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CHAPTER ONE INTRODUCTION
1.1 This report provides results from a comprehensive
national scoping study, commissioned by the Scottish
Executive, on minority ethnic enterprises in Scotland. The
study is the first systematic research undertaken with
minority ethnic businesses (
MEBs) and their owners in Scotland. The
limited extent of previous studies and the lack of
comprehensive work with the importance of
MEBs is an omission in the 21
st Century, when the importance of
MEBs for the diversity and vitality of
modern economies has been recognised for some time (Bank of
England, 1999). This study identifies the vital importance
of
MEBs for Scotland's economy in growing
and emergent sectors such as
IT and leisure, as well as their
traditional sectors of retailing, wholesaling and
catering.
1.2 The study utilises a combination of research methods
and data sources. First, analysis of secondary Census data
on self-employment rates in minority ethnic groups in
Scotland. Second, quantitative analysis of baseline data on
the distribution, characteristics and importance of
minority ethnic businesses (
MEBs). Third, findings from a programme
of qualitative, in-depth face to face interviews with
MEB owners conducted by the research
team. Fourth, the research team has completed extensive
consultation with key informants from enterprise support
agencies, specialist agencies, funders and minority ethnic
community leaders. However, before reporting the main
findings, it is important to establish the nature and
purpose of the scoping study and to provide some contextual
background.
The nature and purpose of the study
1.3 The study aims to provide information on the
particular issues and the distinctive importance of
MEBs in Scotland. It also aims to build
upon previous research. For example, the largest study with
MEBs in the
UK, by Ram, Smallbone and Deakins (2002)
indicated that they do face additional barriers in
accessing formal sources of finance and are reluctant to
engage with business support agencies (Ram,
et al. 2002). The study utilises further analysis
from this
UK study to highlight the distinctive
nature and profile of
MEBs in Scotland. At the same time, the
scoping study builds upon previous research undertaken in
Scotland to investigate the changing importance of known
issues with
MEBs for Scotland. For example, a
well-known finding from previous research is the reluctance
of
MEB owners to engage with mainstream
enterprise support provision, and previous research has
established that this is little different in Scotland
(Deakins,
et al. 1995).
1.4 For the programme of qualitative interviews, the
study has focused upon six minority ethnic groups to build
upon the Ram,
et a.l (2002) study which covered issues
concerning
MEB owners from the following
communities; Indian, Pakistani, Bangladeshi, Chinese,
African and Caribbean. It is recognised by the research
team that other
MEB owners from different communities
may face similar, equally important issues. However, there
is less known about such groups, but the difficulties and
limitations of research with such groups, without
considerable resources, has been indicated by the Barclay,
et al. (2003) study for the Scottish Executive
which focused on the implications for society in Scotland
of policy and experience of asylum seekers. The research
team has consulted with representatives of such groups,
where this was feasible, during the consultation stage of
this study. It is important that the nature and limitations
of the scoping study is seen within these set parameters.
Nevertheless the scoping study is still relatively
ambitious, given the limited previous research with
MEB owners in Scotland. A brief
indication of previous research in Scotland is included in
the following section of this report.
1.5 The issues discussed in this study reflect those in
the Prime Minister's Strategy Unit's project
Ethnic Minorities in the Labour Market
(http://www.strategy.gov.uk.) The Scottish Repercussions of
the aforementioned project were then later highlighted by
an event organised by the Scottish Executive, Scottish
Enterprise and the
CRE (
http://www.scotland.gov.uk/library4/DD/Equality
Unit). This event was significant as it demonstrated the
extent to which the Strategy Unit's findings were
applicable to a Scottish setting. Linked to this are the
different issues facing different minority ethnic
businesses, that is,
MEBs which are owned by people from
differing minority ethnic backgrounds and, as such, policy
aimed at supporting the minority ethnic community should
reflect this diversity. Additionally, the geographical
spread of the minority ethnic population is a further issue
that is highlighted by this study. The Strategy Unit's
project emphasises the need for 'joined up-thinking' by
differing government departments, acknowledged by the
Government with the setting up of a Task Force, bringing
together Ministers, Government officials and key external
stakeholders with the objective of Departments working in a
more co-ordinated way.
Limitations of the Study
1.6 The study, although the largest of its kind in
Scotland, provides an indication of the nature and
importance of minority ethnic enterprise, only. Therefore,
there are limitations due to the nature and purpose of the
study, for example, there are issues with minority ethnic
enterprises which will need further investigation. Areas
for further research are indicated in Chapter 7.
Previous research with minority ethnic
enterprise in Scotland
1.7 Previous research in Scotland is limited; for
example, the Netto,
et al. (2001) study for the Scottish Executive,
which was itself a review of the literature and research
with minority ethnic communities in Scotland, commented
that there is a dearth of published research on this
subject in Scotland (Netto,
et al. 2001, p 128). This review of previous
research suggested that
MEB owners have high levels of sectoral
concentration in traditional service sectors such as
retailing, wholesaling, catering and in clothing
manufacture; highlighting problems of diversification for
MEB owners as a major issue. For
example, Deakins,
et al (1995), a study of issues facing
MEBs in the West of Scotland,
recommended support strategies that enterprise agencies
might adopt to support
MEBs with diversification strategies in
the West of Scotland. Bent,
et al. (1999) focused specifically on the retail
sector, with
MEBs in the East of Scotland, and noted
the high degree of competition faced by
MEBs located in this sector in the East
of Scotland. Thus, a focus of such studies has been on
issues faced by
MEBs in Scotland in traditional sectors.
The needs of
MEBs in such sectors are related to
marketing and business development strategies that take
account of high competition and declining demand
characteristic in these sectors. The recent study
undertaken for Fife Council on
MEB owners in Fife (Fife Council
Development Services, 2004), which involved a survey of
MEB owners from an extensive database in
Fife, indicated, "Most ethnic minority business is
concentrated in the restaurant, takeaway and retail
sectors" (Fife Council Development Services, 2004, p. 3). A
study for Glasgow City Council on businesses in Tradeston,
commissioned to look at the effects of redevelopment of
this area, but predominantly with
MEB owners, indicated that 89 per cent
were in traditional sectors of textile and wholesaling (
EKOS, 2004). The 2002 Omnibus Survey for
Scotland on Small Business did include minority ethnic
businesses in its sample of 1,000
SME owners, but there is no breakdown of
the issues or sector, reported in the survey, by ethnic
group (Scottish Executive, 2003).
1.8 However, the Ram,
et al. (2002)
UK study, which included a sample of
MEB owners in Scotland, indicated that
MEBs in Scotland were well represented
in emergent new and developing sectors of the economy such
as
IT, telecommunications, software, media
and mobile phone technology, compared to levels indicated
in previous studies. The needs of
MEBs in such sectors are different from
those in traditional and declining sectors of the economy.
Although such
MEBs may be associated with successful
growth, the Ram,
et al. (2002) study showed that they could still
face barriers in accessing finance and business support,
but Scottish
MEB owners were not identified
separately for further analysis in this study.
1.9 The importance of
MEBs for the economy has been shown
repeatedly by a number of studies (Bank of England, 1999).
Self-employment rates for the
UK are higher among some minority ethnic
groups than in other sections of the population. There is
considerable variation with rates for South Asians among
the highest and rates with African and Caribbeans the
lowest (
ONS, 2003). However, a recent report
indicates that the current variation in rates is changing
with higher rates of new start self-employed from "Black
and Mixed race groups" (
SBS, 2004, page 12). Other studies have
shown that, in the
UK and in Scotland, minority ethnic
groups have higher entrepreneurial capacity. This is an
important factor in economic growth, according to the
Global Entrepreneurship Monitor (
GEM) national studies, although the
sample sizes for Scotland were very small (18 or 1.2 per
cent of the respondents) in the
GEM study for Scotland (
GEM Scotland, 2002, page 19). There does
seem to be consistent evidence, however, that
entrepreneurial activity rates are high in minority ethnic
communities compared to their white counterparts (
GEM,
UK Report, 2003). A recent report by the
Scottish Executive confirms the importance of
self-employment by minority ethnic groups in Scotland
(Scottish Executive, 2004). The result is that minority
ethnic enterprise is far more important for Scotland's
economy than the size of the minority ethnic population
might suggest. This is discussed in more detail later with
the analysis of the secondary data on self-employment.
1.10 It is worth noting as well, that the contribution
of
MEBs in rural areas is potentially
important given the demographic context of rural areas,
which may suffer declining populations, as well as ageing
population structures, in some areas (Bryden,
et al. 2001). As will be discussed, a small number
of interviews with
MEB owners in rural areas have been
included as part of this study.
Organisation of the report
1.11 The remaining chapters of this final research
report deal with research methods and data sources,
secondary data analysis, baseline data analysis and
qualitative data analysis. The report includes a chapter on
interpretation and integration, which includes additional
data and information gleaned from the extensive
consultation that has been undertaken by the research team.
Finally the report draws conclusions that incorporate some
implications for policy.
Terminology
1.12 The terminology used in the report has been made as
consistent as possible, however, where a term is cited
directly such as from the Census 2001 data, the Census
terms are used. This mainly applies to terms used in the
secondary data tables in the annexes.
1.13 For the purposes of this report, the importance of
MEBs refers to their contribution to the
local and national Scottish economies, referring to both
numerical numbers of
MEB owners in relation to all business
owners, especially small and medium-sized business owners,
and their relative value.
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