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Entrepreneurial response to changing opportunity structures: Self-selection and incomes among new immigrant entrepreneurs in Sweden
Linköping University, Department of Management and Engineering, Business Administration. Linköping University, Faculty of Arts and Sciences.
Linköping University, Department for Studies of Social Change and Culture, Centre for Municipality Studies – CKS. Linköping University, Faculty of Arts and Sciences.ORCID iD: 0000-0002-5950-2764
2019 (English)In: International Journal of Entrepreneurial Behaviour & Research, ISSN 1355-2554, E-ISSN 1758-6534, Vol. 25, no 5, p. 859-879Article in journal (Refereed) Published
Abstract [en]

Purpose

The purpose of this paper is to analyse how the introduction of a liberalised regime for labour immigration in Sweden affected the self-selection of new immigrant entrepreneurs and to what extent the changes in entrepreneurial income among new immigrants was due to self-selection or to a changing business environment.

Design/methodology/approach

Based on rich microdata from Swedish administrative registers, this paper investigates how incomes changed during the years before and after the migration policy reform. By decomposing the income differential of new immigrant entrepreneurs arriving before and after the reform, this study estimates the contribution of a changed composition of migrants to the changing entrepreneurial income.

Findings

Entrepreneurial income among self-employed new immigrants improved after the reform, narrowing the immigrant–native income gap, while among employees, the income gap remained during the whole period of the study. Out of the total 10.9 per cent increase in log income, the authors find that 2.7 per cent was due to selectivity, i.e., changing characteristics of new immigrant entrepreneurs. The remaining 8.2 per cent was due to increased returns to characteristics, i.e., the characteristics of new immigrant entrepreneurs were better rewarded in the markets in the latter period. Hence, increases in entrepreneurial income among new immigrants were due both to self-selection and changes in the business environment.

Practical implications

The authors find that the migration policy reform had the effect of attracting successful immigrant entrepreneurs. Hence, the findings have implications for migration policy as well as for growth and employment policy.

Originality/value

This paper reveals a positive trend regarding income from the entrepreneurship of new immigrants after the liberalisation of labour immigration policy in Sweden. Theoretically and methodologically, the authors combine self-selection theory and the mixed-embeddedness perspective in a novel way, using rich data and a quantitative approach.

Place, publisher, year, edition, pages
Emerald Group Publishing Limited, 2019. Vol. 25, no 5, p. 859-879
Keywords [en]
Entrepreneurship, Migration, Entrepreneurial income, Self-selection
National Category
Business Administration International Migration and Ethnic Relations
Identifiers
URN: urn:nbn:se:liu:diva-153309DOI: 10.1108/IJEBR-02-2018-0090ISI: 000479278800006Scopus ID: 2-s2.0-85058087573OAI: oai:DiVA.org:liu-153309DiVA, id: diva2:1269869
Note

Funding agencies: Marianne and Marcus Wallenberg Foundation; Handelsbanken Research Foundations

Available from: 2018-12-11 Created: 2018-12-11 Last updated: 2019-09-25Bibliographically approved
In thesis
1. Immigrant entrepreneurs in a changing institutional context: a mixed embeddedness approach
Open this publication in new window or tab >>Immigrant entrepreneurs in a changing institutional context: a mixed embeddedness approach
2019 (English)Doctoral thesis, comprehensive summary (Other academic)
Alternative title[sv]
Invandrarföretagare och institutionell förändring : ett mixed embeddedness-perspektiv
Abstract [en]

Immigrant entrepreneurs are known to be heterogeneous in terms of available resources and entrepreneurial outcomes. However, this heterogeneity, as well as immigrant entrepreneurs’ embeddedness in social networks and the institutional context of high-income welfare states such as Sweden, remains understudied. Sweden represents an interesting case as a popular immigration destination which liberalized its migration policy for entrepreneurs and changed other regulations, encouraging immigrant entrepreneurship after 2008.

Theoretically, the dissertation contributes to the mixed embeddedness approach to immigrant entrepreneurship by considering three stages of the entrepreneurial process – entry, performance, and potential exit – in a changing institutional environment.

Methodologically, the dissertation operationalizes the mixed embeddedness approach by studying these three stages – entry (propensity to start a business), performance (entrepreneurial incomes), and potential exit (duration in business) – among different categories of immigrants. Explanatory factors are drawn from three levels of analysis: institutional change (macro), social, ethnic and family networks (meso), and the individual’s human capital (micro). A range of statistical tools is used for empirical analyses: Difference-in-difference methods in combination with Coarsened Exact Matching and Oaxaca-Blinder decomposition are used to investigate the influence of institutional change on entrepreneurial entry and performance. Survival models based on Cox regression are applied to investigate the influence of social and family ties on the likelihood of entrepreneurial exit. A combination of clustering and association analysis allows heterogeneity to be approached via the categorization of immigrant entrepreneurs.

Empirically, based on rich data from Swedish registers, the dissertation reveals that the propensity to start businesses in expanding ICT industries among labour immigrants was increased, and performance in terms of income among new immigrant entrepreneurs was improved after institutional change, compared to earlier. It also stresses that family networks mitigate a lack of other resources for refugee entrepreneurs, allowing them to stay in business longer. Two main categories of new immigrant entrepreneurs were distinguished in the overall heterogeneous population.

The dissertation consists of four papers and an introductory chapter.

Abstract [sv]

Invandrarföretagare uppvisar stor heterogenitet när det gäller tillgängliga resurser och framgång i sitt företagande. Denna heterogenitet, liksom invandrarföretagens inbäddning i sociala nätverk och i den svenska välfärdsstatens institutionella kontext, är emellertid understuderad. Sverige utgör ett intressant fall eftersom det är ett land med relativt stor invandring som efter 2008 liberaliserade migrationspolitiken för företagare och på olika sätt uppmuntrade invandrares företagande.

Teoretiskt bidrar avhandlingen till mixed embeddedness-perspektivet genom att analysera tre stadier i entreprenörsprocessen: uppstart, utveckling och eventuell avveckling, i förhållande till institutionell förändring.

Mixed embeddedness operationaliseras i avhandlingen genom att olika kategorier invandrare studeras vid olika steg i entreprenörsprocessen; uppstart (benägenhet att starta ett företag), utveckling (företagarinkomster) samt eventuell avveckling (varaktighet i företaget) och genom att förklarande faktorer studeras på tre analysnivåer: institutionell förändring (makro), sociala, etniska och familjenätverk (meso) samt individens humankapital (mikro). En rad statistiska verktyg används för de empiriska analyserna; Difference-in-difference-metoder i kombination med Coarsened Exact Matching och Oaxaca-Blinder decomposition används för att undersöka hur institutionella förändringar påverkar uppstart och utveckling. Överlevnadsmodeller baserade på Cox-regression tillämpas för att undersöka hur sociala nätverk och familjeband påverkar sannolikheten för avveckling. Med en kombination av klusteranalys och associationsanalys undersöks mönster i heterogeniteten bland invandrarföretagarna genom kategorisering.

Empiriskt, baserat på detaljerade data från svenska register, visar avhandlingen att benägenheten att starta verksamhet inom IKT-branschen ökade bland arbetskraftsinvandrare, samt att inkomsterna bland nya invandrarföretagare förbättrades efter en period av institutionell förändring. Avhandlingen visar även att familjenätverk motverkar bristen på andra resurser för företagare med flyktingbakgrund, vilket gör att de kan stanna i verksamheten längre. Två huvudkategorier går att urskilja i den heterogena gruppen av företagare.

Avhandlingen är en sammanläggning av fyra artiklar och en inledande kappa.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2019. p. 83
Series
Linköping Studies in Arts and Sciences, ISSN 0282-9800 ; 776
Keywords
Immigrant entrepreneurs, Mixed embeddedness, Entrepreneurial process, Institutional change, Invandrarföretagare, Mixed embeddedness, Entreprenörsprocess, Institutionell förändring
National Category
Business Administration
Identifiers
urn:nbn:se:liu:diva-160516 (URN)10.3384/diss.diva-160516 (DOI)9789179299897 (ISBN)
Public defence
2019-10-25, Planck, F Building, Campus Valla, Linköping, 10:00 (English)
Opponent
Supervisors
Available from: 2019-09-25 Created: 2019-09-25 Last updated: 2019-09-25Bibliographically approved

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