome, or language difficulties impede the
understanding of shared norms and processes.
Reciprocity, a second network dimension, relies on trust and the power of exclusion as
it is not enforceable in law. Existing network members evaluate the new member’s
potential to bring new skills, knowledge, contacts, connections or markets to the
network. Potential exclusion from a network promotes reciprocity, reflecting the
expectations of network members (Bourdieu, 1986; Portes & Sensenbrenner, 1993).
Reciprocal transactions guided by altruistic values might directly benefit the
networked community and only indirectly the person involved (Putnam, 2000), such
as fund-raising for schools and communities. Reciprocal transactions mirror the value
of financial transactions but trade in intangible assets (Fukuyama, 1983). Networks of
organised social interaction, such as co-operatives and neighbourhood associations,
reflect an underlying value of deferred reciprocity (Putnam, 2000). Deferred
reciprocity, or gratification, occurs when neighbours provide support in the belief that
similar reciprocity would occur if the need arose. In this way, reciprocity builds
networks, which might link co-ethnic and non-ethnic communities (Ley, 2006).
Chinese urban enclaves in the United States and the Russian Jewish community in
New York illustrated the social and financial value of ethnic networks incorporating
Obligatory reciprocity however, might negatively strain start-up enterprises by
imposing unsustainable donation or employment requests. Such obligations to provide
community, religious or family donations might undermine reinvestment in the
enterprise (Portes & Landolt, 1996). Therefore, ventures operating in small New
Zealand markets might need to rationalise donation requests or similar impositions in
order to become or remain viable.
Bounded solidarity, the third dimension of Portes and Sensenbrenner’s (1993)
networked social capital, occurs when a group of immigrants is excluded or
discriminated against based on a distinctive religious, ethnic or a physical appearance.
The stronger the exclusion, the stronger the bounded solidarity of those excluded such
as occurred in Chinatown in San Francisco (Portes & Landolt, 1996). The social
cohesion resulting from the strength of dense ethnic networks provides moral support
and a sense of belonging which can help to reduce stress (Meares, Ho, Peace, &
Spoonley, 2010b). The more physically distinctive the group, the more difficult it is to
exit from this situation. To compensate, the sentiments of in-group solidarity among
its members become stronger, increasing the appropriable social capital (Portes &
Sensenbrenner, 1993, p. 1329). Bounded solidarity refers to the level of closeness and
commitment within the community. Individuals use their cultural capital to integrate
through developing personal networks and social capital. Such communities offer
embedded immigrant entrepreneurs an emerging market, potential access to start-up
capital and low wage labour (Portes & Sensebrenner, 1993). This is particularly
significant to under-resourced immigrants but is less relevant to IWR immigrant
The majority of literature on ethnic entrepreneurs assumes a capital deficit which
compels immigrants to become embedded within ethnic communities. Tightly knit
immigrant communities with social networks regulating participants’ norms and
behaviour, might provide supplementary loan finance for start-up ventures (Nee &
Sanders, 2001; Portes & Landolt, 1996). The threat of exclusion from the benefits of
such communities is usually a sufficient enforcement of loan repayments. However,
adequately resourced IWR immigrant entrepreneurs may avoid involvement in ethnic
communities in order to integrate directly into larger, less densely networked,
mainstream markets.