In the United States, Koreans are 34 times more likely than other immigrant groups to run dry cleaners, while Gujarati-speaking Indians are 108 times more likely to manage motels.
Economists William Kerr, of Harvard Business School, and Martin Mandroff, of the Swedish Competition Authority, studied the relationship between ethnicity, occupational choice, and entrepreneurship. They found that ethnic groups in the United States tend to concentrate in certain businesses and that these small, socially-isolated groups attain considerable financial success through this type of concentrated entrepreneurship.
According to Kerr and Mandroff, Yemenis are 75 times more likely to own grocery stores than other immigrants, while Greeks tend to concentrate in the restaurant sector, and Middle Eastern immigrants are more likely to own grocery and liquor stores.
The researchers say people decide what industry to enter based on their interactions.
The tendency to cluster around certain industries often results because market interactions — such as with corporate America or in higher education — can prove more challenging for certain members of ethnic groups.
Consequently, they rely more on social interactions — with friends, family or people within their ethnic group — to learn new skills and find jobs.
This tendency to own their own business is more apparent among some groups. For example, 45 percent of adult Korean males are self-employed. That’s three times higher than the 15 percent self-employed rate of the general adult male immigrant population.
As business owners, these immigrant groups have to rely on their own judgment and they tend to learn from each other.
“When socializing during family gatherings and religious/cultural functions, entrepreneurs mentor each other and exchange industry knowledge and professional advice,” the authors wrote. “The more an entrepreneur socializes with other entrepreneurs, the more knowledge is exchanged. Social interaction and production are therefore complementary in the entrepreneurial sector and entrepreneurial productivity increases with the number of friends and family members in that sector.”