Jin-Kyung Yoo has done a resourceful job in documenting why a rather new immigrant group chooses entrepreneurship in the competition-oriented economic system currently dominating the United States. This study concentrates on the growth of the Korean community in Atlanta, but refers to other large cities where Koreans have congregated longer. Contrary to free market ideology and its promotion of the image of the self-reliant, hardworking individual entrepreneur, this book shows, using several statistical tables, how establishing and expanding Korean businesses is due rather to ethnic and network resources that support entrepreneurial activity. This book has been out a few years and the status of Koreans in America may have changed in the interim, but it worth reading nevertheless due to its focus on a generally ignored element of socio-economics.
Korean businesses are divided into enclave and non-enclave sectors, the former serving primarily Korean-Americans and the latter located primarily in inner city African-American neighborhoods. Korean immigrants launch these activities relying heavily on Korean network resources, both family and social. Included amongst these resources are startup capital, business information, price discounts, interest-free loans, cheap Korean labor, unpaid family labor, cultural identity, rotating credit associations (RCAs) to supply finance, and a policy of selling businesses only to other Koreans. Numerous statistics show that networks are the most prominent source of resources for immigrant entrepreneurial pursuits.
The book also discusses the main theories developed to explain why so many immigrants become entrepreneurs.
Marxist dependency theory, which states that the demand for cheap labor attracts poor peasants to rich industrialized countries, in this case is wrong. More than half of Korean immigrants have college education, meaning other factors cause them to become Americans.
Orthodox cultural theory in turn argues that certain cultures have a built-in cultural predisposition for entrepreneur values and ambitions. This theory posits both class and ethnic resources. The former includes the values, skills and money of the business class that are passed along through the generations. The latter includes business resources distributed amongst all socio-economic levels of a particular ethnic group, giving that group a reputation of having a commercial mentality.
Reactive cultural theory explains immigrant entrepreneurial activity as a matter of exclusion rather than exclusiveness. I.e., immigrants are disadvantaged by factors like discrimination and the lack of linguistic or transferrable work skills, and instead of working poorly paid jobs take to more profitable business activities.
Similarly, structural advantage theory argues that poor mainstream opportunities force immigrants to occupy a gap in the economy. They become “middleman minorities” between the producing corporate sector and low-income consumer neighborhoods.
Network theories show how ethnic networking encourages and increases immigration and generates business resources for immigrants. Relying on networks, some immigrants, including a majority of Koreans after the 1980s, come simply to make money.
None of these theories concerns only Korean immigrants, but any ethnic group extensively involved in business.
J-K Yoo’s accomplishment is to show how all these factors, not just one, are involved in making the Korean community as notably entrepreneurial as it is. Unlike previous researchers, she also differentiates family and social networks, the former providing startup capital and the latter providing valuable business information. Business expansion, as opposed to business startup, she shows to be financed by heavy reliance on Korean/Asian revolving credit associations.
Korean enclave businesses provide a necessary function for the Korean-American community, and add richness to the American cultural context through, for example, Korean restaurants. Entrepreneurial activity in the non-enclave economy, however, is in disharmony with the African-American community, as money that could be used for development of the black community is soaked up and taken out, a loss not made up for by employing blacks. Proutist policy would for the most part require capital to stay within its community of origin so as to enrich rather than exploit it.
The mainstream economy and immigration policy are in turn in disharmony with Koreans, to some extent forcing them to work in harsher settings where hostility is higher and profits lower. It is almost as if Koreans are being made pawns in a game between corporations and low-income African-Americans.
As a middleman minority, non-enclave Korean entrepreneurs sell products manufactured by corporations if not other ethnic groups. Being faceless, corporations are harder to attack. Koreans have a face, however, and bear the brunt of anger when inner cities explode. Were it not in part for Korean immigrant entrepreneurs, black Americans could own the businesses in their own communities, allowing these communities to grow faster and more independently of both corporations and government. Were it not for corporations and the U.S. government, which protects corporate activity, black communities could go even farther. Were government to follow Proutist ideas, it would break up corporations into employee-owned divisions. It would also assist various communities like the African-American in taking over for themselves functions formerly held by corporations within their communities, like distribution, manufacturing, and banking.
Though the profit motive is a factor, bad immigration and post-immigration policy and economic practice have allowed the current situation to develop. It is a mess that is ultimately of neither Korean- nor African-American doing, but equally one that demands resolution.
A good book that summarizes key theoretical issues and takes discriminating steps forward in the subject of ethnic economics. It needs a little editing, but is a good primer and includes an extensive bibliography. What is also needed, as the author states, is comparison with the economic activities of other ethnic and cultural groups. The Korean-American community is quite small and rather new compared to some other ethnic groups who may act along network lines, and operates almost entirely on the small business level in the marginal, not mainstream, economy. To some extent African-Americans are being made fools of by focusing on Koreans as the source of their problem, and should consider the possibility of racial and ethnic sentiments being manipulated to hide larger causes of their economic subservience – in corporations and perhaps even other racial or ethnic groups for whom even Korean-Americans are only useful tools. At the same time, the mutual-aid activities of Koreans can serve as a good example of what members of any economically subjugated ethnic group can do to develop economic strength, respect, and self-reliance, though the exploitation of cheap Korean labor by other Koreans is something that a Prout economy would do without and is not a particularly good example for other communities. (People’s News Agency)
