Mixed embeddedness concept and its further developments
The original mixed embeddedness thesis was built as a critical response to the neoclassical model of entrepreneurial opportunity. According to the neoclassical paradigm, the opportunity structure, understood as market conditions and access to ownership (including degree of competition, business vacancies and public policies regarding entrepreneurship; cf. Waldinger et al., 1990), is fully transparent and equally accessible to both indigenous and immigrant individuals. As this framework obviously does not match the reality, especially in the case of immigrants from less-developed countries who settle in more advanced economies,
Kloosterman and Rath (2001) called for closer attention to be paid to the demand side of entrepreneurship and to the barriers and constraints faced by immigrants who consider creating a business in the host country. Consequently, they proposed the concept of mixed embeddedness: in order to understand the socio-economic insertion of immigrant entrepreneurs, it is necessary to consider not only their embeddedness in co-ethnic social networks, but also their embeddedness in their socio-economic and politico-institutional environments in the destination (Kloosterman & Rath, 2001).
When discussing the opportunity structure, Kloosterman and Rath (2001) emphasize two aspects that are crucial for successful integration of immigrant entrepreneurs: the accessibility of markets for newcomers willing to open a business and the growth potential of these markets. These two factors, crucial for immigrant entrepreneurship development, should be analysed at national, regional and local levels. For instance, at national level, there might be formal regulations that constrain the creation of immigrant entrepreneurs, imposing bureaucratic, legal or financial conditions that are very hard to meet for recently arrived foreigners. The regional level affects immigrant entrepreneurship, as the regions are very heterogeneous and tend to specialize in different economic activities. In this context, the relative peripherality of the Artic subregions and their specialization in coal mining, oil and gas extraction provide few opportunities for prospective immigrant entrepreneurs, who usually do not have much capital and create businesses mostly in the SME sector. Also, the local context is important: there are towns and neighbourhoods where immigrants are highly concentrated and can rely on the support of the ethnic enclave, and there are locations where immigrant communities are too weak for them to do so (Zubair & Brzozowski, 2018). On the other hand, there might be negative factors at play also at the local level. These are the policies that exclude migrants by giving preference to traditional local industries: for instance, in the case of some small towns in Lombardy (Italy), kebab shops were banned to protect traditional Italian trattorias (Barberis & Solano, 2018).
Further elaborations of the mixed embeddedness model point to the “dual nature” of immigrant insertion in the host country: (1) embeddedness in the socio-institutional structure in which their business is started and then developed (meso level of opportunity structure and macro institutional framework) and (2) embeddedness in the immigrants’ networks of social relations (and immigrants’ resources; cf. Kloosterman, 2010). This enables identification of conditions that are favourable to immigrant entrepreneurship: the markets in a host country have to be open to the new entrants, not only in terms of economic barriers, but also when it comes to national and local rules and regulations. Based on this theoretical framework, a typology of opportunity structure was developed, enabling comparisons of conditions of entry into entrepreneurship and its future growth prospects (Figure 10.3).
The upper-left area of Figure 10.3 remains blank, as sectors that are stagnating and require high human capital levels are unattractive for immigrants who either seek entrepreneurial activity in expanding sectors or simply consider waged employment. The vacancy-chain openings are the opportunity structures
Growth potential
тз ф
-a
Ф ф c
Stagnating
Expanding
Post-industrial / high-skilled
c
TO
Zj
-C
Vacancy-chain openings
Post-industrial
/low-skilled
Figure 10.3 Typology of opportunity structure in the mixed embeddedness model
Source: Kloosterman (2010)
characterized by low entry requirements and, therefore, they are very often considered as an attractive option for immigrant entrepreneurs. Unfortunately, such markets are usually stagnating or even in decline: these are very often sectors left over by natives in which the profits are low and the risks of failure are high. Very often, survival in this market is possible only in the case of reliance on low-paid work by family members and in the ethnic markets dominated by members of the same ethnic community. Typical examples of such businesses include Asian liquor stores in the US, trading points for clothes or shoes on open-air fair trades in Central and Eastern Europe, Indian internet kiosks in Southern and Western Europe and Arab/Turkish kebab shops in most parts of Europe.
The post-industrial, low-skilled markets are characterized by relatively low entry barriers and high growth potential, and so, compared with vacancy-chain openings, they are much more attractive alternatives for immigrant entrepreneurs. These activities mostly comprise services, such as household and care services for which there is continuously increasing demand in North America and North-west Europe. Finally, in the top-right corner, there are markets that require high levels of human capital, but, on the other hand, they represent a high growth potential. These are usually innovative, high-technology firms. Although these businesses are often perceived as elite (for instance, ICT), immigrants are also increasingly successful in these sectors (Brzozowski et al., 2014).
As most of the immigrant entrepreneurs are usually clustered in the vacancy-chain opening opportunity structure, the chances of their economic success are limited. Therefore, Kloosterman suggests that the most suitable way for the immigrant entrepreneur and their family to achieve upward mobility is a breaking-out strategy - that is, a shift of a business model into more profitable sectors. In this regard, the most likely transition is that into the post-industrial/low-skilled market: it requires some experience which could be gained by an immigrant during the initial stages of entrepreneurial activity, supplemented by a change in production and adjustment of a business model (Kloosterman, 2010). However, the crucial factor needed to succeed in breaking out is the widening of the immigrant’s social capital and, more precisely, wider access to weak ties (cf. Granovetter, 1985) and social contacts beyond the co-ethnic community and homogeneous ethnic networks. There are multiple examples of such successful immigrant enterprises operating in post-industrial/low-skilled markets, which include such services as delivery and packaging, catering and food, repair and maintenance (Kloosterman & Rath, 2018), but also ethnic-specific ones such as Ayurveda medicine, acupuncture sessions or yoga training.
In a recent special issue devoted to contemporary applications of mixed embeddedness theory, Barberis and Solano (2018) show that this concept has influenced at least three areas of migration studies: the spatial dimension of migrants’ embeddedness, the super-diversity debate and research on immigrants’ transnationalism. The first strand of research is particularly important: it reminds researchers not only to consider the three-level approach developed by Kloosterman and Rath (2001) - national, regional/urban and neighbourhood levels - but also to investigate the role that immigrant entrepreneurs play in restructuring local economies in which they settle.
In an essay that summarizes 20 years of mixed embeddedness theory, Kloosterman and Rath (2018) point out its most important extension: the dynamism of immigrant entrepreneurship. The typology and model of opportunities outlined by Kloosterman (2010) is not static, as it enables movement from the vacancy-chain opportunities into more promising post-industrial markets, as the migrants accumulate strategic resources. Moreover, the institutional framework can change over time, giving more market opportunities to immigrant entrepreneurs, but also sometimes closing some of them. For instance, the enforcement of employment regulations in Amsterdam’s garment industry has severely hit Turkish entrepreneurs, as many of them relied on illegal agreements (Kloosterman & Rath, 2018).
