Dimensions of entrepreneurship: a study of first and ... · study will concentrate on the Chinese entrepreneurs in Box Hill’s Chinatown. Since the Chinese communities, as well as

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Dimensions of Entrepreneurship – A Study of

First and Second Generation Ethnic Chinese

in Melbourne

Henri Lee

This thesis is submitted in fulfilment of the requirements of

Degree of Doctor of Philosophy

Faculty of Business and Enterprise

Swinburne University of Technology Victoria, Australia

2009

April

ii

ABSTRACT

This thesis explores the entrepreneurial behaviours of first and second generation ethnic

Chinese in Melbourne.

Immigrants have contributed to Australia’s economic growth since the European settlement

in the 19th century. In recent years, especially since the new non-discriminatory

immigration policies were introduced in the 1970s, large numbers of Asians have migrated

to Australia. This new wave of migrants from Asia has added to the European migration,

creating a vibrant and successful multicultural Australia. In providing and enabling

economic growth, entrepreneurship has been in the forefront of Australia’s development

(Collins 2000). Since the Second World War, large numbers of Greeks and Italians, among

other European settlers, have contributed to small business growth in Australia. Many of

these businesses are now in the hands of second and third generation immigrants. Very

little research has studied their growth phenomenon, especially given that immigrant

entrepreneurs have contributed to the development of the Australian economy. With the

sizeable and visible contribution of Chinese entrepreneurship in Australia in recent years, it

is the aim of this research to study first and second generation Chinese entrepreneurs. The

study will concentrate on the Chinese entrepreneurs in Box Hill’s Chinatown.

Since the Chinese communities, as well as other ethnic communities from other countries,

have been important in shaping and contributing to the economic potential in Australia,

contributions made by these groups of immigrants should be explored and researched. A

number of benefits arise from research such as this. In the first instance, this research can

provide a better understanding of the skills and human resources required for Australia’s

economic development. Secondly, this research can provide a better understanding of

immigrants’ entrepreneurship needs and therefore influence policy decisions. Thirdly, as

this study is specific to Chinese entrepreneurship in Box Hill, the findings can support the

Whitehorse municipality’s economic development plans for the region.

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Influences as such should be explored and utilized by all levels of the community.

Entrepreneurial activities have become stronger and more important in the life of

immigrants in Australia. The influx of skill and economic benefits that these entrepreneurs

create and grow should not be underestimated. They not only contribute to the domestic

growth of Australia but also they have the ability to connect Australian business with

overseas economies through trade. The international connections and the globalization

efforts of Australia are assisted by the existence of various, numerous ethnic communities

who have settled in Australia. The underlying cultural background of these communities

plays an essential role in providing an understanding of the entrepreneurship behaviour in

these communities which is currently lacking.

.

The history of ethnic Chinese immigrants in Melbourne who came from Southeast Asian

countries and mainland China has been studied previously. However, this has always been

in the form of a linear narrative description; there has been relatively limited research on

the entrepreneurial behaviours of the first and second generation ethnic Chinese

entrepreneurs in Melbourne. This raises the question of what are the differences between

the generations in regard to entrepreneurial behaviour.

Variably, with the progress of time and social adaptation, the working philosophies and

styles of the businesses’ operations are bound to change as the second generation

entrepreneurs takes over from the first. The organizational complexity is bound to increase

in this progression, which may include the nature of the business, the size of the

organization and the human resource requirements. These are explored in this research.

Specifically, this research will study the entrepreneurial profiles of the first and second

generation ethnic Chinese entrepreneurs in Box Hill in Melbourne, Australia. The research

will be based on quantitative analysis of data of both the first and second generation

entrepreneurs. Furthermore, the study will be used to compare the generations and to

ascertain if the differences mirror those between east and west thinking of entrepreneurship.

Differences may be due to the upbringing of the two generations in different cultural

iv

environments; in this study, the second generation entrepreneurs are Australians by birth

but of Chinese parentage.

The study will address the question whether there is a ‘typical Chinese entrepreneurial

profile’ when comparing the two generations’ entrepreneurial activities. In addition, the

study will test if there is a general ‘culture’ of Chinese entrepreneurs. Another purpose of

the research is to explore factors that contribute to the creation of successful entrepreneurs.

This may assist further generations of Chinese entrepreneurs and the local Chinese

community.

This study looks at the perceptions and views of both first and second generation ethnic

Chinese entrepreneurs in Melbourne, in relation to business success:

1. Background of the entrepreneurs

2. Motivation of the entrepreneurs

3. Traditional Confucian values of the entrepreneurs

4. Difficulties and hurdles experienced by the entrepreneurs

5. Overseas expansionary vision of the entrepreneurs

Responses were sought from different sectors and levels of the Chinese business

communities in Box Hill. These included professionals, restaurants, real estate, and trading

companies. However, the purpose of the study is not to identify the characteristics and

values within the industry sectors but of the Chinese ethnic businesses generally.

v

ACKNOWLEDGMENTS

This is, in fact, the most challenging project in my life so far. The USB gadget for storing

the files has travelled with me all over the world during this research. I am deeply grateful

to my supervisors, Professor Christopher Selvarajah, Associate Professor Siva Muthaly and

Dr Denny Meyer, for their commitment and dedicated supervision during the research. I

thank them for their understanding and patience; especially as I do not come from an

academic background or rather I have been away from academia for many years. Secondly,

I am an optometrist and a businessman by profession. I am actually surprised that they can

put up with my ‘working style’ and the way that we communicate. Without them, I truly

believe that the project would not have been possible. I have learnt from Chris that there is

always light at the end of this tunnel, and I am always one step away from it. I am

privileged to have a coordinating supervisor who works late into the night as I do and

provides instant feedback. I hear of students who had either abandoned their studies or

changed supervisor. Thankfully, this has never occurred to me as I found not only an able

supervisor but a lifelong friend. I have learnt from Siva that life can be very short, and I

should make good use of it. Lastly, I have learnt a wonderful word – ‘blindly’ – from

Denny, who also taught me what the three letters (PhD) should mean.

I wish to acknowledge my gratitude to all the participants from the Chinese community, for

their trust and honest opinions in answering the questionnaires. They provided the most

valuable information in this study, without which this thesis would not have been

completed. Their contribution to this study also helped me understand and appreciate the

ethnic entrepreneurship process. The project is no different to other business deals that I

have to make in my life as a businessman, which include research, question, and organize.

However, I now realise the difference. Working toward the completion of this thesis has

opened my eyes to a new world of thinking, especially the questions of ‘Why’ and ‘Why

not’.

vi

I would like to thank Swinburne University, in particular, in allowing me to carry out this

research off campus and in the business community. Without the approval, this research

would not have been possible. I have learnt so much from my study. I thank all my

supervisors once again because this has been a very lonely journey. However, this is the

most rewarding of all projects that I have done in the past. I also thank Donna Williams for

her contribution as a proofreader of this thesis. Thank you.

Lastly, I wish to dedicate this thesis to my other half, Cleone, who has been so unselfishly

helping me in the last three years – giving me all the support, putting up with my

continuous annoyance and encouraging me to finish this research. Without her good food

and care for our children, I do not believe that this thesis could have been finished at all.

My two lovely kids, Zoe and Rex, have been supporting me by saying ‘How’s the thesis?’

every morning and afternoon to me. After this study, they all believe that I am a ‘hobo’

from outer space, which is in fact a good topic to investigate.

Without my family, I would not have been able to carry on and talk to my supervisors.

Thank you to all of you and the readers.

vii

DECLARATION

I, Henri Lee, declare that the thesis:

1. Contains no material which has been accepted for the award to the candidate of any

other degree or diploma, except where due reference is made in the text of the thesis

2. To the best of my knowledge contains no material previously published or written

by another person except where due reference is made in the text of the thesis; and

3. Where the work is based on joint research or publications, discloses the relative

contributions of the respective authors.

4. Has met all the requirements of the Ethics Approval from the Swinburne University

of Technology under SUHREC Project 0607/105 (refer to Appendix 23).

Signature:

Date:

viii

CONTENTS

ABSTRACT .......................................................................................................................... ii

ACKNOWLEDGMENTS .................................................................................................... v

DECLARATION ................................................................................................................. vii

CONTENTS ....................................................................................................................... viii

LIST OF TABLES ............................................................................................................ xvi

LIST OF DIAGRAMS ..................................................................................................... xvii

Chapter 1 .............................................................................................................................. 1

General Overview and Purpose of this Study ................................................................... 1

1.1 Introduction ................................................................................................................ 1

1.2 Background to Entrepreneurship ............................................................................. 3

1.2.1 Background to Chinese Entrepreneurship ....................................................... 6

1.2.2 The Importance of Immigrant Chinese Entrepreneurs .................................. 8

1.3 Why Study Chinese Entrepreneurship? ................................................................ 12

1.4 Research Objective................................................................................................... 15

1.5 Research Questions .................................................................................................. 15

1.6 Theoretical Framework of the Study ..................................................................... 16

1.6.1 Background of the Entrepreneurs ................................................................... 18

1.6.2 Motivations ........................................................................................................ 18

1.6.3 Traditional Confucian Values .......................................................................... 19

1.6.4 Difficulties and Hurdles .................................................................................... 20

1.6.5 Overseas Expansionary Vision ........................................................................ 20

1.7 Summary of the Hypotheses of the Study .............................................................. 21

1.8 Box Hill – Chinatown ............................................................................................... 23

1.9 Definitions ................................................................................................................. 24

1.9.1 Migration ........................................................................................................... 25

1.9.2 First and Second Generation Chinese ............................................................. 25

1.9.3 Acculturation (9 years old) ............................................................................... 26

1.10 Thesis Outline ......................................................................................................... 27

ix

1.11 Summary ................................................................................................................. 31

Chapter 2 ............................................................................................................................ 32

Different Views of Entrepreneurship ............................................................................... 32

2.1 Introduction .............................................................................................................. 32

2.2 Definitions of Entrepreneurship ............................................................................. 33

2.3 Factors for Successful Entrepreneurship............................................................... 36

2.4 Social Learning Theory ........................................................................................... 42

2.5 Theories of Immigrant Entrepreneurship ............................................................. 43

2.5.1 Disadvantage and Stepladder Theories ........................................................... 44

2.5.2 Opportunity and Risk-taking Theories ........................................................... 46

2.5.3 Middleman Theories ......................................................................................... 49

2.6 Chinese Business Culture ........................................................................................ 51

2.7 Chinese Entrepreneurial Process and Characteristics ......................................... 53

2.8 Importance of Chinese ‘Family First’ Ethics ........................................................ 57

2.9 Comparison between Chinese and Western Entrepreneurship .......................... 59

2.10 Individualism vs Collectivism ............................................................................... 63

2.11 Adoption of Western Styles in Chinese Business ................................................ 66

2.12 Summary ................................................................................................................. 67

Chapter 3 ............................................................................................................................ 69

Chinese Entrepreneurs and Ethnic Enclaves .................................................................. 69

3.1 Introduction .............................................................................................................. 69

3.2 Population of Australia with Chinese Ancestry .................................................... 70

3.3 Different Phases of Immigration ............................................................................ 72

3.3.1 First Wave – Gold Rush Era ............................................................................ 72

3.3.2 Second Wave – European Settlement .............................................................. 75

3.3.3 Third Wave – 1980 Migrants ........................................................................... 76

3.3.4 Selective Immigration Policies ......................................................................... 77

3.4 A Brief History of Chinese Entrepreneurship ....................................................... 79

3.5 Three Theories of Ethnic Enclave Economy ......................................................... 82

3.5.1 ‘Networking’ Theory ........................................................................................ 84

3.5.2 ‘Location’ Theory ............................................................................................. 86

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3.5.3 ‘Social Capital’ Theory ..................................................................................... 88

3.6 Chinese Diaspora ...................................................................................................... 90

3.7 Summary ................................................................................................................... 95

Chapter 4 ............................................................................................................................ 97

Characteristics of Successful Chinese Entrepreneurs .................................................... 97

4.1 Introduction .............................................................................................................. 97

4.2 Psychological Traits ................................................................................................. 98

4.2.1 Self-Satisfaction ............................................................................................... 100

4.2.2 Potential Seeking ............................................................................................. 102

4.3 Motivations ............................................................................................................. 103

4.3.1 Economic Motivations .................................................................................... 103

4.3.2 Social Motivations ........................................................................................... 105

4.4 Adaptive Opportunism – Innovative Entrepreneurship .................................... 107

4.5 Cultural Issues – Unique to Chinese Entrepreneurs .......................................... 109

4.6 Resources ................................................................................................................ 116

4.6.1 Human Capital ................................................................................................ 117

4.6.2 Financial Capital ............................................................................................. 118

4.7 Difficulties and Hurdles ......................................................................................... 121

4.7.1 Language .......................................................................................................... 121

4.7.2 Education ......................................................................................................... 123

4.7.3 Religion ............................................................................................................ 125

4.7.4 Adaptation ....................................................................................................... 126

4.7.5 Previous Work Experience ............................................................................. 127

4.8 Business Skills and Capabilities ............................................................................ 130

4.8.1 Bureaucracy and Regulation .......................................................................... 131

4.8.2 Prior Exposure to Entrepreneurship ............................................................ 133

4.8.3 Standard of Success ........................................................................................ 134

4.8.4 Overseas Expansionary Vision ...................................................................... 136

4.9 Summary ................................................................................................................. 136

Chapter 5 .......................................................................................................................... 138

Research Design and Methodology ................................................................................ 138

xi

5.1 Introduction ............................................................................................................ 138

5.2 Objective, Research Questions, Hypotheses of the Study .................................. 138

5.3 Important Research Characteristics of the Study............................................... 140

5.4 Philosophical Research Paradigms of the Study ................................................. 141

5.4.1 Positivist Paradigm ......................................................................................... 142

5.4.2 Interpretive Paradigm .................................................................................... 143

5.4.3 Applicable Paradigm of this Study ................................................................ 143

5.4.4 Pragmatic Paradigm ....................................................................................... 144

5.4.5 Mixed Methods Research Approach ............................................................. 145

5.5 Population and Sample of the Study .................................................................... 148

5.6 Research Instrumentation ..................................................................................... 150

5.6.1 Quantitative Method ....................................................................................... 150

5.6.2 Ethics Approval ............................................................................................... 152

5.6.3 Pilot Study ........................................................................................................ 153

5.6.4 Data Collection Procedure ............................................................................. 155

5.7 Data Analysis Method ............................................................................................ 157

5.7.1 Factor Analysis – Data Reduction Tool ........................................................ 157

5.7.2 Multiple Regression ........................................................................................ 160

5.8 Summary ................................................................................................................. 160

Chapter 6 .......................................................................................................................... 162

Analysis - Demographic Profiles of the Chinese Entrepreneurs ................................. 162

6.1 Introduction ............................................................................................................ 162

6.2 Sample Sizes of First and Second Generations ................................................... 163

6.3 Country of Origin ................................................................................................... 164

6.4 Gender ..................................................................................................................... 166

6.5 Industry ................................................................................................................... 168

6.6 Position .................................................................................................................... 171

6.7 Targeted Businesses ............................................................................................... 173

6.8 Targeted Customers ............................................................................................... 175

6.9 Age of Respondents ................................................................................................ 176

6.10 Religion of Respondents ...................................................................................... 178

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6.11 Are You Highly Spiritual? .................................................................................. 179

6.12 Did You Start Your Business? ............................................................................ 180

6.13 Summary ........................................................................................................... 182

Chapter 7 .......................................................................................................................... 184

Analysis - The Five Dimensions of Chinese Ethnic Entrepreneurship ....................... 184

7.1 Introduction ............................................................................................................ 184

7.2 Dimension 1 – Background of the Entrepreneurs ............................................... 184

7.2.1 Guanxi connections ......................................................................................... 185

7.2.2 Prior Experience.............................................................................................. 189

7.2.3 Summary of Dimension 1: Background of the Entrepreneurs ................... 192

7.3 Dimension 2 – Entrepreneurial Motivation ......................................................... 193

7.3.1 Potential Seeking ............................................................................................. 195

7.3.2 Self-Satisfaction ............................................................................................... 197

7.3.3 Summary of Dimension 2: Entrepreneurial Motivation ............................. 198

7.4 Dimension 3 – Traditional Confucian Values ...................................................... 200

7.4.1 Traditional Confucian Values ........................................................................ 201

7.4.2 Summary of Dimension 3: Traditional Confucian Values .......................... 203

7.5 Dimension 4 – Difficulties and Hurdles ................................................................ 205

7.5.1 Assimilation ..................................................................................................... 206

7.5.2 Business Set-up ................................................................................................ 206

7.5.3 Bureaucracy and Regulation .......................................................................... 207

7.5.4 Personal Hurdles ............................................................................................. 208

7.5.5 External Hurdles ............................................................................................. 209

7.5.6 Business Management ..................................................................................... 210

7.5.7 Adaptive Opportunism ................................................................................... 210

7.5.8 Financial Rewards ........................................................................................... 211

7.5.9 Summary of Dimension 4: Difficulties and Hurdles .................................... 213

7.6 Dimension 5 – Overseas Expansionary Vision .................................................... 216

7.6.1 Overseas Expansionary Vision ...................................................................... 217

7.6.2 Summary of Dimension 5: Overseas Expansionary Vision ......................... 220

7.7 Summary ................................................................................................................. 222

xiii

Chapter 8 .......................................................................................................................... 224

Testing of Hypotheses and Discussion of Results .......................................................... 224

8.1 Introduction ............................................................................................................ 224

8.2 The Dependent Variable: Financial Rewards as Measure of Success ............... 226

8.2.1 Development of Scale for Measures of Financial Rewards ......................... 227

8.3 Hypothesis 1 – Background of the Entrepreneurs Is Related to Entrepreneurial

Success ........................................................................................................................... 229

8.3.1 Development of Scales for the Background of the Entrepreneurs ............. 229

8.3.2 Hypothesis Testing Results: Success in Terms of Background of the

Entrepreneurs ........................................................................................................... 231

8.4 Hypothesis 2 – Entrepreneurial Motivation Is Related to Entrepreneurial

Success ........................................................................................................................... 232

8.4.1 Development of Scales for Entrepreneurial Motivation .............................. 232

8.4.2 Hypothesis Testing Results: Success in terms of Motivation ...................... 234

8.5 Hypothesis 3 – Confucian Piety Is Related to Entrepreneurial Success ........... 235

8.5.1 Development of Scales for Confucian Piety .................................................. 235

8.5.2 Hypothesis Testing Results: Success in Terms of Confucian Piety ............ 237

8.6 Hypothesis 4 – Difficulties and Hurdles Are Related to Entrepreneurial Success

........................................................................................................................................ 237

8.6.1 Development of Scales for the Difficulties and Hurdles .............................. 238

8.6.2 Hypothesis Testing Results: Entrepreneurial Success in Terms of

Difficulties and Hurdles ........................................................................................... 241

8.7 Hypothesis 5 – Overseas Expansionary Vision Is Related to Entrepreneurial

Success ........................................................................................................................... 242

8.7.1 Development of Scales for Overseas Expansionary Vision ......................... 242

8.7.2 Hypothesis Testing Results: Success in Terms of Overseas Expansionary

Vision ......................................................................................................................... 244

8.8 Summary of the Hypotheses Testing Results ...................................................... 245

8.9 SEM – Structural Equation Modelling (N=200) ................................................. 245

8.9.1 Influence of Gender – Two Factor MANOVA Test ..................................... 246

8.9.2 Results .............................................................................................................. 246

xiv

8.9.3 Diagrammatic Representation of the Model ................................................ 250

8.9.4 Explanation of the Model ............................................................................... 252

8.10 Comparison of the Two Generations ................................................................. 254

8.11 Summary ............................................................................................................... 261

Chapter 9 .......................................................................................................................... 262

Conclusion ......................................................................................................................... 262

9.1 Introduction ............................................................................................................ 262

9.2 Aim of the Study ..................................................................................................... 262

9.3 A Reflection on the Theory of Entrepreneurship ............................................... 264

9.4 Concluding Profiles of Chinese Entrepreneurs ................................................... 266

9.4.1 Who Are They? ............................................................................................... 266

9.4.2 What Are the Background Factors? ............................................................. 268

9.4.3 What Are the Entrepreneurial Motivation Factors? ................................... 270

9.4.4 What Are the Traditional Confucian Values? ............................................. 272

9.4.5 What Are the Difficulties and Hurdles? ....................................................... 273

9.4.6 The Importance of Overseas Expansionary Vision...................................... 274

9.5 Staircase Effects ..................................................................................................... 276

9.6 Social Integration of Chinese Entrepreneurs ...................................................... 278

9.7 New Hybrid Entrepreneurs ................................................................................... 281

9.8 Importance of Chinese Entrepreneurs ................................................................. 285

9.9 Working with China .............................................................................................. 287

9.10 Limitations of the Study ...................................................................................... 289

9.11 Research Implications and Recommendations for Further Work .................. 290

9.11.1 Policy Implication ......................................................................................... 293

9.11.2 Future Research ............................................................................................ 295

9.12 Conclusion ............................................................................................................. 296

References ......................................................................................................................... 298

Appendix 1 Research Questionnaire .............................................................................. 334

Appendix 2 Form of Disclosure and Informed Consent ............................................... 338

Appendix 3 Samples of Findings ..................................................................................... 340

xv

Appendix 4 Consent Letter of Australia-China Commerce and Economic Association

Inc. ..................................................................................................................................... 344

Appendix 5 Pattern Matrix of Factor Analysis ............................................................. 345

Appendix 6 Structure Matrix of Factor Analysis.......................................................... 351

Appendix 7 Relationships between Generation and Other Demographic Variables 357

Appendix 8 Correlations between Various Constructs ................................................ 358

Appendix 9 Regression Weights of Total Population (N=200) .................................... 359

Appendix 10 Standardized Regression Weights of Total Population (N=200) ........... 362

Appendix 11 Standardized Total Effects of Total Population (N=200) ...................... 364

Appendix 12 Regression Weights of First and Second Generation ............................. 365

Appendix 13 Standardized Total Effects of First Generation (N=132) ....................... 369

Appendix 14 Standardized Total Effects of Second Generation (N=68)..................... 370

Appendix 15 Multiple Regression of 14 Scales (N=200) ............................................... 371

Appendix 16a Covariances of the Three Factors (N=200) ........................................... 372

Appendix 16b Correlations of the Three Factors (N=200) ........................................... 372

Appendix 17 Independent T-test and Mann-Whitney U Test of 14 Scales ................. 373

Appendix 18 Mean Comparison between Two Generations ........................................ 374

Appendix 19 Multivariate Test on 2 Generations combined ....................................... 375

Appendix 20 Total Variance % and Cronbach’s Alpha of 14 Scales .......................... 377

Appendix 21 General Linear Regressions of 14 Scales (N=200) .................................. 378

Appendix 22 Multivariate Tests on Gender Difference for 14 Scales (N=200) .......... 379

Appendix 23 Ethics Approval Letter from Swinburne University .............................. 380

xvi

LIST OF TABLES

Table 2.1 Western and Eastern Business Styles. ............................................................. 61

Table 2.2 Individualism and Collectivism. ....................................................................... 65

Table 6.1 Sample Size of the First and Second Generation Entrepreneurs (N=200) . 163

Table 6.2 Country of Origin (N=200) ............................................................................. 165

Table 6.3 Genders of the Respondents (N=200) ............................................................ 166

Table 6.4 Industries of the Respondents (N=200) ......................................................... 169

Table 6.5 Positions of Entrepreneurs in Their Businesses (N=200) ............................ 171

Table 6.6 Locality – Target Businesses of Entrepreneurs (N=200) ............................. 173

Table 6.7 Target Customers of Entrepreneurs (N=200) ............................................... 175

Table 6.8 Age of Respondents (N=200) .......................................................................... 176

Table 6.9 Religion of Respondents (N=200) ................................................................... 178

Table 6.10 Level of Spirituality of Religion among Respondents (N=200) ................. 180

Table 6.11 Starting Own Business among Respondents (N=200) ................................ 181

Table 6.12 Analysis of Part I Results (Demographic) ................................................... 182

Table 7.1 Results of Dimension 1: Background of the Entrepreneurs ........................ 192

Table 7.2 Results of Dimension 2: Entrepreneurial Motivation .................................. 198

Table 7.3 Results of Dimension 3: Traditional Confucian Values ............................... 202

Table 7.4 Results of Dimension 4: Difficulties and Hurdles ......................................... 212

Table 7.5 Results of Dimension 5: Overseas Expansionary Vision ............................. 218

Table 8.1 Description of Pattern Matrix for Background Factors .............................. 230

Table 8.2 Description of Pattern Matrix for Entrepreneurial Motivation Factors ... 233

Table 8.3 Description of Pattern Matrix for Confucian Piety Factors ........................ 236

Table 8.4 Description of Pattern Matrix for Difficulties and Hurdles Factors .......... 239

Table 8.5 Description of Pattern Matrix for Overseas Expansionary Vision Factors 243

Table 8.6 Model Summary of Regression Square ......................................................... 247

Table 8.7 Squared Multiple Correlations of 11 Factors ............................................... 248

Table 8.8 Summary of Correlations of 14 Constructs .................................................. 250

Table 8.9 Summary of Regression Weights for First and Second Generations ......... 255

Table 9.1 First Generation Immigrant Presence in Major Countries in 1995 ........... 285

xvii

LIST OF DIAGRAMS

Diagram 1.1 Theoretical Framework of the Study ......................................................... 22

Diagram 5.1 Research Strategy Using Triangular Methodology ................................ 147

Diagram 7.1 Factors Influencing the Background of Chinese Entrepreneurs ........... 185

Diagram 7.2 Key Characteristics of the Background of Chinese Entrepreneurs ...... 193

Diagram 7.3 Variables Influencing Entrepreneurial Motivation ................................ 195

Diagram 7.4 Key Characteristics of Entrepreneurial Motivation ............................... 200

Diagram 7.5 Variables Influencing Traditional Confucian Values Important to

Chinese Entrepreneurship in Australia ......................................................................... 201

Diagram 7.6 Key Characteristics of Traditional Confucian Values Important to

Chinese Entrepreneurship in Australia ......................................................................... 204

Diagram 7.7 Variables Contributing to Difficulties and Hurdles Impacting Chinese

Entrepreneurship ............................................................................................................. 205

Diagram 7.8 Key Characteristics of Difficulties and Hurdles Impacting Chinese

Entrepreneurship ............................................................................................................. 215

Diagram 7.9 Variables Influencing Overseas Expansionary Vision ........................... 217

Diagram 7.10 Key Characteristics of Overseas Expansionary Vision ........................ 222

Diagram 8.1 Model of Chinese Entrepreneurship Success .......................................... 252

Diagram 8.2 Box-plot: Guanxi connections vs First and Second Generation

Entrepreneurs ................................................................................................................... 258

Diagram 8.3 Box-plot: Prior Experience vs First and Second Generation

Entrepreneurs ................................................................................................................... 259

Diagram 8.4 Box-plot: Self-satisfaction vs First and Second Generation Entrepreneurs

............................................................................................................................................ 260

Diagram 9.1 Staircase Effects ......................................................................................... 276

Diagram 9.2 Chinese-ness and Australian-ness vs the Two Generations ................... 278

1

Chapter 1

General Overview and Purpose of this Study

1.1 Introduction The study of Chinese entrepreneurship is the main theme of this research. Specifically, this

thesis is about the study of first and second generation Chinese entrepreneurs in Melbourne,

towards which it develops a framework for understanding immigrant entrepreneurs in

Australia. The framework will look at the behaviour and operation of first and second

generation Chinese entrepreneurs in Box Hill in Victoria. There are several explanations for

the representation of immigrants in small business (Collins 1996, 2003b, Harris and Ryan

1994) and these will be explored in this chapter and discussed further in the thesis.

This study further investigates the entrepreneurial success of the Chinese immigrants,

including their commercial impact on the local and Australian economies. Therefore,

economic growth principles are relevant to the study (Collins 2002, Choi 1975, Henderson

2003). Entrepreneurship and economic principles seem to have common grounds; both

focus on profitability, individual economic empowerment and independence, wealth

creation and distribution, job creation and national economic growth (Collins 1995, Friesen

1997). Various elements of successful entrepreneurship will be studied. Hence, Chinese

entrepreneurship and relevant economic concepts primarily form the foundation of the

study.

Authors and researchers, who in most instances have been social scientists, economists and

entrepreneurs, have contributed to the phenomenon of growth change; their work has

emphasized the relationship between entrepreneurship, the economy and globalization.

Tributes are paid to people such as Adam Smith, Joseph Schumpeter, Frank Knight, David

McClelland, Peter Drucker and Robert Sobel, who have contributed to the development of

2

entrepreneurship research linking the entrepreneur to social and economic growth where

each draws on the other.

While first generation entrepreneurs are governed by the interactions of human and social

behaviour in a period where immigrants are new to a country and interested in settling and

commencing a business activity, their successors will be governed by situations arising

from the contribution of their predecessors and the influences from within Australia where

they were born (Chan 2001). In both instances the collective contribution of these

entrepreneurs to growth and national development is enormous. This cycle of events has

been contributing continuously to social and entrepreneurial development (Chin 1988, Choi

1975). The entrepreneurial styles of the two generations of entrepreneurs will be discussed

in later chapters.

In this thesis, the entrepreneurial behaviours of two generations of ethnic Chinese

entrepreneurs in Box Hill will be studied, with the notion that a study of this kind will help

understand and possibly provide a ‘road map’ or model for ethnic entrepreneurship

behaviour for immigrant entrepreneurs and theoreticians.

The premise of the thesis is that the development of ‘local’ economies and the standard of

living within the Chinese community will flourish as a result of concentrated community

networking. Lever-Tracy et al. (1991) argued that very few small and medium businesses

are able to operate effectively at the international level, especially where exports are

concerned, such as in Australia. However, given that there is ease of communication and

transportation nowadays, it may be easier and more flexible for the second generation to

carry out more entrepreneurship activities with better resources (Boyer 1996, Clark and

Drinkwater 2000). In the second generation, the nature and extent of the influence of the

ethnic community will diminish as the group is integrated into the host community. In fact,

their views will be a mixture of both Chinese and Australian ways of thinking (Chan 2000,

Chan 2001). This mixture enables the group to utilise the background knowledge of the

parents and foundation structures such as finance and personnel networks, and to extend

into local Australian and overseas operations. The first generation frequently comes from

3

countries (e.g. China, Taiwan, Hong Kong, Malaysia, and Singapore) where many small

and medium family businesses are successful manufacturers and exporters, and where their

communities have long-established networks (Chou 1993). The know-how, experiences

and knowledge of the ethnic Chinese are important in shaping the views of individual

entrepreneurs to take risks and to succeed (Chavan and Agrawal 2002).

Lever-Tracy et al. (1991) concluded that both the Chinese and Indian immigrant enterprises

are successful, innovative and export oriented. Collins et al. (1997) found that Asian

entrepreneurs in Australia reported the highest rate of import and export trade of all those

surveyed. The linkages with their country of origin and the social communication with their

business associates, friends and families overseas may play very important roles in the

success of their businesses (Coleman 1988, Collins 2002). The content of this thesis comes

from a range of different studies, hypotheses and researches.

1.2 Background to Entrepreneurship

The 1997 Australian student edition of the Oxford English Dictionary mentions that the

word ‘ethnic’ is used for ‘designating a social group or migrants (or their descendants)

whose original language is not English’. This definition quarantines the English-speaking

population from the definition of ethnic groups and attempts to designate all ‘others’ as

‘ethnic’ groups. For the sake of simplicity and purpose of this research, this commonly

used definition in Australia will be used. In this study, the study concentrates on Chinese

entrepreneurs.

Although entrepreneurship has generated considerable academic interest, there has never

been a single unified or agreed definition of entrepreneurship (Gartner 1990). It differs

from one author to another. Some definitions focus on innovation, risk taking, venture and

wealth creation (Fry 1992; Gartner 1985; Schumpeter 1939). Others such as Bennet and

Dann (2000) described the elements of ‘entrepreneurship’ from their own research

perspectives rather than adopt a specific definition for the term itself. It is widely

acknowledged that entrepreneurship is not confined to any one type of business; rather,

4

there are several types of entrepreneurs (Thompson 1999). Legge (1997) suggested that the

word ‘entrepreneur’ should be reserved for a man or woman who creates an enterprise,

either as a new organization or an initiative from within an existing organization. On the

other hand, ethnic entrepreneurship is loosely defined as business-ownership by immigrant

and ethnic group members (Waldinger 1986).

For example, from an economist’s perspective, financial matters measured in terms of

monetary gain and business growth are seen as being at the heart of entrepreneurship. At

the same time, from a psychological perspective, personal attributes, values and the

presence of specific traits are seen as inherent in entrepreneurs. According to management

views, entrepreneurship is perceived as a process of organizing existing resources in

marketable products or services. Every different perspective will introduce different forms

of explanation (Saxon 2003). Therefore, it should be the interpretation, depending on the

field of studies or research, which determines the definition.

Bennet and Dann (2000), Hofer and Bygrave (1992) and Kao (1993) argued that

entrepreneurship is an amalgamation or medley of art and science, which displays itself in a

combination of factors in a range of different settings, contexts, industries, countries and

times. Some of the developmental definitions of entrepreneurship will be explored in this

study. However, when Chinese culture becomes involved in the study, only the relevant

definitional issues will be used. This is because these Chinese entrepreneurs come from

different backgrounds; their cultural orientation will be different from those studied

previously by other authors (Schumpeter 1934, Bennet and Dann 2000).

Stevenson et al. (1989) defined entrepreneurship as ‘the process of creating value by

bringing together a unique package of resources to exploit an opportunity’. The process

itself consists of the set of activities necessary to identify an opportunity, develop a

business concept, assess and acquire the necessary resources, implement the concept, and

then manage and harvest the venture. However, the author will still apply the scholarly

definitions of entrepreneurship by Schumpeter (1934, 1954) that lay specific emphasis on

innovation, identification of opportunities, wealth creation, consequences for the economy,

5

and the entrepreneur as the main actor in the entrepreneurial process will be adopted as the

working definition for the study.

Kirzner’s (1999) theory of entrepreneurship suggests how a market process arises and why.

It explains that entrepreneurs respond by alertness to the market, through profitable

opportunities to gain pure profits. This alertness to the market is the force that generates the

market process and determines its direction. Jennings (1994) observed that, similar to

Schumpeter’s idea, the entrepreneur is the decision maker in a particular cultural context,

who commands a range of behaviours that exploit these opportunities. Both Kirzner and

Jennings perceive the entrepreneur as the driving force of the market economy. The

entrepreneur functions primarily as a creator of innovations in the production process and

as an exploiter of profitable opportunities.

The major elements embodied in Schumpeter’s and Kirzner’s views of entrepreneurship are

widely accepted in literature and are summarized in Kao’s (1993) underlying beliefs of

entrepreneurship. These are the entrepreneurial behaviours that involve the ability to

identify new opportunities based on new ideas and approaches and turn them into

something tangible. Second, entrepreneurs require an array of organizational and personal

skills (interpersonal skills, self-understanding, leadership, conflict resolution, stress

management and tolerance of ambiguity). Third, there are consequences of entrepreneurial

behaviours for the entrepreneurs themselves and the economy as a whole.

In this study, entrepreneurs are those (beyond inventors, bureaucrats and managers) who

not only recognize opportunities, but also have creative abilities and practical skills to turn

opportunities into ventures and commercial realities that survive, grow and flourish to

become successful businesses. Consequently, in this chapter, the author will focus on

businesses and initiatives with some growth potential, albeit limited perhaps. The author is

less concerned with the so-called lifestyle businesses, for which growth is not a major

objective. The main aim of the research is to study Chinese entrepreneurship in Melbourne.

A secondary aim is to find out the differences between the two generations of Chinese

entrepreneurs in how they view and interpret entrepreneurship.

6

1.2.1 Background to Chinese Entrepreneurship Ahltrom et al. (2004) and Backman (1995) suggested the following characteristics of

overseas Chinese firms:

• Beyond the family – In the first generation, the businesses are set up as a matter of

survival, not of exploration or challenge. These people prefer to return to their own

inner community, speak the same language and make a living like in their own

country of birth. They seldom go beyond the boundary of family to set up the

businesses within the Australian community. Family members almost always

maintain controlling interest in the firms. Outsiders are not commonly admitted to

top management ranks.

• Simple organizations – In the first generation, the information remains inside the

firms and within the founding family. Between the first and second generations,

cultural differences create conflicts in the ways that businesses should be carried

out. Chinese businesses are usually found to be clustered around different localities.

Physically, these are found to be messier, dirtier, bulkier and nosier, especially in

the retail businesses. ‘Laissez-faire’ attitudes to doing business are found to be the

norm. .

• Centralized governance and decision-making – There is only one decision maker

within the family, and he or she gives orders to other staff members. This prohibits

the businesses from going beyond the boundary of the family and extending into the

larger community. In the first generation, the strategy is to make enough money for

the family. Most families will not see the necessity of introducing an external party

to oversee and ‘manage’ the business. As it has been mentioned earlier, the typical

Chinese family and family business are inseparable. Managing the business as well

as the day-to-day running of the family is seen as the role of the head of the family.

• Internal financing – Networking within the community enables the firms to seek

finance among relatives and friends. At the same time, this may limit the potential

of expansion and put constraint on the growth of the companies.

7

• Lack of marketing – The importance of promoting and marketing the products or

services is non-existent in the early days of immigrant businesses. Chinese tend to

keep a very low profile while acting as suppliers to others. Chinese tend to keep the

skills, knowledge and practical experience within the family or very close to the

family. The resources or any simple development projects will not be passed onto

the staff easily. This, however, prohibits the expansion and future development of

the businesses.

These firms typically are characterized by family ownership and control, simple

organizational structures with centralized decision making, internal financing, and little or

no spending on research and development or advertising (Carney 1998, Chen 2001). The

critical role of the manager or owner, in controlling the enterprise, makes some immigrant-

owned small businesses fundamentally different from Australian businesses (Chu 1995).

Language and cultural differences influence immigrant small business people in their

choice of employees and business associates and the way that they choose to do business.

These factors and traditional values can be found in the earlier stages of Chinese

businesses. It has been found that small business people face problems in management and

bookkeeping and that they rarely seek external advice when they encounter difficulties

(Strahan and Luscombe 1991).

However, many immigrants have shown considerable entrepreneurial talent in establishing

small businesses and developing large ones. Small businesses owned and managed by

immigrants are generally more successful than their Australian counterparts and show

strong employment growth (Strahan and Williams 1988). The difference is due to the fact

that some individual entrepreneurs have previous business experiences and prior knowledge

of business set-up from overseas, knowledge that helps them to implement the proper

management and business styles that are required for successful businesses (Collins 1996).

8

1.2.2 The Importance of Immigrant Chinese Entrepreneurs For centuries, people left China and crossed the South China Sea to neighbouring countries

such as Vietnam, Burma, Thailand, Malaysia, Singapore, Indonesia, Philippines and, in the

last two centuries, western nations such as Australia, Canada and the United States (Choi

1975, Li 1988). They included peasants, bankers, doctors, entrepreneurs, and others. Over

time, they formed a vast web of networks reaching across the globe and each reaching back

to their own laojia, the people in their small corner of the homeland who come from the

same village or the one down the road, who speak the same language in the same tones –

Hakka, Taishan Cantonese, Teochiu, Hokkien, Hokchia, Hokchiu, Henghua and Wu. These

great networks of overseas Chinese reach back through the network, sending billions of

dollars back into their homelands (ABS 2006b).

For many years, these people were known for their aggressive, vibrant and influential roles

in the Asia-Pacific. Distinctive characteristics included being hard working, pioneering,

progressive and acquisitive. Further descriptions included their fondness for accumulating

land as the traditional form of wealth, with the rest of their capital being held in liquid

form. They were also known for lacking interest in participating in politics (Fitzgerald

1997).

The migration of the ‘Chinese’ people from their homeland has been one of the largest

movements of individuals in recent history (Clammer 2002). Throughout history, Chinese

communities have spread all over the world, with some twelve million Chinese moving out

of China from the 1820s onwards and managing to adapt to different social environments

(Skeldon 1995).

Although there are many estimates of the exact number of overseas Chinese, figures are

imprecise. Prior to the 19th century, a number of diasporic Chinese communities were

already scattered overseas; however, Chinese immigration overseas was prohibited in

China. The majority of those overseas saw themselves as living abroad only temporarily,

reflecting the political and cultural discourse of return. By the end of the 19th century, the

political attitudes towards overseas movement had changed and living abroad was no

9

longer considered treason or a crime. Chinese who were successful elsewhere could

become an asset to the Chinese empire through the skills and expertise they acquired

overseas. In 1893 the lifting of the ban on foreign travel was in reality only a removal of a

defunct policy, as there had been illegal movements all through the prohibition period. This

act gave official recognition to diasporic Chinese for their contributions and it encouraged

them to identify not only with their provincial homes, but also with China and Chinese

culture.

Different political systems and geographical factors influence people of ‘Chinese’ descent

all over the world (Chow 1998). Certainly culture is continuously changing, and ethnic

Chinese have also developed distinct cultural expressions. Tu (1994) argued that such

cultural expressions have often been used generically to designate communities that are

culturally and racially similar but are otherwise unrelated. These Chinese may look similar,

but their thinking may be different (Chan 2001).

The formation of identities is subject to varying perceptions of culture, to the geography of

power hierarchies, and to strategic accommodations at local, national and transnational

levels. Increasing transnational movements and continuous transformations through the

intensification of flows of resources, people, capital and information have altered local

conditions in all aspects of life. As global flows constrain local production and

consumption, they also modify local cultures and identities (Axford 1995). As a

consequence of the creation of multicultural communities globally, cultural practices often

intersect with and blur the boundaries of place. This has led to a situation where the

construction of identity for migrants and their descendents often occurs in a state of

dilemma, thus transforming the collective notion of a shared Chinese identity. Their sense

of belonging is maintained through intrinsic social relationships between their country of

origin and country of settlement (Clifford 1997).

These overseas Chinese have created a number of successful firms in several industries

such as light manufacturing, real estate, and trading commodities (Yeung and Olds 1999).

By 2008, more than 60 million Chinese lived overseas, in Taiwan (23 million) and Hong

10

Kong (7 million), with another four and a half million in Singapore. Commercially

powerful, dominant minorities spread all over Southeast Asia. In today’s world of high-

speed travel and communications, this diaspora has become a source of strength and

tremendous leverage in the global economy. The overseas Chinese represent a powerful set

of organizing forces that will help to shape the future of China and the host countries. They

bring three things back to China:

1. Capital that is large-sale, mobile and intimately connected to China

2. Knowledge, comprising business acumen, technical know-how and a broad

awareness of how the rest of the world works

3. A cultural reservoir of Chinese identity built up outside China; another model for

being Chinese that brings the traditional values into the modern world. This ‘buffer’

serves as a coherent system where everyone from both east and west, from

traditional and modern societies, can find a comfort zone to learn about the opposite

side.

Their capital is impressive by any standards. In 2004, a Bank report by National Bureau of

Statistics (NBS 2004) put the GDP of this Greater China (in purchasing power terms) at

US$3.5 trillion, already more than that of Japan, and nearly half as big as that of the United

States. The same report estimated that ‘Greater China’ has already surpassed the United

States by 2002, with a purchasing power GDP twice as big as Japan’s and three times that

of Germany. China, for instance, held the world’s largest foreign reserve, at US$1.9 trillion

(NBS 2004). The foreign reserve of Taiwan stood at US$292 billions, which places the

country as the third largest in the world. It was estimated that fully three-quarters of the

hundreds of billions of dollars of investment capital flowing into China was coming from

overseas Chinese. Beijing was shrewdly encouraging this flow (Backman 1995). All of

China ‘special economic zones’ were set up all along the southeast coast, because they

were the areas that more than 90 percent of overseas Chinese called home.

At the upper levels of personal wealth, the overseas Chinese are, particularly, groups of

migrants that travel between homes in Hong Kong, Vancouver, London, Sydney and San

11

Francisco. Some spend so much time in the air that they have earned the nickname

‘astronauts’, and their children the title ‘parachute kids’ for the way they come for the

holidays from boarding schools (Harris and Ryan 1994).When these overseas Chinese go

back to the villages and counties that they or their ancestors come from, they bring with

them money and presents, wearing fine western suits and bearing tales of globe-spanning

commercial networks and enterprises that sound like magic cash machines. They instantly

become role models for those who stay behind. Their very existence sets up a vision of a

different future, of a China that is vigorous, prosperous, and unfettered by party or borders.

In Australia, ethnic Chinese come from a range of backgrounds, especially different

countries of origin. Thus, different regional, religious and social class backgrounds are

found in different capital cities (Harris and Ryan 1994). They also have very different

immigration and socio-economic profiles. Many of those born in Southeast Asian countries

have arrived in Australia under family migrant categories, while those from Northeast Asia

are more recent migrants and are more likely to arrive under skilled or professional or

business categories.

In the last twenty years, Asian families migrating to Australia have changed from

‘permanent’ migration to ‘semi-migration’ – the ‘astronaut’ families. Astronaut families are

a type of family arrangement found in migrant Asian families in which one or both parents

reside and work in their home country while the remainder of the family live in the host

country (Ip et al. 1998, Pe-Pua et al. 1996). The astronaut arrangement is not a preferred

option but an involuntary and temporary arrangement that is considered a better alternative

to unemployment and underemployment. The ease of flying between countries and the

better socio-economic background of these families make it easier for the parent or parents

to travel back and forth between the home and the host countries. This was unheard of

twenty years ago. These first generation Chinese entrepreneurs have facilitated the

exchange of ideas, goods and services. They form the bridges between different countries,

their country of origin and the host country (Pookong and Skeldon 1994).

12

1.3 Why Study Chinese Entrepreneurship?

Chinese entrepreneurship is related to several established disciplines including culture,

economics, management, psychology, sociology. There are several different approaches in

addition to these disciplines. A multi-theoretical approach was therefore adopted in this

study to study the five dimensions of these entrepreneurs in order to provide a rich insight

into Chinese entrepreneurship in Melbourne from different perspectives.

Schumpeter (1934 and 1939) formed the basis for understanding the entrepreneurial

process; his is the working definition of entrepreneurship that is used and implied in this

study. The main theme is how the Chinese start their businesses ventures by using the

knowledge, experiences and resources available to them to identify and exploit

opportunities; and what the consequences are of their entrepreneurship for themselves and

the economy. Ripas (1998) and Wennekers and Thurik (1999) were also found to be

explicitly relevant in this study, for explaining economic growth and overall entrepreneurial

success.

This study specifically seeks to explore and provide information on these entrepreneurs in

small and medium enterprises (SMEs), including their personal profiles and the types of

entrepreneurial ventures they created; their motivations for business ownership and the

human and financial resources available to them; and their network affiliations (known as

guanxi connections in Chinese culture); and especially the difficulties encountered during

the entrepreneurial process – the start-up, development and expansion of their business

ventures.

Immigration has always been high on the political agenda of the Australian Government.

To date, there has been little policy specifically addressing immigrant entrepreneurs in

Australia, even though there has been a Business Migration Programme since the 1980s

(Strahan and Luscombe 1991). Australia is one of many countries (such as Canada, the

United States) that have attracted immigrants since its first settlement. Coincidentally,

13

immigrants have had a higher rate of self-employment and entrepreneurship than their non-

immigrant counterparts.

In 2006, one in four of the Australian population of 18.5 million people was born overseas

(ABS 2006a). These first generation immigrants, together with their Australian-born

children – the second generation – comprise over half of the population of Australia’s

largest cities of Sydney, Melbourne, Adelaide and Perth (Collins 1991, Collins 2000).

Entrepreneurial activities have become stronger and more important aspects of the life of

immigrants in Australia, and their businesses continue to be important in the economic

growth of Australia. This is reflected in the existence of numerous ethnic communities in

Australia (Chin 1988, Ingley and Selvarajah 2002). To understand ethnic Chinese

entrepreneurship, the author believes that the underlying cultural background (Confucian

Piety) plays an essential role in laying the foundation and the seeding for further

entrepreneurship; this it will be discussed in full in Chapter 4.

Entrepreneurship among different immigrants and different factors is important in shaping

the economic development and contributing to the economic potential in Australia. The

influences should be explored and utilized by all levels of the whole community. Some of

the factors for consideration are as follows:

• The influx of skill and economic benefits that these entrepreneurs create and grow

should not be underestimated. They stand as the next connection to the local and

outside economies.

• The traditional view of immigrant entrepreneurs as uneducated, unskilled and poor

no longer reflect reality (Gartner 1984).

• The same immigrants are also found to seek upward social mobility by having or

providing better education to their children. Certain ethnic groups such as Chinese

in early Gold Rush period provided classic examples of this phenomenon. A study

by Gartner (1984) indicated that entrepreneurs are better educated than the general

population, especially in the second generation.

14

• A study by Carney and Gedajlovic (2000) supported the flow of routine

manufacturing from high labour cost to lower labour cost locations in most Asian

countries.

Therefore, the detailed discussion backed by empirical input regarding the different

attitudes of two generations of Chinese towards entrepreneurship can provide many clues to

the factors that are influencing entrepreneurs to act differently, such as the social, economic

and cultural environments of Australia. Earlier studies on Australian immigration history

have always been a time-linear narration. In fact, most of them concentrate only on

categorizing history into different phases of Australian immigration. It is difficult to find an

intense study on ethnic Chinese entrepreneurship in the second generation, i.e. those who

were born here or who arrived in Australia as minors.

Despite information on small business formation and the economic contribution of Chinese

entrepreneurs in Australia and other developed countries (Backman 1995, Chin 1988,

Collins 2002, Collins 2003, Li 1988), little is known of the possible transition change from

the first to the second generation of Chinese in Australia. This scarcity of research on the

two generations of entrepreneurs in Australia is a critical omission. There is also a need for

this research in an economic and social context in order to identify the contributions of the

newer entrepreneurs to the modernization of developing economies. Such research will be

also useful in understanding the particular needs, and pertinent issues concerning the

promotion and development of the entrepreneurial activities of both present and future

generations.

The thesis focuses on the entrepreneurial journey of two generations of Chinese immigrants

and underpins the telling effects of culture and business management. These findings will

help future researchers to create favourable quotients for further development of both

entrepreneurship and society.

15

1.4 Research Objective

The primary objective is to investigate the success achieved by first and second generation

Chinese entrepreneurs so as to improve understanding of their impact and contribution in

the development of Melbourne. Ultimately, this study seeks to provide an insight into their

entrepreneurial activities and their social and economic contributions to themselves and the

nation, leading to Chinese being recognized as an important source of economic growth.

This will provide an avenue for these entrepreneurs to understand themselves better. It is

expected that the outcome from this research will lead to supportive policies and

programmes for these entrepreneurs, and will also serve as reference for government policy

makers, who are responsible for small and medium enterprises (SMEs), and private sector

development.

A further objective of this research is to study major differences between the two groups,

with particular references to their views, execution and implementation of entrepreneurship.

The findings of this research will enhance the understanding of the entrepreneurial

differences between the generations.

The next contribution of this research is to develop a profile of successful Chinese

entrepreneurship in Melbourne. As contributors to economic growth and nation building,

understanding the needs and wants of this group will be important to policy makers.

1.5 Research Questions Five dimensions of Chinese entrepreneurs from the first and second generations were

identified for investigation and exploration, in order to achieve the objectives of the study

outlined earlier. These are their background, their motivations for business ownership,

traditional Confucian values, difficulties and hurdles, and their overseas expansionary

vision. Ultimately, the study concentrates on their successes.

16

These five dimensions were identified based on past studies into Chinese entrepreneurship

in western countries such as Australia, the USA and Canada, and some Asian countries

(Collins 1996, 2003, Hsing 1996, Li 1988, Light 2002). This study is therefore constructed

on six research questions: This study looks at the perceptions and views of both first and

second generation ethnic Chinese entrepreneurs in Melbourne to answer the following:

• Research Question 1: What are the background factors contributing to the success of the

entrepreneurs?

• Research Question 2: What are the motivational factors that contribute to the success of

the entrepreneurs?

• Research Question 3: What are the traditional Confucian values that contribute to the

success of the entrepreneurs?

• Research Question 4: How do the difficulties and hurdles encountered during the

entrepreneurial process contribute to the success of the entrepreneurs?

• Research Question 5: How does their overseas expansionary vision contribute to the

growth of their entrepreneurial ventures?

These questions are based on the gaps identified earlier in the thesis; further discussion is in

literature review in chapters 2, 3 and 4.

1.6 Theoretical Framework of the Study

Chinese entrepreneurship will be examined in the light of existing theories and studies in

order to develop a better understanding of the Chinese, and to determine the extent to which

these theories apply in a local and national economic context. Hence, five hypotheses have

been formulated and will be tested. These hypotheses comprise the five identified

dimensions of successful entrepreneurs and are based on the various theoretical

perspectives adopted in the study. Each of these theoretical perspectives will be supported

by its corresponding body of empirical research. The use of a multidisciplinary approach in

17

the study of Chinese entrepreneurs underscores the diverse nature of the entrepreneurial

phenomenon and the fact that no single taxonomy can capture all of the important

differentiating variables. These theoretical perspectives utilized in the study are

summarized below. An in-depth analysis of them will feature in the literature review.

At base, this thesis is about Chinese entrepreneurs in Box Hill. The focal point of the

investigative light is on the understanding of the elements contributing to the success of

their businesses. Chinese entrepreneurship, as explained earlier, is related to several

established disciplines including Chinese traditional values, cultural background, overseas

experience, economics, management skills, personal traits and sociology.

This study seeks to explore and provide information on the five dimensions. Accordingly,

five hypotheses based on these dimensions derived from entrepreneurship literature will

guide this study. In this introductory chapter, an overview of the content of this thesis is

provided.

Secondly, the study is also interested in immigrant entrepreneurship; a multi-theoretical

approach is therefore adopted in the study in order to compare different theories and to find

out the contributing factors to immigrant entrepreneurship. Therefore, the economic impact

on the local community and economic growth principles are relevant to the study. The

background (Bennet and Dann 2000, Schumpeter 1934, Kirzner 1999) on the

multidisciplinary approach adopted in the theoretical framework of the thesis, with views

on entrepreneurship, psychological aspects, motivations, resource-based views and

networking perceptions in entrepreneurship will be summarized. This background

information on the principal issues of analysis in the thesis are further discussed and

examined in the next chapter, which is the first part of the literature review.

Thirdly, different theories of the ethnic enclave economy will be studied. These theories are

important to illustrate the different strategies of settlement adopted by immigrants upon

their arrival in Australia. In view of this, other entrepreneurial theoretical perspectives

18

which have been proven in literature as relevant factors in explaining entrepreneurial

behaviour and success also form part of the theoretical framework of this study.

In this thesis a number of hypotheses are developed to explore the factors that influence

first and second generation ethnic Chinese entrepreneurs in Box Hill, Melbourne. These are

covered in detail in the later literature review chapters. However a summary detailing the

development of the hypotheses is presented below.

1.6.1 Background of the Entrepreneurs This study is informed by the literature pertaining to human and financial capital and the

literature pertaining to social learning theory, which provides a complementary perspective

to the resources-based view. Theoretical perspectives in the specified areas are drawn upon

to develop a hypothesis about the background of the Chinese entrepreneurs that is

associated with their educational level, prior work experience, entrepreneurial family

background experience, as well as the extent of their finances. Guanxi connections, which

include personal networking and local know-how is also included in this investigation

(Yang 2002). Research has proved the importance of human and financial capital to the

creation and success of entrepreneurial businesses. The possession of human capital

(consisting of capabilities, business skills and knowledge derived from education, previous

work experience, entrepreneurial family background) and financial capital (consisting of

access to funds) has been found to differentiate successful entrepreneurs from the less

successful ones (Bandura 1977; Brush et al. 2006). Thus it is hypothesized that:

H1. The background of the entrepreneurs is related to the success of their businesses.

1.6.2 Motivations Previous studies (Bennett and Dann 2000, Fielden and Davidson 2005) have investigated

reasons why entrepreneurs choose the path of entrepreneurship. These studies conclude that

a combination or range of factors, rather than any single factor alone, provides the impetus

for entrepreneurs to create their own business venture. The reasons normally given for

19

Chinese venturing into business are complex and multiple, such as migration, profit

maximization and inheritance of family businesses (Yeung 1999, 2000). Generally, the

motivation for the ventures is based on personal attributes and a vision of their

entrepreneurial pathway. For instance, psychological motivations such as freedom, desire,

the potential to make more money, and strong belief in one’s own capability have been

widely investigated with regard to their influence on businesses (Lerner et al. 1997).

The second major motivation can be explained by ‘push and pull’ theory. This is now a

common way of explaining different motivations to start a business (Amit and Muller 1995,

Brush 1992). Push factors are elements of necessity such as insufficient family income,

dissatisfaction with a salaried job, unemployment and a need for a flexible work schedule

because of family responsibilities. Pull factors relate to independence, self-fulfilment,

entrepreneurial drives and desire for wealth and social status (Ducheneaut 1997). It is

therefore likely that the motivational factors of Chinese entrepreneurs influence their

business success; hence the following hypothesis:

H2. Entrepreneurial success is related to the motivation of the entrepreneurs.

1.6.3 Traditional Confucian Values Confucianism has been woven into the very fabric of Chinese society. For hundreds of

years, Confucianism has been actively taught. No matter what a person’s religion is,

Confucianism defines the proper mode of conduct within society and within the family

(Nish et al. 1996). Chinese families use stories, sayings and special terms to instill

Confucian ideals in children. Although it is not a religion, Confucianism continues to exert

a major influence on the everyday lives of Chinese people (Chan 2008, Jabobs et al. 1995).

Research has revealed that, even in overseas Chinese family businesses, the most important

family values are Confucian (Jacobs et al. 1995, Lee 1996). These Chinese family values

and interpersonal patterns contribute to business development and success in different cases

(Yan and Sorenson 2006). The influence of Confucianism and its incorporation into the

20

lives of so many for so long has built a tight matrix between the culture and the

psychological character of the people (Cheng 1997).

Based on the above perspectives, traditional Confucian values will be explored to find out

whether there is any relationship between Chinese business success and these values. This

leads to the following hypothesis:

H3. Entrepreneurial success of the Chinese is related to traditional Confucian values.

1.6.4 Difficulties and Hurdles

The fourth hypothesis of the study rests on the premise that Chinese immigrant

entrepreneurs face a lot of barriers in their entrepreneurial endeavours that impede their

progress. Chinese entrepreneurship literature (Selvarajah 2008, Wickberg 1994) points out

a number of barriers that Chinese entrepreneurs face such as infrastructure barriers, social

and cultural barriers, educational and occupational barriers, role barriers and behavioural

barriers. Other external difficulties and hurdles include poor access to market information,

technology and finance, poor linkages with support services and an unfavourable policy

and regulatory environment (Smart 2003, Tseng 1995). It has been observed that the

reduction of these problems results in the greater success of Chinese entrepreneurs

(Kitching et al. 2005); hence the following hypothesis:

H4. Entrepreneurial success is related to the difficulties and hurdles experienced by the

entrepreneurs.

1.6.5 Overseas Expansionary Vision Overseas business connections are important in how local firms approach creating new

businesses (Zhou 2004, Yeung & Olds 1999, Tsang 1998). A vision to utilize the advantage

of these connections is a form of innovation. Schumpeter (1934, 1943) argues that an

21

entrepreneur is the innovator who introduces something new into an economy.

Schumpeter’s definition and description of entrepreneurship not only addresses economic

factors of entrepreneurship but also emphasizes innovative, growth-oriented ventures.

Drucker (1985) supported the notion that entrepreneurship refers to the ability of new firms

to create innovation. Every innovation successfully introduced by business firms, large or

small, new or old, creates new demand for goods and services and therefore creates new

wealth. Thus, the importance of the overseas expansionary vision will be investigated.

However, the vision is not just about money. These overseas Chinese are bearers not just of

the new ways, but also of the old – of the dominance of family, clan and village, the

importance of face, the predominance of values. They are a root that has not been cut back,

a place where ‘blood is truly thicker than water’. Thus, it is hypothesized that:

H5. Entrepreneurial success is related to the overseas expansionary vision of the

entrepreneurs.

Hence, based on the hypotheses, the study compares the differences between the first and

second generations of Chinese entrepreneurs in Box Hill, Melbourne, with emphasis on

their views, execution and implementation of entrepreneurship. This is an additional

objective of the present study.

1.7 Summary of the Hypotheses of the Study Based on the above discussion, five hypotheses (derived from the five identified

dimensions of the Chinese entrepreneurs from two different generations) have been

formulated and will be tested for the first and second generation Chinese entrepreneurs in

Melbourne. Each of these theoretical perspectives will be supported by its results.

H1. The background of the entrepreneurs is related to the success of their businesses.

H2. Entrepreneurial success is related to the motivation of the entrepreneurs.

H3. Entrepreneurial success of the Chinese is related to traditional Confucian values.

22

H4. Entrepreneurial success is related to the difficulties and hurdles experienced by the

entrepreneurs.

H5. Entrepreneurial success is related to the overseas expansionary vision of the

entrepreneurs.

Diagram 1.1 shows the diagram of the theoretical framework of the study; H= Hypothesis.

Diagram 1.1 Theoretical Framework of the Study

Based upon the previous literature review, a theoretical framework was developed to find

the relationships among the five dimensions that contribute to business success.

Motivation

H2

Difficulties and

Hurdles H4

Overseas

Expansionary Vision H5

Traditional Confucian

Values H3

Background

H1

Entrepreneurial Success

23

1.8 Box Hill – Chinatown Before turning to the review of literature in the next chapter, this section presents a basic

demographic and geographical description of Box Hill, as well as an overview of the

migration and business pattern in the area.

Prior to 1980, Box Hill was the home of immigrants from Europe, especially from

Germany, Italy and Greece. Since the 1980s, waves of Vietnamese, Cambodians, and in

recent years, Hong Kong Chinese, Taiwanese and mainland Chinese have moved to Box

Hill, creating the Chinatown of today. Most of the Chinese ethnic entrepreneurs in the older

and mature part of the City of Melbourne’s Chinatown are from Hong Kong and Macau.

This suggests that the early wave of immigrants to Australia prior to 1991 was from Hong

Kong and its surrounding region. Box Hill, a relatively new ethnic cluster, has the majority

of its inhabitants from Mainland China. Mandarin and Cantonese are spoken equally by the

Chinese inhabitants of the two Chinatowns. Again this suggests that roughly 50 percent of

the Chinese have come from Guangdong province and Hong Kong where Cantonese is the

common dialect (Selvarajah et al. 2008)

Of Box Hill’s 10.59 percent Chinese population, 6.19 percent are Chinese by birth. Of the

City of Melbourne’s 10.42 percent Chinese population, 3.39 percent are Chinese by birth.

(The term ‘Chinese by birth’ refers to ethnic Chinese originating in Mainland China,

Taiwan, Hong Kong and Macau.) This again suggests that of the two Chinatowns, Box Hill

has more recent migrants compared to the City of Melbourne.

Box Hill, located 14 kilometres east of Melbourne, is bounded by the Eastern Freeway to

the north, Elgar Road to the west, Middleborough Road to the east, and Canterbury Road to

the south. The early settlement of the city can be traced back to the 1850s, when the main

activity was agriculture, such as mixed farming, vineyards, and orchards. The significant

development of the township, however, commenced after the 1880s following the

development of areas closer to Melbourne. A market was opened close to Box Hill railway

station in 1895 which enhanced the city’s commercial prominence. During the 1940s and

1950s, the city experienced rapid growth, and today Box Hill is one of the main

24

commercial centres in Victoria. The suburb is home to a large Asian community, and it has

many Chinese and South East Asian cafes, bars, restaurants, and grocery stores.

The emergence of Box Hill as another Chinatown was due to the refugees from Southeast

Asia in the 1970s. To accommodate the newcomers, the Immigration Department placed

them at the Eastbridge Hostel, a Federal-funded immigration hostel in Nunawading.

Slowly, the immigrants settled down in the suburbs near to the hostel (a similar pattern also

occurred in the formation of business clusters at Footscray and Springvale). Naturally, Box

Hill was one of the places that the newcomers chose to stay as it was close to the hostel.

The immigrant hostel and subsequent formation of a micro-cluster had a ‘honey pot effect’

on the formation of a bigger cluster in Box Hill during the 1990s.

From the mid-1980s, more immigrants from Hong Kong and Taiwan arrived to stay in Box

Hill. They were professional, technical and managerial persons, and some were quite

wealthy (especially those who came to Australia under the Business Migration program). In

1989, after the Tiananmen incident, a lot of Chinese students who were studying in

Australia were granted permanent resident status. This contributed to the growth of Box

Hill as the second Chinatown in Melbourne. From 1991 to 2001, the number of Chinese-

speaking immigrants living in Box Hill jumped from 1281 to 2949 (Selvarajah et al. 2008),

an increase of 130 percent. On the other hand, the number of Vietnamese-speaking

residents remained stagnant and the number of major ethnic European (such as Greeks and

Italians) immigrants declined. To serve the needs of its large Chinese population, retail

shops, professional service providers such as accountants and solicitors, real estate brokers

and other social services providers sprang up in Box Hill, making it a new Chinatown (City

of Whitehorse Community Profile).

1.9 Definitions A brief summary of definitions here provides the basic concepts and meanings of this

study.

25

1.9.1 Migration

Migration in the context of this thesis may be defined as the international movement of

people from one place to another (www.britannica.com/ebi/article-9275837). This

movement can be permanent, for purposes such as uniting families or for business ties, or

temporary, with the intention of education or work. It can also occur as a result of factors

such as famine, political unrest or wars. Nevertheless, it is usually associated with an

expectation of better prospects after migration, both for the migrants and for the country of

destination.

1.9.2 First and Second Generation Chinese The combination of information on individual and parents’ birthplace makes it possible for

people to be identified as first, second or third-plus generation Australian. According to

ABS (2006a), the groupings are classified as follows:

• First generation refers to Australian residents who are born overseas.

• Second generation refers to people who are born in Australia but have one or both

parents who are overseas-born.

• Long-established Australians refers to people who are born in Australia whose

parents were also born in Australia.

While the definition of generational groupings according to birthplace is conceptually neat,

i.e. mutually exclusive, the definition quickly proves problematic in the face of empirical

realities, particularly in the classification of Australian-born Chinese (ABC). Firstly,

although based upon the birthplace of individuals and their parents, the definitions do not

acknowledge their ‘ethnic’ background. For the purposes of this study, individuals, whether

‘pure’ or ‘mixed’ Chinese, who acknowledge their Chinese heritage are included in this

study. Self-acknowledgment of genealogy and race is deliberate as far as the study is

concerned.

26

Secondly, the definition of third-plus generations suggests that both parents have to be

Australian-born in order for Chinese to be categorised as long-established ABC

(Australian-born Chinese). For the purposes of this study, only one parent needs to be

Australian-born for their descendents be considered third generation, and so on for the

higher orders. This greater flexibility is deliberate, as the study is concerned with the

impact of long-term residence on identity construction. However, in this study, only the

first two generations will be considered. Thirdly, according to Khoo (2004), it is not

possible to differentiate between third and higher order generations in the Australian 2001

census data.

1.9.3 Acculturation (9 years old)

In this study, the second generation includes those who arrived in Australia as a minor and

before they reached their tenth birthday. This age cut-off assumes an insignificant effect of

acculturation on entrepreneurial journeys due to earlier settlement in a foreign country. In

other words, they are treated the same as those who were born here in Australia. This cut-

off criterion is important, and its validity can be found in a similar study by Barrett et al.

(2002), who examined the cultural adjustment experiences of 158 children and adolescents

from former-Yugoslavian (N-42), Chinese (N=60) and Anglo-Australian (N=56)

backgrounds. In the study by Barrett et al (2002), to ensure accurate cultural representation,

all participants were born, and spent a number of years growing up in their culture of origin

with different lengths of time ranging from 2.5 months to 7.5 years.

In addition, for those Australian-born Chinese and those who have grown up in Australia,

though they may speak Chinese (either Mandarin or Cantonese) at home, their main

language is English (ABS 2006b). In other words, the Chinese language which is a second

language may not be spoken at all. Since language is the core factor of culture and identity

(Barker 1992), it can be argued that these young Chinese have become more Australian due

to the higher usage of English than Chinese (Chung 2006). Although the second generation

has been exposed at least to two cultures (the Australian culture in the society and the

Chinese traditional culture in their family, in which the parents were the first generation in

27

Australia), they are more westernised than their parents. This study also serves as an

examination of the Chinese and Australian ways of entrepreneurship.

1.10 Thesis Outline

In order to track down the evolution in the outlook and attitude of the Chinese immigrants

towards entrepreneurial ventures over the generations, the entrepreneurial views of Chinese

immigrants in Box Hill in Victoria were studied; these immigrants have their origins in

Southeast Asian countries and mainland China. Various relevant literatures and methods of

analysis will be used to substantiate the hypotheses in the following sections:

Introduction (Chapter 1)

Chapter 1: General Overview and Purpose of this Study

This chapter provides the background and the layout of the thesis. This thesis is divided

nine chapters in total. It introduces the problem statement, the research questions and the

hypotheses.

Literature Review (Chapters 2 to 4)

Chapter 2: Different Views of Entrepreneurship

Chapter 2 contains a brief literature review and definitions of entrepreneurship. In

particular, traditional Chinese business and management styles will be discussed. These

will be compared to western styles. The emphasis in this thesis is placed on Chinese

entrepreneurship.

The interpretation of entrepreneurship may vary between the Chinese and the Australian

business communities, as humans are highly influenced by elements such as philosophies,

traditions and cultures. The thesis explores the notion that the second generation Chinese

28

immigrants will gradually move towards a more Australian values base, while their

predecessors will hold on to their traditional Chinese culture mainly.

Chapter 3: Chinese Entrepreneurs and Ethnic Enclaves

Chapter 3 contains a brief history of Chinese immigrants and of Australian immigration

history. Immigrants from different countries have long shaped Australian history at

different times, including its sociological, demographic and economic changes.

While the review of the subjects associated with entrepreneurship creates the assembly line

of the relevant clues, the brief history of Chinese immigrants as well as the history of

immigration in Australia is important to demonstrate the development of Chinese

entrepreneurship. These immigrants came from many parts of the globe carrying their

unique perceptions based on the philosophy and culture of their respective homelands.

Gradually all these divergent views and forces merged into the mainstream of immigrant

activities in Australia and thus started shaping the history of this country.

The significance of different ethnic enclave economies, especially the formation of

Chinatowns in Melbourne, will be discussed. The information gathered will be used to

explain the importance of networking and business formation within the Chinese

communities.

Chapter 4: Characteristics of Successful Chinese Entrepreneurs

This chapter illustrates the essences of being a Chinese entrepreneur in Australia. The

chapter investigates the entrepreneurial profiles and the activities of Chinese entrepreneurs.

The elements of successful entrepreneurship will be discussed. Though there are

similarities between the two generations of Chinese entrepreneurs, the chapter will explore

the entrepreneurial pathways of the two groups in order to highlight differences.

29

The process of immigration is a multi-dimensional process, where migration is just one

element among the other variables like the law of the land or the past experiences of each

individual, as well as the influence from other co-ethnic immigrants (Selvarajah 2004). It is

the chemistry between such variables that determines the outcome – as for example, the

earlier immigration policies were not receptive to Chinese immigrants in particular (Collins

2000, 2002).

Methodology (Chapter 5)

Chapter 5: Research Design and Methodology

This chapter details the design and testing of the questionnaires. The methodological

framework of this research will be presented, including the methods and research

techniques that are applied. Different statistical tools are used to help interpret the results

gathered by the questionnaires. The process involves different quantitative analyses of the

data gathered from two hundred (200) subjects of both first and second generation

entrepreneurs.

SPSS software was for carrying out various statistical tests. Structural Equation Modelling

(SEM) was also used to establish the conceptual model for this study.

Analysis and Results (Chapters 6 to 8)

Chapter 6: Analysis – Demographic Profiles of the Chinese Entrepreneurs

The results are divided into two chapters (Chapter 6 and Chapter 7). Chapter 6 relates to the

demographic findings, such as sample size, country of origin, gender, industry, position,

targeted businesses, targeted customers, age, religion, spirituality and how businesses are

set up.

30

Chapter 7: Analysis – The Five Dimensions of Chinese Ethnic Entrepreneurship

This chapter reports on the results from quantitative data related to the questions on the

views of entrepreneurship. Results are presented using frequency percentages, according to

the sequence of the sections in the questionnaire survey. More statistical tools, such as scale

developments, are used to develop patterns of agreement and themes. These results will

provide more information about the five dimensions being investigated in this study.

Chapter 8: Testing of Hypotheses and Discussion of Results

Fourteen elements contributing to the success of businesses were identified. They all show

high importance as contributing factors. Regression analysis was carried out on the results

from both generations. The results from the analysis were used to test the five hypotheses.

The results appear below:

H1. The background of the entrepreneurs is related to the success of their businesses –

Supported

H2. Entrepreneurial success is related to the motivation of the entrepreneurs – Supported

H3. Entrepreneurial success of the Chinese is related to traditional Confucian values –

Supported

H4. Entrepreneurial success is related to the difficulties and hurdles experienced by the

entrepreneurs – Supported

H5. Entrepreneurial success is related to the overseas expansionary vision of the

entrepreneurs – Supported

Chapter 9: Conclusion

This chapter discusses the impact and the role of Chinese entrepreneurs in Australia. The

concept of ‘staircase effects’ is introduced to illustrate the effects of various elements

during the process of adaptation and adoption by these Chinese. Their journeys of

31

entrepreneurship show the importance of other issues such as the relationship and the future

of the Australian and Chinese economies.

1.11 Summary This study seeks to explore and provide information on five dimensions of first and second

Chinese entrepreneurs: the background of the entrepreneurs; their motivations for business

ownership, traditional Confucian values, difficulties and hurdles, and overseas

expansionary vision. The questions are related to Chinese entrepreneurship, the influences

of migration and the differences between two generations of entrepreneurs. Five hypotheses

based on these dimension will guide this study.

In this introductory chapter, an overview of the content of this thesis has been provided. A

brief background on the multidisciplinary approach adopted in the theoretical framework of

the thesis, including psychological, motivations, resource-based views and networking

perceptions in entrepreneurship has been introduced. An overview of the definitions of

entrepreneurship has been provided. Information on the study area, Box Hill, has also been

presented. This background information on the principal issues of analysis in the thesis are

further discussed and examined in the next chapter, which is the first part of the literature

review (Chapters 2 to 4).

32

Chapter 2

Different Views of Entrepreneurship

2.1 Introduction The literature review is organized into three chapters (chapters 2, 3 and 4). The process of

understanding immigrant entrepreneurship and comparing Chinese and western

entrepreneurship commences in this chapter with a review of literature on defining the

principal components differentiating Chinese entrepreneurship:

• Definition of entrepreneurship itself;

• Basic elements of entrepreneurship;

• Theories of immigrant entrepreneurs;

• Comparison between Chinese and western entrepreneurships;

• Comparison of individualism and collectivism.

This chapter identifies gaps in the entrepreneurship literature especially in illustrating the

difference in traditional Chinese views and those of the westerners. Furthermore, the

importance of Chinese culture will be detailed as it defines the emphasis and influences of

traditional values on Chinese entrepreneurship. The importance will highlight the making

of successful businesses in the Chinese communities in earlier days, especially in the first

generation entrepreneurs. A comparison between Chinese and western entrepreneurships

will show the change in the entrepreneurial behaviour of Chinese entrepreneurs in

Australia.

In chapter 3, the different phases of Australian immigration will be used to illustrate the

history of Chinese entrepreneurship in Melbourne. In addition, the formation of

Chinatowns and the three theories of ethnic enclave economies will be discussed. In chapter

4, various elements of Chinese entrepreneurship will be discussed. These elements are

33

influenced by the cultural background, education, motivations, resources availability, prior

business experiences, management and organization skills. A detailed discussion of each

element is needed.

2.2 Definitions of Entrepreneurship The definitions of entrepreneurship in literature are broad and they vary from one author to

another. Vanderwerf and Brush (1989) in their review of twenty-five definitions for

entrepreneurship indicated that entrepreneurship has been defined as a business activity

consisting of some ‘intersection’ of the following human behaviours:

• Creation – which is the establishment of a new business unit;

• General management – which is the managerial direction of or resource allocation

for a business;

• Innovation – which is the commercial exploitation of some new product, process,

market, material, or organization;

• Risk taking – which is the acceptance of uncommonly high risk from the potential

losses or failure of a business unit;

• Performance intention – which is the intent to realize high levels of growth and/or

profit through a business unit.

By 1800, many French economists and writers had given a special meaning to entrepreneur

and entrepreneurship, with differences arising largely from the characteristics of the sector

of the economy that chiefly attracted their interest and attention. For example, the French

aristocratic industrialist Jean Batiste Say (1828), with practical business experiences, wrote

that the chief contribution of the entrepreneur was to combine and coordinate factors of

production. He perceived an entrepreneur as a manager.

Other researchers, also commenting on the diversity in defining entrepreneurship, think that

because entrepreneurship is a wide spread business phenomenon it embraces a diffuse

range of economic activities. Thus, definitions differ and vary as they try to adapt to the

34

specific characteristics of these differing economic activities. The number of fields

available for entrepreneurial endeavour, the forms which such endeavour may take and the

scope for profitable activity through market exchange may vary considerably depending on

whether the society in question is pre-capitalist, early or late capitalist, socialist (Kallenberg

1986).

In this chapter, entrepreneurial behaviour that involves activity and success of

entrepreneurs will be examined. A general classification of these explanatory variables in

literature reveals that these variables stem from different theoretical and disciplinary

backgrounds. The chapter commences with a brief review of the various economic

perspectives on entrepreneurship, particularly the theories that best explain the ingredients

of making of successful entrepreneurs. This review will then lead to a general working

definition of entrepreneurship derived from different authors’ views of entrepreneurship,

which form the basis of investigating entrepreneurial process.

Other theoretical perspectives such as psychological, motivational and resource-based

views, networking and innovation, which have been theorized and empirically proven in

literature as determinants of entrepreneurial behaviour and success, will be reviewed also.

Hypothesis One (H1) is used to check the influences of these background factors of the

Chinese entrepreneurs on the business success. The hypothesis (H1) implies that research

about Chinese entrepreneurship needs to take different perspectives and backgrounds into

consideration. In addition, the sociological and economical contexts of the entrepreneurial

activity need to be included in the equation for study.

H1. The background of the entrepreneurs is related to the success of their businesses.

Such a multi-disciplinary approach to the study of entrepreneurial behaviour is important,

since entrepreneurship scholars argue strongly that the entrepreneurial phenomenon cannot

be adequately explained by one theory alone and, a multi-disciplinary approach is

recommended (Campbell 1992, Rauch & Frese 2000, Ripsas 1998, Schumpeter 1954).

35

Thus, a combination or range of factors is needed to explain entrepreneurial behaviour or

success.

In the western world, entrepreneurship is a pattern of behaviours, a style of management

which is concerned with obtaining and managing resources to exploit opportunity (Glezer

1998, Massey 2005). Entrepreneurs deal with risk in strategy creation with a quick initial

screening using a careful, but limited, analysis to evaluate the quality of an idea, but then

they stay flexible throughout the process of implementation. The pursuit of opportunities is

not constrained by resources which are currently available and controlled. Resource

exploitation is, therefore, seen as a manageable challenge, but this in turn demands a clear

appreciation of risk and, invariably, a strongly developed ability to network within the

organization and its environment (Greene & Chaganti 2004, Yoon 1991). Other theoretical

perspectives such as psychological, motivational and resource-based views, networking and

innovation, which have been theorized and empirically proven in literature as determinants

of entrepreneurial behaviour and success, will be reviewed also. Hypothesis Two (H2) is

used to check these motivational factors and the influences on the business success.

H2. Entrepreneurial success is related to the motivation of the entrepreneurs.

An important issue arising from the review of the developmental definitions of the concept

of entrepreneurship is that many of the definitions, theories and works of literature on

entrepreneurship have emerged from Europe, America and other western cultures.

Definitions are rather based on various researchers’ empirical studies, observations,

fieldwork and culture. This, to a large extent, shows that the concept and definition of

entrepreneurship is context or culture bound – which is usually from a westerner’s point of

view (Ahlstrom et al. 2004, Chu 1995). That is, it depends on the context or the angle from

which one is analyzing it. The issue therefore is whether the insight into entrepreneurship

based on these western countries can be successfully exported to other non-western

countries such as China and other Asian countries. The importance of this issue cannot be

ignored, as it goes to the validity of attempts to aid and support the study of Chinese

entrepreneurship internationally with any model, because of emphasis on Confucianism and

36

other traditional Confucian values (Fouts & Chan 1995). These factors will be discussed in

the following chapters.

If culture is enmeshed with entrepreneurship, there must be differences and those

differences are likely to vary from one race to another (Gilroy 2000, Kotkin 1993). This

study therefore has a considerable interest in finding out just how much Australian and

other western entrepreneurs differ from Chinese entrepreneurs. This is another important

gap identified in the literature in this study. Hypothesis Three (H3) is used to check the

validity of the influences of traditional Confucian values on entrepreneurship behaviour.

The hypothesis (H3) implies that research about Chinese entrepreneurship needs to take

cognizance of intersections of race and entrepreneurship. In addition, the socio-cultural and

economic context or the environment of the entrepreneurial activity needs to be included in

the equation for study.

H3. Entrepreneurial success of the Chinese is related to traditional Confucian values.

2.3 Factors for Successful Entrepreneurship Yusuf A (1995) carried out research in the South Pacific islands where respondents were

asked to identify and rank the factors that they perceived as critical for success in small

business. Several possible factors for success were suggested and classified as follows:

• Good management – the ability to develop and effect good business plans, to obtain

and employ resources effectively, to balance traditional obligations with business

demand, and to accurately keep records and control finances.

• Satisfactory government support – provision of basic business Set-up, training

facilities, tax incentives, and protection against competition from big businesses.

• Marketing factors – especially in relation to location, the market and size of

demand, and sales promotion skills.

• Overseas exposure – tour of business facilities, residency, study, and/or

apprenticeship training abroad.

37

• Level of education and training

• Access to finances and level of initial investment

• Prior experience and traits such as self-confidence, charisma, perseverance, local

reputation and trustworthiness

• Prior experience in business

• Political affiliation

The results showed that the qualities and the making of entrepreneurs are universal and

similar (Basu 2004, Walker & Brown 2004). They are not restricted to one race or one

country. Therefore, although background and upbringing of the Chinese entrepreneurs are

different, reduction of the difficulties and hurdles encountered during the entrepreneurial

journeys should not be different to the success of businesses. Consequently, this argument

forms the basis of Hypothesis Four (H4).

H4. Entrepreneurial success is related to the difficulties and hurdles experienced by the

entrepreneurs.

In essence, the process of entrepreneurship is a result of an individual’s actions, and the

basic factors are as follows:

Potential Seeking – Propensity for risk taking. The essential element here is that of

taking on adventures or risky undertakings that are full of uncertainty. Cantillon (1931)

stressed the importance of the entrepreneur as an arbitrageur, who conducts all exchanges

and bears risk as a result of buying at certain prices and selling at uncertain ones.

Cantillon’s entrepreneur is perceptive, intelligent and willing to take risks: his role is to

bring the two sides of the market together, bearing all the risks involved in this process.

Risk-taking propensity remains a key aspect of the entrepreneurial psyche as visualized by

American researchers (Carland et al. 1996). To these researchers, risk-taking is a primary

element of entrepreneurship. However, some studies have indicated no significant

differences in risk-taking propensities for entrepreneurs as compared to the general

38

population (Brockhaus 1980, Sexton and Bowman 1983), but other have discovered a

higher propensity for risk-taking among entrepreneurs (Carland et al. 1995).

Innovating. Entrepreneurship is the means through which the creation of new

combinations is to be brought about .This characteristic is emphasized by Schumpeter

(1934, 1945) and central to the American model of entrepreneurship. Schumpeter’s view of

entrepreneurial innovation was rooted in the classical theories of economists such as Say

(1828). In entrepreneurship literature, innovation remains a frequently identified functional

characteristic of entrepreneurs (Brockhaus 1982, Gartner 1990, McClelland 1961). Drucker

(1985) actually defined entrepreneurship as innovation in a business setting.

Even though innovation is a necessary element of entrepreneurship, it is insufficient to fully

circumscribe entrepreneurial behaviour because of the broad parameters of the function.

Nevertheless, the preference for innovative behaviour is firmly established as a

distinguishing characteristic of an entrepreneur. For example, Carland et al. (1984)

proposed that innovation is the critical factor in distinguishing entrepreneurs from

managers and small business owners.

Personal Satisfaction. That individual’s actions are profoundly affected by his or her

personality. Strong need for achievement is another characteristic identified to describe

entrepreneurs (McClelland 1961, McClelland & Winter 1971). In a study of behaviour in

young men, McClelland (1961) concluded that a high need for achievement would

influence the self selection of an entrepreneurial position, defined as a salesman,

management consultant or a business owner. Several subsequent studies have shown a

positive relationship between achievement motivation and entrepreneurship (Begley &

Boyd 1986, Davidson 1989, Lachman 1980). However, other studies have shown that need

for achievement is not the most important variable for predicting the likelihood of starting a

business (Hull et al. 1980). Nevertheless, motivation remains an important characteristic in

the psychological theories of entrepreneurship. Most of these studies conclude that

entrepreneurs have a high need for achievement.

39

This is a major reason for their success; they refuse to be beaten and persevere when ‘the

going gets tough’. On the other hand, this also explains why some entrepreneurs fail. They

have too much faith in their own ability; they believe they are infallible and can do almost

anything; they refuse to accept they might be wrong; they fail to seek help that might be

available. Successful entrepreneurs are also able to deal with unexpected obstacles

(Zimmerer & Scarborough 2005).

Networking. It is the energy and abilities of the entrepreneur that bring entrepreneurial

activity into being. Entrepreneurs are good networkers (Zimmerer & Scarborough 2005).

Constrained by resource limitations, especially finance, entrepreneurs use creativity, social

networking and bargaining to obtain favours, deals and action. There is a paradigm that

ideas can be found anywhere, anytime and people need to be alert for opportunities. In this

study, the author will investigate further Chinese ‘guanxi’ connections and other traditional

Confucian values, from which successful entrepreneurs learn where they can obtain sound

and often free advice.

Importantly, entrepreneurs are the central figures in the entrepreneurial process.

Researchers have described this entrepreneurial process as involving all the functions,

activities, and actions associated with entrepreneurs perceiving opportunities, and the

creation of organizations to pursue these opportunities (Bygrave 1989)

Adaptive Opportunists. They are decision makers and generators of action. They make

choices and decisions in a variety or a multiplicity of social contexts and situations. True

visionaries have to sell their new ideas and create demand. They transform a simple, ill-

defined idea into something that works. Entrepreneurs add value (Birley & Muzyka 2000)

on their beliefs. Entrepreneurs acquire and utilize resources to create products and services,

which satisfy customers and markets. Value is then added through a transformation process.

They have their own ways of dealing with opportunities, setbacks and uncertainties to

‘creatively create’ new products, new services, new organizations and new ways of

satisfying customers or doing business (Birley & Muzyka 2000).

40

Entrepreneurs are able to create unique strategies and they understand market needs and

satisfy them (Jennings 1994, Swedberg 2000). There is often a strong element of demand-

pull. However, there are definite cases of a good idea being lost or wasted through poor

marketing. This is where the entrepreneur sometimes needs a partner to provide a

commercial brain. Effective control of the value-adding process requires sound

performance measurement to achieve profit maximization. The entrepreneur needs to

understand which factors are critical for success and ensure that performance in respect of

these is measured and any failings are remedied.

Business Management. The economic and non-economic aspects of their activities

become part of the process of development. Adam Smith (1776) perceived the ‘capitalist’

as an owner-manager who combined basic resources – land, labour, and capital – into a

successful industrial enterprise. Smith described how capitalists were essential ingredients

to the growth and distribution of wealth in society. The next one hundred years saw

economic theorists expand and modify Smith’s original theories. Around 1810, in the midst

of the industrial revolution, general ‘managerial capabilities’ were required for success as

an entrepreneur (Say 1828). At this time there was no middle management in organizations

and the entrepreneur had to fulfil these roles alone (Long 1983). The idea that the

entrepreneur must also be a manager was followed up by Knight (1921) and Leibenstein

(1968).

Mill (1848) strongly believed that the singular factor in differentiating a ‘manager’ from an

‘entrepreneur’ was the ‘bearing of risk’. Schumpeter (1943) believed that ‘innovation’

rather than ‘risk’ formed the central causal characteristics. An extensive review of literature

revealed that from the time of Adam Smith in 1776 through to the middle of the twentieth

century, entrepreneurship literature was dominated by economists focusing upon the

outcomes of the entrepreneurship phenomenon.

Dynamic process. Many researchers also explain the entrepreneurial process as a dynamic

and holistic process initiated by an act of human volition that occurs at the level of the

individual firm. It also involves a change of state, antecedent variables and a discontinuity,

41

and its outcomes are extremely sensitive to the initial conditions of these variables (Gartner

1989, Ronstadt 1984, Schumpeter 1934, Virtanen 1997, Wennekers & Thurik 1999). To

these researchers, entrepreneurial process, which is an integral component of

entrepreneurship, is not a static system, or a fixed state of existence, but a dynamic process

of becoming rather than a state of being. It involves the combination of time dimension and

innovating behaviour in the market to create value. Such combination induces unforeseen

hurdles and difficulties, and they vary from one place to another.

Regardless of the diversity in its definition, most authors agree that entrepreneurship is

fundamentally a human creative act. It commences by finding the personal energy and

financial means to initiate and build a commercial enterprise. It is invariably an innovative

process which requires an identification and seizing of an opportunity. It entails an

organization of existing resources to convert those opportunities into workable/marketable

products or service, thus adding value through time, efforts, money, or skills for the benefit

of society. The entrepreneur assumes the risks of the competitive marketplace to implement

these ideas, and realizes the rewards from these efforts.

It can be deduced from the above review of literature on the conceptualization of

entrepreneurship that it is a dynamic process of the creation of incremental wealth. The

wealth is created by individuals who assume the major risks in terms of equity, time and/or

career commitment and through innovation provide value for some product or service. The

product or service may or may not be new or unique but value must somehow be infused by

the entrepreneur by receiving and allocating the necessary skills and resources.

In the sections below we look at the theories that support the study. Social learning theory

(SLT) in section 2.4 provides the theoretical underpinning for the social and networking

orientation of the Chinese entrepreneurs and in section 2.5 the different theories relating to

immigrant entrepreneurs are addressed.

42

2.4 Social Learning Theory The distinctive feature of social learning theory (SLT) is the central role it assigns to self-

regulatory process. People are not simply reactors to external influences. They select,

organize and transform the stimuli that impinge upon them. Through self-generated

inducements and consequences they can exercise some influence over their own behaviour.

SLT approaches the explanation of human behaviour in terms of a continuous reciprocal

interaction between cognitive, behavioural and environmental determinants Bandura

(1977). This theory provides the explanation for the Chinese entrepreneurs in effecting

personal and social change.

Cognitive theories promote the view that learning originates through mental processing of

information resulting in behaviour to be executed; behavioural theories on the other hand

advocate that learning is the outcome of behaviour, its consequences, and the relationships

between the two as determined by individuals. Although the two approaches have opposing

ideas, the SLT combines the two. Bandura (1977) asserts that individuals are capable of

learning from their behaviour as well as modifying their behaviour based on learning

experiences and observations of other people’s behaviour and associated consequences.

The SLT theory seems capable of accommodating and absorbing the varying explanations

to acculturation patterns of the first and second generation entrepreneurs.

It explains how the entrepreneurs learn by modelling, how frequently and when imitative

behaviour will be performed. Chinese entrepreneurs learn from role models what to do, at

least in approximate form, before operating their own business. While most influential role

models are family members, the prevalence and visibility of successful examples can be

helpful to entrepreneurs. Similarly, role models are normally trusted counsellors who share

their business knowledge, skills and experience and, most importantly, serve as respected

role models for would-be entrepreneurs and budding entrepreneurs. In the Chinese

entrepreneurship context, role models are best described as experienced business owners

willing to give back to their communities by assisting other Chinese ready to start or grow

their businesses. These are usually found through the guanxi networking (Light et al. 1990,

King 1991).

43

Raijman and Tienda (2000) pointed out that ethnic resources such as the knowledge and

skills to run businesses, ability in transferring experiences and managerial skills can

facilitate the necessary start-up lessons. By learning these skills, the Chinese entrepreneurs

can spare needless errors and avoid unnecessary waste of resources. They can profit from

the successes and mistakes of others as well as from their own experiences. In everyday

situations numerous opportunities exist to observe the actions of others and the occasions

on which they are rewarded. These types of people are dependent and they are especially

prone to adopt the behaviour of successful models. It helps entrepreneurs appreciate the

value of new information. It influences individuals’ willingness and ability to make new

connections among pre-existing ideas, as well as with new ideas, hence allowing them to

recognise opportunities.

2.5 Theories of Immigrant Entrepreneurship Evans (1989) claims that the ownership of small businesses is seen as a key strategy in

immigrants’ adaptation to industrialised societies. Similarly, Lofstrom (2002) and Yoon

(1991) assert that immigrant entrepreneurs have achieved upward social and economic

mobility through running and managing small businesses. According to Amit and Muller

(1995), based on their motivation to engage in entrepreneurial activity, there are two types

of entrepreneurs, namely, ‘push and pull’ entrepreneurs. The former includes those who are

pushed to start a business as they are dissatisfied with their current position in the labour

market in terms of unemployment or underemployment. The latter are those who are

attracted by their new venture idea and initiate venture activity.

Amit and Muller (1995) also concluded that ‘pull’ entrepreneurs are more successful than

the ‘Push’ ones. Chavan and Agrawal (2002) found from their study, examining the

changing role of ethnic small business in Australia by studying three generations over a

period of time, that the first generation of ethnic entrepreneurs are associated with ‘Push’

motivations and the second and third generations of entrepreneurs are associated with ‘Pull’

motivations. As scholars (Basu 2004, Chavan & Agrawal 2002) have found, immigrants are

motivated to engage in entrepreneurial activity either derived from ‘push’ or ‘pull’ factors,

44

or from both, as immigrant entrepreneurs can also be classified as either. There are a

number of theories that appear to be relevant for immigrant entrepreneurship and the

following paragraphs will examine them.

2.5.1 Disadvantage and Stepladder Theories The first theory explains that disadvantages such as language barriers, cultural

unfamiliarity, un-recognized qualifications, inadequate skills and discrimination force

immigrants to settle for lower-skilled or under-employment types of jobs (Henderson 2003,

Mesch & Czamanski 1997, Tseng 1995). As Kupferberg (2003) describes it, immigrants

are assumed to be less integrated into the labour market because they are being

discriminated against and structurally excluded. Due to these disadvantages, many

immigrants are excluded from mainstream occupations in the primary labour market

(Fernandez and Kim 1998, Greene & Chaganti 2004). This implies that there is a

possibility that immigrants tend to be directed to the secondary labour market, where most

of the available jobs have low wages and poor working conditions. As Light (1984) claims,

immigrants may derive a special incentive from this unfortunate situation to consider self-

employment. In addition, this drive may increase as the disadvantage increases. Thus,

disadvantages in the labour market can be a factor that pushes immigrants from

underemployment to engage in entrepreneurial activity (Clark & Drinkwater 2000, Pio

2005).

On the other hand, the stepladder theory argues that low status employment can be an

avenue for immigrants to access business ownership (Raijman & Tienda 2000). According

to Raijman and Tienda (2000), immigrants’ participation in undesirable employment in

organizations owned and managed by other co-ethnics (owners of the organizations from

same ethnic groups), is a way to acquire the knowledge and experience required to establish

a business. Rather than immigrant workers being exploited by co-ethnics, they believe that

time spent in low-wage employment can be seen as a form of on-the-job training. In

addition, such employment enables immigrant workers to build their social relationships

within the ethnic economy. Thus, their networks can then be widened and the chances to

move through a variety of jobs will increase. With such training opportunities in place, they

45

are able to obtain industry-specific business skills and accumulate experience in the

adopted country. As a result, the immigrant sector develops and the immigrant can work in

ethnic firms through a self-feeding process. After acquiring the necessary skills and

becoming acclimatised to the local labour market, immigrants will then establish their own

businesses (Bailey & Waldinger 1991, Henderson 2003, Waldinger 1993).

In this sense, disadvantages can provide a pathway for immigrants to become

entrepreneurs. Furthermore, from a psychological point of view, the disadvantages

experienced in the mainstream labour market could encourage immigrants to become

business owners. As described by Kupferberg (2003), immigrants may have the feeling that

they are seen as second-class citizens in the newly settled country due to the lack of legal,

political or cultural rights, social citizenship rights and the right to access the labour market

on an equal basis. Thus, immigrants are put in a situation where structurally imposed

tension may lead to diminished self-esteem. This lower self-esteem might cause them to

perceive that they are disliked or looked down upon by the host society. This feeling may

inspire a counter-movement to repair their damaged self-esteem. Therefore, self-

employment can be an alternative for immigrants to raise their sense of self-worth

(Kupferberg 2003), and as a means of resisting discrimination and responding to blocked

mobility (Fairlie & Meyer 1996, Waldinger et al. 1990).

Meanwhile, some researchers have reported that the lack of recognition for foreign

experiences which leads to unemployment or underemployment can also be a driving force

for immigrants to play entrepreneurial roles (Henderson, 2003, Henderson et al. 2001, Ho

2003, Mesch & Czamanski 1997, Trlin et al. 2004). Henderson et al. (2001) found from

their study that generally immigrants’ professional skills were being under-utilised or even

not used at all in the host country. Hence, the lack of recognition of their experiences

results in unemployment or underemployment (Boyer 1996, Friesen & Ip 1997). These

phenomena are associated with real or perceived loss of self-esteem, social status and

power (Ho 2003); Kupferberg (2003) believed that self-employment is one of the important

coping strategies and a desirable alternative.

46

Correspondingly, Hammarstedt (2001) declares that self-employment can be a good way to

avoid unemployment and underemployment. These self-employed people who are

motivated to engage in entrepreneurial activity are seen as ‘push’ entrepreneurs. Indeed,

immigrant entrepreneurship can pave the way to upward social mobility (Kloosterman,

2003). Nevertheless, business researchers have documented that the businesses many

immigrants engage in are small businesses which are characterised by low entry cost, high

levels of competition, limited profit margins, high rate of failure, and labour intensity

(Fernandez & Kim, 1998, Phizacklea & Ram 1995, Waldinger 1989, Waldinger et al.

1990). The reasons for this situation can be best explained using opportunity structure

theory.

2.5.2 Opportunity and Risk-taking Theories According to Waldinger et al. (1990), immigrant entrepreneurs face various challenges in

adapting to the host culture and establishing their own businesses. The main problems that

ethnic business owners commonly face include: protecting themselves from political

attacks; dealing with surviving competition; managing relations with customers and

suppliers; obtaining financial and human resources; acquiring needed information and

appropriate training and skills. These social and economic handicaps coupled with the

disadvantages discussed earlier drive many immigrant entrepreneurs into small businesses.

The opportunity structure theory argues that ethnic entrepreneurs can only move into those

niches that are underserved or abandoned by native entrepreneurs. These opportunities are

mainly found in the industries where the risks of failure are high. They are characterised by

low status, low rewards, heavy labour, high running costs, and limited profit margins

(Kupferberg 2003, Waldinger 1989). Due to the evolution of the global economic system,

the structure of opportunities is continually changing in modern business society. In

addition, political factors might frequently hinder the working of business markets.

Immigrant business owners have therefore found themselves facing various market

conditions (Aldrich & Waldinger 1990). Waldinger et al. (1990) point out that demand for

services provided is essential for a business to prosper. The primary market for immigrant

47

entrepreneurs can be the members of their own ethnic community in which there are no

language barriers.

Within the same community, people intimately know each other’s needs and preferences. In

this sense, ethnic entrepreneurs can develop niche customer bases. Kloosterman (2003) sees

this as the pull factor on the demand side that creates the opportunities for immigrants to set

up a shop within their own ethnic community. Immigrant businesses then do this to meet

newcomers’ needs and facilitate them in solving their special problems caused by the

strains of settlement and adaptation. Some businesses provide cultural products, such as

newspapers, books, magazines, food and clothes. Others offer special services, for instance,

law firms and accountants (Waldinger et al. 1990). Ethnic entrepreneurs thus enjoy an

advantage over potential competitors outside the community since they can tap into the

buying preferences of consumers in these groups (Hammarstedt 2001). Massey (2005)

claims that enterprise is a risky business as only a proportion of the businesses will survive.

Entrepreneurs have to take a number of risks such as financial, emotional and social. This is

because they put themselves on the line and thus, their social identities can suffer as well.

Barbosa et al. (2007) claimed that risk has always been at the centre of the definition of

entrepreneur. Risk perception has been conceived as a determinant of risk behaviour and

entrepreneurial decision making. One interprets the environment based on one’s

perceptions which include analysis, judgment, and intuition. In this sense, whether a

situation is deemed of moderate or high risk depends on the perceivers. Different people

can draw different conclusions. As Stearns and Hills (1996) note, successful entrepreneurs

are good risk managers but not wild-eyed risk takers. They are able to calculate risks and

whether the potential rewards are appropriate. Das and Teng (1997) also suggest that a

successful entrepreneur is a professional risk-taker because one of the most distinctive

features of entrepreneurial behaviour is risk taking. Indeed, risk-taking behaviour has been

associated with entrepreneurship and entrepreneurs have been described as self-employed

individuals who adjust themselves to risk (Gilmore et al. 2004).

48

Entrepreneurs introduce new products or processes and they adjust themselves to risk

where the return is uncertain (Palich & Bagby 1995). Starting a small business is seen to be

a particularly risky undertaking (Gilmore et al. 2004). The risk that entrepreneurs face can

be both financial and psychological since new actions and activities may put their self-

images at risk. Failure may lead to the loss of their capital and of their self-image.

Therefore, Das and Teng (1997) asserted that the entrepreneurs are inherently risk takers.

They often underrate their chances of failure and they need to be aware of the risks

involved and make appropriate financial decisions (Pinfold 2005).

Similarly, immigrants are also risk takers by nature because the process of leaving one’s

home to take up life in a new country means accepting great changes (Waldinger et al.

1990). As Delores (1997) pointed out, immigrants face a number of emotional and

cognitive adjustments to the reality of life in the host society. They experience the stresses

of adapting to a new country and being upset by the loss of their own culture. Therefore,

Waldinger et al. (1990) claim that people who enter the immigration stream tend to be able,

better prepared and more inclined toward risk.

There is no doubt that immigrant entrepreneurs must be prepared to take risks. According

to Kupferberg (2003), the risk-taking theory emphasizes that immigrants are prepared to

take on a low status business when they perceive that there is a future in that business.

These immigrant entrepreneurs will have strong motives to prove themselves and thus they

tend to enter the business differently from a member of the native community. Aldrich and

Waldinger (1990) claim that in almost all markets, small businesses continue to attract

immigrants and many newcomers have set up small business enterprises.

There are two possible explanations for this situation. One can be the low status and low

rewards in running such businesses. The other may be that small businesses have a high

rate of failure. These two factors may reduce the pool of native-born entrepreneurs.

Immigrant entrepreneurs therefore can step in as vacancies arise (Waldinger 1989). Since

the structure and allocation of opportunities open to potential ethnic owners have high rates

of failure and low status, immigrant entrepreneurs must have the ability to take risks in

49

order to survive. In addition, they are able to quickly respond to the results that the business

produces. Immigrant entrepreneurs will abandon those businesses that have limited

prospects and stick to those businesses that bring good profits, regardless of whether the

businesses might be risky. Based on this theory, immigrant entrepreneurs are seen to have

great sensitivity to the market and this market-adapted behaviour enables them to seize any

opportunities and attempt all types of businesses.

However, immigrant entrepreneurs usually face many difficulties and barriers to enter into

larger businesses, most of which are higher status ones. According to Porter (1979), one of

the major sources of barriers to entry is capital requirements. Larger businesses require a

large amount of capital not only for start-up, but also for day-to-day operations. As

Waldinger et al. (1990) note, larger businesses must shoulder heavy overhead and

administrative costs. In addition to the financial requirement, human capital is also

necessary for larger businesses. They must recruit well-qualified and experienced

employees who have stable work histories. For this reason, large businesses are prepared to

hunt these people in the primary labour market, to pay high salaries and to offer a wide

range of fringe benefits to them (Stanworth & Curran, 1989). Furthermore, unlike ethnic

small businesses, the market their larger counterparts target is the host society. This

requires immigrant entrepreneurs to have sufficient command of the local language

(Morokvasic 2003). So financial and human capital, coupled with a sufficient

understanding of the host country’s language typically prevent immigrant entrepreneurs

from entry into larger businesses. As a consequence, immigrants are forced to run small or

ethnic businesses.

2.5.3 Middleman Theories Some immigrants act as middlemen working between the elite and the masses, distributing

the products and services between these two (Boyd & Xu 2003, Yoon 1991). Middleman

minority is an important immigrant adaptation strategy (Cobas 1987), as it suggests that

immigrant minority groups occupy an intermediate position in the ethnic stratification

system of their host society (Boyd & Xu 2003, Chah 2002). Trading with ethnic goods and

50

services in this system creates business opportunities for immigrant entrepreneurs

(Kloosterman 2003).

Such activity also provides labour market opportunities for newcomers (Bauder 2003).

According to Bonacich (1973) and O’Brien and Fugita (1982), the middleman minority has

three characteristics. Firstly, this group has a sojourner orientation to the host country.

Secondly, they promote ethnic solidarity as a response to host hostility, which means that

they will use ethnic collective actions to resist being disadvantaged or discriminated against

by the host society. Finally, they are concentrated in the businesses that can be easily

converted to cash (Fernandez & Kim 1998).

Similarly, Zhou (2004) also sees the middleman minority entrepreneurs as sojourners.

Sojourners are those immigrants who move into the new countries not for permanent

settlement but only for financial purposes. Their interest is to amass as much profit as

possible in the shortest period and then sell off the business and reinvest their money

elsewhere or send it to their home countries.

Several researchers (Boyd & Xu 2003, Chah 2002) found that middleman businesses are

seen as those small ones which are highly accessible. Cherry (1990) argues that middleman

minority groups invest in small businesses because they do not have enough capital to set

up large businesses. He believes that limited available capital is the explanation for Chinese

immigrants investing in laundry and grocery businesses. Consequently, the availability of

resources appears to be the key factor influencing immigrants to choose the way in which

they form their businesses. As Fernandez and Kim (1998) pointed out, aspiration and

business opportunity alone cannot explain immigrants’ access to business ownership.

Another important element is their ability to mobilise the resources required for

establishing and running a business.

51

2.6 Chinese Business Culture ‘Culture’ is defined as personal refinement, establishing a person’s ideals, values, formation

and uses of categories, assumptions about life and goal-directed activities (Burns 1998).

Kershen (1998) describes ‘culture; as human experience of language, ideas, beliefs,

customs, codes, rituals, ceremonies, religion and laws with the option of being learnt and

transferable geographically. The Chinese culture regards harmonious relations among

family members as the foundations for a prosperous business. Extending harmonious

relations to external business networks, Chinese family enterprises use subcontracting to

maintain production flexibility and to reduce inter-firm coordination costs (Batonda &

Perry 2003).

A study into the traditions and business cultures of Chinese pathways to entrepreneurship

will enhance a better insight and understanding of this thesis, especially the difficulties

encountered by the first generation Chinese entrepreneurs in Australia. The traditional

Chinese culture believes that a successful business depends on three external factors: luck,

compatible environments, and harmonious social relations (Fung 1948, Clammer 2002).

However, it will be incorrect to view the modern Chinese family business as a purely

passive and reflexive system. On the contrary, new generation Chinese entrepreneurs

nowadays actively pursue strategies that attempt to ‘match’ with these three factors (Chen

2001).

• Adaptive Opportunism – Luck can influence the fate of the enterprise. Chinese

entrepreneurs also believe that missing an opportunity is even worse than

extravagantly spending all the family’s fortune. In other words, the success of an

enterprise does not depend on sheer luck but on alertness to the opportunity.

Chinese family business have always competed and prospered by being capable of

identifying profit opportunities, and exploiting them to their advantage (Kim 1994).

However, the final decision of this factor still falls on the head of the family; a

feature which enhances the power of the father-figure is the common ownership of

family belongings. Possessions are normally seen as belonging to the group,

although individuals may have stewardship of certain parts of the resources. When

52

poor families have little physical capital to be deployed, they still manage to

cultivate human capital for collective advancement (Lee 1996, Pistrui et al. 2001).

This is not only confined to rich families, but permeated through the whole society.

• Business Management – Favourable external conditions may enable a project to be

completed at half of the original effort. But when the external conditions are

unfavourable, Chinese entrepreneurs strive to ‘overcome’ them by searching for

new alternatives. They retreat to their family members and utilized family networks

(Backman 1995, Chen 2001). They restrict their productions to small scale; take

short-cuts to produce some non-capital-intensive and unsophisticated commodities,

with short gestation periods. A Chinese family firm is governed by paternalism.

They exhibit a strong sense of responsibility toward employees that is not only

moral, but also economic. Owners of the family firms consider themselves as

patriarchal business leaders who confer welfare benefits on their employees as

favours, take a personal interest in their subordinates’ non-job related activities, and

disapproves of trade union activities. This practice partly explains the low dispute

rates in industrial relations in East Asian economies and, more importantly, enables

a network of subcontracting to work efficiently. Moreover, members in the Chinese

family business express, in their behaviour and attitudes, a strong sense of vertical

order (Lee 1996, Pistrui et al. 2001).

• Networking – The Chinese culture regards harmonious relations among family

members as the foundations for a prosperous business. Extending harmonious

relations to external business networks, Chinese family enterprises use

subcontracting to maintain production flexibility and to reduce inter-firm

coordination costs (Friesen & Ip 1997, Park & Luo 2001). A Chinese family firm

engages extensively in business networks and nepotism. The creation of wealth in

one family unit can be managed in isolation; it must buy and sell, exchange

information, borrow money, and seek advice. Therefore, it is essential to make

linkages if one’s own purposes are to be served. The operation of Chinese business

networks is, in fact, an extension of family culture. To ensure that such networks

53

operate reliably, Chinese firms pay special attention to trust in business transactions

(Carney 1998, Lee 1996).

Given the resource base, Chinese entrepreneurs in the world market have largely forsaken

the strategy of upgrading their technologies where they lack competitive advantages.

Instead, they have pursued strategies in the form of imitation, and specialize in regional co-

ordination (Child & Tse 2001). In fact, a lot of Chinese from overseas are still lacking the

research and development tactics to raise them and the businesses to next level up (Ralston

et al. 1996, Thune 2001). This phenomenon can be found in all Chinatowns including Box

Hill and other suburbs that are of interest in this study.

2.7 Chinese Entrepreneurial Process and Characteristics Liang (1987) stipulated the following ten characteristics as condensation of ‘typical

Chinese business style’:

• Selfish – Being protective of their families’ reputations and assets, Chinese do not

work cooperatively with others, whether they are the public or government bodies.

Corruption and biased judgements severely handicap the normal functioning of

legislation.

• Hardworking – Being self-exploitative to the limit, Chinese are on average very

hardworking people, and seldom take leisure time off as it will affect the

profitability.

• Superficial – Chinese tend to show off their riches, doing all it takes to promote

their own image and to save face in front of the other people.

• Timid – Chinese are not risk-taking people; most of them are taught to lay low and

to choose the moderate pathway in all types of decisions. Thus, they can easily shift

and change a decision made at an earlier stage.

• Control by one’s destiny – Chinese believe heavily in fate, and they are satisfied

with what they are given, without being concerned about what they can have.

54

• Conservative – ‘A bird in the hand is worth two in the bush’, Chinese are not

willing to change ‘settled’ conditions for some unknown future; they are less

aggressive in pursuing the future by changing the present conditions.

• Average quality – Chinese do not usually pursue ‘precision’ or ‘premium quality’.

Guidelines are set to be broken, the law is to be respected but not followed.

• Over-jealous – similar to point 1. Chinese do not work cooperatively with others;

cohesion between different families does not exist. They are always jealous of other

people’s achievements, but they will not want to understand or analyse the reasons

behind the success of other people.

• Flexible – Chinese are willing and able to bend rules to accommodate one’s desire

to achieve. They can work very hard, even with non-ethical standards, to achieve

their goals.

• Moderate – Chinese are taught from a very early age to stay away from taking

drastic decisions, which can be irreversible. Risk taking is a virtue that should not

be encouraged. Old pathways are always better in providing a stable environment.

New territory should not be explored.

These ‘traditional styles’ were advocated by Liang (1987), who established his own

thoughts during the 40’s and 50’s years. These values, however, are still embraced by the

older generations of Chinese who have some sort of influences over the teachings of the

younger generations (Jacobs et al. 1995, Yan 2006). Although these influences have been

diminishing in recent 20 years because of advances in telecommunication and computer

technologies, this Confucian influence still maintain its grip the ways that businesses are

established and run in this business world.

The first generation entrepreneurs bring into Australia a different business style from that

prevailing in Australia. This experience may be of considerable disadvantage to the

immigrant small business persons who attempt to gain access to small business support

services in Australia (Chan 2001, Ip et al. 1998). It may also create perceptions of

assistance-providers, especially Governments and Government agencies which cause the

immigrant small business to actively avoid anything to do with them (Strahan and

Luscombe 1991). Favourable external conditions enable a project to be completed at half of

55

the original effort. But when the external conditions are unfavourable, Chinese

entrepreneurs strive to ‘overcome’ them by searching for new alternatives. They retreat to

their family members and utilized family networks. They restrict their productions to small

scales; take short-cuts to produce some non-capital-intensive and unsophisticated

commodities, with short gestation periods (Hsing 1996, Tseng 1995)

Any good business venture is the outcome of a cumulative chemistry of various elements,

where they impact one another. Thus, a detailed review of such elements is a must, which

will be shown in the following chapters. However, this venture, to a great extent, is very

different when comparing the Australian and Chinese business styles discussed in previous

paragraphs. The influences by such elements on the Chinese immigrants’ entrepreneurship

in Australia depend on the recipients, their past experiences, backgrounds, and especially

their views of running businesses (Boyer 1996, Chan 2001).

This study will cover both the past and the present state of Chinese business environments,

which will help in determining the differences between the two generations in discussion,

and will throw light on the plausible future course of the entrepreneurship in discussion.

In traditional Chinese culture, ethics within the community are more important than the law

and legal principles set by the State (a term for Chinese government in China). In other

words, disputes and confusions are also resolved by the conscience and common taking

within the community (Child & Tse 2001). To shift the decision making power from within

the family to external independent law enforcer and other professionals is a face-losing

exercise (Liang 1987).

Dependence on the State to help sorting out the disputes is minimal. In fact, the belief that

‘the truth is in one’s heart’ is so prevalent that most people ignore the guided rules and

regulations, and they will do things in their ways. Instead of creating new business, or

value-added items, Chinese tend to imitate other people’s success and duplicate the

formulae of other people (Gold 2000). This is the short cut to survive and to make enough

money within the shortest period of time. However, this will only increase unhealthy

56

competition Lack of individualism can only lead to cut-throat price competition, which can

only depreciate the effort put into by similar business types being set up. Consumers will

like to see larger but different ideas within the community instead of copied businesses

styles (Fouts & Chan 1995, Fung & Jie 1996).

Simply speaking, typical Chinese society is guided by ‘moral standard’ dependent on the

like and dislike of the person-in-charge, everything from politics in the highest level to

judgment of a criminal is based on ‘moral standard’ set by the head of various families of

various sizes (Lee 1996). Western society is guided by ‘political and judicial systems’

independent of the government in charge. Chinese may talk or buy their way whenever it

comes to confrontation with the law enforcement agency. This presents a conflict of

thinking when the immigrants start the new life in Australia, in the early days. This is a

typical example of cultural shock to both Chinese and Australians (Cheung & King 2004).

From the first generation immigrants’ point of view, a cultural shock still exists for them to

extend the past business experiences in Australia. The factors can still affect the value

placed on entrepreneurship and the motives for starting a business for this newer generation

of first generation entrepreneurs (Kim 1994, Morokvasic 2003). It is important to recognise

the role of ‘opportunity structures’ presented by the social and economic context, as a

contributory factor, as well as cultural influences (Hall & Xu 1990, Huisman 1985)). This

diversity that exists between ethnic groups still affects their orientation towards business

and their opportunities for mobilizing resources to start and run a business (Kaye 2002).

In the last 20 years, the first generation immigrants came from a different background.

These are more educated, and they come with more money. However experienced though

these first generation entrepreneurs are in their own professional fields, they may also

experience difficulties (Stromback & Malhotra 1994, Yuan 1988), such as:

• Inadequate cultural awareness skills of some mainstream bodies

• Conservative view that these immigrants were too difficult to assist

57

• Lack of familiarity of these immigrants with the Australia business environment,

taxation and legal requirement

• Administrative inflexibility in terms of inadequate recognition of overseas

qualifications and skills.

Hence, there should be a transitional change from the first to second generation

entrepreneurs in their establishing and running of the businesses (Garcia-Alvarez et al.

2002, Fletcher 2004), especially in the last 20 years. The factors for this argument will be

illustrated later in this thesis.

2.8 Importance of Chinese ‘Family First’ Ethics In the Chinese history, politics and laws have been fairly universal across the regions of

whole China. The one ideological constant in China has been Confucianism (Chen 1991).

Confucianism had epitomized the core values of China since the Han dynasty (206BC–220

AD). Its philosophy has been deeply embedded in the minds of the Chinese. Core values

change very slowly, and even Mao’s Great Cultural Revolution (1966–76) could not

destroy the centuries of adherence to Confucian values (Lachman 1983, Jacobs et al. 1995).

The fundamentals of establishing and running businesses have not been changed,

whichever pathways that these entrepreneurs choose.

‘Family first’ has always been the most important factor and determinant of the traditional

Chinese culture in every practice (Lee 1996, Pistrui et al. 2001). Much of this arises from

the emphasis: what importance does each member of the society give to the individual?

What does each member give to the family or to the community? Family has always been

the primary make-up building block of the whole community. Families of same surnames,

whether directly or indirectly related, always cluster around the same localities. Sayings

such as ‘The whole country – one big family’ or ‘Four seas – all brothers and sisters’ are

used to describe the bonding between the individuals (Liang 1987).

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Throughout Chinese history, the head of each individual family had always been the eldest

male, being married with several wives and concubines. All the descendents would be

expected to live within the ‘big house’ until they died. Everyone would be working for the

common good of the ‘surname’. The authority and privileges would be assigned to the

individuals according to the hierarchy within the family (Clammer 2002, Triandis 1986).

Males, however young they would be, always enjoyed the supreme authority and privilege

compared to the female counterparts. The males would be assigned different tasks within

the family, while taking the supreme orders from the head of the family. The decision-

making task rested upon the head of the family, everyone else would be expected to follow

and to carry out the orders as such. Lower hierarchy would be the servants and labourers

who were sold to the family by the parents when they were very young. They also took up

the surname of the family. These workers were to work for the family for the rest of their

lives (Clammer 2002, Earley 1997).

This embedded tradition of hierarchy forms the basis of both family and business relations.

Everyone from the family will be honoured to carry the same ‘surname’. The same

‘surname’ individuals will always bear the glory and fame, as much as shame and guilt of

the others who carry the same ‘surname’.

In Australia, the greater importance is given to the individual. For example, in the movies

individuals are portrayed as struggling against the odds (and often against society). The

music also has the same bent, as do the literature, artistic traditions and the political ideals.

Chinese are more society focussed, except among western-influenced intellectual elites,

discussions are seldom about the individual or personal rights. There are no words in

Mandarin and other Chinese languages about ‘privacy’, ‘individualism’, or ‘personal

things’, without the connotation of self-indulgence, selfishness and insensitivity to others.

Chinese life is about the collective (Choi & Choi 1994, Sinha & Tripathi 1994).

In the past many years in China, Hong Kong, Taiwan and other Asian countries, the

engines of the Chinese economy have been the family, the family business, and the village

enterprise (Boyer 1996, Lee 1996, Hsing 1996). In the traditional Chinese extended family,

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the family is an economic entity. Everyone who has a job or a business gives what he or she

makes to the head of the family and receives money for necessities in return. The success of

the family is the success of everyone in it. All life decisions – whom to marry, where to

live, how to make a living – follow much the same pattern. This sense of family is closely

tied to a sense of place (Pistrui et al. 2001, Uhlenbert & Mueller 2003, and Yan & Sorenson

2006). In China, the Communist Party reinforces this identification with place through an

iron triangle’ of residence permits (hukou), secret personnel files (dangan), and work units

(danwei). Until very recently, one can not travel to, for example, Shanghai without a

Shanghai hukou, and an assignment to a Shanghai danwei, with the appropriate references

from one’s dangan.

In each family, the authority of the father is absolute, as the head of a hierarchy arranges by

generation, age and sex, in which every member of the extended family is related in rank to

every other. By the time the Chinese toddler has even mastered the vocabulary of this

complex pecking order, he is hooked on hierarchy. Aggression is suppressed, dependence

encouraged. What is owed to parents have no limits; therefore a sense of guilt for one’s

filial inadequacy is part of the Chinese personality (Clammer 2002, Taormina & Lao 2007).

The vigorous conduct of change by democratic means is unlikely to be advanced by the

prevalence of expectations which leads to fear of conflict, inability to act within a peer

group and submission to authority. Creativity is often suppressed. Family firms are

especially well suited to networked production and to industrial settings where their low

managerial overhead and their ability to efficiently organize low-cost labour in non-

complex technologies is a key competitive advantage (Child & Tse 2001, Lee 1996).

2.9 Comparison between Chinese and Western Entrepreneurship

Major changes taking place in the global economy create a clash of ideologies between the

traditional commercial culture of Chinese firms and the new economic environment

(Carney 1998). The importance of brand building, an increased reliance on research and

development, new organizational management skills become more obvious in the

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entrepreneurship styles of the newer generation. Ahlstrom et al. (2004) suggested that

certain characteristics of the Chinese firms that are assets in the slower growth industries

may prove to be liabilities for firms that sought rapid growth. Therefore, the success of the

new generation entrepreneurs depends not only on the personal attributes and the

foundation of the first generation; a change in the ‘running of the business’ has to be in

place for meeting challenges from within and outside Australia.

Suggested by Ahltrom et al. (2004), the changes required are decentralised organizational

structures, transparent corporate governance, and acceptance of outside capital that required

the ceding of ownership and control. These will be departure from traditional practices.

Also, it depends on the ‘openness to change’ of the old firms to grow and expand. In recent

years, there have been intense changes occurring in East Asia with significant bearing on

entrepreneurial development in the region (Ang et al. 2000).

Similar comparison study by Ralston et al. (1996) suggested that the new generation

managers in China are more individualistic and they are more likely to act independently,

while taking risks in the pursuit of profits. However, these new generation managers are,

likewise, not forsaking their Confucian values (Selvarajah 2008). Thus, they may be

viewed as crossverging their eastern and western influences, while on the road of

modernization. Although the samples by Ralston et al. (1996) were taken from the state-run

enterprises, rather than individual and independent business sectors, and the age of the

sample groups (40+) was also higher than the second-generation group in this thesis,

parallel comparison can still be drawn in predicting the change of business style and

management skills in the latter group. The findings from the empirical data may illustrate

that the second generation entrepreneurs are growingly more westernised.

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Table 2.1 Western and Eastern Business Styles

Western Business Styles Eastern Business Styles

Occident (modernity) Orient (tradition)

Rational (public) law Ad hoc (private) law

Double-entry bookkeeping Lack of rational accounting

Free and independent cities Political/administrative camps

Independent urban bourgeoisie State-controlled merchants

Rational-legal (and democratic) state Patrimonial (oriental despotic) state

Rational science Mysticism

Protestant ethic and the emergence of the

rational individual

Repressive religions and the predominance of

collectivity

Basic institutional constitution of the

West

Basic institutional constitution of the East

Fragmented civilization with a balance of

social power between all groups and

institutions (i.e. multi-state system or

multi-power actor civilization)

Unified civilization with no social balance of

power between groups and institutions (i.e.

single-state systems or empires of

domination)

Separation of public and private realms

(rational institutions)

Fusion of public and private realms (irrational

institutions)

Source: Weber 1978, pp.1192

The importance of this section is to propose a transitional change from the first generation

to the second based on the contrast between Individualism and Collectivism. Individualism

can be defined as an individual’s self-orientation that emphasizes self-sufficiency and

control with value being given to self-accomplishment; whereas collectivism can be

defined as the subordination of personal goals to the goal of the (work) group with an

emphasis on sharing and group harmony (Morris et al. 1994, Triandis 1986).

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It is not unexpected that Chinese cultures score high on collectivism, while individualism

epitomizes western cultural values. This scenario is similar to the notion that the second

generation immigrants will accept western culture more than the first generation. Ralston et

al. (1993) found that the values of Hong Kong Chinese managers, who long had been

exposed to western influences, were more western (individualistic) than their PRC

(People’s Republic of China) Chinese counterparts, suggesting that the long exposure to

eastern values had influenced the values of the Hong Kong Chinese managers. The

influence of culture on relationship development processes in Overseas Chinese is also

supported by Batonda & Perry (2003).

The emergent profile of this second generation entrepreneurs, including managers and

professionals who will be leading Chinese into the 21st century is one of a generation whose

values are clearly more individualistic, less collectivistic and less committed to Confucian

philosophy than their previous generation counterparts. Ralston et al. (1993) describe this

phenomenon as ‘crossvergence’, where crossvergence does not mean the Chinese adopt

western values, but that they internalize some aspects of western individualism into their

Confucian-based value system. Thus, they develop a unique perspective or set of values

that combined facets from both cultures.

Welsh (1999) suggested the concept of ‘transculturality’ aims for a multi-meshed and

inclusive understanding of culture. People can make their own choices with respect to their

affiliations while their actual homeland can be far away from their original homeland.

Thus, the identity of Chinese second generation in the multicultural society is

‘transcultural’ (Welsh 1999) comprehending both traditional Chinese culture from their

local affiliations, such as families, and Australian culture in the society.

The process of inter-cultural exchange takes place within ethnic groups, and leads to

cultural renewal within the value systems of each ethnic group (Secombe & Zajda 1999)

Chinese younger generation may inherit the traditional Chinese culture from their parents,

and they are meanwhile confronted the contemporary culture of their society. Chinese

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people are of the ‘both-and’ thinking type and thus, they blend in with the western culture

and learn western ways of doing businesses. The first generation in a western society learns

quickly from the western culture. These parents use more verbal praise, talk to their

children, and give them more freedom and choice in their own decision-making (Rice &

Dolgin 2002), a situation that reflects their ‘both-and’ cultural characteristic. As Slee

(2007) pointed out, the younger generation may become confused about their identity when

their family struggles to maintain its ethnic identity in the face of Australian mainstream

culture. For those with parents born overseas, their identity development is in relation to

how well their parents have blended in the Australian mainstream culture.

2.10 Individualism vs Collectivism

There are cross-cultural differences in parenting style between the individualistic cultures,

such as Australian, and collectivist cultures such as Chinese (Slee 2007). Inspired by

Hofstede’s landmark (1980) international survey of western work-related values, Triandis

and his associates had since applied the approach to most of their cross-cultural research on

individualism and collectivism at the cultural level (Hui & Triandis 1985, Triandis 1986).

Hofstede (1980) defined individualism as the emotional independence from groups,

organization, and other collectivist societies where people are born into extended families

or kinship systems which protect them in exchange for loyalty. As for collectivism, Hui and

Triandis (1986) defined it as a syndrome of feelings, emotions, beliefs, ideology, and

actions related to interpersonal concern. These are reflected in the following seven

categories:

1. Consideration of implications (cost and benefits) of one’s own decision and/or

actions for other people

2. Sharing of material resources

3. Sharing of non-material resources (such as time and effort)

4. Susceptibility to social influence

5. Self-presentation and face-work

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6. Sharing of outcomes

7. Feeling of involvement in other’s lives.

Hofstede and Triandis’ studies on individualism and collectivism have been replicated in a

large number of cultures. There is little doubt that the individualism-collectivism construct

represents a cross-culturally valid characterisation of a number of cultures. However, there

is an increasing perception that the construct may be too neat to be true and may not be

universally applicable. Cheng (1997) pointed out that these two theories may have been

over generalised and that some values may not fit well with either individualism or

collectivism, there may also be some values that comfortably accommodate both (Choi &

Choi 1994, Sinha & Tripathi 1994).

Similar findings by Adler et al. (1986) suggested that east–west cultural differences were

becoming more significant and had proved to be troublesome variables for western-owned

multinational companies. In this study, the difference between the two generations in their

responses to the survey is the more important element to study. This will indicate a

transitional change from collectivism to individualism among different dimensions of

entrepreneurship displayed in their journeys. There may be groups which display values

that can fit and accommodate both theories.

Hofstede (1980) has shown that countries such as the United States, Australia, Great Britain

and Canada demonstrate high scores on his individualism-collectivism index, while

Venezuela, China, Pakistan, Thailand and Mexico score fairly low. Has this index changed

in recent years, in particular reference to the Chinese entrepreneurs? Simply speaking,

individualistic cultures may foster development of an individual’s self-concept and self-

confidence. There is also likely to be a greater sense of personal responsibility for

performance outcomes, while interpersonal competition may generate a steady stream of

ideas of innovative change. However, there is also likely to be an emphasis on personal

gain, self satisfaction, selfishness and expediency.

65

On the other hand, collectivism offers the advantage of more harmonious relationships

among individuals. In this type of culture, greater synergies may occur from the combined

efforts of people with diverse skills, while individuals may enjoy a network of social

support. However, there is likely to be a loss of one’s self to the group or organizational

persona, and a greater level of emotional dependence on the organization. Chinese

entrepreneurs from the first and second generation come from different educational

backgrounds, working experiences and networking styles. Their idealism and expectation

of their entrepreneurial experiences display the differences between the east and west

entrepreneurial behaviours (Chu 1995).

Table 2.2 Individualism and Collectivism

Collectivist Individualistic

People are born into extended families which continue to protect them in exchange for loyalty

Everyone grows up to look after him/herself and his/her immediate (nuclear) family only

Identity is based on the social network to which one belongs

Identity is based on the individual

Harmony should be maintained and direct confrontation avoided

Speaking one’s mind is a characteristic of an honest person

Relationship of employer–employee perceived in moral terms, like a family link

Relationship employer–employee is a contract that is supposed to be based on mutual advantage

Hiring and promotion decisions take employees’ in-groups into account

Hiring and promotion decisions are supposed to be based on skills and rules only

Relationship prevails over task Task prevails over relationship Collective interests prevail over individual interests

Individual interests prevail over collective interests

Opinions are predetermined by group membership

Everyone is expected to have a private opinion

Group harmony and consensus is the ultimate goal

Individual differences in Collectivist and actualization is the ultimate goal

Source: Extracted from two tables in Hofstede (1991, pp. 67, 73).

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2.11 Adoption of Western Styles in Chinese Business In summary, for businesses to grow, management skills have to be in place to facilitate the

transition and expansion. In the last 30 years, China and other major Asian countries have

been adopting new ways of doing business, due to the influences of technological changes

that bridge the countries within a split second (Ralston 1993, 1996). Reluctance to adopt

new management skills will only restrict the proper growth and expansion of one’s business

(Gilmore et al. 2004). Transition changes are needed to ensure the survival of the

businesses.

In this study, two options are forwarded for the survival of the family businesses:

1. Whether the market or product is existent. For example, in Box Hill and other Asian

community suburbs, the long history of these businesses have already help various

businesses to establish and grow to their optimal sizes, such as restaurants and

hairdressing shops. Larger size and concentration of the community will enhance

the chance of survival because of the higher attractiveness to the potential customers

and users (Friesen & Ip 1997, Henderson 2003).

2. Whether the market or product is so specialized that only certain people or firms

have the know-how. Indeed, having a differentiated, specialist product or service

often goes hand in hand with having a well-targeted market segment. This ‘niche

strategy’ offers the better chance of success (Carland et al. 1995). It involves filling

or creating gaps in the market that big firms find unsuitable for their large

investment capacity. It emphasizes the non-price elements of the marketing mix,

such as quality, and satisfying a small, clearly-defined target market or segment

which have these specialized needs.

Option 1 does not require a lot of knowledge or professional skill. On the other hand,

option 2 provides a potential to those entrepreneurs who want to be specialized in their own

fields or businesses. Further into the growth of the businesses, entrepreneurs have to

expand further in order to grow beyond the family-owned size, into larger firms (Begley &

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Boyd 1986). Thus, proper and westernized management skills are needed. They will need

to develop the team and delegate more and more. Delegating to those closer to the problem

necessitate tolerating mistakes, supporting and protecting staff as they grew into their jobs,

encouraging them to experiment and test the market, and finally, rewarding their successful

initiatives (Carland et al.1995). Inevitably, there will be some confusion and ambiguity of

tasks and a certain amount of internal competition, but organizational structures will need

to be formalized as the business grows (Burton et al. 1995). These styles may not be

recognized or put into practice by the first generation entrepreneurs because of their limited

background knowledge and resources to go beyond their own local businesses (Strahan &

Luscombe 1991).

The emphasis will probably shift to maintaining stability, fine-tuning and structuring the

business more tightly by coordinating activities, eliminating overlap and careful analysis.

Not unexpectedly, the first generation entrepreneurs may have never considered further

growth or penetration of the market, new development of their products or services (Boyer

1996, Ip et al. 1998). This is because these entrepreneurs usually start at a later stage (in

their 40s). By the time the businesses are founded and developed, these entrepreneurs may

not be willing to take further unnecessary risks which may in turn jeopardize their hard

earned living.

Conflicts may arise due to differences in opinions. Cultural preferences for certain

behaviours will take precedence over the western view of logical managerial behaviours,

such as hiring employees and expectation of intense loyalty to the family or in-group. Often

times, hiring decisions are based on nepotism rather than competence because family can

be trusted and should be helped (Hall & Xu 1990).

2.12 Summary An important issue arising from the review of the developmental definitions of the concept

of entrepreneurship is that many of the definitions, theories and works of literature on

entrepreneurship have emerged from Europe, America and other western cultures.

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Definitions are rather based on various researchers’ empirical studies, observations,

fieldwork and culture. This to a large extent shows that the concept and definition of

entrepreneurship is context or culture bound. That is, it depends on the context or the angle

from which one is analyzing it. The issue therefore is whether the insight into

entrepreneurship based on these western thinking can be successfully implied used in the

Chinese entrepreneurs. The importance of this issue cannot be overstated because of the

different cultural and business backgrounds.

Secondly, if culture is enmeshed with entrepreneurship, there must be differences and those

differences are likely to vary from country to country. This study therefore has a

considerable interest in finding out just how much entrepreneurs are influenced by the

Chinese and western culture. Two analogies have been given to show the differences

between the cultures. Another important gap identified in the literature is that existing

entrepreneurship definitions and theories have been developed assuming all generations of

Chinese entrepreneurs have the same entrepreneurial profiles. In fact, the study of the two

generation entrepreneurs in this thesis represents an ideology clash between east and west.

Thus, a further study into the difference between the two generations is necessary to check

if the results are different.

The review of literature in the next chapter examines the different phases of Australian

immigration. In addition, the formation of Chinatowns and the three theories of ethnic

enclave economies will be discussed to provide background information of Chinese

entrepreneurship in Melbourne.

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Chapter 3

Chinese Entrepreneurs and Ethnic Enclaves

3.1 Introduction This chapter will commence with a brief history of Chinese migration to and settlement in

Australia. In addition, the different phases of Australian immigration will be used to

illustrate the history of Chinese settlement in Melbourne. Prior to 1980, Box Hill was the

home of immigrants from Europe, especially from Germany, Italy and Greece. Since the

1980s, waves of Vietnamese, Cambodians, and in recent years, Hong Kong Chinese,

Taiwanese and mainland Chinese have moved to Box Hill creating the Chinatown we have

today.

The formation of ethnic enclaves and the three theories of ethnic enclave economies will be

discussed. Ethnic enclave refers to a concentration of people from the same ethnic group

within a specific geographical location. Ethnic enclaves provide incentives to become self-

employed and they give rise to a protected market in which particular ethnic groups are

able to trade with one another through their preferred language. The literature related to

explanatory variables of entrepreneurial behaviour, activity and success of the Chinese

entrepreneurs is examined. A general classification of these explanatory variables in

literature reveals that these variables stem from different theoretical and disciplinary

backgrounds. The theories will help to understand the pathways taken by the Chinese

entrepreneurs. Along with the nature and history of Chinese entrepreneurs, the chapter

concludes with a summary of the key studies reviewed and the importance of Chinese

diaspora in Australia.

Such a multi-disciplinary approach to the study of entrepreneurial behaviour is justifiable,

since entrepreneurship scholars argue strongly that the entrepreneurial phenomenon cannot

be adequately explained by one theory alone and, a multi-disciplinary approach is

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recommended (Campbell 1992, Lerner et al. 1997, Rauch & Frese 2000, Ripsas 1998,

Schumpeter 1954).

3.2 Population of Australia with Chinese Ancestry

In the 2006 Census (ABS 2006a), there were 669,890 Australians with Chinese ancestry,

compared to 556,000 in the 2001 Census. This made up 3.1 percent of the total Australian

population. Their population was the largest among those of Asian descent. Of those with

Chinese ancestry, 9.1 percent were Australian-born and born to Australian-born parents

(both parents and either parent), making them a population of 60,917. These are the second

or third-plus generation Chinese. The first generation Chinese are those with both parents

born overseas, there were 594,962 of them 88.8 percent of the total (ABS 2006a). The

remaining 2.1 percent did not state the origin of their parents.

According to the 2006 Census, of those Chinese resident in Victoria, 90.6 percent were first

generation migrants, while only 7.2 percent of second and third plus generation migrants.

These figures are comparable to those of the national statistics. Compared to the same

categories of statistics in the 2001 Census (ABS 2001), the figures are very close (89.5

percent and 7.5 percent), While the population of third-plus generation seems to be

relatively small, this category is likely to increase substantially in the future with more

second generations reaching marital age and increasing numbers of Chinese migrants

permanently settling in Australia. At the same time, there have been more Chinese

migrating to Australia from China and neighbouring countries.

In 2006 Census, the total population of Australia (excluding the overseas visitors) was

21,511,606 (ABS 2006b). According to the 2006 Census, the overseas-born population was

4,416,037 persons, which was 20.5 percent of the total population. In comparison, the total

population in Victoria was 5,430,943. In the same Census (ABS 2006b), the overseas-born

population was 21.6 percent (1,173,201). In the 2006 Census, there were 69.4 percent of

Australians with Chinese ancestry who spoke a language other than English at home,

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making a population of 465,154. English was not the dominant spoken language at home in

the Chinese families.

In contrast to the large Canton-based origins of early Chinese migrants in the first half of

the century, there has been a growth in ethnic diversity as a result of the expansion of

numbers. Traditionally, people came from various districts of Canton such as Chungshan,

Toishan, Kaoyau and they are often separated from each other because of the different

dialects spoken (Choi 1975). Today, Chinese Australians are even more highly diverse in

their national and ethnic origins. Taiwanese, HK, Shanghaiese, for example, are among the

fastest growing segments of the Chinese Australian population.

There has also been a general shift away from the largely working class origins of the late

19th–early 20th century Chinese. While there is considerable social and economic diversity

within the Chinese Australian population today, it is also the case that many post-1965

Chinese immigrants came from professional, white collar and highly educated backgrounds

(ABS 2003b, Chan 1999)

Fitzgerald (1997) predicted that the Australian population of Asian descent will be between

7 percent and 10 percent by 2020. In fact, this may be an underestimate, as it does not allow

for the possibility of temporary residents such as students and business entrants who may

become permanent residents. A conservative projection made in 2001 is that Asians would

make up more than 10 percent of the Australian population in the next 10 years (ABS

2006b).

The modern Chinese diaspora is one of the largest and most geographically dispersed in the

world. The Chinese Government estimates that there are 30 million ethnic Chinese living

outside of China (Thune 2001), and they are to be found on every continent in the world. In

some countries, Chinese communities number in the millions and comprise a substantial

portion of the national population, for example, in Malaysia, Indonesia and other Southeast

Asian nations. In many western countries, such as the United States, Canada, the United

72

Kingdom and Australia, they are among the largest and longest established non-English

speaking migrant groups (Barrett et al. 2002, Frost 2002).

3.3 Different Phases of Immigration

Migration has long been a feature of Chinese life. As Wickberg (1994: 68) wrote, ‘The

Chinese are among the world’s great migration peoples. Indeed, the history of their country

can be seen as a process of migration, settlement, and control over the region that is now

China across the span of many centuries’. The modern history of China has been

characterised by incessant upheaval, associated with western and Japanese imperialism,

popular rebellions, dynasty collapses and transitions, warlord struggles, civil warfare, and

most recently, the turbulent history of the Tiananmen Square incident. Food shortages and

poverty have also been perennial features of life for the majority of the Chinese populace.

Migration, either internally within China, or abroad, has been a common means of adapting

to this political turmoil and economic hardship (Choi 1975, Collins 1995).

Chinese migration comprises a significant component of the Australian migration program,

with Chinese arriving from China, Hong Kong, Taiwan, Vietnam, Malaysia, Singapore,

Indonesia and other parts of the global Chinese diaspora (ABS 2006a, DIMA 1997).

3.3.1 First Wave – Gold Rush Era

Early Chinese history in Australia had always been linked to the Gold Rush era. Studies on

both local and migrant Chinese were scarce. During the gold rush years of the 1850s, there

were immigrants from overseas countries such as China, Germany, Poland, America,

Scandinavian countries and Hungary. These immigrants were divided according to race,

religion and national backgrounds. The Chinese were employed in menial labour, the

government and the mining community restricted their movements and economic activities

(Yong 1977). The first wave of Asian arrivals was made up of Chinese who came seeking

their fortune during the Gold Rush era of the 1850s. Prior to the discovery of gold in the

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1850s, it was estimated that there were fewer than 3,000 Chinese in Australia (Price 1966).

A decade later, there were over 38,000 Chinese in Australia.

According to Yong (1977), the Chinese were blocked from working in the gold fields and

jobs in the cities. Yong (1977) divided the Chinese ‘entrepreneurs’ into the labouring class

and the merchant class. The Chinese labouring class was engaged in market gardening,

cabinet making, hawking, laundry and cooking, whilst the merchant class concentrated on

import-export businesses, fruit and banana trades, grocery and green grocery. As one of the

largest and most visibly different of the non-British groups that came to Australia in this

period, their difficulties attracted a great deal of interest (Frost 2002). Generally, the

Chinese were characterized as sojourners rather than settlers. Beyond generalizations about

the labour-intensive nature of their agriculture, there was little detailed consideration of

their technology, methods, labour arrangements, and interactions with Europeans. There

was less discussion of how Chinese farming developed over time, and how their skills were

adapted to Australian environmental conditions.

The majority of early immigrants worked as labourers, this phenomenon were similar to the

early settlement of Chinese in Canada (Li 1988, Smart 2003). White Australia policy and

blocked mobility resulted in the economic segregation of Chinese up to 1970s. Business

ownership was restricted to the service sector in restaurant, laundry and retail. This pattern

is similar to that of early Canadian Chinese history (Li 1988). During the time, business

partnership was common strategy to pool limited resources and financial back-up for the

collection goal of achieving upward mobility. Such partnership was largely built on trust

and accountability through multi-stranded social relations (Backman 1995, Carney 1998).

Ethnic minority groups, such as the Chinese were prepared to work long hours in business

such as retail shops supported by family, were amongst the most prolific and successful.

The very experience of living in a difficult environment (and of planning, financing and

executing a move and then surviving in a new and often hostile environment) required

qualities of self-restraint, abstinence, hard work and voluntary postponement of

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gratification. These were normally far more severe than those demanded by the lifestyle of

those who remained at home (Choi 1975, Yong 1977).

As a consequence, many Chinese who were denied work had switched from mining to

agricultural pursuits as general labourers or station hands. Others resorted to self-

employment as market gardeners or shop owners. Setting up the businesses might be the

last ditch alternative to unemployment or rejection by the majority Australians, which was a

case of ‘survival strategy’ or ‘economic lifeboat’ (Valdez 2002).

In Melbourne, Little Bourke Street was the meeting place for Chinese travellers who were

bound to China having spent time on the gold fields of Ballarat and newly arrived Chinese

to Australia from China. The Chinese were clustering in a single area that provided

security, exchange of information and a place to do businesses among the Chinese

immigrants. This type of clustering was very typical of ethnic minority groups wherever

they came from. However, different from today, the number of Chinese immigrants was not

high enough for the Chinatown to develop beyond its boundary in Little Bourke Street

(Selvarajah 2008).

The characteristics of traditional Chinese business are a direct consequence of the pull of

traditional Confucian values (Chou 1993). The male-dominated population, the commuting

system and the sustained contraction of the size of the community are expressive of a deep

commitment on the part of the immigrants to return to their family and homeland. The

purpose of the journey to Australia is to make money for a better life on their return home.

They come for the purpose of breaking free of traditional constraints and merging with their

new society, the ideas of white Australians are of little concern to them. Rarely do the

Chinese direct their actions against white racism or demand more political attention and

social assistance (Strahan & Luscombe 1991).

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3.3.2 Second Wave – European Settlement

British immigrants had always been the major source of immigrants since white settlement

in Australia (ABS 2006a). However, in the post-war years, Australia had to open its doors

to more migrants in order to provide sufficient labour force for the increasing

industrialisation. However, immigrants from Greece, Italy and other European countries

(mainly Eastern and Southern European countries) were allowed to match the demand of

Australia’s economic development (Collins 1991). The supplement from these countries

was a minor deviation of White Australia Policy. Over the years, although immigrants were

added into Australian population, the overall proportion of Chinese was still at a negligible

level.

This organized migration programme was mainly conducted through government-to-

government agreements between 1952 and 1972 (Ip et al. 1998). This was achieved through

difference assistance programme, such as; ‘ten-pound tourists’, chartering of transport,

provision of accommodation, public schooling and health care. For the period up until the

late 1980s, immigrants from non-English speaking backgrounds were concentrated in the

unskilled and semi-skilled manual jobs in the male and female labour markets, sometimes

called the secondary labour market. One consequence of this was that unemployment

during the post-war recessions had been much higher for immigrants from non-English

speaking backgrounds than for immigrants from English-speaking backgrounds or the

Australian-born (Collins 1991).

This type of programme was substituted by ‘selective programmes’, of which the

prospective immigrants were selected based on their skills, education and qualification.

This was introduced since 1970s as Australia experienced increasing unemployment and a

decline in its manufacturing workforce. The Europeans did not respond well to this new

policy where skilled and educated migrants were sought. The make-up of the immigrants’

population had been changed from UK and Ireland being the dominant source countries

(41.4 percent between 1971 and 1975) to Asian countries (such as Hong Kong –21.5

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percent in 1991, PRC – People’s Republic of China 11.3 percent in 1995) of combined 43.9

percent in 1989. (BIPR 1990, 1994, 1996 and 1997)

3.3.3 Third Wave – 1980 Migrants

First were the arrivals of Indo-Chinese refugees in the late 1970s and the 1980s. Later in

1980s, there were the boat people from Vietnam after the fall of Saigon during the time. By

June 1986, Australia had resettled nearly 90,000 Indo-Chinese refugees, of whom 80

percent were Vietnamese and the remainder from Laos and Cambodia (Collins 1991). At

the same time, there were some other different migrants who arrived from the mid-1980s.

Previous generations of migrants tended to have arrived under the family reunion program,

and were less educated and skilled, or were former students who had studied in Australian

universities. By the late 1980s, the majority of Hong Kong, Malaysia and Taiwanese

migrants were independent migrants admitted on the basis of their credentials, skills or

wealth (Pookong & Skelton 1994).

Thus in the late 1980s, Australia received its first substantial wave of migration from China

since the nineteenth-century Gold Rush. Before 1988, there were less than 38,000

mainland-born Chinese in Australia (Fung & Jie 1996). However, with the more open

climate on the mainland, the Australian educational services industry recruited thousands of

Chinese students to Australia, mainly to study English. After the Tiananmen Square

incident in 1989, the Hawke Labour Government granted special permanent visas to

approximately 20,000 Chinese (from PRC – People of Republic of China) students in

Australia, and about 22,000 more arrived in the 12 months after the incident, most of whom

were also eventually granted permanent residency (Fung & Jie 1996). These former

students and their families, sometimes known as the ‘Tiananmen Square generation’

(Ommundsen 2001), now make up an important segment of the PRC-born population in

Australia. There was a surge of Chinese settlement. The number grew to 206,591 compared

to 36,595 in the population census of 1986 (ABS 2006b), a five-fold increase in twenty

years.

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3.3.4 Selective Immigration Policies

The abolition of White Australia policy encouraged more Chinese immigrants to settle in

Australia. These new immigrants had the formal education, skill and often economic

resources to facilitate their economic and social integration within Australian society

without resorting to ‘sub-ethnic’ resources and politics (Yuan 1988). This forward leap had

already laid the foundation for the second generation to build up its own businesses.

Asian countries had been very prominent among the ‘top ten’ Australian immigration

countries (Collins 1995). During the last 15 years, there had also been new movements of

entrepreneurial migrants (Harris & Ryan 1994). The Business Migration Programme

(BMP) was officially launched (DILGEA 1990) in 1981. Since then, Australia had actively

sought to encourage foreign investments. Immigration flows had increasingly comprised of

highly educated and qualified people with good English language skills, many of whom

came from Asian countries (Ip et al. 1998, Chan 2001)

By 1996–97, the business skills intake increased to 5,600 or 8.4 percent of the total for all

the immigration categories (Castles et al. 1991). These new incoming groups played the

roles of sources and linkages for foreign investments. Hence, the influx of these groups also

brought in different working modules and principles in a western society. Australia, being a

big and resource-rich country with a small population, had always been the dreamland for

most immigrants to seek new opportunities and development (Collins 1991, 1995)

Business migration programme had always been a key component of Australian policies.

Ideally, the programme combined both the amount of monetary investment as well as the

skills of the intended migrants (Lowenstein 1992). The intention was to restore Australia’s

reputation as a business migrant destination. There were two main streams of non-

humanitarian selection, namely the skilled stream (that included business skills) and the

family stream. In addition to this selective migration programme, Australia had a

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humanitarian programme that selected refugees and asylum seekers for resettlement in

Australia.

The difference between these immigrants and previous immigrants was obvious. These

immigrants entered Australia based on stringent immigration selection processes that

focused on the applicant’s skills and qualifications, including technical and business skills,

and the transfer of business capital. While many of the Asian immigrants found jobs in the

labour market, these jobs were often below their past experience and skills levels (Alcorso

2000). Career advancements were limited or blocked. Collins (1996) attributed this to the

ascent ceiling as a blocked mobility factor that prevented their advancement. The benefit of

skilled migration to the Australian economy depended on the ability of skilled migrants to

find employment at a level that adequately reflected their qualifications.

Business migration programme was introduced in 1980s (Lowenstein 1992). The

programme attracted business people from all over Southeast Asia, especially from Hong

Kong and Taiwan, to settle in Australia. These immigrants were obviously different from

the Indo-Chinese refugees and the Chinese students from Mainland China. These business

immigrants were generally older and wealthier. They possessed better business skills and

experiences than the previous groups of Chinese immigrants in the previous 100 years of

Australian immigrants’ history (Boyd 1996, Chan 2001).

Immigrants could always inject new skills into the marketplace, created jobs through

consumption and entrepreneurial activities. They encouraged investment and created

economies of scale in domestic markets (Collins et al. 1995). These were skills that the

Australian government did not have to finance as they were financed by the education

systems of the countries of origin. With globalization and international migration, Australia

was competing against countries such as Canada, US and UK in this immigration category

(Li 1988).

Business migrants to Australia arrived as experienced entrepreneurs with large amounts of

capital ready to make their mark on the national and international markets. Their pathway

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to ethnic enterprise was often found to be very different from that of the traditional path of

ethnic Chinese. The pathway had been changed from wage labourer to entrepreneurs. The

changing demographics across nations give rise to a multicultural workforce throughout

various parts of the world resulting in a growing number of ethnic minorities in different

countries (Li 1988, Pio 2005), including migrant-receiving countries such as Australia,

Canada and New Zealand. The following section is to provide more information of Chinese

entrepreneurship in Australia.

3.4 A Brief History of Chinese Entrepreneurship

The history of Australian Chinese immigrant entrepreneurs has been shaped by racist

immigration policies and practices at all levels of Australian society in early years. The

racist immigration policy of exclusion and the discriminatory laws and practices shaped the

character of Chinese immigration in the first three-quarters of the twentieth century.

However, in the last quarter or the twentieth century, the government policy had turned to a

non-discriminatory immigration policy and to a settlement policy of multiculturalism

(Collins 2000). Both the Labour and Liberal governments had embraced economic

rationalism and globalization. Several factors, such as deregulation of the financial system

and the exchange rate led to fundamental changes to the Australian economy, particularly

the decline of manufacturing and the growth of finance, telecommunications and media.

Early historical data on migration indicated that there were no permitted free settlers to

Australia from China or other Southeast countries (Choi 1975). Organized settlement of

contract-indentured labourers first came to Tasmania in 1830, then to Western Australia in

1847 and from 1848 to New South Wales (Chan 2001). The resource-rich Australian

colonies attracted miners and merchants to NSW, Victoria and Northern Australia to mine

tin, diamonds and gold from 1851.

By 1901, many Chinese moved into entrepreneurship, particularly market gardens, food

and furniture markets (Choi 1975).There were 799 Chinese shopkeepers and groceries in

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New South Wales, and half of these were in the Sydney area, many as greengrocers: one-

third of the Chinese in Victoria and NSW worked in market gardens. Other Chinese moved

into the laundry business or opened small furniture shops. In 1912, the Chinese owned 168

factories (31 percent of the total number) and employed 818 workers (28 percent of the

furniture trade’s workforce (Yuan 1988).

Most of their entrepreneurial activities are concentrated in the small and medium

enterprises sector (Lever-Tracy et al. 1991, Ip et al. 1998). Their specific impact and role in

the country’s economic development is not well known or recognized by the society,

government and other stakeholders. In particular, most researches are concentrated on

earlier Gold Rush Era (Choi 1975, Collins 1991, Ip et al. 1998).

Today, the two largest Chinatowns are in Sydney (Haymarket-Dixon Street) and Melbourne

(Little Bourke Street). There are also satellites Chinatowns, of smaller scale, in the

suburban areas such as Cabramatta, Parramatta in Sydney, Box Hill, Springvale and

Richmond in Melbourne. These satellite Chinatowns are clusters of suburban businesses,

where the ethnic Chinese can do day-to-day grocery shopping, hairdressing, medical

consultations and others. In the past and even present time, restaurant business has been the

most typical of all Chinese immigrant entrepreneurship. The businesses are clustered

around the major ethnic centres or inner suburbs where the ethnic communities are based. It

has now become a feature of the Australian suburban and country town landscape, where

there are different ethnic restaurants, with the Italian, Chinese, Thai, Vietnamese, Japanese

and French cuisines being very popular (Collins 2003). Compared to the earlier generations

of Chinese immigrants in USA (Werbner 2001), Chinese in Australia also tended to engage

in ethnic enclave economy, both in obtaining and supplying Asian goods and services, such

as grocery stores, noodle factories, lawyers and dentists. These multiple and overlapping

markets form the basic network and foundation of Asian suburbs or commercially so-called

Chinatowns.

In early days, these industrial, commercial and service cluster providers were usually

networks of small or medium sized enterprises. According to Schmitz and Nadvi (1999),

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this clustering is particularly important in the early phase of a firm’s life, ‘helping small

enterprises to grow in riskable steps’ and to compete in broader markets. This formation is

important to introduce non-traditional Australian goods and services and to local economy

and to bring in foreign investment and business ideas to broader community.

Werbner (1999) argued that the ethnic enclave economies are collective, best grasped as

networked spaces embedded in particular industries which focus around the production and

distribution of particular types of objects. Outstanding individuals rise on the back of these

networks. For example, in 1975, the Asian clothing enclave economy in the UK barely

seemed to exist. Ten years later, Asian (mainly Indians) traders had increased exponentially

(Werbner 1999). They operated within the ethnic enclave economy, which manufactured

and sold clothing and related goods to outsiders, beyond the ethnic group.

‘Once the clothing enclave was established, it created a need for support network of new

kinds of services’; this was interesting according to Werbner (1999). Werbner believed

some businesses are under-capitalised and often run by inexperienced traders and

manufacturers and some even collapse. Asian millionaires rise and fall, but the gradual

expansion of the enclave continues. The self-feeding process within the enclaves enables

the newcomers to take up work in immigrant firms, and workers who have gained skills and

experience working for co-ethnic owners set up a new business of their own. This is similar

to the formation of Chinatowns in Australia.

The type of industry concentration through clustering and networking can deliver gains to

all parties involved. The economic growth through collective business networks can not be

ignored. Collaboration between different enterprises and businesses is vital to both the

survival of ethnic community and growth of individual businesses. Portes and Zhou (1996)

pointed out that these successful immigrant entrepreneurs can have social and economic

effects on their communities that will go well beyond purely individual success. Rather

than a statistical anomaly, this presence represents an integral part of the answer to the

question of whether immigrants and ethnic groups gain or lose when members engage in

independent economic activity.

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In the last twenty years, there has been a change in Chinese entrepreneurship, according to

the categories of ‘jobs’ or businesses’ that the entrepreneurs are involved in. In this study,

these are the first generation Chinese entrepreneurs. The following is a summary of

different pathways of the first generation Chinese entrepreneurs:

1. Entrepreneurs who arrive in Australia under the business migration programme.

They come with cash, business experience and a commitment to set up a business in

Australia.

2. Professionals, particularly those who get Australian medical, dentistry, law and

pharmacy degrees. They are also entrepreneurs in the sense that they hire employees

for their professional business.

3. Unskilled and semi-skilled with poor English language skills – their pathways are

similar to the Indo-Chinese refugees who are allowed into the country in the mid-

1970s. They did not have sufficient start-up capital for business. At the same time,

they were also trapped in the labour market in the diminishing Australian

manufacturing industry, particularly the clothing, footwear and textiles industries.

4. Marginal entrepreneurs who operate in the Chinese restaurants or small groceries,

milk bars and different types of franchises. While they are rejected by the

mainstream labour markets, being self-employed gives them more freedom to work

longer hours and to choose from a variety of jobs such as cleaning, small retail

businesses and other odd jobs where they can rely on their own family members and

friends.

3.5 Three Theories of Ethnic Enclave Economy

Ethnic resources are important for immigrant entrepreneurship success (Basu 2004, Fong &

Ooka 2002) According to Sequeira and Rasheed (2004), these resources are defined as

socio-cultural and demographic features of the whole ethnic group, which include informal

credit, business knowledge and shared expertise, business training, a ready source of lower

cost labour and social support. Lofstrom (2002) and Raijman and Tienda (2000) also

provided some similar examples of ethnic resources such as the knowledge and skills to run

businesses, ability in transferring experiences and managerial skills, availability of cheap

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labour, and the social support networks that facilitate a new owner in obtaining necessary

start-up capital. Such resources are important for new settlers in establishing their small

businesses in the host countries. Similarly, Sequeira and Rasheed (2006) suggested that

within the same ethnic group, immigrant entrepreneurs can actively utilize these resources

or passively benefit from them in their business activities because such resources help

reduce risks and uncertainties that a new immigrant would face when starting a business,

and they also facilitate to minimise transaction costs associated with labour and financial

market transactions.

Fairlie and Meyer (1996) provided another example of ethnic resources, namely the

exploitation of sector-specific human capital. Human capital includes training, experience,

judgment, intelligence, and the relationships between managers and workers according to

Barney (1991). The levels of human capital that immigrants hold and the ability to transfer

such information across ethnic groups can be key elements that contribute to immigrant

business success (Fairlie & Meyer 1996). Therefore, ethnic resources can explain why large

immigrant groups are more successful than small ones.

According to Clark and Drinkwater (2000), ethnic enclave refers to a concentration of

people from the same ethnic group within a specific geographical location. They provide

incentives and opportunities to find jobs, and to become self-employed within the

communities that they are familiar with. Similarly, Sequeira and Rasheed (2006) described

an ethnic enclave as an interdependent network of social and business relationships that are

graphically concentrated. This enclave is a source of social cohesion and economic support

which provides the immigrants with opportunities to socialize and associate with their co-

ethnic peers. In this network, people from the same community buy or sell ethnic products

and services. They also find employment or start their own businesses. Kupferberg (2003)

from an economic perspective defined an ethnic enclave as small enterprises operated and

owned by members of an ethnic community. Within such an enclave, networks are integral

parts which provide the essential information for the establishment of businesses and the

economic input requirements.

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Therefore, the larger the ethnic group, the more favourable the economic opportunity for its

entrepreneurs will be. Ethnic entrepreneurs know more about their tastes and preferences of

the customers and thus, provide them with the comfort and security of conducting

transactions under the environment of their own culture and language. Li and Dong (2007)

also argued that ethnic enclave theory implies that both the ethnic entrepreneurs and

workers gain superior economic benefits over those in general labour markets since the

ethnic owners obtain low-paid and trustworthy workers while enclave employees receive

rewards such as secure jobs through ties of ethnicity, friendship or family. As Sequeira and

Rasheed (2004) pointed out, the ethnic enclave plays an important role in providing access

to business information, opportunities and support for immigrant entrepreneurs.

To conclude, there is a range of theories associated with the ethnic enclave economy.

Researchers have developed and analysed these theories based on their empirical studies.

Many theories are closely related and some overlap. Some theories draw on cultural factors,

while some focus on socio-economic areas and some theories are related to ethnic and

racial issues. These theories may explain immigrant entrepreneurship for some groups at

certain times. Many of them can fit well with diverse ethnic groups, for instance, the

Chinese community. As indicated in the previous chapters, entrepreneurship is a field that

is characterized by widespread disagreement on basic models, assumptions and methods.

Similarly, a myriad of different understandings of the concept of entrepreneurship exists in

the economists’ perceptions of entrepreneurship (Djik & Turik 1995, Praag 1996). There

are three possible theories regarding the formation of Chinatowns, and they are as follows:

3.5.1 ‘Networking’ Theory The networking idea has been especially attractive as a means by which small firms can

collaborate to compete more effectively. The premise is that clustering and networking

among small firms enable them to achieve collectively more than they can individually, in

accessing and competing in the marketplace (Ingley & Selvarajah 2000). Stromback and

Malhotra (1994) highlighted the entrepreneurial advantages of Asian (mainly Chinese)

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immigrants because of their ‘cultural baggage’ and motivation. These advantages are

important in the future overseas networks of ethnic entrepreneurs in Australia.

The links with relatives or friends in the country of origin are often used to provide a

reliable source of supply, access to a marker, advice about market prospects and to secure

credit (Hsing 1996). Similarly, Lever-Tracey et al. (1991) concluded that Chinese

entrepreneurs are on the whole ‘successful, innovative and export orientated’ entrepreneurs

who have considerable overseas resources, including financial resources and business

networks. These networks provide an advantage when establishing import and export

activities because they provide ‘personalized, trust-based’ networks which extend into the

community and beyond, into mainstream society and overseas (King 1991).

Network activities of entrepreneurs create and maintain social contacts during the planning,

establishing and running of the businesses. These contacts that lead to successful outcomes

are their social capital and are a key component of entrepreneurial networks. Although they

are a set of virtual resources, these will be the key components during the establishment of

the businesses. Entrepreneurs require information, capital, skills and labour to start business

activities (Morokvasic 2003). The contacts that they rely on may also extend across

professional networks, reaching friends and colleagues from earlier jobs. These networks

can even extend relations to different organization, clusters of firms, as well as to other

people who help them set up the firm.

Traditionally, Chinese entrepreneurs rely a lot on their personal contacts through ‘guanxi’

(personal contact and network) with the immediate families, friends and business

associates. They are more adapted to this networking system. The multiple network system

or relation that the entrepreneurs depend on include several factors, such as age and length

of residence in Australia, education levels, work experience, family association and

personal contacts (Park & Luo 2001, Yang 2002).

Paradoxically, dependence on family members may, at the same time, restrict the network

from which the entrepreneurs seek a wider range of resources when planning and

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establishing or acquiring a business. Entrepreneurs may be more likely than average

population to have parents who also run small businesses. Therefore, their own ideas during

planning and contacts through the families may be restricted by the own experiences of the

parents (Carney 1998, Yeung 2000). On the other hand, a network of loosely coupled

acquaintances offering skills, knowledge and insights will reduce the importance of family

members. However, the range and types of businesses set up may be larger and wider than

the ones through the sole dependence on the family ties. There are always pros and cons to

this familial networking system.

Nowadays, the networking system extends beyond the community. Informal networks play

a major role despite the extensive use of government and community services, such as

employment centres, legal aid offices and welfare agencies. Even after a period of time

when reliance on friends and kin has decreased, informal networks remain the single most

important support for most Chinese and are the most important social resource within the

Chinese community. Such network provides informal but personal experience of local

business environment, access to capital, bureaucracy standards and requirements, and local

Australian customs and cultures (Carney 1998, Friesen & Ip 1997).

Although Chinese are accustomed to being a minority and they are not overtly political,

they are strongly oriented towards trade and business and they have an effective informal

structure within the community to provide information, jobs and welfare services

(Selvarajah 2008).

3.5.2 ‘Location’ Theory The theory of the urban growth machine (Logan & Molotch 1987) provides an

understanding of ethnic cluster development, where interest in a place, in the first instance,

may have been ‘planted’ by economic self-interest of an individual, organization or group

of people (Light 2002). Immigrants are attracted to and guided to a neighbourhood by

ethnic social networks anchored among friends and relatives who have moved there

(Massey 1985, Light 2002)

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The number of English-born residents has nearly doubled in Box Hill, for example 125 in

1976 to 212 in 2001. However, in the same period the Chinese, including those from Hong

Kong, jumped from 17 to 952. Chinese professionals choose the eastern suburbs because of

their perceived security. A huge influx of Chinese students has also occurred in the past two

decades. In 1983, there were fewer than 1000 Chinese-born overseas students in Australia.

By 2004 there were 68,857 China born students studying in Australia. The 1997 takeover

of Hong Kong by China also saw a flood of people leave the country. Many of these people

settled near Box Hill. Ip et al. (1998) suggested that it is not surprising to find that many

immigrants tend to move into the middle and upper middle-class suburbs of the major

Australian cities because of their privileged socio-economic background. In Sydney, for

example, they prefer to settle on the North Shore and in the newer areas of the Hills

District, as well as around Hurstville and Sylvania in the south.

This creates a community, within which the individuals and groups utilize the locality as a

convenience of meeting other immigrants of same ethnic background. These immigrants

are hoping to create collective cohesiveness and thereby facilitate the pursuit of collective

goals. Within the community, the immigrants can set up their businesses and run the

businesses between different suppliers without going outside the suburbs. This adds to the

security of establishing the businesses in a foreign country.

At the same time, this ‘working within the local suburb’ system may prohibit the inflow

and outflow of information. Strong solidarity with in-group members may create over-

embeddedness that reduces the flow of new ideas into the group, resulting in parochialism

and inertia (Gargiulo & Bernassi 1999). The reliance on the locality may also prohibit the

immigrants to extend physically outside the boundary, and therefore, the chances of

adaptation into Australia more broadly will only become lower. Even though the economy

itself is self-sufficient, it will not be able to extend further into other areas.

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3.5.3 ‘Social Capital’ Theory The classical economists identify land, labour and physical capital (i.e. assets that generate

income) as the three basic factors shaping economic growth. Compared to physical and

human capital, social capital, members of ethnic community organizations and associated

networks use ‘social capital’ or advantages such as capital from community sources, co-

ethnic employees, co-ethnic suppliers and co-ethnic markets. Coleman (1988) explained the

nature of the relationship between human capital and social capital, which include age,

experience, education and the influence of the family. According to Portes (1998), financial

capital which is measured by wealth and income levels can also be increased by social

capital. Literature supports the growth machine view in that it says belonging to an ethnic

group enhances the establishment and continuing business success of ethnic business

(Adler & Kwon 2002, Portes 1998 & Woolcock 1998).

Collins (1996) argued that innovative strategies designed to increase both the rate of ethnic

small business formation and the success of existing ethnic small business will strengthen

the Australian economy. More importantly, it is also an indirect method to increase

employment in the minor ethnic groups. Although there were cases that some groups of

non-English speaking background (NESB) continued to have rates of unemployment four

to five times the national average. By creating more ethnic small business, it will alleviate

the pressure on the job creation for these particular groups of immigrants.

The concept of ethnic resources or social capital that has emerged from ethnic

entrepreneurship studies refers to some identifiable group resource, such as ethnic networks

and ethnic solidarity that allow resources to be gathered, shared and utilized (Greene &

Chaganti 2004). Their work alludes to the kinds and quality of ethnic resources that

immigrants possess or can access that explained their different propensity for

entrepreneurship. For example, in the beginning, these Chinese specialised in catering

goods and services to their own ethnic communities, or in supplying ethnic goods and

services, such as grocery, clothing, hairdressers, video stores and restaurants. These retail

businesses tended to run within areas of high concentration of ethnic Chinese. They were

not economically significant, as they contributed to very small-scale operations. Palm

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(1985) found that home sellers select real estate brokers partially on the basis of race and

that real estate brokers tend to work for ‘brokers of the same race or ethnicity’. In two other

studies by Teixeira (1997 and 1998), it was found that Portuguese real estate agents served

a predominantly Portuguese clientele. In fact, 52 percent of Portuguese home buyers

utilised a Portuguese agent in their search. Portuguese brokers had ‘cultural expertise’ in

dealing with co-ethnics whose ‘behaviour and needs’ differed from those of non co-ethnic.

These businesses remain. Over the years, new types of businesses such as import and

export trading, education providers, student accommodations are added to the list. The

change of business types change because of different times, plus different economical and

social environments. The subtle change in the sizes of operations cannot be ignored, as they

represent numerous business deals and continuous supply of low cost items to the

Australian community (Millington & Eberhardt 2006).

Li (2001) suggested that the immigrants with more human capital are more inclined toward

self-employment, possibly because these immigrants have greater access to capital and

other resources, as well as more exposure to business experiences. The finding essentially

suggested that immigrants with more resources and qualifications are more inclined to

engage in self-employment. Adler and Kwon (2002) suggested that there are three

dimensions of social structure, each rooted in different types of relations: (1) market

relations, in which products and services are exchanged for money or bartered (2)

hierarchical relations, in which obedience to authority is exchanged for material and

spiritual security, and (3) social relations, in which favours and gifts are exchanged.

Therefore, the self supporting community takes shape and quickly attracts many other

immigrants to join in. Different localities and enclave clusters are formed. Immigrants are

more inclined to work within the social and economic communities which they are more

familiar with, especially the way that businesses are carried out and limited non-regulatory

styles that they can enjoy. These three theories combine to show the multi-dimensional

influences on the formation of Chinese diaspora or Chinatown clustering in earlier days of

settlement in Australia.

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3.6 Chinese Diaspora

The concept of ‘diaspora’ has gained credence as a way to understand the complexities of

global movements and shifting identities of migrants and their descendants in the dystopia

of late modernity. According to Gilroy (2000), diaspora is identified by ‘a relational

network, characteristically produced by forced dispersal and reluctant scattering’. Similarly,

Leung (2003) conceives diaspora as ‘a dynamic patchwork, or a fluid collage made up of

multiple and diverse journeys, sometimes diverging while other times overlapping,

embarked upon by individual of a dispersed community’. Diaspora has been used in various

ways in the literature. Traditionally, the concept of diaspora describes groups of people

who have been dispersed from a common ancestral homeland and have settled in different

places. It also suggests that individuals living across the world identify collectively with

each other base on their host societies and the geographical place from which their

ancestors originate (Levitt & Waters 2002). Earlier migration research suggests migrants

will sever physical linkages with their homeland as they become integrated into the

receiving country. As such, ‘diaspora’ is conceived as a geographic concept which focused

on ‘place’.

Chinese communities in Australia are not homogeneous. Although they may all call

themselves Chinese, they differ among themselves according to dialect, sub-dialect, clan

and family, all of which are linked to their place of ancestral origin in China, as well as by

country of birth outside of China. The degree to which these differences are considered

important varies from individual to individual, but a community, whether it is constituted

for social or business purposes, always comprises individuals who share one or more of

these secondary characteristics in addition to their collective cultural characteristics (Xiao

2001).

For the first 50 years of Chinese settlement in Australia, almost all Chinese who were born

overseas were born in China. But the Chinese diaspora in Australia today includes many

ethnic Chinese who were born in Vietnam, Malaysia, Hong Kong, Singapore and Taiwan as

well as those born in China (Ho & Coughlan 1997). For example, one third (34.1 percent)

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of the Vietnamese born in Australia in 1986 reported that they were of Chinese ancestry.

The 1986 census also showed that 93.3 percent of those born in Taiwan were ethnic

Chinese, as were 84.6 per cent of those born in Hong Kong and Macau, 61 percent of those

born in East Timor, and 60.6 percent of those born in Malaysia and Brunei. In addition,

42.7 percent of those born in Singapore, 40.7 percent of those born in Cambodia and 27.4

percent of those born in Indonesia claimed Chinese ancestry (Ho & Coughlan 1997).

Immigrants are drawn to settle in certain places for personal, social, cultural and economic

reasons. As the numbers grew, whole suburbs underwent subtle and unsubtle personality

changes. Historically, Victoria had always enjoyed longer perspective on migration than

any other state in Australia (Selvarajah 2008). Since 1840’s, immigrants from all over the

world came to Melbourne when the gold rushes began in 1851. Italians, French, Poles,

Germans, Americans and Chinese along with the major source of immigrants – British Isles

began to settle in different locations around the Gold Fields. The story of Chinese on the

gold fields was mostly one of peaceful co-existence. While there were occasional anti-

Chinese riots, these came well after the initial gold rush and large-scale Chinese

immigration. In the second half of the 19th century, it led to state and then national laws

aimed at keeping the Chinese out and later discouraging even non-Anglo-European

migrants,. By 1966, the non-white ban on immigration was lifted. This was replaced with a

points system that still favoured Europeans, but by the late 1960s, more than 6,000

immigrants a year were arriving from Asia.

In early days from 1901 to the 1960s, adaptation which was based on the White Australia

policy required migrants to ‘shed their cultures and languages and be assimilated into the

host population so they would rapidly become indistinguishable from it’. Migrants were

expected to conform to the norms of Anglo-Australian culture, again emphasizing the

desire for homogeneity. The adaptation policy, in keeping with the desire to minimize

difference, was not sensitive to the special needs of migrants once they had arrived in

Australia. This adaptation policy underwent a restructuring in 1964 when the ‘Adaptation

Section’ became the ‘Integration Section’. According to DIMIA (2003), integration policies

allowed immigrants to speak their own languages and retain their customs, but expected

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their full participation in an ‘integrated Australian culture’. Under integration, the idea that

migrant disadvantage ought to be ignored was effectively discarded as a large number of

migrants, especially those whose first language was not English, experienced hardships as

they settled in Australia, and required more direct assistance. The importance of ethnic

organization in helping the process of resettlement was recognized. The Department of

Immigrations began to fund certain some migrant aid and education programs (Collins

1991), and expenditure on migrant assistance and welfare rose sharply in the early days in

response to these needs (DIMIA 2003).

The English, Italians and Greeks were overwhelmingly the largest groups entering

Melbourne from an almost exclusively European pool. The English went to the outer east,

far south and bay side; the Italians went north and north-west; the Greeks intermingled with

the Italians in Northcote, Coburg, Preston, Brunswick and Bulleen, but also gravitated

south-east around Oakleigh and west around Williamstown and Altona. Other nationalities

occupied pockets. The Polish-born settled in Caulfield, reflecting the fact that most were

Jewish refuges and this was where Australian Jews had set up synagogues and schools.

Since 2000, Chinese and Indians immigrants have outnumbered those arriving from Britain

for the first time. Malaysia and Vietnam were the next most common countries of origin.

Added in thousands of international students, and the city’s cultural topography had

become very finely contoured indeed. According to the 2001 Census, Australia was a truly

multicultural country and was home to 4.1 million people born overseas, from over 200

countries. The racial composition of Australia’s population had changed dramatically over

the past 200 years. The population had gone from an almost totally Aboriginal population

to predominantly Anglo-Celtic by 1900, and now a multicultural population.

It was found from the 2006 Census that 70.9 percent were born in Australia (ABS 2006b).

Of those born overseas, the three main countries of birth were United Kingdom (4.3

percent); New Zealand (2.0 percent) and Italy (1.0 percent). No other country accounted for

one or more percent, signifying the diversity of Australia’s overseas-born population and

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that the Asian-born were not the dominant group of immigrants as perceived by many

Australians. The number of English-born residents has nearly doubled in Box Hill

There has always been debate on the socio-economic contributions made by immigrants to

Australia. The immigrants do not only contribute in financial terms during their stay in

Australia; from renting a place, to buying a car to sending their children to school, they also

created limitless opportunities for themselves and other fellow Australia in terms of jobs

creation, businesses opportunities and interaction during their daily encounters.

The establishment and growth of Chinatown within Chinese community deserves a lot of

attention and investigation. Not only the Chinatown represents a commercial precinct

where trading practices occur every day, it also influences the surrounding suburbs in terms

of present and future development. The other areas such as house pricing, number of

immigrants living in the surrounding suburbs, supporting facilities, cultural factors are also

affected by the establishment. These cannot be ignored.

In the past, entrepreneurship in ethnic minority communities could also contribute to

reducing social exclusion and contributing to raising living standards in groups that could

be often among the more disadvantaged in society. Moreover, because of a tendency for

ethnic minorities to concentrate in particular localities, the development of some local

economies, and the standard of living within them, might be heavily influenced by the

nature and extent of ethnic minority business development. Glezer (1988) argued and

supported the notion that earlier immigrants faced ‘blocked mobility’ as employees, and he

suggested that there was a strong tendency of some ethnic groups to have a proportionately

larger presence in small business than British migrants and the majority population had

often been as much the product of constraints and limitations as of their preferences, skills

and cultural assets.

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For example, Chinese furniture makers and laundry keepers were not permitted to sponsor

Chinese migrants to help in their business, so that they had trouble in finding sufficient

labour. In addition, the Factories and Shops Act (NSW 1896, Victoria 1896) defined any

workshop employing one or more Chinese person as a factory, whereas four Europeans

were required for a ‘factory’ to exist. This meant that all small Chinese workshops fell

under industrial regulations concerning wages, conditions of work and limited hours of

opening.

The other solution was to develop a niche market such as market gardeners where they

developed into large wholesale fruit and vegetable distributing firms. Unlike the furniture

and laundry businesses, which competed strongly with other businesses, the Chinese

market gardeners found a niche that did not threaten others and did not attract

discriminatory legislation (Choi 1975).

In the last 20 years, Chinese population increased and the growth in the immigrant

population and their urban ethnic concentrations has prompted the expansion of the

immigrant enclave economy which offered a protected market for immigrant entrepreneurs

to engage in ethnic business and self-employment (Portes & Zhou 1996). At the same time,

the styles and sizes of the community has been more complex and diversified. In

Melbourne, Chinatowns were formed in the major areas of high concentration of Chinese,

such as Melbourne Little Bourke Street, Ballarat, Footscray, Box Hill and Springvale.

Surrounding suburbs grew in terms of Chinese population

Entrepreneurship in the Chinese community can also contribute to the developments of

‘cluster’ economies, because of a tendency for the community to concentrate to live in

certain localities. Hence, business development within the localities will flourish. The

flourishing as such will further ‘strengthen’ the social status of the community. On the

other hand, Woolcock (1998) explained that sharing information and providing advice and

training to co-ethnics can also be counter-productive as they will become another source of

future competition which can lead to market saturation if the ethnic market is limited.

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However, this can be disadvantageous to the growth of the businesses. The argument is

this: ethnic Chinese entrepreneurs, sometimes the opportunists, follow each other into an

economic enclave in entrepreneurial chains. Rivalry needs to be managed alongside trust:

Asians never form a single representative group, but on the contrary, they engage in cut-

throat competition with one another. Hairdressing and restaurants are the most dominant

business type in Box Hill and surrounding suburbs. However, the growth of the population

does not support the continuous opening of new shops. In reverse, the fierce competition

can only force the retail price to go down, without improvement in the services or products

being supplied (Smart 2003, Taormina & Lao 2007). Traditionally, Chinese will only cut

the price down to a cut-throat level that the businesses with most finance can survive

Although the command of an enclave economy, such as the clothing traders in Manchester

in 1990s (Werbner 2001), enabled an ethnic group to acquire collectively wealth and

influence, concentration in a single industry might also lead to a collapse because of

oversupply of the same goods or services. The following sections will illustrate the history

of earlier days, the formation of Chinese diaspora and the importance of Chinese

communities.

3.7 Summary

Apart from showing the different phases of immigration, this chapter provides a detailed

explanation of how the ethnic enclave economies are formed. This progression of these

phases coincides with the Chinese migration history in Box Hill. The concept of ethnic

resources that has emerged from ethnic entrepreneurship studies refers to some identifiable

group resource, such as ethnic networks and ethnic solidarity, which allow resources to be

gathered, shared and utilized. Three theories of ethnic enclave economies have been

studied, these explain the kinds and quality of ethnic resources that immigrants possess or

can access. These theories have also explained their different propensity for

entrepreneurship.

The importance of Chinese entrepreneurship and related diaspora cannot be ignored. These

immigrants introduce multilingualism, cultural sensitivity and knowledge, training and

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qualifications earned overseas. These attributes reside in many ethnic entrepreneurs and in

the ethnic resources they can develop their enterprises. Immigrants are drawn to settle in

certain places for personal, social, cultural and economic reasons.

In the next chapter, the elements of successful Chinese entrepreneurship will be studied.

These will be compared to the western entrepreneurs, to show the possible differences

between the first and second generation Chinese entrepreneurs in Melbourne.

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Chapter 4

Characteristics of Successful Chinese Entrepreneurs

4.1 Introduction

Apart from research findings that investigate the settlement and migration patterns of

Chinese entrepreneurs in various countries (Boyer 1995, Chah 2002, Collins 2002, Li 1988,

Selvarajah 2004, 2008, Smart 2003, Tseng 1995), recent statistics also show that the

Chinese entrepreneurs are important drivers of growth in many of the local and the world’s

economies (Collins 1996, Fong & Ooka 2000, Frost 2002). It is of great interest to find out

if the first and second generations exhibit different patterns of entrepreneurial profiles.

However, research until present does not reflect this. In fact, literature concentrates on the

differences of psychological profiles and identity of entrepreneurs (Bond and Hwang 1986,

Chan 1999, Chan 2000, Clammer 2002). These questions are important to fully understand

the entrepreneurial process, success and the Chinese entrepreneurs’ contribution to the

development of the economy. This study aims to investigate the factors that influence the

first and the second generation Chinese entrepreneurs in Melbourne.

In studying the phenomenon of entrepreneurship in the two generations, two main

emphases in the literature source are sought. Firstly, the knowledge and the resource

needed to create and to manage new business are culturally embedded and historical

specific (Carroll & Hannan 2000, Chu 1995). That is, Chinese entrepreneurship is different

from western entrepreneurship because the Chinese culture and history have a strong and

deep impact on the entrepreneurial process of the Chinese.

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Second, it has been established in several entrepreneurship studies that the first generation

Chinese have access to fewer resources, have less knowledge, and have a lower societal

position compared to the local population (Collins 1991, 2000, Harris & Ryan 1994 and Pe-

Pua et al. 1996). Thus, based on this emphasis, the Chinese entrepreneurs will differ from

the Australian with respect to their personal and business profile: they start and run

businesses in different sectors, develop different products, pursue different goals and

structure their businesses in a different fashion (Pistrui et al. 2001, Ralson et al. 1993,

Selvarajah 2008, Tseng 1995, Tseng 1998, Waldinger et al. 1990). These significant

features of Chinese entrepreneurship contribute to the diversity of entrepreneurship in the

economic process (Backman 1995, Chen 2001, Yeung 1999, 2000).

Hence, studying the various elements of Chinese entrepreneurship and its process including

how Chinese successfully start-up and grow their entrepreneurial ventures will provide a

better understanding of an important sector of the economy.

4.2 Psychological Traits

There are several approaches to describe the entrepreneur and determining business

success. One of the approaches is based on the psychological perspective, which argues that

entrepreneurs often exhibit a typical characteristic profile. Numerous studies on Chinese

entrepreneurs have endeavoured to develop a profile of Chinese entrepreneurs (Ahlstrom et

al. 2004, Collins 2002, Liang 1987) and establish whether a ‘typical’ profile of Chinese

entrepreneurs exists, and if so, whether people matching this profile are more likely to

make successful entrepreneurs (Bennet & Dann 2000). Demographic features such as age,

marital status, ethnicity and educational background, as well as the psychological or

personality traits of the Chinese entrepreneurs, are often studied in order to develop this

profile.

Other factors commonly investigated in such studies (Ahlstrom 2004, Bennet & Dann

2000, Taormina and Lao 2007) include educational qualifications, age at business

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commencement and business type. As socio-demographic and societal changes have

occurred in the thirty years, and access to education about entrepreneurship and business

management has increased for Chinese, it is likely that this situation has changed (Carney

1998, Chen 2001).

However, one area that has demonstrated commonality between entrepreneurs is the study

of psychological characteristics, indicating that entrepreneurship is related to the

behavioural and personality traits of the individual entrepreneur (Brandsttar 1997, Hull et

al. 1980). A study by Yusuf (1995) demonstrates the business characteristics frequently

displayed by individual successful entrepreneurs: they include good management,

satisfactory government support, marketing factors, overseas exposure, level of education

and training, access to finances and level of initial investment, prior experience and traits

such as self-confidence, charisma, perseverance, local reputation and trustworthiness, prior

experience in business and political affiliation. On an individual level, recent studies

(Bennett & Dann 2008) outline the personal characteristics, they include; commitment,

determination and perseverance; the drive to achieve and grow; persistent problem solving;

internal locus of control; calculated risk taking; and integrity and reliability. Innovativeness

is another characteristic that researchers (Kao 1993, Schumpeter 1979, Timmons 1999)

have linked with entrepreneurship. This supports the perception that entrepreneurs are

creative and innovative, using these skills to solve problems and develop new strategies.

The most mentioned of these personality traits are high need for achievement, high need for

power or internal locus of control, high need for affiliation, risk-taking and having self

confidence (Gartner 1989, McClelland & Winter 1971). These characteristics have been

identified as leading to the emergence and consequently the success of entrepreneurs.

However, the trait or personality contribution to the description of entrepreneurs has been

criticized on the grounds that the diversity among entrepreneurs is much larger than

personality descriptions. The problem identified with the psychologists’ approach is they

seem to assume the entrepreneur to be a particular person, in a fixed state of existence

(Gartner 1989).

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The other personality trait is strength, a concept which broadly covers personality attributes

such as resilience, risk-taking, hardiness, persistence, patience and resourcefulness. Thus,

individuals with a strong and open personality disposition are more likely to face

challenges successfully and are better equipped to develop host communication

competence, and in so doing, facilitate their own intercultural transformation and growth

while they go through the adaptive process in the host society (Kim 1994). Also, the lack of

proficiency in the everyday language of the host society may prove a stumbling block as

well as a source of anguish and frustration for migrants (Scollon & Wong-Scollon 1990).

4.2.1 Self-Satisfaction Personal motivations have been labelled as another category of motivators embedded in the

push and pull factor theory, such as the desire for autonomy, to control one’s destiny and

the need to be personally fulfilled. The motivation for self-fulfilment is very strong.

Entrepreneurship has provided an opportunity for the immigrants to discover a new-found

sense of accomplishment in supporting themselves instead of relying on being employed by

others and government welfare systems.

This shows that entrepreneurship is related to the behavioural and personality traits of the

individual entrepreneur (Bennet & Dann 2000). This accords with the findings of Woldie

and Adersua (2004) that self-satisfaction, desire for independence, desire for autonomy,

control of one’s destiny and being the boss are very important personal reasons for business

ownership. Psychological characteristics are strong influences for potential entrepreneurs.

Pitstrui et al. (2001) found that Chinese entrepreneurs are most motivated by the following

four items:

• Desire for higher earnings;

• Desire to have fun;

• Need for achievement; and

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• Desire to make a direct contribution to the success of an enterprise.

The data also found that Chinese entrepreneurs are being driven to achieve a personal sense

of accomplishment, foster family well-being, and develop new skills.

Brandstatter (1997) looked into one of the psychological factors in the entrepreneurship.

The owners indicated how they perceived their past and expected future success as

entrepreneurs. As predicted, owners who have personally set up their business (founders)

are emotionally more stable and more independent (self-assertive) than owners who have

taken over their business from parents, relatives, or by marriage. The personality

characteristics of people interested in setting up their own business are similar to those of

the founders. In addition, independent and emotionally stable business owners are more

satisfied with their roles as entrepreneurs and with the success of their business, prefer

internal attributions of the business outcome and are more inclined to expand their business.

This will be all related to the personal confidence in managing their own businesses.

In addition, dissatisfaction in previous employment has been suggested by many earlier

researchers (Wirth 2001). Another possible factor in influencing people to leave their

previous employment and pursue a business venture is slow career progression (Moore &

Buttner 1997). Therefore, independence gained by self-employment and power to make

own decisions based on their own choices are the other two main attractions that

entrepreneurs seek to obtain. The motivation for people to go into small business ownership

vary, they include personal satisfaction, independence and flexibility. Even given the

anxiety and stress that go hand-in-hand with operating a small business, most small

business operators appear to derive more satisfaction by being the decision maker rather

than the recipient of decisions made by others (Walker and Brown 2004).

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4.2.2 Potential Seeking

Lofstrom (2002) found out that self-employed immigrants are found to do substantially

better in the labour market than wage or salary immigrants. The attractiveness of the

potential to gain more monetary reward is one of the important factors in the consideration

of being entrepreneurs.

The entrepreneur, however defined, is a self-motivated individual who takes the initiative to

start and build an enterprise relying primarily on self rather than others to formulate and

implement his or her goals. Personal attributes such as independence, need for control, self

reliance, confidence, initiative, and resourcefulness have been frequently cited as closely

associated with entrepreneurial values and behaviour. Mueller and Thomas (2000) used the

term ‘internal locus of control’ to describe the mentioned factors as basic internal value of

entrepreneurs required for successful businesses. Interestingly, Pinfold (2001) concluded

that entrepreneurs tend to be overly optimistic about their chances of success, regardless of

whether or not a high level of optimism is warranted.

Founder entrepreneurs tend to have individualistic orientations and motives. Most new

business entrepreneurs in the Huisman (1985) 12-country study are driven by opportunities

to ‘develop oneself’ and ‘to lead rather than follow.’ Key motives identified by the

Scheinberg and MacMillan (1986) 11-country survey are the ‘need for approval,’ wealth,

personal development, independence, and escape from an unsatisfactory job. Opportunistic

behaviours are part of human nature, and thus they are often perceived as self-interested.

One type of entrepreneurs (self-satisfaction) is more involved and concentrated in the areas

in which they have expertise; the other type (potential seeking) of entrepreneurs is more

interested in expanding ‘outside the local circle’ and forming greater contacts with other

businesses.

In summary, these personal traits among others are considered to be crucial in

distinguishing successful entrepreneurs from unsuccessful ones (Brockhaus 1982). Chinese

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entrepreneurs will therefore be investigated within this framework to find out whether they

possess these unique traits, and whether their personality trait backgrounds relate to their

business success. The testing of the related hypothesis will also help to provide knowledge

about the attributes of Chinese entrepreneurs and the extent to which this theory is

applicable. It is therefore hypothesized that:

H1: The background of the entrepreneurs is related to the success of their businesses.

4.3 Motivations

Another determinant of successful entrepreneurship, which is frequently researched, is the

motivations for business ownership. Previous studies (Bennet & Dann 2000, Gilmore 2004,

and Walker & Brown 2004) have investigated reasons why entrepreneurs choose the path

of entrepreneurship. These studies conclude that a combination or range of factors, rather

than any single factor alone, provides the impetus for entrepreneurs to create their own

business ventures.

For instance, psychological motivations such as achievement, independence, and locus of

control have been widely investigated with regard to their influence on business start-up

(Lerner et al. 1997). Economic motivators include economic necessity, a path to material

independence and greater control over the products of labour (Bennet & Dann 2000). In

addition, dissatisfaction with circumstances can describe a combination of factors including

disillusionment with career, perceived lack of career opportunities, flexible work patterns

and the challenge of business ownership.

4.3.1 Economic Motivations

According to the push and pull factor theorists, one of the universal motivations which push

the immigrants into starting their own business ventures is the need to generate income.

Many first generation Chinese are pushed into whatever market economic activity they can

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take up. The changing nature of government programmes coupled with the lack of

opportunity for entry-level work in Australia have led these immigrants to view

entrepreneurship as the best way out of the permanent cycle of poverty (Choi 1975, Collins

1991, Strahan & Luscombe 1991). As a result, they look at their own business as the best

way to achieve those things the system has failed to provide. After realizing dependence on

government programmes is doing nothing to improve their self-esteem, many immigrants

have tried to enter the workplace (Strahan & Luscombe 1991). To save face, many

immigrants have rejected government assistance, started a new job, and at the same time,

launched a new business (Hwang 1987, Ng 1982).

The research by Lever-Tracy et al. (1991) highlighted the importance of the family to

Chinese entrepreneurs in Australia. They found that 80 percent of the Brisbane

entrepreneurs surveyed used family labour, including spouse, children and other extended

family members. Family members are regarded as being trustworthy and committed to the

business. A typical entrepreneurial profile in terms of experience and family background

has been more clearly defined in the second generation. Adult encouragement, parents’

occupations and family interpersonal relationships all gave indications of affecting

entrepreneurial tendencies (Light & Gold 2000). The additional adult encouragement, the

role model of a successful entrepreneurial parent, and a supportive relationship which

encourages independence and achievement are factors strongly linked with later

entrepreneurial behaviour.

This is, particularly, important in the start-up phase to keep the operation cost down and

enhance the likelihood of surviving the competition. However, this reliance on family

labour input is hardly unproblematic; in particular it becomes a common ground for

disagreement between parents and children. According to Collins et al. (1997), data from

the 1996 survey of immigrant and non-immigrant entrepreneurs in Sydney, Melbourne and

Perth showed that very few, generally less than ten percent, of the immigrant entrepreneurs

surveyed said they had a family business background in the first generation.

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Labour cost has always been one of the major reasons of decline in the manufacturing

sector. Therefore, for any enterprise to succeed, the owner has to either compete on:

1. Price

2. Variety of goods or services provided

3. Uniqueness of the goods or services provided.

For example, over the past 20 years, Singaporean electronics firms relocated to

neighbouring Johor province in Malaysia (Hobday 1994), and Hong Kong-based firms

relocated to South China (Hsing 1996). These ‘migration’ of business set-ups indicate and

support the trend of the shift of high labour cost countries to lower labour cost countries. In

Australia, the clothing industry has already ‘died’ and other manufacturers are at risk, and

they were unable to compete with the energy, cheaper labour and sheer size of China’s and

India’s industries.

The same practice of relocating the manufacturing unit to lower cost sites represents

evidence not of technical upgrading but the continuation of labour-intensive low-cost

production strategies employed by the first generation entrepreneurs. In Australia, this

gives the entrepreneurs an immediate advantage to win over the competitors as the labour

cost in Australia is always on the high side.

4.3.2 Social Motivations Socio-cultural value is a major aspect in an entrepreneurial environment. In particular,

Earley’s (1997) theory of face provides a model to connect socio-cultural dimensions to

individual decision to enter entrepreneurship. Earley’s (1997) theory of face derived from

Chinese culture, in which two kinds of faces are identified, lion (moral character) and

mianzi (external prestige). Unlike lion, which is a stable internal characteristic, mianzi is

more fluid, subject to the flow of external successes and failures, and required active

management. Mianzi is more relevant to entrepreneurship because it relates to social status,

achievement, and success and figures prominently in business.

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There are two main processes related to face: gaining face and losing face (Ng 1982). Some

efforts are intended to enhance face, others to prevent loss of face. There are strong feelings

of pride, satisfaction, and confidence followed from gaining face while strong feelings of

shame accompanied losing face. These two aspects of face should serve as predictors of

important decisions with visible external outcomes such as starting a business.

Concern for face increases as the visibility of outcomes increases. Occupation is a

significant, visible characteristic that affects the presentation of the self in society. Social

status systems have received particular attention in the west. In the east, social status is the

basis for the Confucian system of social order. The goal of facework is to enhance standing

in relevant social groups through shaping member impressions. Mianzi can be acquired in

three primary ways: 1) occupation of a high social rank, 2) achievement and accumulation

of influence, and 3) family prestige, wealth, or power.

A second motivation related to face is to prevent its loss. Potential loss of face motivates

actions to avoid it (Earley 1997). A serious threat to loss of face when contemplating

starting a business is the possibility it may fail. Since more than half of all new businesses

may fail within the first five years, the risk of failure is a threat to face when considering

entrepreneurship as a vocation. A strong sense of shame is necessary for loss of face to be

an effective sanction. The desire to avoid shame from letting down the family is a primary

motivator in Asian societies.

Earley (1997) viewed face processes as universal, and that Asian societies base cultural

sanctions more on shame than guilt while western societies are more guilt-based. Shame

responds to external social sanctions, guilt to internal personal convictions of right and

wrong. Shame-based cultures orient citizens toward the social dimensions of success and

failure, namely status, enhancement and shame, respectively.

In summary, entrepreneurial motivations are usually explained by ‘pull’ and ‘push’ theory

(Brush 1992). Push factors are elements of necessity such as insufficient family income,

dissatisfaction with a salaried job, unemployment, and a need for a flexible work schedule

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because of family responsibilities. Pull factors relate to independence, self-fulfilment,

entrepreneurial drives and desire for wealth and social status (Ducheneaut 1997). It has

been confirmed in the literature that these motivational factors play a key role in successful

business creation and development. It is therefore likely that the motivational factors of

Chinese entrepreneurs influence their business success, leading to the following hypothesis:

H2. Entrepreneurial success is related to the motivation of the entrepreneurs.

4.4 Adaptive Opportunism – Innovative Entrepreneurship

Assigning the role of innovator to the entrepreneur implies that successful entrepreneurs

adopt and implement competitive strategies such as introducing new products and services,

new methods of production, opening new markets or sources of supply, or even

reorganizing an entire industry. This is the most obvious criterion of being an entrepreneur.

A key condition of entrepreneurial strategies is the capacity to assume risk by the person or

persons who have the prerogative to take action – either the owner or manager of group of

managers (Osborne 1995). People who start new businesses vary in the degree of

entrepreneurial talent and temperament they possess. The same is true of strategic leaders

inside large organization, where entrepreneurial people are required to champion the

change agenda in dynamic and turbulent environments (Thompson 2004).

Collins (1996) argued that innovative strategies designed to increase both the rate of ethnic

small business formation and the success of existing ethnic small business will strengthen

the Australian economy. More importantly, it is also an indirect method to increase

employment in the minor ethnic groups. Innovativeness is another strong characteristic that

researchers (Kao 1993, Schumpeter 1979, Timmons 1999) have linked with

entrepreneurship, supporting the perception that entrepreneurs are creative and innovative

and use these skills to solve problems and develop new strategies, which impacts their

businesses positively.

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Schumpeter’s (1945, 1979) renowned perspective of entrepreneurship, which emphasizes

creativity and innovativeness in venture creation and being able to use one’s skills to create

new businesses. Drucker (1998) suggested that innovation is a better criterion for judging a

small business than age and size. The term ‘innovation’ is first associated with

entrepreneurship by Schumpter (1942). Innovation is the conversion of ideas into products,

services and processes, and is the result of creative thinking, perseverance, ingenuity and

imagination (Baumol 1993, Grigg 1994). It goes hand in hand with creativity. While

creativity involves idea generation, innovation means converting such ideas into fruitful

business activities and a mindset that has a strategic vision (Kuczmarski 1996). According

to Kao (1989), creativity implies a vision of what is possible, and the entrepreneur

translates that creative vision into action.

However, pertinent questions this research is interested in are: what types of activities are

being undertaken by these entrepreneurs; are their activities limited to some particular

industrial sectors; are they just reproducing existing goods and services or imitating

existing practices? This will enable the study to identify the types of industrial sectors

Chinese entrepreneurs operate in Box Hill and also gain deeper insight into the types of

ventures being created, whether entrepreneurial or in imitation of existing practices.

Schumpeter’s perspective is strongly affirmed in the business literature in that the choice of

industry sector and the type of business activity undertaken has a direct effect on potential

growth and success (Bhide 2000, Carter et al. 1997). According to Bhide (2000), business

ventures based on radically innovative ideas that solve big problems have much greater

potential for success, while less innovative ideas serving small niche markets that are easily

imitated have much lower growth potential. Innovative business ventures that are not easily

imitated are more likely to attract growth capital for expansion (Timmons & Bygrave

1997), attract high patronage, create wealth and be successful.

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4.5 Cultural Issues – Unique to Chinese Entrepreneurs

The influence of Confucianism cannot be ignored, since 20 percent of the world’s

population is ethnic Chinese. Confucianism is not a religion, instead it is, an ideology that

underlines and guides Chinese culture. It is a worldview and set of unwritten principles

initiated by Confucius, studied and developed by scholars for more than 2,000 years.

Confucianism has been woven into the very fabric of Chinese society. For hundreds of

years, Confucianism was actively taught. No matter the religion, Confucianism defines the

proper mode of conduct within society and within the family (Nish et al. 1996).

4.5.1 Confucian Piety

Chinese families use stories, sayings and special terms to instil Confucian ideals in

children. Although it is not a religion, it continues to exert a major influence on the

everyday lives of Chinese people (Chan 2008, Jabobs et al. 1995). The basic unit of society

is not the individual, but the family. Family is always more important than any individual

member, and harmony is the most important value for all family members. Without

harmony, no family can stand, neither can a family business. Children are taught to restrain

their individualism to maintain harmony in the family. The Anglo-American culture is the

most individualistic, providing a very good and sharp contrast to the Confucian-influenced

cultures, as it has been illustrated in chapter two.

Research reveals that even in overseas Chinese family businesses, the most important

family values are Confucian (Jacobs et al. 1995, Lee 1996). These Chinese family values

and interpersonal patterns contribute to business development and success in different

cases. The extent of its influences and its incorporation has built a tight matrix between the

culture and the psychological character of the people.

Traditionally, ideologies of the Confucian social philosophy determine the roles and

expectations at every stage in the Chinese life cycle. In the Confucian tradition, certain

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relations between family members are provided a position of paramount importance; in

particular senior members of a family are accorded a wide range of authority with respect

to the juniors. Both parties to a relationship are circumscribed by rules of correct behaviour

which entail rights and responsibilities for each (Bond & Hwang 1986). ‘Xiao’ or filial

piety, which principally defines children’s moral duty to their parents, has been understood

in the Chinese tradition as the root of morality (Weber 1951) Traditionally, through

education and indoctrination, the younger members of the extended Chinese family learn

and accept the responsibility that they will care for, the financial and social wellbeing of the

elderly members in their family. The elderly accepts care as their right and families have

pressure from the wider community to meet their obligations. Such reciprocal relationships

are still considered a distinctive characteristic of Chinese family cultural values (Ryan

2003). Exercising individuality is a threat to an orderly society and therefore directly

contradictory to one’s duties and responsibilities to others (Fouts & Chan 1995)

There is a longstanding literature concerning the philosophy of Confucius (Fung 1948). The

concern here, however, is to highlight its influence in Chinese familial values and social

roles of individuals as they age. According to Chinese philosophy, age transition is

perceived as a series of fixed states which imply social and moral obligations and a pattern

that is to be repeated across the generations. For those who depart from China for a

substantial period of time often find cultural values and gender identities regarding duty for

the aged to be increasingly influenced by the cultural values of the host country. Uhlenberg

and Mueller (2003) explained the significance of any specific family environment may vary

markedly across societies and across time.

Rigby (1990) agreed that Chinese people are taught not to question their parents’ authority

or break rules, for this will bring dishonour to their families (Cobb 1998, Shaffer 2002).

Rogers (1972) adds that the father of the family is the one to whom Chinese younger

generation must listen; as in traditional Chinese families, parents are the authorities while

the father is the chief. This authoritarian parenting style commended as ‘appears’ to work

well ‘in China and among recent Asian immigrant families in the Untied States’. (Shaffer

2002)

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Between the two generations, there is still a strong sense of family ties, with parents’

authority remaining unquestioned and the role of parent remains exceptionally important in

Chinese families wherever they are (Cobb 1998). The decision making process always

depends on mostly one person, who is the head of the family. External and independent

assistance are not usually sought. In fact, the whole management style is a closed circuit

style, of which any decision-making does not go beyond the boundary of the family.

Basically, importance of any opinion initiated depends on the status and hierarchy of the

spoken person. Trust and ‘sense of belonging’ are the two major factors in determining

further working relationship between the family and the person involved.

Another cultural factor, succession of family business, cannot be ignored in the studies of

entrepreneurship. The successors’ process of induction to family business behaviour plays a

crucial role in the succession process (Fletcher 2004, Yan & Sorenson 2006). On the

positive side, it provides family continuity to the business, raises the entrepreneurial

potential of descendants, and reduces the level of conflict among siblings in the succession

process. However, when this process does not fit particular succession requirements, the

negative side of succession in family business commonly appears: sibling rivalry, poor

performance, and business failure (Carney 1988, Yeung 2000).

In summary, based on the above perspectives, the traditional Confucian values of the

Chinese entrepreneurs will be explored to find out whether there is any relationship

between their business success and these values. This leads to the following hypothesis:

H3. Entrepreneurial success of the Chinese is related to traditional Confucian values.

4.5.2 Western Networking Style

In recent decades, the business environment has become more dynamic and complex than

ever before. Rapidly changing and competitive environments reinforce the importance of

business cooperation. Moreover, a business can hardly succeed without their partners’

cooperation. Therefore, firms must build collaborative and long-term relationships with

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their customers and suppliers. Relationship marketing can help attain these goals by

attracting, developing, and retaining customer relationships (Aldrich & Zimmer 1996,

Werbner 2001).

Another important determinant of entrepreneurial success which is of interest to researchers

is support and networks. It has been widely acknowledged that networks form an integral

part of the explanation of entrepreneurial success. Researchers have generally obtained

positive evidence that networking, whatever its form, does have an impact on a business

venture’s survival and success (Backman 1995, Batonda & Perry 2003, Boyer 1996, Chan

2001, Friesen & Ip 1997).

Networking theorists view entrepreneurship as embedded in a complex network of social

relationships. Within these networks, entrepreneurship is facilitated or constrained by

linkages between aspiring entrepreneurs, resources and opportunities (Aldrich & Zimmer

1986). According to this view, the presence of networks (formal or informal), such as

access or membership in associations, plays an increasingly important role in the success of

entrepreneurs.

Networking is understood as one of the key practices contributing to small business

success. Research into the networking practices of entrepreneurs in business and the

significance of networking to small business success has been pursued predominantly by

US and Canadian academic institutions. The findings from these researches primarily based

on developed countries have emphasised the importance of support systems, mentors and

advisors to the successful start-up and operation of entrepreneurial ventures.

Interestingly, past research findings have indicated that entrepreneurs from developed

countries tend to rely more on instrumental networks (Hofstede 1980). These people are

members of professional associations and formal organizations. Relationships are normally

formalized among organizational members as they interact and are connected with mentors

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and business colleagues who have lived through the entrepreneurial process themselves and

are willing to share the experiences they have accumulated. Thus, in the advanced

economies and more individualistic societies, networks as linkages are used instrumentally

and mainly in resource generation (Aldrich & Zimmer 1986, Carney 1998). This western

networking style is different from the Chinese networking style in the following section.

4.5.3 Eastern Networking Styles – Guanxi connections

The Chinese have been sometimes been called ‘born traders’ and the business culture is a

key feature, prioritising the strengthening of the organization before competing

successfully, with the outside world. Trust amongst businesses is built on the foundation of

undertakings, loyalty and commitment and is a culture distinguishable from other ethnic

groups. Recent studies of the Chinese business environment show differences between

Chinese business culture and other cultures (Child & Tse 2001, Tjosvold et al. 2005). In

particular, guanxi, as a form of personal connection that has ‘strong implications for

interpersonal and inter-organizational dynamics’ (Park & Luo 2001), implies strong

strategic potential for doing business in China (Fu et al. 2006, Tsang 1998). Guanxi

networks, woven by individual guanxi, have become pervasive in business and social

practices. In the last two decades, guanxi networks have been given increasing attention by

both business practitioners and academics within the agenda of China’s economic reform

(Guthrie 1998, Millington et al. 2006).

The practices of guanxi can be traced back to Confucianism, which advocates social

harmony and emphasizes the importance of interpersonal relationships (King 1991).

Conforming to Confucian ideology, the social norms of mianzi (face) and renqing (human

feelings) also regulate the way Chinese individuals utilize guanxi. These social norms bring

intricacies into guanxi practices in three ways: by making personal connection special in its

guanxi base, by making it transferable in social networks, and involving long-term

obligations and behaviours (Hwang 1987, Yang 2002). Chinese people traditionally use the

words xin (trust) and qing (affection) to evaluate the quality of guanxi. The subjective

judgment of the quality of a focal relationship shapes the dynamics of individual guanxi

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network development and utilisation. Guanxi is constantly changing, and the activities

associated with it also therefore need to change. A close guanxi may provide more

confidence for guanxi partners to utilise it for both expressive (affection and trust) and

instrumental (business) purposes (Chen & Chen 2004).

In this scenario, the powerful culture of kinship and connection (guanxi) becomes the

matrix of Chinese community. This is a network scenario. This is not a network formed

around township and village enterprises, but a network of networks whose nodes and

threads are families, clans, village, and language groupings. These are perhaps large

familial (and faux-familial), non-geographic power structures twined, wound,

interconnected, woven through thousands of enterprises across mainland China, throughout

the area of southeast Asian states, and reaching into the United States, Europe and other

western countries.

Even today in China, the political slogan ‘one family member joins the army, the whole

family shares the glory’ illustrates the importance of family value among all members.

Networking has been highlighted in Chinese entrepreneurship literature as a very important

tool for any venture creation and management. In further support of this view, Coughlin

(2002) suggested strongly that networking is a very effective method for entrepreneurs to

get assistance in developing their business plans and engaging in fruitful entrepreneurial

ventures. Chinese rely a lot on their immediate family members, relatives and close family

friends to help them to set up the businesses.

In general, the Chinese place high importance on person-to-person relationships. It is said

that having a good relationship network in China is the single most important factor for

business success as they prefer ‘relationships first, business later’ (Burns 1998). In this

way, the Chinese have a highly structured style of negotiation that goes well beyond the

usual western practices (De Mente 1994). These guanxi-based affiliations cut the cost and

time involved in transactions. Another element of this person-to-person relationship is the

sense of social prestige. One cannot understand Chinese behaviour without understanding

of the concept and role of this subjective feeling. An intangible respect exists in the family,

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language group, neighbourhood, business circles and in society. Known as the ‘face’ of a

person, this can be of overriding importance in the society that bestows it and it is a grave

matter if this standing is lost as this will destroy all an individual’s personal and business

relationships and future engagements (De Mente 1994).

Recent efforts in management related guanxi research has demonstrated that the dynamics

of guanxi in the business context is affected by the attributes of organization and job

incumbents (Gold et al. 2000, Luo 2000). These studies have conveyed findings that the

application and operation of guanxi network varies according to the attributes of

organization (i.e. ownership structure, regional location, industrial affiliation,

administrative hierarchy, size, history and resources) and job incumbents (i.e. educational

level, age, tenure, industrial experience, managerial experience). Additional findings from

Hutchings and Murray (2003) have also supplemented that the attributes of organizations

and individuals are intensively related to the command of the guanxi process, which

subsequently affects the dynamics of guanxi.

Similarly, role models are normally trusted counsellors who share their business

knowledge, skills and experience and, most importantly, serve as respected role models for

would-be entrepreneurs and budding entrepreneurs. In the Chinese entrepreneurship

context, role models are best described as experienced business owners willing to give back

to their communities by assisting other Chinese ready to start or grow their businesses.

These are usually found through the guanxi networking (Light et al. 1990, King 1991).

Interpersonal relationships that exist in different social levels are influenced by the size of

the enterprises and their ideologies. This contributes to distinctive characteristics to Chinese

family firms. For example, in addition to having low staff dependence, Chinese families

have relatively high levels of flexibility, cooperation and hard work between the family

members. This also displays a sense of strong mutual obligation, and they are overall

family-centred. Some of the interpersonal principles advocated by the family business set-

up are more prevalent and may be the primary support of earlier settlement and enterprise

set-up.

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Traditionally, Chinese are taught to help others in order to enlarge themselves. Their

ideologies were that social and economic activities were not based on competition, but on

the collectivist principles of cooperation, coexistence, and mutual support. An organization

is not viewed as being independent, but an integral part of a larger network of organizations

that survives and succeeds together. Maintaining trusting relationships within the

organizational network is vital. These networks tend to be established among those who are

kin or who have a similar cultural background. These enterprise set-ups also tend to shape

the style of management in overseas Chinese businesses. However, the second generation

entrepreneurs will vary in their adherence to these values. For many families, as they

become integrated into the larger culture and external influences, family and traditional

Confucian ideals may become diluted. This will be investigated in chapter 7.

In summary, networks have been proved as an important prerequisite to the successful

Chinese organization of entrepreneurial activities in any society. The existences of such

institutions are crucial at the various stages of entrepreneurial activities. No matter the form

it takes and the people involved, it is clear that networking is used by Chinese entrepreneurs

as a means to establish their businesses and reputation, acquire resources and develop their

businesses, gain advice and information, and reduce isolation (Light et al. 1990, Park and

Luo 2001). Hence, Chinese entrepreneurs strategically allocate resources to developing and

maintaining networks and view effective networks as a crucial aspect for ensuring the

success of their ventures (Carter 1997, Grant 1991).

4.6 Resources

The previous discussion centred on networks resources; this section mainly focuses on

human and financial resources, as well as their usefulness in relation to business success.

The most popular explanations of why certain ethnic groups exhibit higher levels of

business creation activities than other groups are based on two theoretical approaches;

middleman minority theory and ethnic enclave theory. In both approaches, largely based on

community level studies of immigration and adaptation, discrimination is a dominant factor

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in determining the economic behaviour of the group members. It is exhibited in a denial of

access to majority-controlled paths of economic advancement and results in minority group

members turning to self-employment activities as a means of economic achievement.

Groups analyzed in this manner include those defined by religion (Sombart 1914, Weber

1904,), race (Aldrich & Waldinger 1990, Butler 1991, Butler & Herring 1991) and ethnic

group (Bonacich 1973, Light 1972).

Entrepreneurship research has focused on two main types of resources. These are the

tangible assets individuals bring with them to the entrepreneurial process in the form of

human capital or human resources, and the ability of entrepreneurs to secure tangible

resources from the environment mainly referred to as financial resources or capital, and

equipment.

4.6.1 Human Capital

The entrepreneurship and management literature highlight the fact that human capital is a

crucial factor in enterprise establishment, influencing business success. Resource based

theorists propose that an entrepreneur’s human capital is comprised of management skills

and tacit knowledge (Coleman 1988, Sequeira & Rasheed 2004); previous entrepreneurial

experience (Ronstadt 1988, Selvarajah 2004); and venture resources in the form of

capability assets, strengths and skills (Grant 1991). These types of human capital, among

others, contribute to growth and the success of business ventures. The resource based

theorists argue that all these components of human capital, including insight, creativity,

vision and intelligence, are derived from educational qualifications, previous industry and

entrepreneurial experiences (Carter et al. 1997, Ronstadt 1988). The following subsections

discuss the components of human capital: business skills, educational qualifications,

previous industry and entrepreneurial experiences, and family background experience.

According to Kaye (2002), research into small business indicated that size, informality of

structures and processes, and the personal preferences, values and attitudes of the owner or

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manager impact significantly on the way in which human resource practices are adopted.

Chinese forms of business set-up and management style are unique, from the top Imperial

Dynasty to the bottom ‘family’ block. ‘Family’ exists from small to big organizations. In a

farming family, the farming business always belongs to the head of the family. In a

manufacturing family, such as clothing, all the machineries are made and used within the

house, all family members are used to work for the family (Liang 1987).

The hard-working and conscientious attitude among Chinese is a well-known characteristic.

This hard-working attitude comes from a desire for success as they seek promotion and

positions of authority. Within the management hierarchy, workers share the responsibility

for the benefits and fate of the employer so that the employees’ motivation is developed

through constant learning and working. Nish et al. (1996) described this as the mainstream

Confucian cultural heritage. Family members including spouses, children and other

extended family members are often used as both formal and back-up personnel to support

the business. Family members are always regarded as trustworthy and committed as the

lead person. This cooperative network of family and community is the essence to the

success of the business. The centrality of family based social, economic and human

resources are keys to their economic and social integration in local Australian society.

4.6.2 Financial Capital

The second category of critical resources that influence success is financial resources,

consisting of cash and the money assets of the business (Bygrave 1993). Obtaining the

necessary financing to start and grow a business is generally considered one of the

entrepreneur’s major problems. Cash capital comes from many sources, including personal

savings, banks, government programmes, venture capital funds and business angels. In

Chinese culture, money contribution from family and relatives is common (Hsing 1996, Li

1988).

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The importance of the family and ethnic community as a source of financing and

employment and a customer base and support for ethnic entrepreneurs (Waldinger et al.

1990) cannot be ignored. Finance is typically perceived as the greatest single problem by

ethnic minority entrepreneurs at the start-up stage. In addition, these first generation

entrepreneurs also face major problems of discrimination on the part of finance providers,

with the vast majority of these feeling that ethnic minorities are discriminated against to a

greater or significantly greater extent than are small business owners or managers in

general. Although explicit discrimination is difficult to prove, there does seem to be a need

for actions by banks and other finance providers to counteract actual or perceived

discrimination.

Valdez (2002) suggested that entrepreneurs who accumulate capital or acquired credit from

an economic institution that operate on profit, are presumably more integrated in the

market, and as a result, will enjoy superior entrepreneurial success. These entrepreneurs

who engage in such relationships are already better integrated in the market. Likely, the

second generation entrepreneurs will be superior to their parents in terms of more

integration, less resistance, and better adaptation into the Australian society. Hence, it can

be implied their success of setting up the enterprises will be easier than the parents.

It is widely recognized that while economic mobility through entrepreneurship is difficult

for poor people because of their lack of class resources, entrepreneurship is realizable if

they have ethnic resource to support them (Light & Gold 2000). One of the primary

problems that local Australians encounter is the lack of diversity among the financial

intermediaries. Large banks (the ‘big four’: ANZ, Commonwealth, NAB and Westpac) in

Australia dominate their corporate financial systems. Banks have little incentive to fund

high-risk projects, and it is not surprising to assume that bank debt is structurally unsuited

to the high-risk uncertainties of lending to start-up firms and to projects at the initial stages

of a product life cycle (Prowse 1996). There are not too many other banks that the local

Australians can turn to, as they also adopt the lending principle of the big fours. Hence,

networking and overseas connections of their parents played an important role in setting up

the foundation of the future businesses.

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To share the assets and to provide free-interest loans are not uncommon among the Chinese

communities. The parents will see this as an obligation to share the accumulated profits

with the children. At the same time, they will expect their children to be involved in the

businesses, to live as one whole family and to carry on the businesses as their own

obligation. This is one of the expected ethical standards’ for being in the family. However,

the perceived weakness in the area of finance in particular may assist in explaining the

result in relation to financial planning being a key barrier to the successful operation of

their ventures.

Chinese entrepreneurs seek to structure their sales channels or businesses to be as short as

possible (i.e. to minimize the number of intermediaries between themselves and the end

customer). Minimizing the number of intermediaries will provide control and opportunities

to focus on a few people with whom close relationships can be developed. Furthermore, a

short channel will give the entrepreneur valuable feedback on market dynamics, which will

enable a quick reaction to emerging threats or opportunities (Vanhonacker et al. 2007). The

typical flexibility of entrepreneurial firms will fit well with closeness to the market.

Chinese entrepreneurs prefer to work within close association and proximity so that they

can have a tighter control of the management. This contrasts vastly with the views of the

more exploring entrepreneurs.

In conclusion, previous studies reviewed have supported the resource based perspective that

the two basic categories of resources discussed, human and financial resources are critical

determinants of entrepreneurial success. Human capital, which is derived from education,

previous experiences and managerial skills and is complemented by skills and experiences

learned through the socialization process, represents initial endowments that provide the

basis for acquiring other sorts of resources, such as financial and physical capital, which are

all important elements in the start-up and success of any entrepreneurial venture.

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4.7 Difficulties and Hurdles

In the creation and growth of business ventures, entrepreneurs face a variety of problems,

including; major financial issues, day-to-day operational issues, business and personal

issues. The environment in the host society and its communities impacts directly on

newcomers’ adaptation experience (Kim 1994). The receptivity of the host environment

refers to the degree to which the environment is open to, welcomes, and accepts strangers

into its social communication networks and offers them various from of informational,

technical, material and emotional support.

Cultural shock is also described as the disorientation that comes from being plunged into an

unfamiliar setting (McLaren 1998). In an unfamiliar culture, everything that the newcomer

experience is different and subsequently, they may feel incompetent, confused and anxious.

Other studies (Gudykunst & Kim 1992, Taft 1976) describe the symptoms as fatigue from

constant adaptation to the local culture, angry and irritable as well as a feeling of not being

in control in dealing with the unfamiliar environment. While experiencing culture shock,

people’s self-esteem is often seriously impaired. Immigrants with more distinctive physical

features or characteristics in relation to the people in the dominant host society, such as skin

colour, facial features and accented English, may find it harder to acculturate (Padilla &

Perex 2003). The contributing factors are listed below:

4.7.1 Language

Language is commonly perceived as a core element in the interrelationships between an

ethnic minority and the host group as it provides common means of communication and,

more importantly, represents a mode of identity. The behaviour of language can also be

explained by communal notions of social categorisation, social identity, social comparison,

psychological distinctiveness and cognitive alternatives (Wu 1995).

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Language is at the heart of adjusting to a new country for most migrants. The significance

of language in migrants’ settlement is affirmed by sociologists, economists, linguists, and

teachers and by migrants themselves (Burnett 1998). In Australia, virtually every aspect of

settlement hinges upon migrants having some technical English language ability. English is

not only the official language of the law and government, but is also the primary language

of the economic, social, cultural and educational life of the nation. As Tait et al. (1990)

suggested, the rules of success are written in English.

Finocchiaro (1995) explained that language is much more than just a means of exchange

between the two groups as they are also trying to understand, accept, assimilate, and reject

each other’s values. Thus, language expresses and evokes something deeper in addition to

the preliminary function for expressing thoughts, perceptions, sentiments and values of a

culture; it also represents a fundamental mode of collective social identity. The significance

of language as indicative of authenticity is illustrated by Wu (1995): for some cultural

groups, language is symbolic of their ethnic identity and values and it demarcates the

boundaries of group membership.

Previous research on language and ethnicity has proposed a strong relationship between

language and ethnic identity. Language is socially accepted as an important system of signs

for identifying the uniqueness of any culture which is crucial to cultural reclamation as it is

a sign of systematic codification and management of ethnicity that is typical of modernity

(Chow 1998). There are various resolutions when the language of a migrant group comes

into contact with a different language spoken by the host group. In the initial stage both

languages are retained and become part of the national social life where each language

acquires a well-defined function. The transition progresses to a later stage where the

incoming group loses its language and the host language become dominant gradually. A

number of Canadian studies have also found a decline in language competence of the

mother tongue from first to third generation migrants (Breton et al. 1990, Castonguay 1998,

O’Bryan et al. 1997).

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4.7.2 Education

There is a maxim among Chinese parents that they put all their hope in the next generation

and strongly impress upon the second generation the importance of higher education (Chu

1995), so that they are motivated to become high achievers. This axiom has been planted in

their mindset from generation to generation, stimulating a strong competitive spirit. This

value for higher qualifications has a strong influence on second generation Chinese,

especially when the first generation has a low literacy level (Godement 1999).The general

belief is that by studying hard and achieving academically, the younger generation will

increase their opportunities of gaining wealth and respect, whereas without academic

achievement they will be disregarded in society.

Traditionally, the prime aim of migration is to find a better life for the children. Chinese see

providing good education to the children as one of the most important ‘tasks’. They value

education as a preparation to go onto higher social mobility, and that sufficient education or

training is one of the prerequisite to go into self-sufficiency and self-employment. This

phenomenon corresponds with the findings of Castles et al. (1991). It has been found that

immigrant parents, especially those from Asian countries, no matter what class they come

from, place high emphasis on education as a means of ensuring a better future for their

children (Collins et al. 1995). Thus, the hope was that entrepreneurship supported by ethnic

resources provided a path out of poverty and allowed for the acquisition of higher human

capital for their children.

They motivate their children to study by providing all their needs, talking to them about

their future and emphasizing that education would help them in their future. The parents

also believe that a good education can lead to achieve a university degree that in turn will

lead to have a good job. This will be the ticket to the better life, and that the children do not

have to work as hard as they do. The parents will see this as their access to upward mobility

through education, self employment and professionalization. Throughout the upbringing of

this second generation, education is highly valued by the parents. The sense of security and

the future lay deeply in the obtainment of the higher education, especially in the

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professional areas such as medicine, dentistry, engineering, law and other subjects that

required higher university entry scores.

Viviani (1996) found that children of ethnic origin (i.e. children of non-English-speaking

background migrants) are staying on at school longer and doing better than students of

Australian-born parents, and that the children of migrant manual workers are moving into

white-collar jobs. This is in contrast to the children of Australian blue-collar workers who

are not doing well at school. Dobson & Birrell (2005) found that Australian-born students

are lagging in the competition (based on University entry scores) to enter the top health

professions, with those from Asian backgrounds now significantly represent in university

places.

In 2004, almost a third of local students in medicine were born overseas, mainly in Asia. In

optometry, more than two out of five domestic students were overseas-born. In dentistry,

more than half the local students were born outside Australia. By contrast, in the overall

population fewer than one in five Australians aged 15–24 were born overseas. The report

attributed the success of children from migrant families to parental ambition and the

willingness of families to invest heavily to ensure their children could compete for scarce

and prestigious places at university Dobson & Birrell (2005).

It has been found that immigrant parents, especially those from Asian countries, no matter

what class they come from, place high emphasis on education as a means of ensuring a

better future for their children (Collins et al. 1995). Thus, the hope was that

entrepreneurship supported by ethnic resources provided a path out of poverty and allowed

for the acquisition of higher human capital for their children.

The skills and capabilities derived from education are broad ranging, from functional

expertise in marketing, accounting, sales or productions, to abilities to spot market trends,

and learning to deal with people and generate ideas to provide competitive advantage and

underpin enterprise performance (Peteraf 1993). Kim et al. (2003) explained that the

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influence of formal education on the decision to become an entrepreneur can be viewed

along two dimensions, namely acquisition of skills and credentialling. They explain further

that general business skills as well as industry specific skills might help entrepreneurs avoid

common mistakes and guide them in setting up basic business functions. Also, formal

education as credentials can provide access into social networks or serve as an indicator in

an evaluation for resources.

4.7.3 Religion

Religion has never played an important role in Chinese history, in either political or

familial level (Chan 2008, Cheng 1997). Christianity and Buddhism are the two major

religions that have been imported into China (ABS 2006b). However, Religious teachings

are not important in the business circles. Instead, they are on average are seen as being

superstitious. There has been no religious movement comparable to Christianity in Europe.

Order and harmony are cosmic principles that give shape to natural laws of which the

Mandate of Heaven is one. Anything that can enhance the prosperity or fortunes of one-self

or the family is preferred. Most of the early settlers and first generation entrepreneurs do

not have any confirmed religion.

The terms spirituality and religion are sometimes used in an interchangeable way, and there

is a close relationship between the two (Engebretson 2004, Slater et al. 2001). Yet,

spirituality is not equal to religion (Ratcliff 2001). While religion refers to a system of

belief, attitudes and practices (Koester 2006), spirituality is concerned with the experience

of a personal relationship with his or her God, which can be experienced in real life

situations or through religious practices (Engebretson 2004). In short, the relationship

between spirituality and religion is that spirituality is the living core of religion.

As Collins (1999) claimed, styles of spirituality are influenced by worldviews in which

they are first formulated. In this research, the influences of Chinese culture and

contemporary western culture, both of which produce different worldviews respectively,

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account for the Buddhism and Daoism spirituality and religion of the first generation while

the second generation in Australia are exposed to Christianity and conversions is common.

4.7.4 Adaptation

Adaptation has always been a subject of sustained empirical and theoretical attention, and

immigrant entrepreneurship has become part of the classic agenda (Light & Gold 2000,

Waldinger et al. 1999). These entrepreneurial activities have been interpreted first in terms

of immigrants’ ethnicization, then adaptation, and most recently, transnationalism

depending on the currently dominant discourse on their adaptation to their new

environments. Conceptualized in the ethnicization and adaptation theoretical frameworks,

immigrants’ entrepreneurial activities has been viewed as conducive to their integration,

whether immigration studies denote sustained regular economic, political, social, or cultural

cross-border involvements of immigrants and their children that escape the boundaries of

the nation-state.

Several factors influence the integration of immigrants into the host society (Morawska

2004). They include:

• Economic and socio-cultural resources;

• Location of the host country where they reside; and

• Home country they originate from.

Some aspects of adaptation into the host society will certainly enhance the survival and

development of the enterprises whether they are carried out by the first or second

generation entrepreneurs.

A study in the US, by Morawska (2004), showed the importance of these ‘bridge-builders’.

Not only do they contribute economically, these entrepreneurs have been engaged in the

civic-political forums as American Chinese citizens. Thus, several advocacy groups,

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including prominent Hong Kong and Taiwanese immigrant ‘globalist’, have been formed

during the 1990s, most with offices in Washington DC, to advance political and ethnic-

cultural interests of Asian Americans.

Research on immigrants has yielded insights into the problems of adaptation, issues on

ethnic discrimination from the host society, racism and issues relating to identity

management and cultural change (Eriksen 2002). Eriksen asserted that groups who look

different from dominant groups may be less liable to become assimilated into the majority

than others, even if they wish to, for it can be difficult for them to escape from their ethnic

identity. In this case, as well as in the case where minority groups have an inadequate

command of the dominant language, their ethnic identity becomes an important and

distinctive status and an ascribed aspect of their person hold. For migrants, even though the

speed of social and cultural change varies from person to person and for some the change

occurs quickly, people tend to retain their ethnic identity despite having moved to a new

environment (Eriksen 2002).

4.7.5 Previous Work Experience

According to the resource based perspectives, apart from education, human capital is

derived from work experience. Research has shown a robust positive relationship between

prior work experience in the same industry or line of business and venture success (Carter

et al. 1997, Cooper et al. 1994). Highlighting the importance of previous work experience,

Kim et al. (2003) explained that if the work experience occurs within the industry in which

the new business venture is located, individual entrepreneurs will gain opportunities to

understand industry-specific market forces and identify potential market opportunities to

exploit. Furthermore, work experience increases opportunities for individuals to obtain

positions within various social networks that can be tapped into for market information,

access to capital, hiring employees, and developing supplier and customer relationships.

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These overseas entrepreneurs, however experienced they may be in their own professional

fields, may also experience difficulties (Boyer 1996, Tseng 1992), such as:

• Inadequate cultural awareness skills of some mainstream bodies;

• Conservative view that these immigrants were too difficult to assist;

• Lack of familiarity of these immigrants with the Australian business environment,

taxation and legal requirements; and

• Administrative inflexibility in terms of inadequate recognition of overseas

qualifications and skills.

Previous studies (Brush et al. 2006, Coughlin 2002, Fielden & Davidson 2005) have

suggested that employment and experience in the same industry as the business venture is a

clear advantage in the entrepreneurial process and are associated with business growth.

Questions are asked in relation to previous industries the respondents have worked in, their

levels of satisfaction, and the barriers to progress encountered in their former employment.

However, most Chinese are not prepared for all the regulations and bureaucracy when they

arrive in Australia. Usually, the most difficult barriers are languages and their presumed

‘freedom’ to exert their influences by bargaining with the independent regulatory bodies.

Broader restriction and limitation are placed on the work and professions that they desire.

This presents the immigrants no choice but to seek upward mobility through setting up their

own specialty within their own ethnic community.

Baker and Wooden (1992) found that 70 percent of migrants with qualifications obtained

overseas did not use their qualifications in their current job, and concluded that non-

recognition of qualifications might have been partly responsible for the relatively high rates

of ‘invisible underemployment’ within some migrant groups. Chapman and Iredale (1990)

found that only 39 percent of formally skilled migrants subjected their overseas

qualifications to official assessment, and of these, only 42 percent had the qualifications

recognised as being equivalent to Australian qualifications. However, they also found that

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those who had their qualifications recognised did not subsequently earn more than those

who did not.

On the other hand, previous work experience of the entrepreneurs has been suggested as

one of the most important influences of new business success (Cooper 1981). An

explanation is offered by Vesper (1980) arguing that start-up experience acts as a proxy for

skills and competencies as well as enabling the building of network contacts, business

reputation and track record among others, hence experience in organization building seem

to be more successful and efficient in the start up of subsequent ventures.

Experience is an important component of an entrepreneur’s human capital and

consequently influences their cognitive behaviour that in turn influences how they engage

in the entrepreneurial process. While experience is generally considered an asset having

built up networks as well as managerial and other competencies, Starr and Bygrave (1991)

argue that this could also be a liability. This may occur with overconfidence such as when

the entrepreneur is reluctant to change from a past successful strategy even if the conditions

have changed. This is referred to as the liability of ‘sameness’ (Starr & Bygrave 1991) and

this can result to the individual failing to recognize blind spots.

Previous work experiences are described as formative by Goss (1991) and may encourage

entrepreneurial behaviour. The skills gained through formative experience may be

managerial, financial, attitudinal or a combination of these, and may build business

competence – highlighting opportunities for the individual. Katz (1992) argued especially

that the family firm should shape children’s career plans. The typical entrepreneur indeed

has a self-employed parent, though not all entrepreneurial offspring choose self-

employment. Parental impact may lie in the transfer of human capital related to starting or

running a business (Lentz & Laband 1990), these finding are also supported by Carroll and

Mosakowski (1987). Another way of learning is through the observation of behaviour in

others, referred to as role models (Bandura 1986). Thus even limited experience with

entrepreneurial activity can substantially influence how one thinks about entrepreneurship

(Scherer et al. 1990). Curran and Burrows (1988) research in the UK found that 50 percent

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of small business owners have come from a family background of self-employment,

compared with 20 percent for all employees. Therefore, based on the resource based

theorists findings that industry-related experience is one of the most important factors for

successful entrepreneurial ventures, it is inferred that the previous work experience of

Chinese entrepreneurs plays a key role in their success.

In summary, the study’s fourth hypothesis rests on the premise that Chinese entrepreneurs

face a lot of barriers in their entrepreneurial endeavours that impede their progress. These

include language barrier, education levels, business skills and knowledge, previous work

experiences, access to human and financial capitals, and regulatory environments. This

leads to the following hypothesis:

H4. Entrepreneurial success is related to the difficulties and hurdles experienced by the

entrepreneurs.

4.8 Business Skills and Capabilities

There is recognition in the entrepreneurship and management literature of the significant

contribution of business skills and capabilities to business success. Begley and Boyd (1986)

found that although all entrepreneurs start with a set of unique entrepreneurial traits,

business skills and capabilities are essential elements of business creation and success.

Business skills, particularly production and marketing skills, strong idea generation and

dealing with people, are found to be related to business performance and success by Lerner

et al. (1997).

Immigrant enterprise development depends on being the ‘middleman minority’, which is

based on the opportunity structure and operating environment in the host country. The set-

up and the running of the businesses has been gradually changed in such ways that external

assistance and help are sought to deal with larger issues and problems. This is due to the

increase in the complexities and the sizes that the organizations have developed into. The

process of organizational growth advocated by Van de Ven and Poole (1995) is central to

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this study. These phases may be the result of search for new opportunities, or because of

internal crises, or in response to changes in the industry structure over the life cycle of a

product, or in response to the changing nature of problems confronting the organization

(Beverland 2000).

Chandler (1962) identified a four-stage model or organizational evolution, starting with

expansion of volume, moving to geographical dispersion and vertical integration, and

ending with product diversification, where each new strategy created new administrative

needs. Greiner (1972) suggested a five-stage model, starting with creativity and progressing

through direction, delegation, coordination and collaboration. Miller and Friesen (1983)

outlined a corporate life cycle of birth, growth, maturity and revival or decline, during any

of which, organizations could experience success or failure. Success depends on how well

the organization balanced innovation and conservatism, and failure tends to fluctuate

between high levels of innovation and excessive stagnation.

4.8.1 Bureaucracy and Regulation

Administrative and regulatory burdens affect all new and small enterprises and can be one

of the factors encouraging entrepreneurs to engage in informal sector activity as a means of

avoiding their influence. Whilst less of an issue than finance, there is a need for support

organizations operating in areas where there are significant numbers of ethnic minorities to

make administrative and legislative requirements available in appropriate languages and to

provide assistance to ethnic minority entrepreneurs who have difficulties in responding to

them (Boyer 1996, Li 1988, Teixeira 1998, Tseng 1992).

Unlikely in western countries, the Chinese judicial systems have always been dependent on

both state and local governments at the time. These judicial systems are different at

different times, depending on the dynasties. However different these laws may be, the head

of the family will be more important and influential than that of the government

representatives. The role of the judicial system is different from those practiced in the

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western societies. In the western societies, one will argue constantly about what legal and

political systems are the right ones, how the details of these systems should be organized

and implemented, and what rights and protections one will have. The assumption behind

the whole discussion is that there is a system: a legal and philosophical framework, fairly

clearly delineated, within which everyone can work.

In China, personal rule – the emperor was the model; the whole discussion was not about

the system, but about the legitimacy of the government, the ‘mandate of heaven’. That

mandate was judged by the physical well-being of the people. If the people had enough to

eat and were not dying from invasions or natural disasters, then heaven must be happy with

the rulers. If the people were suffering, for whatever reason – war, earthquakes, famine,

venal officials – then heaven had withdrawn its mandate, and before long the government

would fall.

Throughout the whole Chinese history, regulatory bodies of any kind of professions,

industries and developments did not exist. The skills acquired by different professions

were, in fact, similar to the Australian apprenticeship system. A layman was not required

by anyone or any department to get any registration, whether to open a restaurant, to build a

house or to become a doctor (herbal medicine). It was simply because such department or

regulatory body did not exist, regulatory system was non-existent. The regulatory

enforcement began and became more mandatory only since China opened its doors thirty

years ago (Liang 1987).

According to many Chinese, China has no need for a system. If the ancient values alone

will not serve, there is always guanxi, the intricate web of connection built of family,

village, friends, and language group (Chen & Chen 2004, Park & Luo 2001). For western

investors, the lack of strong, unambiguous contract law and reasonably incorruptible (or at

least high-priced) courts may be the largest single barrier to entering the Chinese economy,

and vice versa (Chu 1995).

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Another area of business development for immigrant entrepreneurs relates to the issue of

band regulations at all levels of government (federal, state and local governments) and

other regulatory bodies. In the past, there are a lot of hurdles, administrative burden and

compliance costs of regulation and governance. Collins (2003) suggested a name – ‘red

tape’. Business enterprises required to respond to a range of government administrative,

regulatory and reporting requirements. Compliance costs had been estimated to amount to

as much as one-third (32 percent) of the profits of small businesses in Australia (OECD

1998b). The entrepreneurs have to work their ways around the bureaucratic maze of

legislation, red tape and policy developments that impacted on their businesses. The

inefficiency and incapability to reduce the maze of administration work deter both the

potential and existing entrepreneurs to extend or expand their businesses further.

4.8.2 Prior Exposure to Entrepreneurship

Apart from the resource based theorists’ views on the human capital available to an

entrepreneur, social learning theory offers a complementary perspective which proposes

that entrepreneurs can acquire crucial business knowledge and skills from family members

and friends, especially in Chinese culture. The social learning perspective advocates that

the individual’s socialization process, which occurs in the family setting, transforms norms,

aspirations and career preferences through observational learning and modelling (Bandura

1977). While the most influential role models are family members, the prevalence and

visibility of successful examples can be helpful to entrepreneurs.

For instance, researchers have speculated that self-employed parents might encourage the

development of entrepreneurial attitudes in their children through socialization. Parents

may somehow be instilling a learned preference for self-employment in their children,

possibly by providing work experiences at a young age, or through exposing their children

to the entrepreneurial lifestyle and the social networks tied to their businesses (Carroll and

Mosakowski 1987). The socialization process exposure to entrepreneurial skills may

include not only someone’s parents but also other relatives, as well as friends. Other family

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within the same generation (siblings and cousins) can influence an individual’s beliefs

about entrepreneurship, as well as provide role models and practical knowledge. Lentz and

Laband (1990) viewed this informal training and experience as a separate component of

human capital that might increase someone’s interest in the start-up of an entrepreneurial

venture and also improve the chance of success.

In summary, prior knowledge (may not be in the same fields that the immigrants are

experienced in) influences the way entrepreneurs comprehend, extrapolate, interpret and

apply new information in ways that those lacking it cannot duplicate (Roberts 1991). It

helps entrepreneurs appreciate the value of new information. It influences individuals’

willingness and ability to make new connections among pre-existing ideas, as well as with

new ideas, hence allowing them to recognise opportunities.

This finding also coincides with earlier studies in literature, which emphasize that

entrepreneurs are four times more likely to have been subject to the influences of an

entrepreneurial parent. This view also points out the fact that people’s personalities and

skills are partially the result of their genetic make-up, and partially the result of their

environment, that is, their upbringing (Bandura 1977, Hisrich & Brush 1985). Engebretson

(2004) suggested that family, friends and community are the major influences in the

development of young peoples, whose tasks concern the relationship with family, with

peers, and with other people, while becoming a member of the community.

4.8.3 Standard of Success

In this study, success is explored in relation to how researchers have endeavoured to

measure business success, and as to how the Chinese entrepreneurs’ view their success.

Traditional economics and entrepreneurship theories interpret the success of a business

based on its financial performance and profitability (Djik 1996). Traditionally, most

analyses take for granted a definition of success and failure of any entrepreneurship by

looking at different financial, quantitative measures such as income, size of firm, and the

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number of employed people as the achievement. Business success is determined by

financial indicators including the growth rates, business size, turnover, profitability and the

number of people employed. However, more recently there is a growing argument that,

because business and entrepreneurs are not homogeneous, definitions of success need to

include non-financial yardsticks.

Werbner (1999) defined ‘success’, rather than being an individual achievement, is often

defined collectively – as the establishment and reproduction of a new value regime and its

association with a particular ‘place’ or ‘community’. It is a strong desire commonly shared

by Chinese to be prosperous, and they are highly motivated towards the accumulation of

wealth. A former Chairman of China (Deng Xiao Ping) commented, ‘To get rich is

glorious’. It is a Chinese traditional value to judge people’s wealth and power by assessing

the value of their land and property (Fouts & Chan 1995). Because of this motive, the

principle that ‘money can buy everything’ can become a common official and unofficial

means of getting through procedures and systems. This ‘back door’ channel, also called the

‘Chinese way’, refers to the unofficial economy similar to the black market where one can

get things done that are not available or not possible in the official economy (De Mente

1994). Therefore, the traditional way of measuring success by profitability may not be

adequate.

It shows that there is a relatively different standard of ‘successes in another country of

cultural and social value. In the Sydney survey of Collins et al. (1995), it is reported that

their surveyed businesses are profitable. Also, two out of every three Chinese entrepreneurs

in the national survey have established new business rather than taken over an existing one.

However, in Chinese businesses, there is always possibility of inaccuracy due to different

measuring standards. There are always hidden cash money, distorted taxation and

accounting methods to minimum the taxable incomes. Consequently, there are other

businesses that may be incorrectly ‘classified’ as unsuccessful business. Therefore, money

cannot be the only quality to be used as the criterion.

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4.8.4 Overseas Expansionary Vision

Stromback and Malhotra (1994) highlighted the entrepreneurial advantages of Asian

(mainly Chinese) immigrants because of their ‘cultural baggage’ and motivation. They

emphasized the importance of these overseas networks of ethnic entrepreneurs in Australia.

The links with relatives or friends in the country of origin are often used to provide a

reliable source of supply, access to a marker, advice about market prospects and to secure

credit. Similarly, Lever-Tracey et al. (1991) concluded that Chinese entrepreneurs are on

the whole successful, innovative and export orientated entrepreneurs who have

considerable overseas resources, including financial resources and business networks.

These networks provide an advantage when establishing import/export activities because

they provide personalized and trust-based networks which extended into the community

and beyond, into mainstream society and overseas.

The role of links to the country of origin and networking can be further explored in the

context of internationalisation of these businesses. There are issues of how much

dependency on the links to the country of origin and ethnic resources for business is good

for the ethnic business. Ethnic business owners need to consider whether they should make

themselves stronger in their host country rather than continue to depend on their resources

back home. They also need to decide whether to concentrate on domestic investments

rather than on international dealings (Chavan 2002). This expansionary vision increases the

potential for the business to succeed, and it leads to the fifth hypothesis:

H5. Entrepreneurial success is related to overseas expansionary vision of the entrepreneurs.

4.9 Summary

In summary, there has been quite extensive research focused on the key elements of

successful Chinese entrepreneurs. The literature in relation to entrepreneurship generally

has shed light on many of the variables in question. Previous studies about first generation

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entrepreneurs include a number of problems that they encounter at start-up and growth.

Amongst these problems, the lack of access to finance is widely covered in the

entrepreneurship literature. Other problems highlighted in Chinese entrepreneurship

literature include the lack of managerial, business and technical skills, local know-how,

local customs and culture, and lack of access to business networks, and combining

language and recognition of qualification with the management of their ventures (Chan

2001, Ip et al. 1988, Collins 1996).

In addition, the uniqueness of Chinese characteristics has been shown and compared to that

of the western entrepreneurs. These concepts of entrepreneurship are further explained and

enhanced in this thesis by an understanding of common personality traits of entrepreneurs,

their motivations for business ownership, and the critical resources needed for the

entrepreneurial process.

The next chapter is the methodology research strategy chapter. It will describe the selection

of the respondents the survey instrument, analysis techniques and the research paradigm

employed.

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Chapter 5

Research Design and Methodology

5.1 Introduction

This chapter discusses the philosophical paradigm employed in this research and the choice

of research methodology. The methodology also explains the data collection and analysis.

An overview of research paradigms will be presented in this chapter, including the one used

in the thesis and the research strategies used to collect data for the study. The research

population and the sampling technique applied will be explained, as well as the instruments

and procedures of data collection. Finally, the data analysis methods employed in the study

are presented.

5.2 Objective, Research Questions, Hypotheses of the Study

As stated in chapter 1, the research objective is to investigate the first and second

generation Chinese entrepreneurship in Box Hill. In other words, this study aims to add to

our understanding of Chinese entrepreneurs by shedding light on the dimensions explored

in this research. In order to meet the above objective, five dimensions of Chinese

entrepreneurs were identified for investigation based on past studies, namely; (1)

background of the entrepreneurs, (2) motivations of the entrepreneurs, (3) traditional

Confucian values of the entrepreneurs, (4) the difficulties and hurdles encountered by the

entrepreneurs, and (5) the overseas expansionary vision of the Chinese entrepreneurs.

Drawing upon these five dimensions of Chinese entrepreneurs, five research questions are

posed:

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• Research Question 1: What are the background factors contributing to the success of the

entrepreneurs?

• Research Question 2: What are the motivation factors that contribute to the success of

the entrepreneurs?

• Research Question 3: What are the traditional Confucian values that contribute to the

success of the entrepreneurs?

• Research Question 4: How do the difficulties and hurdles encountered during the

entrepreneurial process contribute to the success of the entrepreneurs?

• Research Question 5: How does overseas expansionary vision contribute to the growth

of entrepreneurial venture?

To gain a deeper insight into Chinese entrepreneurship in Box Hill, five hypotheses were

formulated based on the literature and arising out of the research questions and the

theoretical framework of the study:

H1. The background of the entrepreneurs is related to the success of their businesses.

H2. Entrepreneurial success is related to the motivation of the entrepreneurs. H3. Entrepreneurial success of the Chinese is related to traditional Confucian values.

H4. Entrepreneurial success is related to the difficulties and hurdles experienced by the

entrepreneurs.

H5. Entrepreneurial success is related to the overseas expansionary vision of the

entrepreneurs.

The testing of these hypotheses contributes to the achievement of the objective of the study

by helping to answer the research questions and find empirical support for the theories

adopted for the study.

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5.3 Important Research Characteristics of the Study

Based on the research objectives, questions and hypotheses, this study has the following

key research characteristics: descriptive and correlative.

Descriptive study – the major aim of a descriptive study according to Kumar (2005) is to

describe and provide information on what is prevalent regarding a group of people, a

community, a phenomenon or a situation. This study embarks on the research mission of

using quantitative methods to investigate a number of diverse variables (background,

motivation, traditional Confucian values, difficulties and hurdles, and overseas

expansionary vision) to describe the demographics of these Chinese entrepreneurs. This

study also uses renowned theoretical perspectives to derive the research variables and the

hypotheses of the study. It can therefore be argued that this study starts as a descriptive

study and that the research constructs in a descriptive study must be supported by

established theory (Hussey and Hussey 1997).

2. Correlation study – the strength of the relationships of the variables is described and

explored from the testing of the hypotheses of the study (Bryman 2004). This characteristic

of the study shows that it is a correlation study. Kumar (2005) emphasized that in

correlation studies relationships or associations between two variables are ascertained.

The independent and the dependent variables are derived from the five dimensions of

Chinese entrepreneurs identified for investigation. The independent variables are

background, motivation, traditional Confucian values, difficulties and hurdles, and overseas

expansionary vision. The dependent variable is the Chinese entrepreneurs’ successes. This

study concentrates on determining the strength of the relationships between the independent

and the dependent variables. This is helpful in finding empirical support for the various

theoretical perspectives adopted in the study and providing a better understanding of the

Chinese entrepreneurs.

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Research on immigration has frequently been divided between qualitative studies based on

small, often unrepresentative samples, whose findings are rich in detail but relate only to a

specific group of people; and quantitative studies based on large, representative samples

which can demonstrate broad-scale trends but cannot explain how social life is experienced

by people (Statham 1998). However, due to nature of the interview and the relationship

between the interviewer and informants (Neuman 2000), it is possible that the influence of

the researcher may have led to deviation from the ‘true’ response elicited and recorded by

the interviewer. In fact, the author knew a few of the subjects through previous business

dealings and contacts. Therefore, to avoid the possible bias, this research is based on

quantitative data collection and analysis only.

For comparison, the respondents have been separated into two groups in the analysis, one

being first generation and the other being second generation. Hence, all the results in Part 1

and Part 2 of the questionnaire can be further analysed and grouped under first generation

and second generation (Chapter 7).

In summary, the descriptive and correlation methods in this quantitative research

incorporate tools for measuring relationships between variables by linking them to

deductive or integrated theory (Kumar 2005). This paradigm is typified by data collection

methods using quantitative techniques such as surveys and statistics. The paradigm aims at

exact measures, objective research and hypotheses testing by carefully analysing numbers

from the measures.

5.4 Philosophical Research Paradigms of the Study

There are two common approaches to organizational research: positivist and interpretive.

Positivist approach refers to procedures such as those associated with inferential statistics,

hypothesis testing, mathematical analysis and experimental and quasi-experimental design.

Interpretive approach refers to procedures such as those associated with ethnography,

phenomenology and case studies (Lee 1991). Since a philosophical paradigm influences the

choice of research methodology or research enquiry strategy, there is the need to identify in

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which philosophical research paradigm this study is situated. A brief overview will be

presented on research paradigms with their associated research methods; then the paradigm

used in this study will be presented.

The organizational literature has thoroughly covered what differentiates the two

approaches. In their review of the literature, Morey and Luthans (1984) observe that

organizational researchers have described the differences between the two approaches in

the following ways: objective versus subjective (Burrell and Morgan 1979); quantitative

versus qualitative (Van Maanen 1979).

5.4.1 Positivist Paradigm

The positivist paradigm is derived from the natural sciences and treats research as the

independent observation of events occurring within a system. It is founded on the belief

that the study of human behaviour should be conducted in the same ways as studies in

natural sciences and is based on assumptions that social reality is independent of us and

exists regardless of whether we are aware of it.

This paradigm is associated with a quantitative research method that typically incorporates

tools to measure numbers indicating cause-and-effect relationships. Its explanation consists

of establishing causal relationships between variables by establishing causal laws and

linking them to deductive or integrated theory. The positivistic paradigm is typified by data

collection methods using quantitative techniques such as experiments, surveys, and

statistics. These methods seek facts or causes of social phenomena. The paradigm aims at

rigorous, exact measures and objective research, and tests hypotheses by carefully

analysing numbers from the measures (Kumar 2005). These methods and techniques tend

to specialize in quantities in the sense that numbers come to represent values and levels of

theoretical constructs and concepts, and the interpretation of the numbers is viewed as

strong scientific evidence of how a phenomenon works (Starub et al. 2004).

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5.4.2 Interpretive Paradigm

Interpretive studies assume that people create and associate their own subjective and inter-

subjective meanings as they interact with the world around them. Interpretive researchers

thus attempt to understand phenomena through accessing the meaning participants assign to

them (Orlikowski and Baroudi 1991). These methods of research start from the position

that the knowledge of reality is a social construction by human actors and that this applies

equally to researchers. There is no objective reality which can be discovered by researchers

and replicated by others, in contrast to the assumptions of positivist science (Walsham

1995).

This approach adopts a different framework of analysis. It attempts to understand

subjective human behaviour by focusing on meaning rather than measurement. It is

therefore based on hunches, experience and intuition as the means of investigating research

problems. These methods seek to describe, translate and come to terms with meaning

(Neuman 2000).

5.4.3 Applicable Paradigm of this Study

A critical analysis of the key characteristics of this study indicates that it falls within the

framework of the positivist research paradigm only. Descriptive and correlation studies are

essentially within this philosophical framework. This study to an extent makes an effort to

adhere to the principle of positivism by collecting quantitative data by surveys and by

analysing data using statistical techniques. Also, the hypotheses of the study will be tested

and empirical support will be found for theoretical perspectives without any bias.

The exploratory nature of the interpretive approach requires qualitative date collection and

analysis. Personal interviews are required to collect further details. Unfortunately, the

author works in Box Hill, and the retail establishments and personal contacts extend over a

period of twenty-six years in the area. Therefore, the author is a well-known figure in Box

Hill. While conducting interviews would not be difficult, it would involve some issues:

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• Respondents may be reluctant to give detailed and personal views since they know

the author fairly well and may be embarrassed.

• Respondents may be concerned that the information may be sensitive and that the

author should not know about it.

• The interviews would not be anonymous, and therefore true information might not

be given by the respondents.

• There may be bias by the respondents in making up untrue responses about any

phenomenon.

Although this phenomenological paradigm (as an interpretive research approach),

according to Neuman (2000), is useful in gaining meaningful insight into social action in its

real-life context, the data collected by interview is not appropriate and practical in this

study. Since entrepreneurship is social action, to capture and discover an understanding of

Chinese entrepreneurs in their real life context will be difficult. Consequently, the

interpretive research within the phenomenological research paradigm will not be carried out

in this study.

5.4.4 Pragmatic Paradigm

Pragmatism is to position mixed methods research as a complement to traditional

qualitative and quantitative research. This provides a framework for designing and

conducting mixed methods research (Johnson 2004). This philosophy underlying

pragmatism includes induction or the discovery of patterns (associated with qualitative

techniques); deduction, which involves the testing of hypotheses and theories (associated

with quantitative techniques); and abduction, which is uncovering and relying on the best of

a set of explanations for understanding one’s result. Pragmatism therefore legitimatizes the

use of multiple methods in answering research questions, rather than restricting or

constraining researchers’ choice. It rejects dogmatism and is an expansive and creative

form of research. What is most fundamental is the research problem. Also, individual

researchers have a freedom of choice. They are free to choose the methods, techniques, and

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procedures of research that best meet their needs and purposes. Pragmatists do not see the

world as an absolute unity. In a similar way, mixed methods researchers look to many

approaches for collecting and analysing data rather than subscribing to only one way, for

instance, qualitative or quantitative.

5.4.5 Mixed Methods Research Approach

The mixed methods research approach is a type of research where both qualitative and

quantitative research techniques are combined with their associated methods, approaches,

languages or concept in a single study (Creswell 2003). Creswell et al. (2007) described

mixed methods research as a research design with philosophical assumptions as well as

methods of inquiry, with its central premise being that the use of quantitative and

qualitative approaches in combination provides a better understanding of research problems

than either approach alone. The mixed methods approach or triangulation, as it is

sometimes known, has its origin in navigation, military strategy and surveying (Kohlbacher

2005). The term triangulation in social research is used in a less literal sense to describe the

use of a combination of multiple empirical research methods to investigate a phenomenon

(Wolfram Cox and Hassard 2005). The intention is that the combined techniques

complement each other (Johnson 2004).

Easterby-Smith, Thorpe and Lowe (1991) identified four forms of triangulation:

1. Data triangulation, which is the use of the same method of data accumulation on

different occasions or of a different method on the same object of the study.

2. Investigator triangulation, which is the use of several researchers or evaluators.

3. Methodological triangulation, which is the use of various data sources.

4. Triangulation of theories, which is the development of multiple theories about the

same research problem.

This study enhances the validity and reliability of its data by adopting two forms of

triangulation. The first one is data triangulation, in which the same method of data

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accumulation is used on different occasions. The second one is the development of multiple

theories about the same research problem. Multiple hypotheses are derived from the

theoretical framework of the study, which consists of multiple theories such as

psychological, motivational, resource-based, innovation and network. The testing of these

hypotheses results in the confirmation of multiple theoretical perspectives about Chinese

entrepreneurship. However, the qualitative method is omitted from this study due to reasons

given above.

Triangulation or mixed methods research enables a fuller understanding of empirical results

than might be achieved from data gathered using a single method. However, the main

weakness of triangulation identified in the literature is the investment of time and effort

required (Wood et al. 1998). There is the need for each phase of the methodology to be

planned, designed, executed and analysed. Nevertheless, Gillham (2000) argued strongly

that the investment of time and effort required in the triangulation approach is worthwhile,

since different methods have different strengths and weaknesses. Therefore, if these

methods converge, the researcher can be reasonably confident that he/she is getting a true

picture of the study. The effectiveness of triangulation therefore rests on the premise that

the weaknesses in one method will be compensated by the counter-balancing strengths of

another (Jick 1979). Also, the research finding from one method can be used to confirm the

findings of another (Creswell et al. 2007).

In this quantitative methodology, primary data were collected by means of a mail survey.

Objective data, such as demographic profiles, gender, industries, targeted businesses and

customers and others are used to compare the differences between the two generations of

Chinese entrepreneurs. The results are compared and analysed while the study’s hypotheses

are tested.

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Research Problem

Research Questions

Theoretical Framework

Integration and Analysis of 2 Data Sets (2 separate Generations)

Testing of the Hypotheses and Discussion of the Overall Results

Development of the Profile of Chinese Entrepreneurs

Diagram 5.1 Research Strategies Using Triangular Methodology

Hypotheses of the Study

Quantitative Data

Quantitative Survey

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5.5 Population and Sample of the Study

The population of the study comprises Chinese entrepreneurs in Box Hill. Box Hill, a

relatively new ethnic cluster, has the majority of its Chinese inhabitants from Mainland

China. Mandarin and Cantonese are spoken equally. Again, this suggests that roughly 50

percent of the Chinese have come from Guangdong province and Hong Kong where

Cantonese is the common dialect (Selvarajah et al. 2008). Interest in ethnic

entrepreneurship has been due to two factors. Firstly, the symbiosis of culture and business

has always fascinated the author. The study of Chinese immigrants in Australia provided

the author with the scope to explore the future course of Chinese immigrants’

entrepreneurship. Secondly, as a first generation ethnic Chinese entrepreneur in Australia,

the author was eager to find out whether this study on the business succession from the first

to second generation Chinese entrepreneurs can provide insights into business continuity.

The database of Chinese entrepreneurs in the municipality was obtained from the Australia-

China Commerce and Economic Association Inc. in Box Hill. All the subjects were

selected based on their involvement with the Chinese Chamber of Commerce in Box Hill,

which gave consent and support for the research (Appendix 2). The Association agreed to

mail out the questionnaire to its members. These subjects were all volunteers, without any

pay from either the author or the Department of Business and Enterprise at Swinburne

University.

The questionnaire was mailed out by the Australia-China Commerce and Economic

Association Inc. in Box Hill to its members, and the participants were asked to forward the

completed questionnaire in a reply-paid envelope to the First Investigator (Professor

Christopher Selvarajah) at Swinburne University.

In this study, some of the first generation Chinese were reluctant to reveal their past and

their previous experiences to outsiders, unless the outsiders were personally introduced.

This behaviour is very cultural, as business ‘secrets’ remain within the immediate family.

Fortunately, the author is from the Chinese community in Box Hill and is familiar with

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many of the subjects. Since the questionnaire did not include any sensitive personal issues,

the subjects were willing to fill in the forms. However, it did take some time for some

subjects, even after full explanation, to understand the importance and usefulness of their

replies. In comparison, the second generation group was more eager and willing to

participate in the study.

There was no risk to the participants as the whole anonymous survey was based on their

own personal views on how business is done. There was no personal data or information

that might cause any detrimental effect to self-esteem or embarrassment to the participants.

If the participants were uneasy regarding any issue in the questionnaire including gender,

age, or ethnicity, they could discontinue at any time, and/or report to Professor Selvarajah

or Swinburne University.

In this study, several assumptions have been made:

• Firstly, the terms immigrant entrepreneurs and ethnic entrepreneurs, although not

identical, are interchangeable (Collins et al. 1995).

• Secondly, following Light and Rosenstein (1995), this study adopts a very ‘loose’

definition of entrepreneurship. Entrepreneurs include all those who are in self-

employment; these include employers.

• Thirdly, in this study, each business employed less than 100 people.

In order to achieve the objective of the study of investigating Chinese entrepreneurship,

distinct criteria were used to identify the Chinese entrepreneurs for the sample. The

selection was based on the following attributes:

• The entrepreneur either owned all of his or her business, or was the majority

shareholder (50 percent).

• The entrepreneur, who had initiated the business, was actively involved in

managing it.

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• The business of the Chinese entrepreneur was based in the municipality under

investigation.

• The business had been in operation for at least one year.

• The business venture had to exhibit entrepreneurial features.

After the process of screening and scrutiny using the above outlined criteria, two hundred

and sixty-seven (267) subjects were identified for the sample. To collect quantitative data, a

survey questionnaire was mailed out to all the 267 Chinese entrepreneurs identified in the

study area. This enabled all the entrepreneurs in the municipality to participate in the

research irrespective of their ethnic background, age, country of origin, gender, industry,

position and other factors. Also, with the coverage of the entire population of subjects, the

variety or types of businesses that the Chinese operate, their targeted business and

customers were also included in this study.

5.6 Research Instrumentation

In this study, ‘entrepreneur’ is defined as someone who owns his or her business. The

person derives some income by engaging in business or economic activities as a self-

employed person. The business may or may not be inherited through the family. All the

subjects were selected based on their involvement with the Chinese Chamber of Commerce

in Box Hill, the business connection within the business communities all over Melbourne.

The respondents were clustered around the eastern suburbs, mainly in and around Box Hill.

These subjects were all volunteers and were unpaid.

5.6.1 Quantitative Method

The general purpose of this study was to investigate Chinese entrepreneurship. Therefore,

efforts were made to select a quantitative research instrument that would cover as many

Chinese entrepreneurs as possible in the study area. The general background and operating

environment of the Chinese entrepreneurs is Box Hill; the result from the survey of Chinese

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entrepreneurs in the study area can thus be generalized to Chinese entrepreneurs in

Australia. Quantitative data were therefore collected by means of a survey questionnaire

with 92 questions. The survey questionnaire was mailed out to 267 Chinese entrepreneurs

in the Box Hill municipality in Melbourne. Most of the questions were designed to collect

quantitative data.

The survey questionnaire was employed in the study to collect data because it was well

suited to the descriptive and correlative nature of the study and it enabled a systematic

collection of predominantly quantitative data (Bryman 2004, Kumar 2005). The data

collected were useful in measuring the identified variables and testing the specified

hypotheses of the study, which contributed to the understanding of Chinese

entrepreneurship (Neuman 2006). Furthermore, the mail survey procedure allowed the

efficient, in-time and one-off collection of data from respondents (Sekaran 2003).

Moreover, Sekaran (2003) further argued that questionnaires are preferred by respondents

because questions are more easily understood and can be answered at respondents’ own

pace and in their own time. The above arguments therefore support the choice of the survey

questionnaire in the study.

The 92 questions in the survey questionnaire were related to the research variables and the

five hypotheses of the study. Each question consisted of multiple-choice answers. The

subjects were to select the most appropriate answers; these answers were based on their

opinions derived from their personal experiences, thinking and knowledge. There was no

right or wrong answer. The answers ranked from ‘low importance’ to ‘high importance’.

The use of multiple indicators allowed the author to specify more precisely the desired

responses. This did not place total reliance on a single response, but instead on the

‘average’ or ‘typical’ response to a set of related responses. The guiding premise was that

multiple responses reflect the ‘true’ response more accurately than a single response. Based

on the theoretical framework of the study and the five major research questions, the

questionnaire was structured into six sections (a copy of the questionnaire is included in

Appendix 1).

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The questionnaire consisted of two parts: part 1 contained 12 questions and part 2 had 80

questions. The questions based on descriptive statistics (part 1 of the questionnaire) were

designed to give the Chinese entrepreneurs (in both generations) a general profile.

Part 1 collected demographic information, such as:

- Country of origin, gender, industry, position, targeted business, targeted customers,

age of respondents;

- Date of arrival in Australia, religion of respondents, question about spirituality;

- Type of migrant/migration program, when migrant started his or her own business.

Part 2 was used to collect information under six different headings. Question (0) was a

sample question. It had no statistical importance in this study and was excluded from the

analysis. The questions were divided into the following groups:

- Importance of different factors in setting up one’s own business (Q.1 – Q.8)

- Reasons for becoming an entrepreneur (Q.9 – Q.17)

- Views on different traditional Confucian values (Q.18 – Q.23)

- Views on and importance of different difficulties and hurdles (Q.24 –Q.68)

- Importance of having overseas expansionary vision in a business (Q.69 – Q.79).

5.6.2 Ethics Approval

Ethical issues generally arise in the design and conduct of research on human subjects and

in the reporting of results. It is a Commonwealth legislative requirement in Australia that

all projects involving human subjects meet certain standards and have written approval

from the accredited ethics committee. The Swinburne Human Research Ethics Committee

(HREC) or one of its sub-committees has responsibility for ensuring that research within

the University meets ethical principles. Hence the researcher had the responsibility to

ensure that ethics approval was obtained in writing before commencing the data collection

process, including the pilot study. It meant that no data were collected from any human

participants without approval. A completed standard form together with copies of the cover

letter and the survey questionnaire and interview schedule were forwarded to the Human

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Research Ethics Committee for its approval. The committee gave written approval to

conduct the survey after accepting the proposed research protocol.

An important ethical principle in the ethics protocol which this study adhered to was that no

harm should befall any person requested to participate in research. This necessitated

protecting the respondents’ anonymity and ensuring freedom from a stressful experience.

Thus, a written statement was given to all persons who would be requested to participate,

outlining the purpose and nature of the research project. Its objective was to assist those

persons to make an informed choice as to whether or not they wished to participate. A copy

of the statement was attached to the approval application. Later, the approved statement

became a part of the request letter that accompanied the survey questionnaire. Also, due

care was taken to ensure that all data collected were handled confidentially.

The procedure for grievance resolution during the research was also outlined in the initial

pages of the survey questionnaire. The questionnaire made it clear that in case a respondent

participating in the study had any concern about the participation, or a complaint, the

participant could either contact the research supervisor or the researcher in the first

instance. If the issues raised could not be solved, then the chair of the Human Ethics

Committee must be contacted. All relevant contact addresses and telephone numbers were

included (Appendix 2).

5.6.3 Pilot Study

An analysis plan that addressed the set of issues particular to the purpose and design of the

study was drawn up. The issues included general considerations such as minimum or

desired sample sizes and allowable or required types of variables and estimation methods.

The questions should cover areas that were important and significant to the entrepreneurs

themselves, as well as those questions that these entrepreneurs wanted to find out. These

questions were based on an earlier small-scale pilot study and personal experiences of

different entrepreneurs. Most of the questions were related to entrepreneurial behaviour and

views on the entrepreneurial process. The survey questionnaire was piloted to ensure its

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reliability and appropriateness for the study. According to Bryman (2004) and Neuman

(2006), piloting helps in ensuring that the survey questions operate well and the research

instrument as a whole functions well. In this study, the survey questionnaire was pilot-

tested in two phases.

Firstly, the questionnaire was piloted on two of the author’s contacts who were doctoral

students in sociology to ensure all the variables were completely and clearly covered.

During the pilot study, the doctoral students, who had experience in Chinese immigrant

history and migration issues, were very helpful in the reviewing of the questionnaire. The

questionnaire was reviewed on the basis of syntax, spelling, integration, comprehensibility

and grammar. This was to avoid confusion, ambiguity and sensitive issues such as family

members. This review also ensured that the intended respondents readily found the

questions understandable.

In the second phase, four Chinese entrepreneurs resident in Melbourne, Australia took part.

The researcher identified one Chinese telecommunication company owner, two retail

traders and one doctor (who owned a medical group) resident in Box Hill, who had created

their own businesses and were operating them very well. Their attributes and operations

met the criteria and qualifications of the target population of the study. Three of them

belonged to the first generation, and the fourth one belonged to the second generation.

These contacts were personal friends of the author. They had been advised of the ‘pilot’

nature of the study. The pilot test on this group was extremely important and very useful

since it ensured the cultural relevance of the study. These four people, through previous

acquaintance, gave a lot of useful information in the construction of the questionnaires.

Also, as suggested by Bryman (2004) and Neuman (2006), pilot testing is best conducted

on a small set of respondents similar to those in the final survey. This second group of

Chinese entrepreneurs doing business in Box Hill was very similar to those in the study’s

sample frame.

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The pilot test was conducted to ensure that the academic, business, social and cultural

relevance of the survey questionnaire was intact. Importantly, comprehensibility and

confidence in the research questions and instruments were also assured in advance.

5.6.4 Data Collection Procedure

A quantitative methodology approach was used to collect data for the study. The data were

collected in Box Hill, Melbourne from January to April 2008. The target population of the

study was Chinese entrepreneurs in businesses in the Box Hill municipality in the eastern

region of Melbourne. The database of the respondents was obtained from the Australia-

China Commerce and Economic Association Inc. (ACCEA) in Box Hill.

To collect the quantitative data, survey packs were mailed out to the 267 Chinese

entrepreneurs who were identified from the database provided by the ACCEA and then

further screened to reflect the characteristics of entrepreneurship. The survey packs were

mailed out. The survey pack consisted of the following items:

• The survey questionnaire titled ‘Dimensions of Entrepreneurship – A Study of First

and Second Generation Ethnic Chinese in Melbourne’;

• A covering letter;

• A reply paid envelope on which was printed the researcher’s name and address;

• A letter of expression of interest and consent to participate in interviews.

The covering letter explained the following: the purpose of the research and the benefits to

Chinese entrepreneurs and the nation of Australia as a whole; the estimated time required to

fill out the questionnaire; assurances of confidentiality; ethical approval; and a closing date.

Copies of the covering letter, expression of interest and consent letter, and the survey

questionnaire are provided in Appendices 1, 2 and 4.

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5.6.4.1 Responses to the Survey

A total of 200 usable completed questionnaires were collected out of the 267 that were

distributed, yielding a 74.9 percent response rate. According to Hart (1987), response rates

in business surveys vary from 17 percent to 60 percent, with an average of 36 percent.

Therefore the response rate of 74.9 percent was above acceptable for business surveys.

The high response rate could be as a result of the covering letter attached to the survey

questionnaire assuring confidentiality and emphasizing the importance of individual

responses to the study’s outcomes and the contribution to knowledge about Chinese

entrepreneurs in Box Hill. Also, since little research on this subject matter has been carried

out in the study area, the participants may have perceived this study as a medium to let

others hear about them and their activities. A reply paid envelope was also enclosed to

minimize monetary cost and inconvenience to respondents.

5.6.4.2 The Broad Characteristics of the Participants

The broad characteristics of the participating Chinese entrepreneurs and their ventures are

shown below (detailed analysis of the individual characteristics is presented in chapter 5).

The age of the respondent ages ranged from 20 to 69 (72 percent aged between 30 and 59).

Their businesses were located across numerous small-scale industries, including

restaurants, professionals, retail, trading, computer and others. Eighty-one percent had

started their own business, 61 percent were in a partnership or family business, 64 percent

had targeted local suburbs, and 78.5 percent had targeted general customers.

The first generation Chinese (66 percent of the whole group) came from various countries

such as Hong Kong, Vietnam, Taiwan, China, Malaysia, New Zealand, Singapore and

others. Fifty-five percent of the total respondents were male. Overall, the whole population

was divided into three groups: Christianity (32 percent), Buddhism (30 percent) and no

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religion (35 percent). Lastly, only 14 percent chose ‘Most times’ or ‘Yes’ in answer to the

spirituality question.

5.7 Data Analysis Method

This section presents all the statistics tools used in this study. SPSS software was used

throughout the whole statistical analysis. Quantitative data were analysed using the

Statistical Package for Social Scientists (SPSS) software Version 17. SPSS was chosen

because it was very useful for performing the statistical tests which were conducted in the

study, such as multiple regressions, correlation, reliability, factor analysis and structural

equation modelling.

Data from the responses to the questionnaires were coded and entered into the SPSS

program for statistical analysis. SPSS generated outputs that provided the researcher with

systematic frequency counts and sorted and rearranged the data, and served as a useful

data-entry device, with labels for brief entries. SPSS is very useful for the analysis of large

data as in this study; it enabled the researcher to gain a greater insight into the actions,

attributes and attitudes of the Chinese entrepreneurs. Its usage also brought out the

relationship or interdependence of the independent and dependent variables of the study in

the testing of the hypotheses (Bryman and Cramer 2004; Pallant 2005).

5.7.1 Factor Analysis – Data Reduction Tool

The objective was to find a way of condensing the information contained in a number of

original variables into a smaller set of variates (factors) with a minimum loss of

information. By providing an empirical estimate of the ‘structure’ of the variables

considered, factor analysis becomes an objective basis for creating summated scales. Factor

analysis, including both principal component analysis and common factor analysis, is a

statistical approach that can be used to analyse interrelationships among a large number of

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variables and to explain these variables in terms of their common underlying dimensions

(factors).

Since the number of questions in this study was high (92), there was a need to use factor

analysis to reduce or summarize the original data into smaller manageable units for analysis

and to identify the structure underlying them. Factor analysis, including both principal

component analysis and common factor analysis, is a statistical approach that can be used

to analyse interrelationships among a large number of variables and to explain these

variables in terms of their common underlying dimensions (factors).

The insight provided by data summarization can be directly incorporated into other

multivariate techniques through any of the data reduction techniques. The author benefited

from both the empirical estimation of relationships and the insight into the conceptual

foundation and interpretation of the results. The author first identified the separate

dimensions of the structure and then determined the extent to which each variable was

explained by each dimension. These dimensions and the explanation of each variable were

then determined (see chapter 7). Subsequently, the two primary uses for factor analysis –

summarization and data reduction – were achieved. Groups of variables may be interrelated

to the extent that they are all representative of a more general concept, or construct. The

purpose is to retain the nature and character of the original variables, but at the same time,

the factor analysis is used to reduce the size of the data in order to simplify the subsequent

multivariate analysis.

Factor analysis was employed in the analysis of the questionnaire because it is an

interdependence technique in which all variables are simultaneously considered, each in

relation to all the others, while still employing the concept of the variates, the linear

composite of the variables. All the variables or questions were formed to maximize the

explanation of the entire variable set. This tool provides an empirical basis for assessing the

structure of variables and the potential for creating these composite measures or selecting a

subset of representative variables for further analysis.

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After the data reduction, factor analysis was used to identify representative variables from a

much larger set of variables for use in subsequent multivariate analysis. Later, an entirely

new set of variables was created, much smaller in number, to partially or completely

replace the original set of variables for inclusion in subsequent techniques.

From the data summarization perspective, factor analysis can provide a clear understanding

of which variables may act in concert and how many variables may actually be expected to

have impacts in the analysis. The variables are expected to be highly correlated and

members of the same factor will be expected to have similar profiles of differences across

groups in multivariate analysis of variance or in discriminant analysis. MANOVA assumes

normality, so it could not be used to compare the generations.

The related statistical tools of factor analysis such as Kaiser-Meyer-Olkin (KMO) and a

reliability test were also employed. The KMO and Bartlett test of sphericity indicates the

factorability of a correlation matrix and supports the factorability of variables. Reliability

testing was also conducted for each of the extracted factors to ascertain the degree to which

the items making up the scale agreed; that is, to find out whether all the variables collated

on one factor had internal consistency and measured the same underlying constructs

(Bryman and Cramer 2004, Hair et al. 2006, Pallant 2005). How the statistical methods

were employed in the data analysis will be described in the analysis of the data and the

testing of the hypotheses in chapters 6 and 7.

In this study, several criteria are used:

1. Rotation (direct oblimin, rotated solution and Delta = 0)

2. Extraction (correlation matrix, eigenvalues > 1, unrotated factor solution)

3. Descriptive (initial solution, KMO – valued > 0.7 and Barlett’s test of sphericity

< 0.001)

4. Options (exclude case listwise, sorted by size and suppress absolute values less

than 0.10)

5. Total variance explained – for 2 factors > 50 percent

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6. Communalities - percent variation explained for each variable > 20 percent

(0.20)

7. Different loadings to make up the construct or variable for further statistical

analysis.

5.7.2 Multiple Regression

The main statistical technique used in the study to describe the relationship between the

independent and dependent variables is multiple regression. Multiple regression analysis is

a general statistical technique used to analyse the relationship between a single dependent

variable and several independent variables, as in the case study. Multiple regression is a

widely used and versatile modelling technique, applicable in every facet of business

decision making and business research projects such as this study. It allows the researcher

to predict a score or result on a dependent variable from the score or result of a number of

independent variables (Bryman and Cramer 2004; Hair et al. 2006; Pallant 2005). Multiple

regression analysis also produces correlations, which are useful for the exploration of the

strength of the association between any two pairs of variables, and beta coefficients which

give an indication of the relative contribution of each independent variable. Another related

statistical tool is analysis of variance (ANOVA). It is useful for detecting any significant

difference in the relationship between categorical independent and dependent variables

(Hair et al. 2006, Pallant 2005).

5.8 Summary

The research design and methodology, the objective, the research questions and the various

approaches to the study have been outlined and justified in this chapter. The research

objectives of the study support an approach which allows the use of a quantitative method

of data collection and analysis. This approach allows the investigation and exploration of a

number of diverse variables to provide detailed information about Chinese

entrepreneurship, as well as the testing of hypotheses to determine the applicability of

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existing theories in the context. The presentation of the results and findings follows in the

next chapter.

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Chapter 6

Analysis - Demographic Profiles of the Chinese Entrepreneurs

6.1 Introduction This chapter reports on the analysis of the quantitative data. In this chapter, the analysis is

presented using frequency percentages, with the intention of developing patterns of

agreement and themes across cases. The systematic presentation of the combined

quantitative results will reveal the demographic profiles of these Chinese entrepreneurs.

In order to gain insight into the basic demographics of the Chinese entrepreneurs in Box

Hill, the study includes questions about date of arrival, country of origin, gender, industry,

position, targeted business, targeted customers, age, religion, spirituality and start-up of the

business. Each section below consists of the results and the interpretation of the results, so

that a full demographic profile of the Chinese entrepreneurs can be compiled and presented.

In this chapter, the analysis is presented in a structured manner according to the sequence of

the sections in the questionnaire survey. The sequencing of the questionnaire follows the

five dimensions of the Chinese entrepreneurs based on the research questions (Appendix 1).

Each of the five dimensions begins with a brief introduction reflecting the variables

investigated, followed by the results and findings. Findings are discussed in relation to

previous literature. These results are further analysed and interpreted in Chapter 8, when

the hypotheses of the study are tested and the overall results are discussed. Finally, in

Chapter 9, the findings are summarized, leading to the concluding profile on the Chinese

entrepreneurs in Box Hill (see Diagram 1.1).

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6.2 Sample Sizes of First and Second Generations

The criteria used in this study for selecting the two generations are:

1. Those who came to Australia after the age of 10 = first generation.

2. Those who were born in Australia, and those who came to Australia before the age

of 10 = second generation.

The term ‘second generation’ represents not only those who were born in Australia, but

also it includes the under-age (less than 10 years old) ethnic Chinese who came here with

their parents. It is assumed that this group has generally been attending the local schools.

Hence, this group has spent a significant portion of their growing period in Australia. This

generation has therefore adapted to the Australian way of living as part of daily life. This

adaptation occurred during the most important period when this younger generation tended

to be more receptive towards new changes and ideas (Section 1.9.3).

No distinction has been made between children born in Australia, children from English-

speaking countries and children from non-English speaking countries in schools. Learning

and adjustment difficulties are effectively masked, especially for the last group. In

conclusion, the validity of treating those who arrived before their tenth birthday the same as

those who were born here will stand, and they should be treated as a single group; i.e.,

second-generation Chinese.

As shown in Table 6.1, the raw data pool of 200 subjects is split into two groups – first and

second generation entrepreneurs – and the results are as follows:

Table 6.1 Sample Size of the First and Second Generation Entrepreneurs (N=200)

Variable Level Number %

Generation 1st 132 66

Generation 2nd 68 34

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The sample consisted of:

• The first generation (66 percent)

• The second-generation (34 percent).

During the cross-check, there was one respondent found who was born in Australia but had

left the country and returned at a later stage. This particular person was counted as a ‘first

generation’ as he left the country a few years after he was born, and he did not return until

he was older (>10 years old). The ratio of first generation to second generation is

approximately 2:1. This indicates that there are more first generation Chinese than second

generation Chinese in this study, and this may reflect the current distribution in the eastern

suburbs. Selvarajah et al. (2008) pointed out that Box Hill is a relatively new ethnic cluster

and the immigrants started to move into the area from the 1980s. This is supported by the

results in Section 6.2.8 (ages of the respondents), of which the group aged 20–29 years

constitutes only 24 percent of the whole study.

In summary, there are more first generation Chinese entrepreneurs than second generation

Chinese entrepreneurs in this study.

6.3 Country of Origin

Hong Kong is the country where these immigrants mostly came from (30 percent) in the

overall pool (N=200). In the first generation group, Hong Kong is the country of highest

frequency in the population. This is because the business communities surrounding Box

Hill and the neighbouring suburbs were predominantly (in the earlier years of immigration)

made up of immigrants from Hong Kong. In the second generation, apart from those who

were born in Australia, Hong Kong is still the country of highest frequency. Literature by

Selvarajah (2008) also supports this trend. They are professional, technical and managerial

persons, and some are quite wealthy (especially those who came to Australia under the

Business Migration program).

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The other common countries are Vietnam, Taiwan, China, Malaysia and Singapore. The

results indicate a broad representation of these immigrants. From the mid-1980s, more

immigrants from Hong Kong and Taiwan arrived to stay in Box Hill. In 1989, after the

Tiananmen incident, Chinese students who were studying in Australia were granted

permanent resident status. This contributed to the growth of Box Hill as the second

Chinatown of Melbourne. This follows the same trend found in previous censuses (ABS

1995, 2000, 2006b): Box Hill was first ‘Asianised’ by Vietnamese about 25–30 years ago,

and then by Taiwan and Hong Kong 15–25 years ago, and finally by Chinese from China in

recent years. In fact, the change in combination and distribution of the restaurant business

and other businesses coincides with the immigration trend in the last 30 years. Below is a

summary of subjects from different countries.

Table 6.2 Country of Origin (N=200)

Country of

Origin

Total

Number

%

1st Gen

%

2nd Gen

%

Australia 32 16 0 0 32 47.1

Hong Kong 60 30 50 37.9 10 14.7

Vietnam 19 9.5 10 7.6 9 13.2

Taiwan 20 10 18 13.6 2 2.9

China 29 14.5 24 18.2 5 7.4

Malaysia 20 10 15 11.4 5 7.4

New Zealand 2 1 2 1.5 0 0

Singapore 13 6.5 9 6.8 4 5.9

Others 5 2.5 4 3.0 1 1.5

Total 200 100 132 100 68 100

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It is important to point out that even though the entrepreneurs come from different

countries, these entrepreneurs are Chinese by descent. This broad representation also

indicates a multi-national Chinese community in Box Hill. At the same time, the inclusion

of these countries averages out and neutralizes the bias of any entrepreneurship pattern that

may occur if these immigrants were from one single country. Overall, Australian-born

Chinese (also known as ABC) constitute 16 percent of the whole population in this study

(32 out of 200).

6.4 Gender

The results are illustrated as follows:

Table 6.3 Gender of the Respondents (N=200)

Variable

Type

Total

Number

%

1st

Gen

%

2nd

Gen

%

Gender Male 110 55 75 56.8 35 51.5

Gender Female 90 45 57 43.2 33 48.5

In the first generation component of the sample there are more males than females. This

may be due to the fact that males are predominantly the major income earners in traditional

Chinese families; the wives are left to look after the children. This 13.6 percent difference

is equivalent to 18 more males than females in the first generation distribution (a pool of

132 subjects). The results confirm the absolute status of the father in the family as the head

of a hierarchy (Clammer 2002, Taormina and Lao 2007).

The gender representation of the respondents is fairly even in the second generation. The

higher percentage of women in the second generation indicates that they are more active in

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the work force compared to the first generation entrepreneurs. There are three possible

reasons why these females participate in entrepreneurship instead of staying at home:

• They do not have their own children yet;

• They may have their children looked after by friends, helpers or grandparents,

which is a common practice in Chinese families;

• Their businesses are more flexible, so they do not have to be with the children all

the time.

Although the questionnaire survey did not include questions in relation to the highest

educational qualification of the respondents, higher qualifications in the second generation

are expected. There is a maxim among Chinese parents that they put all their hope in the

next generation and strongly impress upon the second generation the importance of higher

education (Chu 1995), so that they are motivated to become high achievers. This axiom has

been planted in their mindset from generation to generation, stimulating a strong

competitive spirit. This valuing of higher qualifications has a strong influence on second

generation Chinese, especially when the first generation has a low literacy level (Godement

1999). The general belief is that by studying hard and achieving academically, the younger

generation will increase their opportunities of gaining wealth and respect, whereas without

academic achievement they will be disregarded in society. This gives support to the rise in

female entrepreneurs in the second generation, compared to the first generation.

In summary, there is a rise in female entrepreneurs in the second generation. Further

analysis will be carried out, in the next chapter, to find out whether the gender difference

shows any significant differences among different variables within the two separate

generations of entrepreneurs.

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6.5 Industry

The following is a summary of the data on the industries collected in this study:

• Restaurants or take-away businesses show a significant difference between the first

and second generation entrepreneurs. The drop from 32.6 percent to 16.2 percent

can be explained by facts that the hours are longer and the labour involved is no

longer attractive to the second generation. In fact, restaurants or take-away

businesses have always been more demanding in both attention and involvement,

even though they are cash-oriented businesses. Conversely, as mentioned in an

earlier section, the second generation can choose to change to a more comfortable

lifestyle and work style. This will be explained in a later section.

• There is an increase in the ‘dry’ retail category, from 12.1 percent to 29.4 percent;

this includes clothing, phones, computers, pharmacies, pet shops and others. These

businesses require more language and management skills that are more prominent

and easier to achieve by second-generation entrepreneurs.

• Professionals such as doctors, lawyers and accountants are the most common. The

increase from 17.4 percent to 23.5 percent may add evidence that the second

generation is entering the professional fields more than the first generation. This

result is similar to that of the ‘dry’ retail.

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Table 6.4 Industries of the Respondents (N=200)

Industry

Total

Number

%

1st Gen

%

2nd Gen

%

Restaurant

Take-away

54 27 43 32.6 11 16.2

Real estate 16 8 10 7.6 6 8.8

‘Wet’ retail

such as grocery

12 6 8 6.1 4 5.9

‘Dry’ retail

such as clothing

36 18 16 12.1 20 29.4

Professional,

such as doctor

39 19.5 23 17.4 16 23.5

Other 43 21.5 32 24.2 11 16.2

Total 200 100 132 100 68 100

There are several reasons for the choice of industries from one generation to another:

Language is commonly perceived as a core element in the interrelationships between an

ethnic minority and the host group as it provides common means of communication and,

more importantly, represents a mode of identity (Wu 1995). Tait et al. (1990) suggested

that the rules of success are written in English, implying that the reduction in the language

barrier enhances communication and therefore enables the entrepreneurs to adopt and

assimilate into the local businesses and local cultures. The behaviour of language can also

be explained by communal notions of social categorization, social identity, social

comparison, psychological distinctiveness and cognitive alternatives (Wu 1995).

Education is an important determinant in the change of industries from first to second

generation Chinese entrepreneurs. The enhancement in education level increases

opportunities of working in the professional fields and higher paid jobs in order to gain

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wealth and respect, as has been pointed out earlier. This valuing of higher qualifications has

a strong influence on second generation Chinese, especially when the first generation has a

low literacy level (Godement 1999).

Human capital is a crucial factor in enterprise establishment, influencing business success.

Resource-based theorists propose that an entrepreneur’s human capital is comprised of

management skills and tacit knowledge (Coleman 1988, Sequeira and Rasheed 2004);

previous entrepreneurial experience (Ronstadt 1988, Selvarajah 2004); and venture

resources in the form of capability assets, strengths and skills (Grant 1991). These types of

human capital, among others, contribute to growth and the success of business ventures,

and they are directly linked to the educational levels of the entrepreneurs. The results from

above support the theories.

Financial capital is more easily accessible in the second generation than it was to the first

generation Chinese entrepreneurs. This is because, in Chinese culture, money contribution

from family and relatives is common (Hsing 1996, Li 1988). The importance of the family

and ethnic community as a source of financing and employment and as a customer base and

support for ethnic entrepreneurs (Waldinger et al. 1990) cannot be ignored. Family

members including spouses, children and other extended family members are often used as

both formal and back-up personnel to support the business. This is in addition to the cash

capital that can come from many sources, including personal savings, banks, government

programmes and venture capital funds. Although obtaining the necessary financing to start

and grow a business is generally considered one of the entrepreneur’s major problems, it is

not difficult for the second generation to gather the resources.

The main aim of this study is to point out that while it is important to study Chinese

entrepreneurship in Melbourne, the results from the whole pool cannot depict a complete

picture, and, certainly, the results from one single pool (N=200) cannot show the

differences among the two generations. The following is a good example:

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The make-up of the 43 respondents (N=200) who chose ‘other’ represents 21.5 percent of

the whole pool. This result, however, does not give detailed information about the

industries involved. Upon further analysis of this ‘other’, and when the 43 respondents are

split into the first and second generations, it is found the distributions of the 32 respondents

in the first generation are: vegetable growing (5), delivery companies (3), child care (5),

hairdressing salons (9) and other (10 unknown). On the other hand, the 11 respondents in

the second generation comprise computer-related industries (4) and trading (7). Full cross-

tabulation results (Appendix 7) show the significance to be less than < 0.05.

In summary, the shift of business change from labour-intensive businesses to mind-

intensive businesses shows the change in entrepreneurial styles between the two

generations.

6.6 Position

Since all subjects are entrepreneurs, none of them is an employee. There are three

categories: sole employer, partnership with others and family business. The difference

between the three indicates the independence of the entrepreneurs. In the ‘sole employer’

category, only one person is involved. There is more than one person involved in the

categories ‘partnership’ and ‘family business’.

Table 6.5 Positions of Entrepreneurs in Their Businesses (N=200)

Position Total % 1st Gen % 2nd Gen % Sole

employer 78 39 51 38.6 27 39.7

Partner-ship

65 32.5 49 37.1 16 23.5

Family Business

57 28.5 32 24.2 25 36.8

Total 200 100 132 100 68 100

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The only apparent difference in this variable is that there is an increase of family business

(from 24.2 percent to 36.8 percent) from the first to the second generation Chinese. This

increase may be due to the transfer of family businesses from one generation to another,

which is a traditional way of Chinese entrepreneurship. Family business succession cannot

be ignored in the studies of entrepreneurship. The successor’s process of induction to

family business behaviour plays a crucial role in the succession process (Fletcher 2004,

Yan and Sorenson 2006). On the positive side, it provides family continuity to the business,

raises the entrepreneurial potential of descendants, and reduces the level of conflict among

siblings in the succession process.

Traditionally, through education and indoctrination, the younger members of the extended

Chinese family learn and accept the responsibility that they will care for the financial and

social wellbeing of the elderly members in their family. The elderly accept care as their

right and families have pressure from the wider community to meet their obligations. Such

reciprocal relationships are still considered a distinctive characteristic of Chinese family

cultural values (Ryan 2003). Exercising individuality is a threat to an orderly society and

therefore directly contradictory to one’s duties and responsibilities to others (Fouts & Chan

1995). However, when this process does not fit particular succession requirements, the

negative side of succession in family business commonly appears: sibling rivalry, poor

performance, and business failure (Yeung 2000, Carney 1988).

On the other hand, there is a decrease in partnerships (from 37.1 percent to 23.5 percent)

from the first to the second generation. The formation of partnerships in businesses is

common in earlier days, due to collective human and social capital accumulation. Lofstrom

(2002) and Raijman and Tienda (2000) also provided some similar examples of ethnic

resources such as the knowledge and skills to run businesses, the ability to transfer

experiences and managerial skills, the availability of cheap labour, and the social support

networks that facilitate a new owner in obtaining necessary start-up capital. Such resources

are important for new settlers in establishing their small businesses in the host country.

Similarly, Sequeira and Rasheed (2006) suggested that within the same ethnic group,

immigrant entrepreneurs can actively utilize these resources or passively benefit from them

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in their business activities because such resources help reduce risks and uncertainties that a

new immigrant would face when starting a business, and they also serve to minimize

transaction costs associated with labour and financial market transactions. This is common

among the first generation Chinese entrepreneurs.

In summary, the literature supports the change of business mode from partnership to family

business mode, when the businesses are passed onto the second generation. This claim is

also supported by the results in this section, which show that the percentage of decrease (–

13 percent) in partnership is the same as the increase (+13 percent) in family business

between the two generations. There is little change in the proportion of ‘sole employer’.

6.7 Targeted Businesses

This section aims to find if the two generations of Chinese entrepreneurs select the locality

and size of targeted businesses differently. The results are as follows:

Table 6.6 Locality – Targeted Businesses of Entrepreneurs (N=200)

Targeted Business

Total % 1st Gen % 2nd Gen %

Local suburbs

128 64 82 62.1 46 67.6

Greater Melbourne

26 13 14 10.6 12 17.6

Victoria 9 4.5 5 3.8 4 5.9 Victoria + Interstate

17 8.5 15 11.4 2 2.9

International 20 10 16 12.1 4 5.9 Total 200 100 132 100 68 100

The results indicate that, on average, 64 percent of the total pool (two generations

combined) targeted businesses in local suburbs. This figure is similar to the figures of both

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generations. However, other figures indicate that while the second generation expands their

targeted business beyond local suburbs into Greater Melbourne and Victoria, there are more

first generation entrepreneurs doing business interstate (11.4 percent to 2.9 percent) and

internationally (12.1 percent to 5.9 percent).

Overseas and interstate connection – In the last twenty years, Asian families migrating to

Australia have changed from ‘permanent’ migration to ‘semi-migration’ – the ‘astronaut’

families. Astronaut families are a type of family arrangement found in migrant Asian

families whereby one or both parents reside and work in their home country while the

remainder of the family live in the host country (Ip et al. 1998, Pe-Pua et al. 1996).

Although this arrangement is not a preferred option, it enables the entrepreneurs to keep the

‘old’ contacts as well as building up the ‘new’ ones in Australia. It is assumed that the first

generation will prefer to work in an environment with similar background and culture if

they want to expand their businesses. The ease of flying between countries and the better

socio-economic background of these families makes it easier for the parent or parents to

travel back and forth between the home and host countries. These first generation Chinese

entrepreneurs facilitate the exchange of ideas, goods and services. They form bridges

between different locations, especially the homeland (Pookong and Skeldon 1994).

Although the second generation has been exposed to at least two cultures (the Australian

culture in the society and the Chinese traditional culture in their family, in which the

parents were the first generation in Australia), they are not different from average

Australians (Ho 2003, Xiao 2001). This implies that they should have more local

connections and contacts than the first generation. Hence, it is assumed that this generation

chooses to expand into Greater Melbourne and Victoria rather than overseas.

In summary, while both generations target their businesses in all localities, there is a

difference in preference in the two generations; with the first generation preferring to

conduct business interstate and overseas, and the second generations preferring to conduct

business within the state of Victoria.

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6.8 Targeted Customers

The targeted customers consist of three groups: (1) Chinese customers only; (2) Asian

customers, which includes the Chinese and other Asian groups; and (3) general, which

consists of everyone including Australians, Greeks, Italians, Asians and others. The results

are summarized as follows:

Table 6.7 Target Customers of Entrepreneurs (N=200)

Targeted Customer

s

Total % 1st Gen % 2nd Gen %

Chinese 13 6.5 11 8.3 2 2.9 Asians 30 15 20 15.2 10 14.7 General 157 78.5 101 76.5 56 82.4

Total 200 100 132 100 68 100

In the total population, most subjects (78.5 percent) prefer to do business with the general

public. Separately, this proportion is higher in the second generation than the first

generation (82.4 percent compared to 76.5 percent). On the other hand, the proportion of

Chinese as targeted customers is lower in the second generation (8.3 percent to 2.9

percent).

In this case, where minority groups have an inadequate command of the dominant

language, their ethnic identity becomes an important and distinctive status and an ascribed

aspect of their person-hood. For the first generation entrepreneurs, even though the speed of

social and cultural change varies from person to person and for some the change occurs

quickly, people tend to retain their ethnic identity despite having moved to a new

environment (Eriksen 2002). Therefore, in choosing the target customers, the first

generation will have a preference for dealing with customers from the same ethnic

background, to facilitate the exchange of goods and services. Conversely, this is also an

indication that the second generation feels more ‘assimilated’ when mixing with the general

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public. The six percent increase in the general public proportion is matched by the decrease

of Chinese customers in the second generation.

In summary, there is an obvious preference for targeted customers due to generation

difference. This result is also comparable to that of the targeted businesses mentioned in the

previous section. This proves that there is a difference in entrepreneurial behaviour between

the two generations.

6.9 Age of Respondents

The ages of the respondents were spread evenly across the whole range:

Table 6.8 Age of Respondents (N=200)

Age Total % 1st Gen % 2nd Gen % <19 0 0 0 0 0 0

20-29 48 24 4 3 44 64.7 30-39 52 26 30 22.7 22 32.4 40-49 50 25 49 37.1 1 1.5 50-59 42 21 42 31.8 0 0 60-69 6 3 5 3.8 1 1.5

Over 69 2 1 2 1.5 0 0 Total 200 100 132 100 68 100

The results indicate that 96 percent of the respondents are 20–59 years of age. In this study,

all the respondent entrepreneurs are still engaged in their businesses. A further assumption

is that these respondents are still working full time. Therefore, the results of this research

give a current representation of their views on entrepreneurship. The validity of the results

and the significance of this research can be further supported. The Chinese entrepreneurs

fall mainly into the economically active age groups, that is between 30 and 59 (72 percent).

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There were only six subjects aged 60–69 and one over 69, which suggests that the number

of older generation Chinese immigrants is not that high. The combined proportion for the

age groups 40–49 and 50–59 in the first generation is 68.9 percent, while the proportion for

the age group 20–29 in the second generations 64.7 percent. This age distribution indicates

that a significant influx of Chinese immigrants started only thirty years ago. Hence, the

history of Chinese entrepreneurship remains in the initial stage, where the community still

remains largely either first or second generation. This is supported by the following

censuses.

According to the 2006 Census, 90.6 percent of Chinese in Victoria were first generation,

and 7.2 percent were second and third-plus. These figures are comparable to those of the

national statistics. Compared to the same categories of statistics in the 2001 Census (ABS

2001), the figures are very close (89.5 percent and 7.5 percent), The population of third-

plus generation seems to be relatively small, although this category is likely to increase

substantially in the future with more second generations reaching marital age and

increasing numbers of Chinese migrants settling permanently in Australia.

In summary, the results support the notion that Box Hill is a relatively new ethnic cluster,

where less than four percent of the whole pool (N=200) is older than 60. In addition, 72

percent of these Chinese entrepreneurs fall into the economically active groups.

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6.10 Religion of Respondents

The inclusion of religion in this study is to cross-check if there has been any change in the

religious beliefs of the subjects. The results are as follows:

Table 6.9 Religion of Respondents (N=200)

Religion Total % 1st Gen % 2nd Gen % Christianity 64 32 32 24.2 32 47.1 Buddhism 60 30 48 36.4 12 17.6

Daoist 0 0 0 0 0 0 No religion 70 35 47 35.6 23 33.8

Other 6 3 5 3.8 1 1.5 Total 200 100 132 100 68 100

Overall, the pool is divided into three categories: Christianity (32 percent), Buddhism (30

percent) and no religion (35 percent). Upon further analysis of the results from the two

generations, the proportion of no religion remains similar (35.6 percent and 33.8 percent).

However, there is a significant increase in Christianity (from 24.2 percent to 47.1 percent)

from the first to the second generation; this is an increase of 94.6 percent. Conversely, there

is a significant decrease in Buddhism (from 36.4 percent to 17.6 percent) from the first to

the second generation; this is a decrease of 107 percent. Full cross-tabulation results

(Appendix 7) show the significance to be less than < 0.05.

The interchange between Christianity and Buddhism indicates the shift in religion belief

between the two generations. Traditionally, Buddhism is prevalent in most Chinese

families. The shift in religious belief may be due to:

• Less traditional culture and belief teaching in Australia

• Discontinuation of Buddhist practice due to long working hours in the first

generation

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• More local Christian teaching in school

Due to the differences in religious upbringing in their earlier years, more of the younger

entrepreneurs are affiliated with Christianity than the older entrepreneurs, who are more

affiliated with Buddhism. This lends support to the acculturation theory that the influences

during the earlier years, such as education and western styles of thinking and upbringing,

will change the views of these second generation entrepreneurs (Chan 2000).

In summary, religion has never played an important role in Chinese history, at either the

political or the familial level (Chan 2008, Cheng 1997). While Christianity and Buddhism

are the two major religions of the respondents (ABS 2006b), religious teachings are not

important in business. Therefore, the influences of religion on entrepreneurship are not

important in either generation.

6.11 Are You Highly Spiritual?

The total percentage of ‘unsure’, ‘maybe’ and ‘no’ is 66.5 percent of the pool (N=200).

Upon further analysis, the separate responses of the two generations are 62.1 percent and 75

percent. The difference is significant. In Chinese culture, spirituality is often confused with

superstition or fengshui. While there is a decrease of Buddhism in the second generation

(see previous section), the proportion of spirituality has also decreased. Full cross-

tabulation results (Appendix 7) show the significance to be less than < 0.05. The results are

as follows:

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Table 6.10 Level of Spirituality of Religion among Respondents (N=200)

Highly

Spiritual Total % 1st Gen % 2nd Gen %

No 63 31.5 38 28.8 25 36.8 Maybe 47 23.5 26 19.7 21 30.9 Unsure 23 11.5 18 13.6 5 7.4

Sometimes 39 19.5 25 18.9 14 20.6 Most times 18 9 17 12.9 1 1.5

Yes 10 5 8 6.1 2 2.9 Total 200 100 132 100 68 100

In summary, although there is a significant change in spirituality between the two

generations, this should have only minimal influence (similar to that of religion) on

entrepreneurial behaviour and related businesses.

6.12 Did You Start Your Business?

The importance of this question relates to the risk-taking factor (new business set-up) as

well as to family back-up (family business succession). According to the resource-based

perspectives, apart from education, human capital is derived from work experience and

family support.

Research has shown an important and positive relationship between prior work experience

in the same industry or line of business and venture success (Carter et al.1997, Cooper et al.

1994). Highlighting the importance of previous work experience, Kim et al. (2003)

explained that if the work experience occurs within the industry in which the new business

venture is located, individual entrepreneurs will gain opportunities to understand industry-

specific market forces and identify potential market opportunities to exploit. Furthermore,

work experience increases opportunities for individuals to obtain positions within various

social networks that can be transformed into the setting up of new businesses.

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On the other hand, researchers have speculated that self-employed parents might encourage

the development of entrepreneurial attitudes in their children through socialization. Parents

may somehow be instilling a learned preference for self-employment in their children,

possibly by providing work experience at a young age or through exposing their children to

the entrepreneurial lifestyle and the social networks tied to their businesses (Carroll and

Mosakowski 1987). This exposure to entrepreneurial skills through socialization may

include not only someone’s parents but also other relatives, as well as friends. Other family

within the same generation (siblings and cousins) can influence an individual’s beliefs

about entrepreneurship, as well as provide role models and practical knowledge. The results

are as follows:

Table 6.11 Starting Own Business among Respondents (N=200)

Start your own

business

Total % 1st Gen % 2nd Gen %

Y 162 81 113 85.6 49 72.1 N 38 19 19 14.4 19 27.9

Total 200 100 132 100 68 100

In this study, the overall results indicate that 81 percent of the respondents started their own

businesses. Once again, further analysis of the results of the two generations indicates a

decrease (from 85.6 percent to 72.1 percent) from the first to the second generation in

starting their own businesses. Conversely, there is an increase in ‘not starting your own

businesses’ (14.4 percent to 27.9 percent) from the first to the second generation. A

possible explanation is that the first generation may have started to shift and transfer the

family business to the second generation. However, there are still second generation

entrepreneurs starting their own businesses instead of following the familial pathways. Full

cross-tabulation results (Appendix 7) show the significance to be less than< 0.05.

In summary, although there is a decrease in those starting their own business in the second

generation, the proportion of the overall population starting new businesses (81 percent) is

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still fairly high. This supports the notion that there are other entrepreneurs looking into new

businesses instead of carrying on other existing or familial businesses.

6.13 Summary

It is important to point out that, apart from looking at the results in the population (N=200)

as a group, it is important to look at the results between the two generations to see the real

changes and the trends in the course of entrepreneurship. The important findings for the

Part I questions are summarized as follows:

Table 6.12 Analysis of Part I Results (Demographic)

Topic Findings Remarks Sample Size Total is N=200, 1st gen. is 132,

2nd gen. is 68 Good representation and strong results in this study

Gender 1st gen. = more male, 2nd gen. = fairly even

Active work force from both genders in the 2nd gen.

Country Good representation of the most common ‘emigrant’ countries

Results are strongly supported

Industry More labour intensive business in the 1st gen. than the 2nd gen.

The shift is due to change in human and capital resources available such as education, local business know-how and better interaction with the local Australian public

Family business

Increase in family business in the 2nd gen

Traditional succession of family business is supported

Partnership More partnership in 1st gen., more family business in 2nd gen.

Financial back-up and resources are better in the 2nd gen.; however, familial involvement and networking are still important

Targeted businesses

1st gen. – higher percentage looking for customers interstate and internationally

More willing to make overseas connection than the 2nd gen.

Targeted customers

2nd gen. – prefers to do business with general public (within and outside Chinese community) more than does 1st gen. (mainly with Chinese community)

Because of better communication skill and local know how

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Age of Respondents

Only 6 respondents aged between 60-69

Although the history of migration began more than 100 years ago, the vast change occurred only in last 30 years (since the Vietnamese refugee wave)

Religion More Buddhism in 1st gen. than 2nd gen.; more Christianity in 2nd gen. than 1st gen.

Strong indicator of influences of acculturation during earlier years. This supports the importance of education and other western styles of thinking and upbringing in shaping the future of Chinese entrepreneurship

Spirituality Decrease in the 2nd gen. This reinforces the results of ‘religion’ in that Chinese-ness diminishes while Australian-ness increases in the 2nd gen. However, if this trend continues into the 3rd gen. and future generations, will they become real ‘Aussies’ and the Chinese-ness disappear totally?

Start of Business

Higher percentage in 1st gen. 1st gen. start their businesses more than the 2nd gen., while more 2nd gen. follow into family business (as can be seen above)

Cross-tabulation

Good significant differences in 4 areas: Industry, religion of respondents, spirituality and ‘own your business’

Results are strong and supportive

The results above show strongly that changes have already occurred within two

generations. This fast pace is due to a sharp contrast between the Chinese and the

Australian cultures which at opposites ends; such adaptation will not be as obvious if the

host country has fewer cultural differences. The changes involved include: the types of

business, the resources available (human and social capital), business style (partnership),

targeted businesses and customers (future expansion), religion and business set-up.

However, the familial support and connection (both Confucian piety and guanxi

connections) are still important in influencing the pathways of entrepreneurship in the

setting up and running of businesses.

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Chapter 7

Analysis - The Five Dimensions of Chinese Ethnic Entrepreneurship

7.1 Introduction

In this chapter, the analysis is presented in a structured manner according to the sequence of

the sections in the questionnaire survey (as was done in sections 6.2 to 6.12). The analysis

reflects on the five dimensions of the Chinese entrepreneurs. Each section of the five

dimensions begins with a brief introduction reflecting the variables investigated, followed

by the analysis. The analysis is interpreted and the results are reported in chapter 8, when

the hypotheses of the study are tested and the overall results are discussed.

7.2 Dimension 1 – Background of the Entrepreneurs

To be able to effectively develop a holistic picture of immigrant Chinese entrepreneurs and

provide an understanding of their entrepreneurial behaviour, it is important to be aware of

their background and answer the questions: What resources do these Chinese entrepreneurs

rely on? What are the factors influencing the business setup? Do they seek assistance from

others? There is significant evidence in literature that entrepreneurial behaviours make a

fundamental contribution to enterprise set-up and development. In view of this evidence,

attempts have been made by several researchers in entrepreneurship literature to develop a

typical profile of entrepreneurs. However, the debate is whether this generalization can

apply to Chinese entrepreneurs, especially when the entrepreneurial behaviours can be

affected by cultures, environments and the host country.

This section therefore presents the analysis of the background factors (variables) of the

Chinese entrepreneurs in Box Hill and how these factors influence the conduct of their

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businesses. The variables investigated in the study, as shown in Diagram 7.1 below, are the

views of the Chinese entrepreneurs on such things as role models, assistance from friends,

better education, financial assistance, personal expertise, decision making, pre-business

work experience, and passion. At the end of the section a profile of the background of the

entrepreneurs supporting business set-up, which is unique to the Chinese entrepreneurs in

Box Hill, is developed.

Dimension 1 (Group 1 questions in Part 2 Questionnaire) –

Diagram 7.1 Factors Influencing the Background of Chinese Entrepreneurs

7.2.1 Guanxi connections

Role Models

Chinese culture regards role models as one of the most important factors in the learning of

‘doing business’ with others (Chen and Chen 2004). Whilst ‘role model’ is a difficult

Role Model Assistance from friends Better education Financial assistance from others

Personal expertise Independent decision making Work experience Passion

Prior Experience

Guanxi Connection

Background of Chinese Entrepreneurs

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notion to define, and can occur at both a formal and informal level, it is generally accepted

as the provision of advice, expertise and support by an experienced ‘role model’ or a

‘mentor’ to a less experienced person, to assist them in achieving their goals. First of all the

pilot test of the questionnaires showed that the two terms ‘mentor’ and ‘role model’ were

used interchangeably by the respondents and meant the same thing to them. Therefore, in

this analysis only ‘role model’ was used. Questions were asked in relation to role models to

determine what pertains to the Chinese entrepreneurs in Box Hill.

Overall, 85 percent of the respondents place ‘role model’ as ‘important’ or above. The

result further indicated that among the first generation entrepreneurs, the proportion is 78.7

percent. Among the second generation entrepreneurs, the proportion is even higher (97

percent). The benefits of the role model were perceived as ‘enormous’, with the help

coming in a mixture of encouragement and moral support, general advice and guidance,

knowledge and expertise in the industry, and help with confidence building in the industry.

These models are usually family elders and relatives. However, the existence of these

models is not common in the first generation as family ties with homeland have been

broken during migration. Conversely, the higher proportion in the second generation is due

to the continuous support of the models within the family and contact circles in Australia.

In summary, this unique type of networking has been reinforced by the collectivist nature

of the Chinese family culture. These networks play a significant role in the guanxi

connections and background of the Chinese entrepreneurs in Box Hill.

Advice from friends

The study explores further the effect of advice from friends on the business operation of

Chinese entrepreneurs. The roles of ‘friends’ are different for the two generations. Earlier

literature on enclave economy (Clark and Drinkwater 2000, Fong and Ooka 2002) indicates

that ‘ethnic enclave’ refers to a concentration of people from the same ethnic group within

a specific geographical location. In the first generation, the friendship is built on mutual

business and personal benefits. In this network, people from the same community buy or

sell ethnic products and services. The definition of ‘friends’ in the second generation may

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have changed to visiting, watching television and participating in recreational activities

without any business connection.

Most of the advice that the second generation uses is from professional advisors such as

accountants and marketing consultants, who are not necessarily their personal friends. The

uniqueness of guanxi in the first generation places a special importance of ‘friends before

business’, as can be seen in the results. The results indicate that while 83.4 percent of the

overall population chose ‘important’ or more in regards to the effect of advice from friends,

the figure in the second generation (79.4 percent) is certainly lower (85.6 percent). This

implies that the reliance on the advice from friends is lower in the second generation.

In summary, advice from friends is important in both generations. However, the importance

of ‘friends’ is different between the generations.

Better education

Traditionally, Chinese parents put all their hope and effort in the next generation and

strongly impress upon the second generation the importance of higher education (Chu

1995) so that they are motivated to become high achievers. This axiom has been planted in

their mindset from generation to generation, stimulating a strong competitive spirit. This

valuing of higher qualifications has a strong influence on second generation Chinese,

especially if the first generation has a low literacy level (Godement 1999). Education is

valued as a preparation for higher social mobility, and sufficient education or training is

one of the prerequisites to go into self-sufficiency and self-employment.

The prime aim of migration is to find a better life for the children. Chinese see providing

good education to the children as one of the most important ‘tasks’. For the entrepreneurs,

the importance of settling in Australia is to make money and provide a home for the family.

Comparatively, the importance of education for the first generation is lower, although they

view it differently for their children. Most (87.5 percent) of the respondents believed that

education is ‘important’. The second generation (94.1 percent) placed greater emphasis on

education than the first generation (84.1 percent). These results compare well with those in

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Section 6.4, where the industries that the second generation entrepreneurs choose are those

that require higher education and good academic credentials.

In summary, the results support the notion and literature mentioned earlier that better

education is an important factor in building up a better business network and a better future

for the next generations.

Financial assistance from institutes

Finance is typically perceived as the greatest single problem by ethnic minority

entrepreneurs at the start-up stage. In addition, these first generation entrepreneurs also face

problems of discrimination on the part of finance providers, with the vast majority feeling

that ethnic minorities are discriminated against to a greater extent than do small business

owners or managers in general (Waldinger et al. 1990). To counter this discrepancy, the

first generation entrepreneurs tend to obtain financing for their business from within the

family and ethnic community (Hsing 1996). This cooperative network of family and

community is the essence of their success in business. The family-based social, economic

and human resources are central to their economic and social integration in the local

Australian society.

In the second generation, with the back-up from accumulated wealth by the parents and the

establishment of local know-how, the entrepreneurs rely on the formal financial institutes

such as banks, finance companies and other venture capitalists. Different from their parents,

they seek less support from with the community. The results support this theory. Overall,

the importance of seeing financial assistance is at 88 percent for the whole population. The

results for the first and second generations are at 86.4 percent and 91.2 percent respectively.

In summary, while the importance of financial assistance is high in both generations, it is

higher in the second generation. This implies that guanxi connections have changed from

an informal establishment (through personal contacts) to a more formal one (through formal

business contacts).

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7.2.2 Prior Experience

Professional expertise

Previous studies (Brush et al. 2006; Coughlin 2002; Fielden & Davidson 2005) have

suggested that previous employment and experience in the same industry as the business

venture is a clear advantage in the entrepreneurial process and are associated with business

growth. However, Baker and Wooden (1992) found that 70 percent of migrants with

qualifications obtained overseas did not use their qualifications in their current job. The

first generation entrepreneurs are often not given the opportunity of practising their

professions because their education and experience are not recognised by the employment

institutions (Tseng 1992, Boyer 1996).

Overall, 78 percent of the whole population rated professional expertise as ‘important’.

Further analysis shows a significant difference between the two generations in placing

importance on professional expertise; 62.1 percent of the first generation, and 86.7 percent

of the second generation respondents confirmed that professional expertise is important.

The second generation entrepreneurs do not have their local qualifications queried by the

local authorities. This evidence supports the above-mentioned literature review. Compared

to the other factors, this factor shows the largest difference (24.5 percent) between the two

generations. The view of Baker and Wooden (1992) that non-recognition of qualifications

may be partly responsible for the relatively high rates of ‘invisible underemployment’

within some migrant groups is supported in this research. Chapman and Iredale (1990)

found that only 39 percent of formally skilled migrants subjected their overseas

qualifications to official assessment, and of these, only 42 percent had the qualifications

recognised as being equivalent to Australian qualifications.

In summary, professional expertise, as a factor, is an important contributor to the prior

experience of the entrepreneurs. The difference is the recognition of their qualifications and

skills by the local authorities.

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Independent decision making

Independent decision making style and power are the two main attractions that

entrepreneurs seek to obtain during the entrepreneurial process (Osborne 1995). In fact,

Yusuf (1995) suggested that independent decision making and self-confidence are the

business characteristics frequently displayed by individual successful entrepreneurs.

The results are similar in both generations (84.8 percent in the first generation and 89.7

percent in the second generation). Although the importance of independent decision is high

(86.5 percent) in the whole population, the proportion is slightly higher in the second

generation. Considering that the second generation has no language barrier or difficulty in

adjusting, it can be implied that these entrepreneurs are more self-confident in making their

own decisions. This decision making style will build up self-confidence, and, hence, help

the entrepreneurs gain work experience and business knowledge.

In summary, the independent decision making factor is important in building up work

experience that facilitates future business set-up in both generations.

Prior entrepreneurial experience

Prior entrepreneurial experience (may not be in the same fields that the immigrants are

experienced in) influences the way entrepreneurs comprehend, extrapolate, interpret and

apply new information, which those lacking it cannot duplicate (Roberts 1991). It helps

entrepreneurs appreciate the value of new information. It influences individuals’

willingness and ability to make new connections among pre-existing ideas, as well as with

new ideas, allowing them to recognize opportunities.

Given their responses to a previous question in section 7.2.1 regarding the importance of

role models, it is not surprising that the majority of the respondents rate their prior

entrepreneurial experience highly in this section. The results are 92.5 percent for the whole

population. Separately, they are 91.7 percent for the first generation and 94.2 percent for

the second generation. It is also noteworthy that this experience is rated as very important

and is an influential source of learning that parents may somehow be instilling in their

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children, possibly by providing work experience at a young age, or through exposing their

children to the entrepreneurial lifestyle and the social networks tied to their businesses

(Carroll and Mosakowski 1987).

In summary, this finding also coincides with earlier studies in the literature, which

emphasize that entrepreneurs are four times more likely to have been subject to the

influences of an entrepreneurial parent (Robert 1991).

Passion to succeed

Among all personal reasons that are strong motivators for business ownership, passion

includes self-satisfaction, desire for independence, autonomy, and achievement seeking

(Schumpeter 1979). The need to be personally fulfilled is the passion to succeed. It can be

gained by learning from others and by personal experience of business ownership.

The results show that 90.5 percent of the whole population rated passion to succeed as

‘important’ or above. Separately, the results are 89.4 percent for the first generation and

92.7 percent for the second generation. The minor difference between the two generations

can be due to the fact that the second generation entrepreneurs are seeking more personal

challenges and fulfilling their lifestyle attitude towards entrepreneurship.

In summary, passion and desire to succeed is important in helping the entrepreneurs set up

a business.

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7.2.3 Summary of Dimension 1: Background of the Entrepreneurs

The following is a summary of the respondents who chose ‘important’ or higher in

dimension 1: background of the entrepreneurs.

Table 7.1 Results of Dimension 1: Background of the Entrepreneurs

Variable

Questions

% (Total Pool)

% (1st Gen)

% (2nd Gen)

Guanxi connections Role Models 85 78.8 97 Advice from friends 83.4 85.6 79.4 Better education 87.5 84.1 94.1 Financial assistance 88 86.4 91.2

Prior experience Professional expertise 78 62.1 86.7 Independent decision 86.5 84.8 89.7 Prior experience 92.5 91.7 94.2 Passion 90.5 89.4 92.7

Overall, the results show that the factors contributing to guanxi connections and prior

experience are important in both generations. In particular, the two factors role models and

professional expertise show the most differences between the first and the second

generation Chinese entrepreneurs. The differences are 18.2 percent and 24.6 percent

respectively. The difference in the role model factor is due to the lack of availability of role

models in the first generation. The difference in the professional expertise factor indicates

that the first generation’s experience of initial hardship is due to the lack of recognition of

their expertise and qualifications upon their arrival in Australian. Other results are fairly

similar in both generations, although they show slight differences. Possible explanations

have been given to show the differences in all factors.

This section therefore answers the question posed by dimension 1 of this study: ‘How

important are guanxi connections and prior experience to the background of the

entrepreneurs?’ The results show that the factors are important to the background of both

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generations of Chinese entrepreneurs. The results are summarized in the following diagram.

Diagram 7.2 Key Characteristics of Background of Chinese Entrepreneurs

7.3 Dimension 2 – Entrepreneurial Motivation

To have a better understanding of the findings of this research on Chinese entrepreneurs, it

is not only necessary to understand the importance of the background of the entrepreneurs

in the business set-up (see previous section), but also to know the motivations and

characteristics required in business.

There are several approaches to describing the entrepreneur and determining business

success. One of the approaches is based on the psychological perspective, which argues that

entrepreneurs often exhibit a typical, characteristic profile. Numerous studies on Chinese

entrepreneurs have endeavoured to develop a profile of Chinese entrepreneurs (Liang 1987,

Role Model (Less important in 1st

generation) Advice from friends (Similar in both generations) Better Education (Similar in both generations) Financial assistance from institutes (Similar in both generations)

Personal expertise (Less important in 1st Generation) Independent decision (Similar in both Generations)

Prior Entrepreneurial experience (Similar in both Generations) Passion to succeed (Similar in both Generations)

Prior Experience

Guanxi Connection

Background of

Chinese Entrepreneur

Very important in both generations

Very important in both generations

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Ahlstrom et al. 2004, Collins 2002) and establish whether a ‘typical’ profile of Chinese

entrepreneurs exists.

There is evidence in literature that the entrepreneurial behaviours make a fundamental

contribution to enterprise set-up and development. In view of this evidence, attempts have

been made by several researchers in entrepreneurship literature to develop a typical profile

of entrepreneurs. However, the debate is whether this generalization can apply to Chinese

entrepreneurs, especially when the entrepreneurial behaviours can be affected by cultures,

environments and the host country.

This section therefore presents the results of the study on the personality traits of the

entrepreneurs (divided into potential seeking and self-satisfying types). The variables

investigated in the study, as shown in the diagram below, are the views of the Chinese

entrepreneurs on, for example, (potential seeking) migration, dissatisfaction with previous

job, envy of others, profit maximization, inheritance of family business, and (self-

satisfying) freedom, desire, potential to make more money and strong belief in capability.

Based on literature on entrepreneurial motivation, Diagram 7.3 was developed; this

diagram will be refined after the research data are analysed, to provide a profile of the

entrepreneurial motivations of the two generations.

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Diagram 7.3 Variables Influencing Entrepreneurial Motivation

7.3.1 Potential Seeking

Migration, dissatisfaction with previous jobs, envy of others, and inheritance have been

identified in the literature as factors influencing Chinese entrepreneurs’ desire to seek

opportunities. In the following section, these factors will be described.

Migration

This has long been a feature of Chinese life (Wickberg 1994). However, the modern history

of China has been characterized by incessant upheaval, associated with western and

Japanese imperialism, popular rebellions, dynasty collapses and transitions, warlord

struggles, civil warfare and, most recently, the turbulent history of the Tiananmen Square

incident. Food shortages and poverty have also been perennial features of life for the

majority of the Chinese populace. Chinese are used to this political turmoil and economic

hardship (Choi 1975, Collins 1995).

Migration Dissatisfaction with previous job Envy of others Profit maximization Inheritance of family business

Freedom Desire Potential to make more money Strong belief in capability

Self Satisfying

Potential Seeking

Entrepreneurial

Motivation

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The analysis of the data shows that the population in the study supports (64 percent) that

migration was important in seeking new opportunities. Breaking down these figures shows

that 71.2 percent of the first generation and 50 percent of the second generation support

migration as a necessity for seeking new opportunities. The higher proportion in the first

generation is because migration has a direct and personal impact on their establishment of a

business.

Dissatisfaction in previous employment

This has been put forward by Wirth (2001) as one possible incentive for entrepreneurs to

move into business ownership. Another possible factor in influencing people to leave their

previous employment and pursue a business venture is slow career progression (Moore and

Buttner 1997). Hence, questions relating to dissatisfaction of the Chinese entrepreneurs in

their prior employment were asked. Analysis of the data indicates that 64 percent of the

total population in this study rated dissatisfaction in their previous jobs as a reason for

going into business in Australia. The breakdown of the analysis suggested that 63.6 percent

of the first generation and 64.7 percent of the second generation support this factor.

In summary, the results show the two generations have a minor difference in choosing

‘dissatisfaction with previous job’ as an important factor in potential seeking in their

businesses.

Envy of others and inheritance

Although these two attributes are not common in studying the personality traits of

entrepreneurs, these are characteristics of Chinese doing business (Liang 1987). The reason

for this is that they are protective of the family’s reputation and assets, and the Chinese do

not work co-operatively with others; instead, they rely on family succession to carry on the

family business.

The results for ‘envy of others’ are 74 percent for the two generations combined: 71.9

percent for the first generation and 77.9 percent for the second generation. For

‘inheritance’, the results are 64 percent for the two generations combined and 64 percent

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for each generation separately. In summary, this shows minor differences between the two

generations on these attributes.

Profit maximization

Traditional economics and entrepreneurship theories interpret the success of a business

based on its financial performance and profitability (Djik 1996). Traditionally, most

analyses reach a definition of success and failure in any entrepreneurship by looking at

different financial, quantitative measures such as income, size of firm, and the number of

employed people as the measures of achievement. Profit maximization is the ultimate goal

for potential-seeking entrepreneurs. Another unanimous explanation of the financial

reasons given for venture creation by all the respondents is that self-employment is far

more lucrative than paid employment. Results indicate 80 percent of the total population

chose the factor as ‘important’ or above. The results are 80.3 percent and 79.4 percent for

the first and second generations respectively. The analysis shows that both generations

consider profit maximization as important to them.

In summary, the analysis supports the notion that profit maximization is an important

attribute for potential seeking entrepreneurs.

7.3.2 Self-Satisfaction

Literature has identified freedom, desire to extend, potential and strong belief in oneself as

factors supporting self-satisfaction as reasons for people to become entrepreneurs. In this

section these factors will be analysed. Several studies in entrepreneurship have investigated

the individual characteristics and personality traits of entrepreneurs (McClelland 1987,

Schumpeter 1979). Although there are no hard and fast rules on the typical entrepreneurial

personality profile, these studies suggest that the common characteristics appear to be high

need for freedom, desire to extend, potential and strong belief in oneself.

A series of personal attributes were listed and the respondents were asked to rate

themselves in relation to these. In terms of their own perceptions about their personal

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attributes, the respondents rated themselves very highly on all the listed traits. The first of

these is desire to extend one’s potential (90.4 percent), followed by potential to earn more

money (91.5 percent), strong belief in oneself (93 percent) and freedom (88.5 percent). The

analysis of the data of both generations shows minor difference between the two

generations. This indicates that high importance is attributed to this factor by both

generations. This analysis supports Bennet and Dann (2000) and Kao (1991) findings that

entrepreneurship is related to the behavioural and personality traits of the individual

entrepreneur.

7.3.3 Summary of Dimension 2: Entrepreneurial Motivation

The following is a summary of the respondents who supported entrepreneurial motivation

as being very important to ethnic Chinese entrepreneurship.

Table 7.2 Results of Dimension 2: Entrepreneurial Motivation

Variable Questions % (Total Pool)

% (1st Gen)

% (2nd Gen)

Potential seeking

Migration 64 71.2 50

Dissatisfaction with previous jobs

64 63.6 64.7

Envy of others 74 71.9 77.9 Profit maximization 80 80.3 79.4 Inheritance 64 64 64

Self-satisfaction

Freedom 88.5 88.7 88.2

Desire to extend one’s potential

90.4 93.9 83.8

Potential to earn more money

91.5 92.5 89.7

Strong belief in oneself 93 93.2 92.6

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Results from migration (within the potential seeking group) show the biggest difference

between the two generations. This is understandable, as the first generation would feel

‘alienated’ in the host country while the second generation calls Australia home. According

to the push and pull factor theorists, one of the universal motivations which push the

immigrants into starting their own business ventures is the need to generate income. Many

first generation Chinese are pushed into whatever market economic activity they can take

up. The changing nature of government programmes, coupled with the lack of opportunity

for entry-level work in Australia, has led these immigrants to view entrepreneurship as the

best way out of the permanent cycle of poverty (Choi 1975, Collins 1991, Strahan and

Luscombe 1991). Hence, this factor is more important in the first generation entrepreneurs.

Personal motivation is another category of motivators embedded in the push and pull factor

theory; they include the desire for autonomy and to control one’s destiny, and the need to

be personally fulfilled. The motivation for self-satisfaction is very strong. Entrepreneurship

has provided an opportunity for the immigrants to discover a new-found sense of

accomplishment in supporting themselves instead of relying on being employed by others

and government welfare systems. Furthermore, when the motivations ‘potential seeking’

and ‘self-satisfaction’ are compared, the latter has a higher importance in becoming

entrepreneurs. This higher importance can be found in both generations. This implies and

agrees with the notion that all entrepreneurs place a higher importance on satisfying their

own dreams and goals in successful entrepreneurship.

This section therefore answers the question posed by dimension 2 of this study: ‘How

important are potential-seeking and self-satisfaction to entrepreneurial motivation?’ The

results show that although both factors are important to entrepreneurial motivation in both

generations of Chinese entrepreneurs, the entrepreneurs place a higher importance on

attributes of self-satisfaction. The results are summarized in the following

diagram.

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Diagram 7.4 Key Characteristics of Entrepreneurial Motivation

7.4 Dimension 3 – Traditional Confucian Values

To have a better understanding of the findings of this research on Chinese entrepreneurs, it

is also necessary to find out the cultural values that influence entrepreneurship. Research

has revealed that even in overseas Chinese family businesses, the most important family

values are based on Confucian piety (Jacobs et al. 1995; Lee J 1996). These Chinese family

values and interpersonal patterns contribute to business development and success. The

extent of its influence and its incorporation builds a tight matrix between the culture and the

psychological character of the people. Hence, the influence of these values cannot be

ignored, and they should not be studied independently. The emphasis here is to highlight

their influence on Chinese familial values and the social roles of individuals. Confucianism

has been woven into the very fabric of Chinese society. Although it is not a religion, it

continues to exert a major influence on the everyday lives of Chinese people (Jabobs et al.

1995, Chan 2008).

Migration (less important in 2nd gen.) Dissatisfaction with previous job (less important in 2nd gen.) Envy of other (similar) Profit maximization (similar) Inheritance (same)

Freedom (similar in both Generations) Desire (less important in 2nd generation) Potential to make more money (similar in both generations) Strong belief in capability (similar in both generations)

Self Satisfying

Potential Seeking

Entrepreneurial

Motivations

Higher importance on self-satisfaction factor in both

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This section therefore presents the results of the study on the importance of various

traditional Confucian values to Chinese entrepreneurship. The variables investigated in the

study, as shown in Diagram 7.4 below, are the views of the Chinese entrepreneurs. At the

end of the section a profile of traditional Confucian values important in this research to the

two generations will be presented.

Diagram 7.5 Variables Influencing Traditional Confucian Values Important to Chinese Entrepreneurship in Australia

7.4.1 Traditional Confucian Values

As has been pointed out in earlier sections, the interrelationship between the dimensions

and how they contribute to business success among immigrant Chinese is a major thrust of

this research. The interrelationship has to be looked at as a whole in order to better

understand how the Chinese entrepreneurs operate. The influences of the traditional

Confucian values are an important input to understanding this phenomenon. In this context,

Traditional Confucian

Values

Guanxi connections

Family involvement

Community guanxi

Head of family

Advice from elders

Traditional wisdom

Helping other Chinese

Racial discrimination

Trust in others

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the attributes studied are guanxi connections, family involvement, community guanxi, head

of family, advice from elders, traditional wisdom, helping other Chinese, racial

discrimination and trust in others. Previous literature has already pointed out that these are

Chinese characteristics and they are related to each other, under the same Confucian

teaching. The results below show that the importance is high across the two generations.

Table 7.3 Results of Dimension 3: Traditional Confucian Values

Attributes % (Total Pool) % (1st Gen) % (2nd Gen)Guanxi connections 90 88.6 92.6

Family involvement 83.5 83.4 83.9

Community guanxi 77.5 78 76.4 Head of family 75 75.8 73.5

Elder advice 72.5 77.3 63.3 Traditional wisdom 85.5 86.4 83.8

Helping other Chinese 81.5 86.4 72.1 Racial discrimination 78.5 75.8 83.8

Trust in others 83.5 96.2 79.4

The descending order of the results (two groups combined) is: guanxi connections (90

percent), traditional wisdom (85.5 percent), family involvement and trust in others (83.5

percent), Helping other Chinese (81.5 percent), racial discrimination (78.5 percent),

community guanxi (77.5 percent), head of family (75 percent) and advice from elders (72.5

percent)

However, this order changes significantly in the first generation: trust in others (96.2

percent), guanxi connection (88.6 percent), traditional wisdom and helping other Chinese

(86.4 percent), family involvement (83.4 percent), community guanxi (78 percent), advice

from elders (77.3 percent), racial discrimination (75.8 percent) and head of family (75.8

percent).

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The order changes again in the second generation: guanxi connections (92.6 percent),

family involvement (83.9 percent), traditional wisdom and racial discrimination (83.5

percent), trust in others (79.4 percent), community guanxi (76.4 percent), head of family

(73.5 percent), helping other Chinese (72.1 percent) and advice from elders (63.3 percent).

7.4.2 Summary of Dimension 3: Traditional Confucian Values

In summary, the analysis shows the high importance of these attributes to the respondents.

However, of all the Chinese traditional values being investigated, three variables show a

difference between the generations:

• Advice from elders – decreases from 77.3 percent to 63.3 percent (from first to

second generation)

• Helping other Chinese – decreases from 86.4 percent to 72.1 percent (from first to

second generation)

• Trust in others – decreases from 96.2 percent to 79.4 percent (from first to second

generation).

This finding is important because, while guanxi connections (on both personal and

community levels) remain the same in both generations, the ratings of the importance of the

three mentioned variables have dropped significantly. The possible explanation is that the

second generation is becoming more independent (see results in section 7.2.2 ‘independent

decision making’) and taking less advice from friends or relatives (see similar results in

section 7.2.1 ‘advice from friends’); they have become more self-confident and more

willing to take advice from professionals.

In summary, all attributes remain major contributors to the traditional Confucian values that

are important to the immigrant entrepreneurs in Australia, though the first generation places

greater emphasis thereon compared to the second. This section therefore answers the

question posed by dimension 3 of this study: ‘How important are the attributes of

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traditional Confucian values to Chinese entrepreneurship in Australia? The analysis is

shown in Diagram 7.5.

Diagram 7.6 Key Characteristics of Traditional Confucian Values Important to

Chinese Entrepreneurship in Australia

Traditional Confucian

Values

Guanxi connections (most important in both

generations) Family involvement

(Similar in both generations)

Community Guanxi (Similar in both

generations) Head of family (Similar in both

generations) Elderly advice (Less important in the 2nd

generation) Traditional wisdom

(Similar in both generations)

Helping other Chinese (Less important in 2nd

generation) Racial discrimination

(Similar in both generations)

Trust in others (Less important in 2nd

generation)

All attributes are important to both generations

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7.5 Dimension 4 – Difficulties and Hurdles

To have a better understanding of Chinese entrepreneurs in Australia, the views and

attitudes of the Chinese entrepreneurs in regard to difficulties and hurdles that they face

during the entrepreneurial process is important. This section is divided into eight

subsections as follows: assimilation, business set-up, bureaucracy and regulation, personal

hurdles, external hurdles, business management, adaptive opportunism and financial

rewards. These attributes may overlap and some of them may look similar to other

questions. However, the importance of re-grouping these attitudes reflects the importance

and influence of these factors on the entrepreneurs. These are represented by Diagram 7.7.

Diagram 7.7 Variables Contributing to Difficulties and Hurdles Impacting Chinese

Entrepreneurship

Difficulties and

Hurdles

Assimilation

Business set-up

Bureaucracy &

regulation

Personal hurdles

External hurdles

Business management

Adaptive opportunism

Financial rewards

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7.5.1 Assimilation

Assimilation

This has long been a subject of sustained empirical and theoretical attention, and immigrant

entrepreneurship has become part of the classic agenda (Light and Gold 2000, Waldinger et

al. 1999, Light and Rosenstein 1995). For migrants, even though the speed of social and

cultural change varies from person to person and for some the change occurs quickly,

people tend to retain their ethnic identity despite having moved to a new environment

(Eriksen 2002). However, assimilation into the host society will certainly enhance the

survival and development of the enterprises, whether they are carried out by first or second

generation entrepreneurs.

In this study, results show high importance for assimilation in all entrepreneurs: difference

in culture (84.5 percent), difference in business practice (83 percent), recognition of skills

(86 percent), acceptance by Australia (88 percent) and adoption of Australian ways (86.5

percent). The differences between the generations are minimal. This suggests not only that

assimilation is an important factor, but also that both generations place a high importance

on this factor during the entrepreneurial process.

7.5.2 Business Set-up

Business set-up

Set-up includes the ‘resource-base factors’ such as location, funds, business skills,

employees, education, power sharing and initial financial back-up. The literature in

previous sections has shown that these are also related to business skills, previous history

and entrepreneurial experiences. This supports the notion that these attributes also

contribute to growth and the success of business ventures. Success depends on how well the

organization balances sound financial back-up and efficient management; and failure tends

to fluctuate between lack of funding and poor management.

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Results for the attributes have been ranked (in descending order) for the combined group:

location (96 percent), employees (95.5 percent), business skills (93.5 percent), funds (93

percent), power sharing (90 percent), education level (88.5 percent) and initial financial

back-up (84 percent). They all show high importance among all attributes. Location and

employees are the two most important contributors to the success of good business set-up.

The results are supportive of enclave economy theory, where businesses and customers

cluster to facilitate the exchange of goods and services.

Results for the two generations show no differences, except in power sharing (87.2 percent

in the first generation and 75.3 percent in the second generation). This implies good

business set-up is important in reducing difficulties and hurdles encountered by both

generations, and the attributes are closely related. The minor difference in power sharing

may be due to differences of staff association; that is, there is more personal and family

orientation in the first generation.

7.5.3 Bureaucracy and Regulation

Bureaucracy and regulation

Legal and bureaucratic matters can be burdens that affect all new and existing enterprises.

They may be the factors encouraging entrepreneurs to engage in informal sector activity as

a means of avoiding their influence. In the west, one will argue constantly about what legal

and political systems are the right ones, how the details of these systems should be

organized and implemented, and what rights and protections one ought to have. The

assumption behind the whole discussion is that there is a system: a legal and philosophical

framework, fairly clearly delineated, within which everyone can work. This is contradictory

to the traditional practice of average Chinese entrepreneurs. Throughout the whole of

Chinese history, regulatory bodies, of any kind, of professions, industries and developments

do not exist. The skills acquired by different professions are, in fact, similar to the

Australian apprenticeship system.

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The analysis of the data for the attributes identified for this factor is (two groups

combined): state government (75 percent), federal government (80 percent), local

government (77.5 percent), government bureaucracy (82.5 percent), unionism (72.5

percent) and workplace agreement (81.5 percent). Results for the combined groups show

that these are rated as being of average importance. This supports the above notion that the

Chinese entrepreneurs engage in informal sector activity as a means of avoiding the

influences of bureaucracy and regulation, due to lack of understanding and adoption of

local rules and regulations. At the same time, the drop in importance of these attributes in

the second generation (an average of 5 percent difference) also supports this notion, as the

second generation entrepreneurs have better language skills than their parents.

7.5.4 Personal Hurdles

Personal hurdles

These include language barrier, long working hours and gambling. The attributes are

strongly related to Chinese entrepreneurs. Language is at the heart of adjusting to a new

country for most migrants, especially the first generation. The significance of language in

migrants’ settlement is affirmed by sociologists, economists, linguists, and by migrants

themselves (Burnett 1998). The first generation should have more language difficulties than

the second generation.

The hard-working and conscientious attitude among Chinese is a well-known characteristic,

especially long working hours. This hard-working attitude comes from a desire for success

as they seek promotion and positions of authority. Chinese are also renowned for their

interest in gambling. The mentioned three attributes are characteristics of Chinese.

The results are different from other factors in this section. As can be seen in earlier results,

the rankings and importance of the attributes are, on average, ‘similar’. Here, the results for

the combined group are language barrier (73 percent), long working hours (85 percent) and

gambling (57 percent). The results based on two separate generations are different:

language barrier (80.3 percent in the first generation and 58.8 percent in the second

209

generation). The results support the earlier explanation that the first generation rates this

language barrier attribute at ‘high importance’. With respect to long working hours, both

generations (86.4 percent in the first generation and 82.4 percent in the second generation)

place this attribute at ‘high importance’; this is one of the characteristics of Chinese

entrepreneurs. Results for gambling show 61.3 percent for the first generation and 48.6

percent for the second generation; the drop in importance can be due to better educational

background, more vocational activities and less boredom among the second generation

entrepreneurs.

7.5.5 External Hurdles

External hurdles

These are difficulties related to community support, locality, family history, return to the

home country, financial assistance, Chinese competition, and parents’ influence. These

factors influence the running of the businesses. These can also be resource-based factors

found in human, financial and social capital. Immigrant enterprise development depends on

being the ‘middleman minority’, which is based on the opportunity structure and operating

environment. The set-up and the running of the businesses have gradually changed in such

ways that external assistance and help are sought to deal with larger issues and problems.

This is due to the increase in the complexity and the size of the organizations.

Results in the combined group for these factors are: Chinese competition (85 percent),

locality and financial assistance (82.5 percent), community support (81.5 percent), parents’

influence (75.5 percent), return to the home country (74.5 percent), and family history (74

percent). Factors which are business-related are above 80 percent; factors which are

personal-related are below 80 percent. This analysis of the data shows that the factor for

external hurdles is more related to financial and social capital. Results for both generations

are similar and do not show significant differences.

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7.5.6 Business Management

Business management

This has been mentioned in literature (Yusuf 1995) as one of the business characteristics

frequently displayed by individual successful entrepreneurs. Chinese family business style

is a closed circuit style, in which any decision-making does not go beyond the boundary of

the family. Trust and ‘sense of belonging’ are the two major factors in determining further

working relationship in the business. The entrepreneurship and management literature

highlight the fact that human capital is a crucial factor in enterprise establishment,

influencing business success. Resource-based theorists propose that an entrepreneur’s

human capital is comprised of management skills.

Results for the combined groups are: organisation skills and staff management (93.5

percent), expansion (93 percent), marketing planning (91 percent), sound accounting (87

percent), niche products (84.5 percent). All these attributes are given ‘high importance’. In

fact, the results for the two generations are similar, with only minor differences. This not

only supports that the Chinese entrepreneurs recognize the importance of these attributes

contributing to good business management, but also that these Chinese put efforts into

expanding the businesses outside the boundary of the family circle. By adopting good

business management skills, both generations place the ‘high importance’ of this factor on

the agenda of successful business.

7.5.7 Adaptive Opportunism

Adaptive opportunism

Flexible solutions and skills are needed to deal with the difficulties and hurdles of the

entrepreneurial process. While it is one of the management skills exhibited by

entrepreneurs, it is also a representation of being creative and innovative when dealing with

exploring new grounds for businesses. Success depends on how well the organization

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balances innovation and conservatism, and failure tends to fluctuate between high levels of

innovation and excessive stagnation (Miller and Friesen 1983).

Results for the combined groups are: cut-price strategies (80.5 percent), continuing

education (80 percent), fusion style (78.5 percent), cheaper imports and regulation issues

(78 percent), workplace reform (70.5 percent). Although the attributes show ‘importance’,

the results are not as high as for the business management factor mentioned in the above

section. Adaptive opportunism may be more concerned with the expansion and potential

growth of the businesses. The results for the two generations are similar. The only notable

discrepancy is workplace reform (65.9 percent in the first generation and 79.2 percent in the

second generation). This can be explained by the fact that the first generation Chinese

entrepreneurs may engage in informal sector activity as a means of avoiding the influence

of workplace-related bureaucracy and regulation.

7.5.8 Financial Rewards

Financial rewards

Profit can indicate how successful a business is. The attractiveness of the potential to gain

more monetary reward is one of the important factors in the consideration of being an

entrepreneur. Business success is determined by financial indicators including growth rates,

business size, turnover, profitability and the number of people employed. Consequently, the

ways to maximize the profits become an important factor since they are related to business

success.

Results for the combined group are: tax (91 percent), increase in profit and better business

knowledge (86 percent) and Australian competition (84.5 percent). These attributes are

ranked at ‘high importance’ for the financial rewards factor, which in turn is a factor of

difficulties and hurdles in the entrepreneurial process. There are differences between the

two generations in the tax factor (93.2 percent in the first generation and 86.8 percent in the

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second generation); this can be due to a higher taxation rate in Australia than in other Asian

countries (e.g. the personal and company tax rate in Hong Kong is a flat rate of 15 percent).

Other attributes show similar results. The results have been tabulated and highlighted as

follows:

Table 7.4 Results of Dimension 4: Difficulties and Hurdles

Variables Questions % (Total Pool)

% (1st Gen)

% (2nd Gen)

Assimilation Difference in culture 84.5 85.6 82.3 Difference in business practice 83 84.1 80.8 Recognition of skills 86 84.1 89.7 Acceptance by Australia 88 88.7 86.7 Adoption of Australian ways 86.5 85.6 88.3

Business set-up Location 96 96.2 95.6 Funds 93 92.4 94.1

Business skills 93.5 92.4 95.6 Employees 95.5 96.2 94.2 Education level 88.5 87.9 89.7 Power sharing 82.5 87.2 73.5 Initial financial back-up 84 84.8 82.4

Bureaucracy & regulation

State government 75 77.3 72

Federal government 80 83.3 73.6 Local government 77.5 79.5 73.6 Government bureaucracy 82.5 84.1 79.4 Unionism 72.5 70.4 73.6 Workplace agreement 81.5 81.1 82.3

Personal hurdles Language Barrier 73 80.3 58.8 Long working hours 85 86.4 82.4 Gambling 57 61.3 48.6

External hurdles Community support 81.5 80.4 83.8 Locality 82.5 83.4 80.8

Family history 74 71.8 79.4

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Return to home country 74.5 74.2 75 Financial assistance 82.5 78.8 89.7 Chinese competition 85 82.5 89.7 Parents’ influence 75.5 74.2 77.9

Business management

Organization skills 93.5 91.6 92.1

Staff management 93.5 93.2 94.2 Marketing planning 91 89.4 94.2

Expansion 93 92.4 94.1 Niche products 84.5 84.9 83.8 Sound accounting 87 84.8 91.2

Adaptive opportunism

Workplace reform 70.5 65.9 79.2

Continuing education 80 78 83.8 Regulation issues 78 77.3 79.4 Cheaper imports 78 76.6 80.9 Fusion style 78.5 78.3 77.9 Cut-price strategies 80.5 80.4 80.8

Financial rewards Increase in profit 86 85.6 86.8 Tax 91 93.2 86.8

Better business knowledge 86 84.1 89.7 Australian competition 84.5 81.8 89.7

7.5.9 Summary of Dimension 4: Difficulties and Hurdles

In summary, the questions supporting the variables show ‘similar’ or ‘no difference’ in the

data of the two generations. This implies that the views and attitudes towards difficulties

and hurdles encountered during the journey of entrepreneurship are the same for both

generations. Only three factors show differences between the two generations:

• Language barrier – a decrease from 80.3 percent to 58.5 percent. This is self-

explanatory, as the second generation grew up in an English-speaking society in

which they spend most of the time speaking and writing in English. The language

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barrier does not exist in their daily living, learning and working.

• Gambling – a decrease from 61.3 percent to 48.6 percent. While this factor is not

important in the study, it points out that the gambling factor plays an even weaker

role in the second generation. Traditionally, Chinese have a reputation for

gambling; however, the shift in the importance of this factor indicates that 1, the

effect is diminishing; 2, the influence of this traditional hobby is less in Australia

among the second generation entrepreneurs.

• Workplace reform – an increase from 65.9 percent to 79.2 percent. Presumably,

instead of being restricted to the Chinese community in the first generation, the

second generation businesses mix more with the general public, and the dealings

with the Australian workforce and Australian customer base are more frequent and

involved. Consequently, the importance of reform is higher in the second

generation.

In summary, all attributes remain major contributors to the difficulties and hurdles, and the

results show the high importance of all factors. This section therefore answers the question

posed by dimension 4of this study: ‘How important are the difficulties and hurdles factors

to the success of Chinese entrepreneurship in Australia?’ The results are shown in Diagram

7.8.

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Diagram 7.8 Key Characteristics of Difficulties and Hurdles Impacting Chinese Entrepreneurship

Difficulties

and Hurdles

Assimilation (Similar in both

generations) Business Set-up (Similar in both

generations) Bureaucracy &

Regulation (Similar in both generations) Personal Hurdles (Similar in both

generations) External Hurdles (Similar in both

Generations) Business Management

(Similar in both generations)

Adaptive Opportunism (Similar in both

generations) Financial Rewards

(Similar in both generations)

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7.6 Dimension 5 – Overseas Expansionary Vision This section develops a detailed understanding of the vision of the entrepreneurs in

expanding into overseas markets, which is seen as an important aspect of Chinese

entrepreneurial development in Australia. Furthermore, to develop a detailed picture of the

business ventures of the Chinese entrepreneurs, knowledge is sought about the international

markets as a means of expansion. This is to assist in understanding the reach, depth and

profile of the businesses.

Overseas business connections are important in creating new businesses for local firms

(Zhou 2004, Yeung 1999, Tsang 1998). A vision to utilize the advantage of these

connections is a form of innovation. However, the vision is not just about money. These

first and second generations are bearers not just of the new ways, but also of the old – of the

dominance of family, clan and village; the importance of face; the predominance of values.

They are a root that has not been cut back, a place where ‘blood is truly thicker than water’.

This section therefore presents the results of the study on the possible factors and attributes

of the overseas expansionary vision that these Chinese have. Details of descriptions of their

business activities will be reported on, as well as the trading patterns, overseas connections,

cheaper supplies, potential to make more money and satisfaction dealing with overseas

people.

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Diagram 7.9 Variables Influencing Overseas Expansionary Vision

7.6.1 Overseas Expansionary Vision Similar to the explanation given in section 7.3, the analysis of overseas expansionary vision

requires study of the matrix as a whole in order to have a better understanding of the

influences of these attributes since they can influence each other: anything-is-possible

attitude, borderless trading, attractive overseas market, more travel, overseas connection,

cheaper supplies, potential – more money, and more satisfaction. Previous literature

(Pooking & Skeldon 1994) has already showed that the first generation Chinese

entrepreneurs facilitate the exchange of ideas, goods and service, and they form the bridges

between different countries.

Overseas Expansionary

Vision

Anything-is-possible

Borderless trading

Attractive overseas

market

More travel

Overseas connection

Cheaper supplies

Potential – more

money

More satisfaction

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The results have been tabulated as follows:

Table 7.5 Results of Dimension 5: Overseas Expansionary Vision

Questions

% (Total Pool)

% (1st Gen)

% (2nd Gen)

Anything-is-possible 88 87.1 89.7 Borderless trading 87.5 84.1 94.1 Attractive overseas

market 83.5 81.1 88.3

More travel overseas 80.5 86.3 69.2 Overseas connection 82.5 80.3 86.8

Cheaper supplies 85.0 86.4 82.4 Potential to earn more

money 88.5 94.7 76.4

More satisfaction 87.0 84.9 91.1

Anything-is-possible

This attitude is similar in both generations (87.1 percent and 89.7 percent). It represents a

strong support of creativity and innovation in the entrepreneurial process. This is similar to

the results of section 7.3.2 (desire to extend one’s potential and strong belief in oneself), of

which the attributes are typical and characteristic of being an entrepreneur in both

generations.

Borderless trading

This behaviour facilitates the exchange of goods and services; it is an important attribute

helping the entrepreneurs expand their businesses both locally and internationally. The

willingness of the Chinese entrepreneurs to consider this attribute is because of the overseas

connection and the growing importance of the Chinese economy nowadays. The results

show high importance in both generations (84.1 percent and 94.1 percent), with 87.5

percent for the combined group.

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Attractive overseas market

This element of business is important in providing potential for entrepreneurs. The growing

expansion of quality Australian exports to foreign countries becomes an important factor in

considering expanding businesses overseas. Conversely, the sheer size of the population of

China and other Asian countries provides tourists and business seekers from overseas. Once

again, the results show that high importance is attached to this (83.5 percent for the

combined group, 81.1 percent for first generation and 88.3 percent for the second

generation).

Travel overseas

This is a major criterion of doing business in Australia, as it is a big country. To enable

businesses to grow, travelling is required, especially interstate. Nowadays, travelling

overseas is required as globalization opens new markets for all countries. At the same time,

the ease of telecommunication helps to facilitate the exchange of information. Results from

the combined group show a high 80.5 percent, and the results for the first and second

generation are 86.3 percent and 69.2 percent respectively (see below for more explanation).

Overseas connection

This gives the Chinese a strong advantage over Australians. The analysis of the data shows

that there is a slight difference between the two generations, with 82.5 percent for the

combined group, 80.3 percent for the first generation and 86.8 percent for the second

generation. This can be explained by the fact that the second generation entrepreneurs can

gain their overseas connection via internet enquiries, communications and networks

through other non-Asian countries such as India, the UK and the USA. This supports once

again the importance of borderless trading.

Cheaper supplies

Such cost saving is a major inducement for entrepreneurs to purchase from overseas, where

the manufacturing costs are lower. Literature (Lee 1996) supports this trend. China and

India have been the countries supplying cheaper goods to Australia; this cost-cutting

effectiveness is a management skill exhibited by entrepreneurs. Results indicate a fairly

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even proportion across the cases (85 percent for the combined group, 86.4 percent for the

first generation and 82.4 percent for the second generation).

Potential to earn more money

Earning more money is listed as the prime motivation of all businesses. The potential to

make more money overseas is a combination of other attributes mentioned in this section.

The results show this as the attribute of highest importance (88.5 percent for the combined

group and 94.7 percent for the first generation). A big difference in the second generation

(76.4 percent) indicates that while it is important to seek more money overseas, the second

generation is also confident of achieving the same result locally.

More satisfaction

Entrepreneurs enjoy the self-satisfaction or self-fulfilment gained in doing business. This

can be seen as a personality trait which influences the desire and passion needed for

business. The results show a higher importance in the second generation (91.1 percent) than

the first generation (84.9 percent). The overall result for the combined group is 87 percent.

7.6.2 Summary of Dimension 5: Overseas Expansionary Vision In summary, both generations place high importance of the factors supporting overseas

expansion. The rankings of the factors (two groups combined) are: potential – more earning

(94 percent), anything-is-possible (88 percent), borderless trading (87.5 percent), more

satisfaction (87 percent), more travel (86.5 percent), cheaper supplies (85 percent),

attractive overseas market (83.5 percent), overseas connection (82.5 percent). This implies

that Chinese entrepreneurs treat the overseas market as a new market in which to invest

time and money. However, there are a few differences between the two generations, as

follows:

• Borderless trading –an increase from 84.1 percent to 94.1 percent. With no language

difficulty and better Australian-rooted connections, the second generation places a

higher importance on borderless trading with partners from overseas because of

easier communication and better technology during the dealings.

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• More travel –a decrease of 86.3 percent to 69.2 percent from the first to the second

generation. Contrary to the fact that the second generation is younger and more

mobile than the first, the second generation uses computers for contacts and spends

more contact time in Australia. China, the biggest exporter in the Asian region, is

more attractive to the first generation entrepreneurs, who prefer to deal with the

homeland. Such a decrease also indicates a preference in the way that the two

generations do business.

• Potential to earn more money–a decrease from 94.7 percent to 76.4 percent. This

implies that the first generation believes that there is a higher potential for making

money overseas than locally. Conversely, the second generation place less

significance on ‘overseas markets’. In turn, this means the second generation

entrepreneurs are more confident of making more ‘potential’ money locally than in

the overseas market, as they will have more ‘local’ advantages in Australia.

In summary, the analysis of the data has provided insights into the attributes supporting

overseas expansionary vision. This section therefore answers the question posed by

dimension 5 of this study: ‘How important are the attributes influencing overseas

expansionary vision to Chinese entrepreneurship in Australia?’ The results are shown in

Diagram 7.9.

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Diagram 7.10 Key Characteristics of Overseas Expansionary Vision

7.7 Summary In summary, the chapter has analysed and discussed the five dimensions and associated

variables in this research. The variables within each of the five dimensions of the Chinese

entrepreneurs have been explored, and the key characteristics arising from these results and

findings highlighted. All factors contributing to the five dimensions in this study are

Overseas

Expansionary Vision

Anything-is-possible (Similar in both

generations) Borderless trading

(More important in 2nd generation)

Attractive overseas market

(Similar in both generations)

More travel (More important in 1st

generation) Overseas connection

(Similar in both generations)

Cheaper supplies (Similar in both

generations) Potential to make more money (More important

in 1st generation) More satisfaction (Similar in both

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supported by the empirical data. Analysis of the whole population provides general

information about Chinese entrepreneurship in Melbourne. The importance of these factors

has been shown in previous sections.

Further comparison of the two generations gives more detailed and meaningful support to

the shift of entrepreneurial behaviour, characteristics, decision making, business style and

overseas expansionary vision from the first to the second generation. The differences

between the two generations have been explained in detail with the support of numerous

studies. The results have built up a holistic picture of the Chinese entrepreneurs in

Melbourne across five key areas, namely the background of the entrepreneurs,

entrepreneurial motivation, traditional Chinese values, difficulties and hurdles, and

overseas expansionary vision. The similarities and differences in the results of this study

with the findings of previous studies and the literature on entrepreneurship have been

highlighted accordingly. The connections of these links (5 dimensions) to the creation of

successful entrepreneurs can now be established and this is proposed in the next chapter.

In the next chapter, the results and findings are discussed and integrated to test the five

hypotheses of the study. Also, a general discussion of the overall findings follows the

testing of the hypotheses in the same chapter. This will provide answers to the five research

questions and lead to the development of a profile of Chinese entrepreneurs across these

five key dimensions and the two generations.

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Chapter 8

Testing of Hypotheses and Discussion of Results

8.1 Introduction The previous chapter presented a detailed report on the analysis of the survey. This chapter

will further integrate these findings to test the five hypotheses of the research, and then

discuss in a broad context the overall results of the study. The hypotheses of the study are:

H1. The background of the entrepreneurs is related to the success of their businesses.

H2. Entrepreneurial success is related to the motivation of the entrepreneurs. H3. Entrepreneurial success of the Chinese is related to traditional Confucian values.

H4. Entrepreneurial success is related to the difficulties and hurdles experienced by the

entrepreneurs.

H5. Entrepreneurial success is related to the overseas expansionary vision of the

entrepreneurs.

From these hypotheses, the measure of success of the Chinese entrepreneurs in Box Hill is

identified as the dependent variable of the study. The success measures are highlighted in

the analysis chapters of 6 and 7. They are:

• Intrinsic factors including guanxi connections and prior experience that

determine the success of business set-up;

• Personal success factors including self-satisfaction and potential-seeking that

determine entrepreneurial motivation;

225

• Confucian piety as an important traditional Confucian value in the

entrepreneurial process;

• Extrinsic factors, including personal hurdles, external hurdles, adaptation,

business set-up, bureaucracy and regulation, incorporate the difficulties and

hurdles faced by the entrepreneurs;

• Financial contributing factors including business management, adaptive

opportunism and expansionary vision determine the overseas expansionary

vision of the entrepreneurs.

The independent variables are classified into these five main groups to capture the

dimensions of all the theoretical perspectives of the study. The five hypotheses are based on

the five main dimensions of the Chinese entrepreneurs identified for study. Financial

rewards is chosen as the dependent variable because it is a useful indicator of the success of

the entrepreneurs. The other variables become the independent variables in the five

hypotheses.

Relevant statistical techniques have been employed to conduct systematic investigations to

test the hypotheses in order to achieve the objective of the study. The main technique to

describe the relationship between the research independent and dependent variables is

multiple regression analysis. Multiple regression analysis produces correlations, which are

useful for the exploration of the strength of the association between any two pairs of

variables, and beta coefficients give an indication of the relative contribution of each

independent variable. It allows the researcher to predict a score or result on a dependent

variable from the score or result of a number of independent variables (Brace, Kemp &

Snelgar 2003, Bryman & Cramer 2004, Hair et al. 2006, and Pallant 2005).

Another related statistical tool employed is the analysis of variance (ANOVA), which is

useful for detecting any significant difference in dependent variables between groups. An

equally important statistical technique which the study employed is factor analysis. Since

the numbers of questions in this study are many (92) there is a need to use factor analysis to

reduce or summarize the original data into smaller manageable units for analysis (14 scales

226

remain). These statistical techniques are employed using the Statistical Package for Social

Scientists (SPSS) version 17. Structural equation modelling (AMOS Version 7) is also used

to test the final model explaining the success of Chinese entrepreneurs.

This chapter is organized into sections. Following this introductory section, the

development of the scales and the computation of total success (dependent variables) are

presented in section 2. Testing of each of the hypotheses is contained in each of the

subsequent sections. The hypotheses results are summarized and the final model will

illustrate the relationships among the variables. Finally, in the last section, key findings

based on the overall results of the study will be integrated and discussed, leading to the

development of an overall picture and understanding of Chinese entrepreneurs from two

generations in Box Hill

8.2 The Dependent Variable: Financial Rewards as Measure of Success As indicated earlier, for the Chinese entrepreneurs, financial rewards is the best indicator of

their success in business. This success factor is commonly used as a measure of success in

entrepreneurship research (Praag 1996, Rauch & Frese 2000, Walker 2004, Yusuf 1995,

Brochhaus 1980).

The dependent variable is made up of a large number of related items (92 in total). There is

the need to prepare these items by means of factor analysis before their use in the

hypotheses testing. Hence, in this section, an exploratory factor analysis statistical

technique will be used to reduce the original large data into a more manageable number of

dimensions or factors conducive for use in multiple regression analysis in the testing of the

hypotheses. The questionnaire is split into logical groups and a factor analysis (using

principal component analysis) is carried out for each group. The principal axis factoring

method of factor analysis will be used to ensure that only a shared variance is used to

cluster variables together.

227

Also, Bartlett’s test of sphericity and the Kaiser-Meyer-Olkin (KMO) measures of sampling

adequacy will be performed to ascertain the appropriateness of the factor analysis for the

research variables. The Kaiser criterion is used to determine the number of factors in each

case, and an oblimin rotation is applied in order to allow correlation of the factors. Scales

will be created for each of these factors by adding the responses for the items, loading

strongly on each factor. Finally, a reliability test which gives a Cronbach alpha value will

be performed to ensure that the items included in the new scales agree well with one

another and are reliable for use in the testing of the hypotheses.

8.2.1 Development of Scale for Measures of Financial Rewards Respondents were asked to rate the answers based on their personal views on engaging in

their own business ventures on a 5-point scale, ranging from 1 = little importance to 5 =

high importance. The response correlations between these items, their ordinal level of

measurement and the large number of participants qualified the data for factor analysis. All

the dependent variable items data specified above were factor analysed by means of a

principal axis factoring, with oblimin rotation. The results from this analysis follow.

In each case, the pattern matrix was used to test for simple structure. Where items were

loaded strongly (>0.3) on more than one factor, the item was removed.

Result 1 The various indications of the factorability of the dependent variable were excellent and

appropriate: KMO was greater than > 0.80; and the Bartlett test of sphericity which

indicated the significant level of p< .001 also showed that factor analysis was appropriate.

Result 2 An eigenvalue of greater than 1.0 suggested the number of factors suitable for extraction.

These values also represented the amount of variance accounted for by each factor (see

Appendix 20)

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Result 3 The SPSS output extracted from the measures of success variable is indicated in the pattern

matrix table (see Appendix 5). The factor analysis reduced the dependent variable data into

fourteen factors collating related items together. These values, which were above 0.3,

indicate the item or responses that were most crucial or important to the Chinese

entrepreneurs in terms of each measure of success. Scales were constructed for each of the

factors by averaging the responses for the items loading strongly on each factor.

For clarity purposes, the pattern matrix SPSS output was described and labelled according

to the loading on the different factors.

Result 4 A reliability test was conducted for the scales constructed for each of the extracted factors

to ascertain the degree to which the items making up the scale were correlated. This was to

find out whether all the items that had collated on one factor had internal consistency and

whether they measured the same underlying constructs. Ideally, the output of a reliability

test, which was a Cronbach alpha coefficient, should have a value above 0.7, but greater or

equal to 0.6 would be an acceptable lower reliability coefficient (Hair et al. 2006). All

scales had good reliability. Means, variance and standard deviation on correlations for these

scales were also calculated.

Result 5 After the extraction and interpretation of the above fourteen factors, the factor for financial

rewards was derived for use in the multiple regression analysis of the general assessment of

the relationship with other independent variables and the dependent variable. The 14 items

comprising total success were also subjected to a reliability test to ensure that all the items

on the total success scale belonged together with strong internal consistency. The reliability

test produced a Cronbach alpha coefficient for the financial rewards factor of 0.769,

suggesting that this scale could be used for hypotheses testing.

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Therefore, the results of the various statistical tests conducted to prepare the dependent

variable (financial rewards) were correct and ready for use in the testing of the hypotheses

in the subsequent sections. The exploratory factor analysis supported the existence of all

fourteen constructs or factors in the interpretation of success by the Chinese entrepreneurs.

8.3 Hypothesis 1 – Background of the Entrepreneurs Is Related to Entrepreneurial Success

The first hypothesis of the study is anchored in economic and financial theoretical

perspectives. These factors (guanxi connections and prior experience) are important

contributors to successful entrepreneurial behaviour and patterns of activities. The major

objective of this hypothesis is to find out whether these factors of the Chinese entrepreneurs

relate to their success.

8.3.1 Development of Scales for the Background of the Entrepreneurs The variables indicating the entrepreneurial factors were measured by using eight (8) items

each in the questionnaire survey asking the respondents to rate themselves in relation to

their personal attributes on a 5-point scale, ranging from 0 = little importance to 5 = high

importance. These variables were subjected to principal axis factoring, with oblimin

rotation. The results are as follows:

Result 1

The factorability of these variables was ascertained by the inspection of the correlation

matrix to find out whether many coefficients of 0.3 and above existed. The Kaiser-Meyer-

Olkin (KMO) was 0.823, and the Bartlett test of sphericity reached statistical significance

(p<0.001), supporting the factorability of the correlation matrix.

Result 2

Two factors with an eigenvalue of greater than 1.0 were found in the SPSS output. The first

factor (guanxi connections) contributed 35.9 percent and the second factor (prior

230

experience) contributed 27.4 percent of total variance in the variables explained (refer to

Appendix 20).

Result 3

The pattern matrix (see Appendix 5) generated by SPSS highlighted variables that loaded

strongly on the factors. Each of the factors had four (4) variables loading strongly on it.

Factor 1 indicated the variables representing the components and importance of guanxi

connections. Factor 2 indicated variables highlighting components and importance of prior

experience. See below for the description of the pattern matrix for the background factors

of the entrepreneurs.

Table 8.1 Description of Pattern Matrix for Background Factors

Factor1 Guanxi connections

Factor 2 Prior experience

Role models Professional expertise Advice from friends Independent decision

making Better education Prior experience

Financial assistance Passion

Results 4

The Cronbach alpha coefficients of the variables proved reliable and acceptable, with

internal consistency among the variables: 0.626 (Factor 1) and 0.801 (Factor 2). Thus, the

factor analysis of the independent variables in hypothesis 1 reduced the data, aligning them

according to their underlying structures to two major factors – factor 1 (guanxi

connections) and factor 2 (prior experience). Scales were constructed for each of the factors

by averaging the responses for the variables loading strongly on each factor. These scales

were proved reliable by their respective Cronbach alpha coefficients and were therefore

appropriate for the testing of the hypothesis.

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8.3.2 Hypothesis Testing Results: Success in Terms of Background of the Entrepreneurs

The scales developed previously for success and personality traits were subjected to

multiple regression analysis for the testing of the first hypothesis of the study. The use of

the multiple regressions allowed the study to determine how well this set of independent

variables – background of Chinese entrepreneurs in Box Hill – were able to predict the

dependent variable – their success. The result also showed how much of the success

variance of the independent variables guanxi connections and prior experience was

explained in the dependent variable financial rewards.

The coefficient of determination (R square value) is 0.266. Thus 26.6 percent of the

variation in success was explained by the background of the entrepreneurs. The ANOVA

results also showed a significant linear relationship between the independent and the

dependent variables (F=35.75, p<0.001), providing support for the first hypothesis. The

contribution of each of the independent variables included in the model in the prediction of

the dependent variable was determined by its beta score. Variables of higher beta values

mean they contribute more strongly to explaining the dependent variable. Here, guanxi

connections had a beta value of 0.44, and prior experience had a beta value of 0.124 (see

Appendix 21).

In summary, hypothesis 1 of the study, which states that the background of the entrepreneur

is related to success, is supported and confirmed (with the independent variables explaining

26.6 percent of the dependent variable. This result has p<0.001, showing strong support for

hypothesis 1. Guanxi connections make a more statistically significant contribution to the

prediction of the dependent variable. This result also implies that the Chinese

entrepreneurs’ background supports that they are orientated towards guanxi connections.

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8.4 Hypothesis 2 – Entrepreneurial Motivation Is Related to Entrepreneurial Success

The second hypothesis of the study is anchored on the psychological and motivational

characteristics of the Chinese entrepreneurs. These attributes have been identified as being

capable of successfully predicting entrepreneurial behaviour and patterns of activities.

These are the reasons for the Chinese entrepreneurs being successful as well as creating

their own businesses. The major objective of this hypothesis is to find out whether the

identified factors of the Chinese entrepreneurs are related to their success.

A number of research variables were included in the questionnaire survey to measure the

factors which motivate Chinese entrepreneurs to engage in entrepreneurial ventures. These

variables, which have been identified as the independent variables for this hypothesis,

centre mainly on personal, business and financial motivations. Appropriate statistical

procedures were employed to summarize the original data into smaller manageable units for

analysis. Thus, factor analysis was used to reduce and simplify the number of the

independent variables. The reliability of the scales created for the various factor scales was

tested. Finally hypothesis 2 was tested by regressing success on these scales.

8.4.1 Development of Scales for Entrepreneurial Motivation The variables indicating the entrepreneurial factors were measured by using eight (8) items

each in the questionnaire survey asking the respondents to rate themselves in relation to

their personal attributes on a 5-point scale, ranging from 0 = little importance to 5 = high

importance. These variables were subjected to principal axis factoring, with oblimin

rotation. The results are as follows:

Result 1

The factorability of these variables was ascertained by the inspection of the correlation

matrix to find out whether many coefficients of 0.3 and above existed. The Kaiser-Meyer-

233

Olkin (KMO) was 0.862, and the Bartlett test of sphericity reached statistical significance

(p<0.001) supporting the factorability of the correlation matrix.

Result 2

Two factors with an eigenvalue of greater than 1.0 were found in the SPSS output. The first

factor (self-satisfaction) contributed 37.6 percent and the second factor (potential seeking)

contributed 35.0 percent of the total variance in the variables explained (see Appendix 20).

Result 3

The pattern matrix (see Appendix 5) generated by SPSS highlighted the variables loading

strongly on the factors. The first factor (self-satisfaction) had four (4) variables, and the

second factor (potential seeking) had five (5) variables. Factor 1 indicated the variables

representing the components and importance of guanxi connections. Factor 2 indicated

variables highlighting the components and importance of prior experience of the Chinese

entrepreneurs. See below for the description of the pattern matrix for the entrepreneurial

motivation factors.

Table 8.2 Description of Pattern Matrix for Entrepreneurial Motivation Factors

Factor1 Self-satisfaction

Factor 2 Potential seeking

Freedom Migration Desire to extend Dissatisfaction with

previous jobs Potential Envy of others

Strong belief in oneself Profit maximization

Inheritance

Results 4

The Cronbach alpha coefficients of the variables proved reliable, with acceptable internal

consistency among the variables: 0.802 (factor 1) and 0.793 (factor 2). Thus, the factor

analysis of the independent variables in hypothesis 2 reduced the data, aligning them

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according to their underlying structures to two major factors – Factor 1 (self-satisfaction)

and Factor 2 (potential seeking). Scales were constructed for each of the factors by

averaging the responses for the variables loading strongly on each factor. These scales were

proved reliable by their respective Cronbach alpha coefficients and were therefore

appropriate for the testing of the hypothesis.

8.4.2 Hypothesis Testing Results: Success in terms of Motivation The scales developed previously for success and personality traits were subjected to

multiple regression analysis with the enter method for the testing of the first hypothesis of

the study. The use of the multiple regressions allowed the study to determine how well this

set of independent variables – motivation of Chinese entrepreneurs in Box Hill – was able

to predict the dependent variable – their success. The result also showed how much of the

success variance the independent variables self-satisfaction and potential seeking explained

in the dependent variable financial rewards.

The coefficient of determination (R square value) was 0.224. Thus 22.4 percent of the

variation in success was explained by entrepreneurial motivation. The ANOVA results also

showed a significant linear relationship between the independent and the dependent

variables (F=28.415, p<0.001), providing support for the second hypothesis. The

contribution of each of the independent variables included in the model in the prediction of

the dependent variable was determined by their beta scores. Self-satisfaction had a beta

value of 0.265, and potential seeking had a beta value of 0.275 (see Appendix 21).

In summary, hypothesis 2 of the study, which states that entrepreneurial motivation is

related to entrepreneurial success, was supported and confirmed (with the independent

variables explaining 22.4 percent of the dependent variable). This result was also supported

by its statistical significant value of p <.001, showing a strong support for hypothesis 2.

Both factors make a similar statistically significant contribution to the prediction of the

dependent variable. This result also implies that both factors are as important in the success

of Chinese entrepreneurs.

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8.5 Hypothesis 3 – Confucian Piety Is Related to Entrepreneurial Success

The second hypothesis of the study is anchored in the psychological and motivational

characteristics of the Chinese entrepreneurs. These attributes were identified as being

capable of successfully predicting entrepreneurial behaviour and patterns of activity. These

are the reasons why the Chinese entrepreneurs not only create their own business ventures

but also do so successfully. The major objective of this hypothesis is to find out whether the

identified factors of the Chinese entrepreneurs are related to their success.

A number of research variables were included in the questionnaire survey to measure the

factors which motivate Chinese entrepreneurs to engage in entrepreneurial ventures. These

variables, which were identified as the independent variables for this hypothesis, centre

mainly on personal, business and financial motivations. Appropriate statistical procedures

were employed to summarize the original data into smaller manageable units for analysis.

Thus, factor analysis was used to reduce and simplify the number of the independent

variables. The reliability of the scales created for the various factor scales was tested.

Finally hypothesis 2 was tested by regressing success on these scales.

8.5.1 Development of Scales for Confucian Piety The variables indicating the entrepreneurial factors were measured by using eight (9) items

each in the questionnaire survey asking the respondents to rate themselves in relation to

their personal attributes on a 5-point scale, ranging from 0 = little importance to 5 = high

importance. These variables were subjected to principal axis factoring, with oblimin

rotation. The results are as follows:

Result 1

The factorability of these variables was ascertained by the inspection of the correlation

matrix to find out whether many coefficients of 0.3 and above existed. The Kaiser-Meyer-

Olkin (KMO) was 0.909, and the Bartlett test of sphericity reached statistical significance

(p<0.001), supporting the factorability of the correlation matrix.

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Result 2

One factor with an eigenvalue of greater than 1.0 was found in the SPSS output. The factor

(Confucian piety) contributed 21.1 percent total variance in the variables explained (see

Appendix 20).

Result 3

The pattern matrix (see Appendix 5) generated by SPSS, highlighted variables loading

strongly on the factors. The factor (Confucian piety) had six (6) variables. This factor

showed the variables representing the components and importance of traditional Confucian

values. See below for the description of the pattern matrix for the Confucian piety set-up

factors.

Table 8.3 Description of Pattern Matrix for Confucian Piety Factors

Factor Confucian Piety

Guanxi connections

Family involvement

Community guanxi Head of family

Advice from elders Traditional wisdom

Helping other ChineseRacial discrimination

Trust in others

Results 4

The Cronbach alpha coefficient of the variables proved reliable and to have acceptable

internal consistency among the variables: 0.855, the factor analysis of the independent

variables in hypothesis 3 reduced the data, aligning them according to their underlying

structures to one factor – Confucian piety. A scale was constructed, which was proved

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reliable by the respective Cronbach alpha coefficient and was therefore appropriate for the

testing of the hypothesis.

8.5.2 Hypothesis Testing Results: Success in Terms of Confucian Piety The scale developed for the traditional Confucian values was subjected to linear regression

analysis. The use of the regressions allowed the study to determine how well this set of

independent variables – traditional Confucian values of Chinese entrepreneurs in Box Hill –

was able to predict the dependent variable – their success.

The coefficient of determination (R square value) was 0.291. Thus 29.1 percent of the

variation in success was explained by the variable Confucian piety. The ANOVA results

also showed a significant linear relationship between the independent and the dependent

variables (F=81.446, p<0.001), providing support for the third hypothesis. The contribution

of the independent variables included in the model in the prediction of the dependent

variable was determined by the beta scores. Confucian piety had a beta value of 0.540

(refer to Appendix 21).

In summary, hypothesis 3 of the study, which states that Confucian piety is related to

entrepreneurial success, was supported and confirmed (with the independent variables

explaining 29.1 percent of the dependent variable). This result was also supported by its

statistical significant value of p <.001, showing a strong support for hypothesis 3. This

implies that the factor is an important measure of Chinese entrepreneurial success.

8.6 Hypothesis 4 – Difficulties and Hurdles Are Related to Entrepreneurial Success

The fourth hypothesis of the study is based on the difficulties and hurdles encountered by

the Chinese entrepreneurs. These attributes were identified as being capable of predicting

entrepreneurial behaviour and patterns of activity. These are reasons why the Chinese

entrepreneurs not only create their own business ventures but also tackle the problems and

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become successful. The major objective of this hypothesis was to find out whether the

identified factors of the Chinese entrepreneurs are related to their success.

A number of research variables were included in the questionnaire survey to measure the

factors that the Chinese entrepreneurs encountered during their ventures. These variables,

which were identified as the independent variables for this hypothesis, centred mainly on

personal, business and financial difficulties. Appropriate statistical procedures were

employed to summarize the original data into smaller manageable units for analysis. Thus,

factor analysis was used to reduce and simplify the number of the independent variables.

The reliability of the scales created for the various factor scales was tested. Finally,

hypothesis 4 was tested by regressing success on these scales.

8.6.1 Development of Scales for the Difficulties and Hurdles The variables indicating the entrepreneurial factors were measured by using forty (40)

items each in the questionnaire survey asking the respondents to rate themselves in relation

to their personal attributes on a 5-point scale, ranging from 0 = little importance to 5 = high

importance. These variables were subjected to principal axis factoring, with oblimin

rotation. The results are as follows:

Result 1

The factorability of these variables was ascertained by inspecting the correlation matrix to

find out whether many coefficients of 0.3 and above existed. The Kaiser-Meyer-Olkin

(KMO) was 0.922, and the Bartlett test of sphericity reached statistical significance

(p<0.001), supporting the factorability of the correlation matrix.

Result 2

Seven factors with an eigenvalue of greater than 1.0 were found in the SPSS output. The

first factor (adaptation) contributed 18.3 percent, the second factor (business set-up)

contributed 21.2 percent, the third factor (bureaucracy and regulation) contributed 24.1

percent, the fourth factor (personal hurdles) contributed 11.9 percent, the fifth factor

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(external hurdles) contributed 24.5 percent, the sixth factor (business management)

contributed 27.9 percent and the seventh factor (adaptive opportunism) contributed 15.8

percent of the total variance in the variables explained (see Appendix 20).

Result 3

The pattern matrix (see Appendix 5) generated by SPSS highlighted variables loading

strongly on the factors. The first factor (adaptation) had five (5) variables, the second factor

(business set-up) had seven (7) variables, the third factor (bureaucracy and regulation) had

six (6) variables, the fourth factor (personal hurdles) had three (3) variables, the fifth factor

(external hurdles) had seven (7) variables, the sixth factor (business management) had six

(6) variables, the seventh factor (adaptive opportunism) had six (6) variables. See below for

the description of the pattern matrix for the difficulties and hurdles factors.

Table 8.4 Description of Pattern Matrix for Difficulties and Hurdles Factors

Factors Variables 1. Adaptation Difference in culture

Difference in business practice Recognition of skills Acceptance by Australia Adoption of Australian ways

2. Business Set-up Location Funds

Business skills Employees Education level Power sharing Initial financial back-up

3. Bureaucracy & Regulation

State government

Federal government Local government Government bureaucracy

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Unionism Workplace agreement

4. Personal Hurdles

Language barrier

Long working hours Gambling

5. External Hurdles

Community support

Locality Family history

Return to home country Financial assistance Chinese competition Parents’ influence

6. Business Management

Organization skills

Staff management Marketing planning

Expansion Niche products Sound accounting

7. Adaptive Opportunism

Workplace reform

Continuing education Regulation issues Cheaper imports Fusion style Cut-price strategies

Results 4

The Cronbach alpha coefficients of the variables proved reliable and to have acceptable

internal consistency among the variables: 0.843 (factor 1), 0.884 (factor 2), 0.903 (factor 3),

0.664 (factor 4), 0.884 (factor 5), 0.885 (factor 6) and 0.809 (factor 7). Thus, the factor

analysis of the independent variables in hypothesis 4 reduced the data significantly,

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aligning them according to their underlying structures to 7 major factors: – factor 1 (Self-

satisfaction), factor 2 (potential seeking), factor 3 (bureaucracy and regulation), factor 4

(personal hurdles), factor 5 (external hurdles), factor 6 (business management) and factor 7

(adaptive opportunism). Scales were constructed for each of the factors by averaging the

responses for the variables loading strongly on each factor. These scales were proved

reliable by their respective Cronbach alpha coefficients and were therefore appropriate for

the testing of the hypothesis.

8.6.2 Hypothesis Testing Results: Entrepreneurial Success in Terms of Difficulties and Hurdles

The scales developed previously for the difficulties and hurdles were subjected to multiple

regression analysis with the enter method for the testing of the fourth hypothesis of the

study. The use of the multiple regressions allowed the study to determine how well this set

of independent variables – motivation of Chinese entrepreneurs in Box Hill – was able to

predict the dependent variable – their success. The result also showed how much of the

success variance the independent variables adaptation, business set-up, bureaucracy and

regulation, personal hurdles, external hurdles, business management and adaptive

opportunism explained in the dependent variable financial rewards.

The coefficient of determination (R square value) was 0.607. Thus 60.7 percent of the

variation in success was explained by the difficulties and hurdles. The ANOVA results also

showed a significant linear relationship between the independent and the dependent

variables (F=42.398, p<0.001), providing support for the fourth hypothesis. The

contribution of each of the independent variables included in the model in the prediction of

the dependent variable was determined by their beta scores. The results were: adaptation

(0.164), business set-up (0.190), bureaucracy and regulation (-0.011), personal hurdles (-

0.098), external hurdles (0.119), business management (0.286) and adaptive opportunism

(0.219) (see Appendix 21).

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In summary, hypothesis 4 of the study, which states that the difficulties and hurdles faced

by the entrepreneurs are related to entrepreneurial success, was supported and confirmed

(with the independent variables explaining 60.7 percent of the dependent variable). This

result was also supported by its statistically significant value of p <.001, showing a strong

support for hypothesis 4. This result also implies that both factors are important in the

success of Chinese entrepreneurs.

8.7 Hypothesis 5 – Overseas Expansionary Vision Is Related to Entrepreneurial Success

The fifth hypothesis of the study is anchored in the visionary and innovative characteristics

of the Chinese entrepreneurs. These attributes can be used as a predictor of entrepreneurial

behaviour and patterns of activity. These are the reasons why the Chinese entrepreneurs not

only create their own business ventures but also expand beyond the local establishment and

achieve success. The major objective of this hypothesis was to find out whether the

identified factors of the Chinese entrepreneurs are related to their success.

A number of research variables were included in the questionnaire survey to measure the

factors which motivate Chinese entrepreneurs to engage in entrepreneurial ventures. These

variables, which were identified as the independent variables for this hypothesis, centre

mainly on personal, business and financial motivations. Appropriate statistical procedures

were employed to summarize the original data into smaller manageable units for analysis.

Thus, factor analysis was used to reduce and simplify the number of the independent

variables. The reliability of the scales created for the various factor scales was tested.

Finally, hypothesis 5 was tested by regressing success on these scales.

8.7.1 Development of Scales for Overseas Expansionary Vision The variables indicating the entrepreneurial factors were measured by using four (4) items

each in the questionnaire survey asking the respondents to rate themselves in relation to

their personal attributes on a 5-point scale, ranging from 0 = little importance to 5 = high

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importance. These variables were subjected to principal axis factoring, with oblimin

rotation. The results are as follows:

Result 1

The factorability of these variables was ascertained by the inspection of the correlation

matrix to find out whether many coefficients of 0.3 and above existed. The Kaiser-Meyer-

Olkin (KMO) was 0.922, and the Bartlett test of sphericity reached statistical significance

(p<0.001), supporting the factorability of the correlation matrix.

Result 2

One factor with an eigenvalue of greater than 1.0 was found in the SPSS output. The factor

(overseas expansionary vision) contributed 24.0 percent of total variance in the variables

explained (see Appendix 20).

Result 3

The pattern matrix (see Appendix 5) generated by SPSS highlighted the variables loading

strongly on the factors. The factor (overseas expansionary vision) had eight (8) variables.

See below for the description of the pattern matrix.

Table 8.5 Description of Pattern Matrix for Overseas Expansionary Vision Factors

Factor Overseas

Expansionary VisionAnything-is-possible

Borderless trading Attractive overseas

market More travel

Overseas connection Cheaper supplies

Potential – more moneyMore satisfaction

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Results 4

The Cronbach alpha coefficients of the variables proved reliable and to have acceptable

internal consistency among the variables: 0.899. Thus, the factor analysis of the

independent variable in hypothesis 5 reduced the data, aligning them according to their

underlying structures to one factor – overseas expansionary vision. A scale was constructed

for each of the factors by averaging the responses for the variables loading strongly on each

factor. These scales were proved reliable by the respective Cronbach alpha coefficients and

were therefore appropriate for the testing of the hypothesis.

8.7.2 Hypothesis Testing Results: Success in Terms of Overseas Expansionary Vision

The scale developed previously for overseas expansionary vision and motivation were

subjected to regression analysis with the method for the testing of the fifth hypothesis of the

study. The use of the regression allowed the study to determine how well this set of

independent variables – overseas vision and motivation of Chinese entrepreneurs in Box

Hill – was able to predict the dependent variable – their success. The result also showed

how much of the success variance the independent variable, overseas expansionary vision,

explained in the dependent variable, financial rewards.

The coefficient of determination (R square value) was 0.449. Thus 44.9 percent of the

variation in success was explained by the overseas expansionary vision set-up. The

ANOVA results also showed a significant linear relationship between the independent and

the dependent variables (F=161.3, p<0.001), providing support for the fifth hypothesis. The

contribution of each of the independent variables included in the model in the prediction of

the dependent variable was determined by their beta scores. Overseas expansionary vision

had a beta value of 0.670 (see Appendix 21).

In summary, hypothesis 5 of the study, which states that the overseas expansionary vision

of the entrepreneurs is related to entrepreneurial success, was supported and confirmed

(with the independent variables explaining 67.0 percent of the dependent variable). This

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result was also supported by its statistical significant value of p <.001, showing a strong

support for hypothesis 5. The factor made a strong statistically significant contribution to

the prediction of the dependent variable. This result also implies that the factor is important

in the success of Chinese entrepreneurs.

8.8 Summary of the Hypotheses Testing Results The scales developed previously for all the variables were subjected to multiple regression

analysis with the method for the testing of the five hypotheses of the study. The use of the

regression allowed the study to determine how well the five sets of independent variables

were able to predict the dependent variable – their success. The results from previous

sections (Sections 7.2–7.7) showed affirmative results for all the variables related to the

dependent variable – financial reward.

The variables of each of the fourteen (14) factors make a statistically significant

contribution to the factors. Hence, the results imply that all factors are important in the

success of Chinese entrepreneurs. In summary, all five components, background of the

entrepreneurs, entrepreneurial motivations, traditional Confucian values, difficulties and

hurdles and overseas expansionary vision, were found to be related to the business success

of the entrepreneurs. Therefore, all five hypotheses were supported and confirmed.

In addition, the theoretical perspectives of the five hypotheses of the study were found to be

useful in explaining the success of the Chinese entrepreneurs. The results strongly support

the characteristics of successful entrepreneurs presented by the extensive literature. A new

model (comprising all the component variables) explaining the success of Chinese

entrepreneurs is proposed and tested in the next sub-section.

8.9 SEM – Structural Equation Modelling (N=200) From the overall hypotheses results, a model explaining the success of Chinese

entrepreneurs is proposed here. Fourteen (14) scales were used to construct the theoretical

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model. The SEM computer programme was applied to test the validity of all correlations to

ensure good-fit. The model depicts the relationships between all the scales. This model

suggests that the relationships among all the scales, namely: guanxi connections, prior

experience, self-satisfaction, potential seeking, Confucian piety, adaptation, business set-

up, bureaucracy and regulation, personal hurdles, external hurdles, business management,

adaptive opportunism, overseas expansionary vision and financial rewards.

8.9.1 Influence of Gender – Two Factor MANOVA Test In this study, it was important to find out, in the beginning, if there was any influence of

gender on the entrepreneurial behaviours of both generations. Multivariate tests on gender

difference for 14 Constructs (2 Generations) were carried out, and the results can be found

in Appendix 8. They are summarized as follows:

• Significant generation effect (Wilks Lambda = .810, F (14,183) =3.07, p<.001,

partial eta square = .190)

• No significant gender effect (Wilks Lambda = .059, F(14,183) = .769, p = .702)

• No significant interaction between gender and generation (Wilks Lambda=.932, F

(14,183) = .956, p = .500).

In this study, there were 110 males and 90 females. This proportion and the number of

respondents add validity to the comparison of the genders between the two generations.

However, there is no significant gender effect in this study.

8.9.2 Results In this study, regression analysis is the appropriate method of analysis when the research

problem involves a single metric dependent variable presumed to be related to two or more

metric independent variables. The linearity of the relationship between dependent and

independent variables represents the degree to which the change in the dependent variable

is associated with the independent variable. The regression coefficient is constant across the

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range of values for the independent variable. The concept of correlation is based on a linear

relationship, thus making it a critical issue in regression analysis. Linearity is easily

examined through residual plots. Any consistent curvilinear pattern in the residuals

indicates that corrective action, such as transformation, will increase both the predictive

accuracy of the model and the validity of the estimated coefficients. This will be listed in

the next section and the following chapter.

Here, the outcome variable is ‘financial rewards’. The other 13 scales become independent

variables. The objective of this analysis is to predict the changes in the dependent variable

(financial rewards) in response to changes in the independent variables. This objective is

most often achieved through the statistical rule of least squares. The ability of an additional

independent variable to improve the prediction of the dependent variable is related not only

to its correlation to the dependent variable, but also to the correlations of the additional

independent variable to the independent variables already in the regression equation. The

following model (which combines 13 of the independent variables specified above)

explains 64.8 percent of the variation in the dependent variable, financial rewards, when

fitted using structural equation modelling.

Table 8.6 Model Summary of Regression Square

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .805a .648 .624 .50060

a. Predictors: (constant), guanxi, Personal Hurdles, Financial Rewards, Overseas Expansionary Vision, Prior Experience,

Bureaucracy & Regulation, Potential Seeking, Self Satisfying, External Hurdles, Adaptation, Business Set-up, Adaptive

Opportunism, Confucian Piety, Business Management

Note that in the following regression equation only three variables (business management,

adaptive opportunism and overseas expansionary vision – each with significant value less

than < 0.05) have a direct relationship with the outcome – financial rewards (see Appendix

15 for full results). Although the other variables have a significant correlation with financial

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rewards (see Appendix 8), they do not have a direct relationship with it, only an indirect

relationship by way of the three strategy variables. The results, by squared multiple

correlations, provide a list of the percentage variations for 11 factors being investigated.

They indicate the contributions of each factor towards the model

Table 8.7 Squared multiple correlations of 11 factors

Factors Estimate Explanation

Guanxi connections .365 The model explains 37 percent of variation in Guanxi Connections

Prior Experience .367 The model explains 37 percent of variation in Prior Experience

Adaptation .366 The model explains 37 percent of variation in Adaptation

External Hurdles .644 The model explains 64 percent of variation in External Hurdles

Personal Hurdles .445 The model explains 45 percent of variation in Personal Hurdles

Business Set-up .582 The model explains 58 percent of variation in Business Set-up

Bureaucracy & Regulation .505 The model explains 51 percent of variation in Bureaucracy & Regulation

Business Management .640 The model explains 64 percent of variation in Business Management

Overseas Expansionary Vision .488 The model explains 49 percent of variation in Overseas Expansionary Vision

Adaptive Opportunism .661 The model explains 66 percent of variation in Adaptive Opportunism

Financial Rewards .607 The model explains 61 percent of the variation in Financial Rewards

The most important factors associated with financial rewards are ranked from highest to

lowest (see Appendix 11 for full tabulated results):