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CHAPTER SEVEN CONCLUSIONS
7.1 This study is the first systematic and comprehensive
national study on the distinctive importance of
MEBs in Scotland. It was noted in the
introduction that this was an omission, since the important
contribution of
MEBs to the
UK economy has been recognised for some
time (Bank of England, 1999). The study has used a
combination of research methods; secondary Census data
analysis, quantitative analysis of baseline data,
qualitative interviews and extensive consultation. The
extent of this study provides an opportunity, for the
Scottish Executive and other agencies, to take forward
implications from the main findings and some of the policy
measures that could be considered from the main
conclusions, are identified. In addition, an indication of
areas for further research are provided. It is important to
realise that, although the scope of the study has been
extensive, the nature of the study is still one that has
identified issues, rather than provided a full in-depth
investigation. The previous chapter has interpreted and
integrated the main findings and this chapter builds on
this to identify the main conclusions.
The importance and diversity of minority ethnic
enterprise in Scotland
7.2 Minority ethnic enterprise in Scotland accounts for
a little over three per cent of all self-employment and
there are likely to be over 4,500 registered
MEBs, contributing an important share of
Scotland's
GDP. It is estimated this is in the
range of £500 to £700 million for 2001 (see previous
chapter and Chapter 3 for explanation). Although such a
contribution to
GDP is important, it is the diversity of
minority enterprise that is vital to Scotland's economy.
The highest rates of self-employment were in the Pakistani,
Chinese, Indian and Bangladeshi communities respectively
and the highest geographical concentrations were in Glasgow
and Edinburgh. In Glasgow alone, for example, it is
suggested that there are over 1600
VAT registered
MEBs. However, it is also indicated that
MEBs are also important to maintaining
diversity in other locations, especially areas of the
Central Belt, contributing to local economic development.
In rural areas, such as the Highlands, the role of minority
ethnic enterprises is still important, helping to diversify
and enrich local rural economies, although it is recognised
that delivering business support effectively to
MEBs in rural areas and areas of low
minority densities is more challenging than in an urban
context.
7.3 Although there is evidence of diversification, with
strong representation of
MEBs in new and emergent industrial
sectors such as
ICT, telecommunications, media and
leisure, the database analysis indicated that Scottish
MEBs are still more concentrated in the
traditional sectors of retailing, wholesaling and catering
than their counterparts in England. The interviews revealed
that even in traditional sectors,
MEB owners were resourceful, were still
prospering, being able to innovate and diversify. However,
it is still the case that Scotland is dependent for
cultural and ethnic diversity on
MEB owners that are both geographically
and sectorally concentrated. The continuing vitality and
diversity of
MEBs will be crucially significant for
Scotland's economy. Demographic trends indicate a
significantly ageing population for Scotland (
GROS, 2004), it is important that the
younger age profile of minority ethnic communities is able
to contribute to economic development through the
achievement of potential entrepreneurial development. This
will mean encouraging both diversification of sectoral
concentrations and ensuring engagement of new start
MEBs with appropriate and relevant
support. This emphasises the importance of policy
initiatives focused on diversification. Further
investigation and consideration should be given to the ways
in which diversity programmes run by supply-side agencies
such as Scottish Enterprise can potentially contribute
towards the diversification of minority ethnic businesses
into different sectors.(for example, see Ram M. and
Smallbone D. 2003).
7.4 Without being contradictory, it is concluded that
the diversity of minority ethnic enterprise is also
important in Scotland. For example,
MEB owners are represented in a
considerable range of different sectors, are operating in
global markets and achieving significant business growth.
The pattern of
MEB ownership is dynamic and diverse.
The dynamic nature of this pattern is reflected in the
importance of younger 2
nd generation owners. The baseline analysis
indicated a younger age profile for
MEB owners compared to their English
counterparts. Where there is inter-generational transfer of
ownership, this may mean particular support needs.
7.5 The Scottish Executive and other agencies will need
to recognise the dynamic pattern and diversity of
MEBs. Discussion, previously in Chapter
6, has indicated the potential of policies seeking to
exploit the links between diversity and competitiveness
through innovation and creativity (Smallbone, et al. 2003;
CEEDR, 2000). Also, as indicated in the
previous chapter,
MEBs cannot be treated as having
homogenous needs, however, some issues deserve particular
attention; these include access to finance.
Access to finance
7.6 It is concluded that there is comparatively low
access to formal sources of finance by
MEBs in Scotland. This was indicated by
the baseline data analysis when compared to
MEBs owners in England and when compared
to a white control group. The reliance on informal and
personal sources of finance was particular high, although
there were ethnic differences with Chinese owners less
reliant on such sources. There is a marked reluctance to
approach banks and institutional providers of formal
sources of finance, although it is commented that once
relationships were established there is little reporting of
any dissatisfaction with the commercial banks. Take-up of
targeted financial schemes was also low, for example with
micro-credit or loan funds that might have
MEB owners as users. In some cases,
religious and cultural reasons were cited for the avoidance
of institutional sources of finance such as the commercial
banks. Even allowing for such factors, however, the
conclusion is that there is a low take-up of formal and
institutional sources by
MEB owners in Scotland.
7.7 This should be of concern to the Scottish Executive
and the commercial banks. It is suggested that it is an
issue that may be compounded by the lack of engagement by
MEB owners with mainstream support (and
other agencies) that could act as a referral mechanism for
such sources of finance. There appeared to be a lack of
intermediaries between agencies, the banks and minority
ethnic communities that would provide a means of building
the trust that is required to establish relationships with
the commercial banks, at present that trust is noticeable
only by its absence.
7.8 It is recommended that experience from the Glasgow
City Council's minority ethnic business support programme
is examined for lessons that can be learned for building
trust and developing initiatives that can lever in
additional sources of finance with
MEB owners (see Annex 4). Separate
interim evaluations of this support programme have
demonstrated that formal sources of finance will be used by
MEB owners when trust is established
through the intermediary role of business advisers employed
on the programme acting as a referral mechanism (
PERC, 2004).
Access to support, advice and training
7.9 Traditionally, minority ethnic communities have had
strong local networks, which have provided resources both
financially and socially. It has been noted that the strong
local networks that provide informal finance for
MEB owners also provide social capital,
or informal sources of advice and support. The interviews
have confirmed that the local minority ethnic communities
are important for sources of finance and advice and
support. There are many dimensions to such resources and it
has been noted that strong social capital may not always be
beneficial (as is assumed in much of the previous
literature). It is concluded that in Scotland, like other
areas of the
UK, such informal sources of support,
advice and finance have been important to the development
of minority ethnic enterprise.
7.10 Therefore, the lack of engagement with the formal
mainstream sources of advice and support such as Business
Gateway is perhaps not surprising. The baseline analysis
indicated similar levels of non-engagement compared to
MEB owners in England. Although it is
possible to argue that the lack of engagement may not
matter for some
MEB business owners, as only a minority
of all business owners will utilise such sources of advice
and support, the issue is still important since it will
affect the potential of the minority of
MEB owners that could benefit from such
sources of support. In addition, those that could benefit
are the potential growth businesses from the
MEB community, particularly those
engaged in diversification into new and emerging areas of
business activity. It is important for Scotland's economic
performance and productivity that these business owners do
engage with public sector sources of support, so that they
can achieve their potential.
7.11 There are different dimensions to this
non-engagement. These dimensions include a lack of
awareness of sources of support and advice to deliberate
strategies to avoid engagement. The former could be tackled
by profiling and the use of additional means of
communication, making messages relevant to local minority
ethnic communities. The latter requires the building of
trust with local minority ethnic communities in the same
ways that are required to build relationships with formal
sources of finance, such as the commercial banks. The key
policy issue for the Scottish Executive and the Enterprise
Networks, therefore, is the development of initiatives that
improve communication and engagement with
MEBs, partly through initiatives that
provide incentives, such as targeted procurement policies,
and through the need to develop links with community
leaders or with organisations that represent
MEB owners.
7.12 One of the gaps in Scotland, is a recognised voice
for
MEB owners and their communities.
Although there was lukewarm support for the development of
a Scottish Minority Ethnic Business Forum, a representative
organisation, so long as it is embedded in minority ethnic
business communities, should be encouraged, such as the
proposed Scottish Institute for Asian Businesses. It may be
noted here, that we describe support as lukewarm mainly
because opinions, where they were given by
MEB owners, were not consistently
supportive, as some felt that such a body might have narrow
interests. Any initiatives to raise profile will need to
work in conjunction with representatives of local minority
ethnic communities to provide the bridges to build trust.
These are complementary to the initiatives that are
required to build trust with the commercial banks. Taken
together they will start to close the support and finance
gaps that currently exist for Scottish
MEBs, as mentioned in the previous
chapter, they should be a priority of policy.
7.13 A further related policy issue is that there is a
low take up by Scottish
MEB owners of formal sources of
management training and they have lower rates of formal
management qualifications and training compared to
equivalent
MEB owners in England. Therefore, a
further benefit of initiatives to build trust with
MEB owners and their local communities,
that could be expected, is the greater take-up of formal
sources of training. It should be remembered, of course,
that small business owners in general have a low take-up of
formal sources of training. However, it is also noticeable
that where strong relationships have been built with
MEB communities, sources of management
training such as management development seminars will be
well attended. As mentioned in the previous chapter,
initiatives to raise awareness of training opportunities,
making provision relevant and using additional
communication methods, in relation to these, would be
worthwhile.
7.14 The legal context, mentioned in the previous
chapter, means that there is a general duty to make the
promotion of racial equality central to the work of public
authorities. This means that the affected organisations
must take account of racial equality in the day-to-day work
of policy-making, service delivery, employment practice and
other functions. Support agencies will have to consider
whether they are doing enough to help
MEBs. Specifically they will have to
consider whether they understand the issues intrinsic to
MEBs and whether they have the resources
to meet the requirements of such businesses. They should
also be able to provide the right advice when approached by
MEBs and that they are making enough of
an effort to engage with
MEBs.
7.15 In order to meet their general duty under the law,
support agencies and their associated bodies may have to
consider whether they have enough diversity in their
workforce,
e.g. personnel who can speak minority ethnic
languages and can communicate with ethnically diverse
clientele. Organisations such as Business Gateway and
Scottish Enterprise will have to review their recruitment
and selection policies and in line with legislative
requirements, introduce ethnic monitoring (if not already
in place) and have a coherent action plan to promote
equality of opportunity in the delivery of services. This
may also require a reassessment of the current equal
opportunities policy of organisations and the extent to
which they should provide some kind of race awareness
training for their staff.
Additional issues
7.16 This study has identified a number of additional
issues including:
7.17 The nature of succession planning. Many
MEBs are family businesses, where these
are in traditional sectors there may be a reluctance of the
2
nd generation to continue in the family business
which raises a succession planning problem. In addition, in
some cases there are different attitudes of the 2
nd generation even where they wish to continue
with the family business. Although there will be similar
issues in family businesses generally, the nature of such
issues will be different with
MEBs and may require specialised advice
and support.
7.18 The remaining concentration of
MEBs in traditional sectors and the need
for diversification. Although it has been noted that
MEB owners have shown resilience and
innovation in traditional sectors, there are still areas of
support needed to achieve diversification. Although these
sectors are perceived to be ineligible for support, such as
retailing, it should be possible to provide advice and
assistance drawing upon successful examples of
diversification or providing assistance with feasibility
studies. The Glasgow
MEB support programme has managed to
provide assistance of this nature to help
MEBs in traditional sectors achieve
diversification and ways of making such experience and
practice more widely available should be undertaken.
7.19 Marginalisation of
MEBs in some localities, trapped in
hostile trading conditions that exist in difficult
environments. It has been noted that the geographical
distribution of
MEBs is very uneven. Likewise so is the
pattern of
MEB experience and trading conditions.
Some
MEBs are in new sectors, niche and
expanding global markets and achieving business growth. By
contrast there are also examples of
MEBs operating in marginal economic
environments with limited local markets, where there are
high crime rates and overt racism against the owners. Thus
the nature of any intervention and support has to be very
different. The latter category probably needs co-ordinated
and targeted assistance from a range of organisations to
ensure that trading conditions improve and assistance is
provided to achieve breakout of marginal conditions.
However, the concern of
MEB owners in such environments could
provide an opportunity for a policy initiative targeted
against crime and racism, this would provide an incentive
for
MEB owners to engage with providers of
public sector support and advice. An examination of
policies designed to improve local trading environments
through holistic approaches could be examined from
elsewhere in the
UK.
7.20 The nature of
MEB experience in rural areas.
MEBs in rural areas are important, as in
urban areas, for their contribution to local economies and
to cultural diversity, especially in the context of
demographic issues. Yet they are virtually invisible in
terms of assistance and profiling. Their needs are
different, they do not have the advantage of strong
networks and strong social or informal sources of financial
capital, therefore, they may be more self-reliant and may
require specific assistance. In rural localities, new
MEBs can provide additional variety and
diversity in the local environment that can attract
additional wealth into such areas through increasing local
economic diversity, tourism and trade. Arguments of
non-displacement in policy, made by respondents in the
consultation phase of this study, should not be allowed to
prevent assistance to new start
MEBs. Indeed it should be a part of the
policy of agencies in such areas to attract greater numbers
of
MEBs. For example, Smallbone and Baldock
in their study of
MEBs in rural Devon and Cornwall
concluded that the majority of
MEBs operated in sectors that were
relevant to tourist-related activities and that the ethnic
diversity of cuisine and culture should be an element of a
tourism strategy for the sub-region. They recommended that
MEBs should be actively encouraged to
take part in a range of initiatives to develop and promote
the tourist sector (Smallbone and Baldock, 2003).
7.21 Agencies in rural areas, especially bodies such as
VisitScotland, should profile ethnic diversity as
a positive tourist strategy. As an illustration, award
winning restaurants in the East of Scotland were identified
through undertaking this scoping study. It is a pity that
such success, in localities not readily associated with
MEBs, is not celebrated and profiled
more widely. However, it is recognised that there are more
difficulties for the
LECs in rural areas and Highlands and
Islands Enterprise in developing effective strategies for
the delivery of support.
Areas for further research
7.22 A number of areas for further research and
monitoring arise from this study including:
7.23 Quantitative data collection on the importance and
pattern of
MEB owners in local economies. This
should be conducted on a Local Enterprise Company basis so
that each
LEC can determine the profile of ethnic
diversity in each locality. This should be accompanied by
the sharing of experience by all
LECs and with centres of expertise in
MEB support agencies from Glasgow and
Edinburgh. This could be done perhaps by a specialised unit
within Scottish Enterprise (or for the Enterprise Networks)
to disseminate information to individual
LECs and Highlands and Islands
Enterprise. Such a specialised unit, if established, could
be tasked with developing approaches that would enable the
more complete participation of
MEB owners with the mainstream providers
of support and finance. It has been suggested earlier, that
this may be achieved by working closely with a
representative body such as the proposed Scottish Institute
for Asian Businesses or a Scottish Minority Ethnic Business
Forum, although care should be taken not to duplicate
provision.
7.24 Although diversity is a feature of Scotland's
MEBs, nevertheless, concentrations of
MEBs in traditional sectors have also
been highlighted. Therefore, there is a need to investigate
methods of successful diversification that can inform
support policy in this area. There is a need for further
research to examine ways of achieving diversification
focusing on (i) supplier diversity and (ii) assessing scope
for diversity being developed as a source of
competitiveness for the Scottish economy.
7.25 An investigation into improving the relationships
between sources of advice, support and finance, which could
provide additional information on appropriate mechanisms
that can build bridges with minority ethnic communities and
their businesses.
7.26 Further qualitative and longitudinal research to
capture the dynamic aspects of business development with
MEB owners in different sectors. The
research could investigate the nature of inter-generational
ambitions and succession planning.
7.27 In particular, the dynamic nature and changing role
of social capital and its distinctive nature for
MEBs could provide an important strand
of research. This would help to inform agencies how best to
build bridges and trust with local minority ethnic
communities. The relationship between formal and informal
sources of both finance and advice, whether they are
substitutes or complementary, is a key area for further
investigation.
7.28 A related strand with this research would be the
nature of human capital and the management training and
development needs of
MEB owners in different sectors. A
training needs analysis (
TNA), with selected
MEBs, could help to determine the nature
of management development seminars and assistance, perhaps
drawing on experience from the Glasgow City Council support
programme.
7.29 An investigation into the nature of marginalisation
of
MEBs in difficult trading conditions.
Such an investigation could identify mechanisms that will
assist break-out into wider markets and identify policies
that could provide some security and protection for
existing
MEB owners operating in difficult and
marginal trading environments.
7.30 The nature of
MEB development in rural areas of
Scotland should be investigated further through additional
qualitative and case study research to determine the extent
of integration and/or isolation of
MEBs and their associated special
needs.
7.31 Finally, monitoring and evaluation of existing and
planned initiatives will be required that may be targeted
at
MEB owners.
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