1 Diversity in entrepreneurship
Vanessa Ratten
Diversity in an entrepreneurial setting can take many different forms from those less represented in society to individuals neglected in the current research. During the past decade, the meaning of diversity has changed based on societal attitudes. This has led to fertile research areas that have been understudied from an entrepreneurship perspective. Whilst many studies in sociology have examined the meaning of diversity, it is less studied in an entrepreneurship setting. In addition, diversity tends to be viewed based on specific characteristics such as gender or age without considering other factors. This has meant that diversity is often seen as a benefit to entrepreneurs due to different lifestyle factors leading to new opportunities. However, currently the entrepreneurship literature considers diversity more in terms of gender, sexuality or location.
Entrepreneurs are increasingly investing in diversity management due to the need to focus on innovation and creativity within workplace practices (Ferreira, Fernandes and Ratten, 2017). They come from diverse backgrounds and need to consider different viewpoints when entering global marketplaces. In some industries, especially high technology, there is a high number of ethnic minorities. This has led to diversity being a competitive advantage in terms of providing a creative environment for new ideas to emerge (Ferreira, Ratten and Dana, 2017). There are different functions apparent in diversity management that utilise human resource management practices, which include increasing the level of human capital (Olsen and Martins, 2012). Madera (2018:100) defines diversity management as āformal organizational policies and programs that develop and maintain a diverse workforce through selecting, developing and advancing employees from diverse backgroundsā. Thus, diversity management in entrepreneurship involves taking a proactive approach to solving problems.
A social perspective taking is useful in understanding diversity in entrepreneurship. Social perspective taking refers to āthe process of having individuals take the perspective of an out-group member by thinking and feeling the experience of an out-group memberā (Madera, 2018:101). In-group members are those within society that are considered stereotypes and have common physical traits. Diversity includes out-group members by referring to the differences amongst people (Manoharan and Singal, 2017). The concept of diversity in entrepreneurship originated from studies on ethnic minorities. Diversity management has come to be widely practised by entrepreneurs, but in some industries it is less common than others. Diversity involves differences amongst people and can include age, sexual preference and lifestyle choices (Dobbs, 1996). Thus, diversity can be classified using a broad or narrow category (Mor Barak, 2005). Taking a broad category approach means including many ways people are considered different, and a narrow category approach is more objective and normally includes traits that are easier to measure.
Diversity can be further evaluated in terms of primary-/surface-level or secondary-/deep-level differences (Manoharan and Singal, 2017). At the primary/surface level, it involves aspects that contribute to identity such as visible characteristics like height, weight and ethnicity. It is easier to study primary-/surface-level diversity due to the already existing research about this topic. Less difficult is secondary-/deep-level diversity that can be hidden in society due to perceived prejudices. Examples of surface-/deep-level diversity include personality traits, learning styles and religion (Lambert and Bell, 2012). In entrepreneurial settings, it may be more useful to focus on secondary-/deep-level diversity as this is an area less understood (Jonsen, Maznevski and Schneider, 2011). In addition, diversity can be examined in terms of shifting societal trends that fundamentally change business practice (White, 2018).
There has been more interest in how to measure and assess diversity in entrepreneurship. The management of diversity is defined as āthe policies and practices that are designed to not only allow and acknowledge and recognise diversity, but also to leverage these differences to support an organizational goalā (Manoharan and Singal, 2017:78). In this book, we attempt to take stock of research that relates to diversity in entrepreneurship as a way of identifying future research trends. This is due to changing definitions existing in research and practice about diversity. Entrepreneurs are a diverse group of individuals, with each person having a unique identity. Although entrepreneurs are sometimes classified as being all the same and interested in risk-taking activities, they each have different attributes, which impacts their success in the market. As Fuller-Love, Lim and Akehurst (2006:429) state, āentrepreneurs are a diverse group whether they are men or women, those from different ethnic backgrounds, social groups, types of businesses or geographical areasā. Thus, it is necessary to further our understanding of diversity in entrepreneurship by examining their different cultural attributes. This involves focusing on how entrepreneurs utilise their networks to access information that can be located in distinct groups. This will enable more diversity in entrepreneurship to evolve that brings about better management skills.
The rationale for this book came from an examination of the literature on minority entrepreneurship, which found that most studies tend to focus on biology or ethnic traits without considering other diverse segments of society. The initial research found that whilst ethnic minority and female entrepreneurship are well studied in the literature, other diverse individuals are less researched. This has led to a concentration of studies on specific characteristics without considering what it means to be a minority in todayās society. The chapters in this book address various issues concerning diversity in entrepreneurship, including (1) the changing notion of diversity in society, (2) how diverse communities help or hinder entrepreneurship and (3) the potential for entrepreneurship in under-represented parts of society.
Based on the new societal meanings of diversity, this book was inspired to take a broad view as to how diversity is interpreted in an entrepreneurial setting. This enables an exploration about how diversity is important and the impact it has on research. As society begins to accept more diverse individuals, it is important to understand how these individuals contribute to entrepreneurship research (Dobbs, 1996). More importantly, how can we learn from diverse groups of people in society in terms of their attitudes and expectations regarding entrepreneurship? The purpose of this book is to open up the discussion on diversity and entrepreneurship in order to improve the literature. More concretely, the goal is to develop better theoretical and empirical studies about diversity. This can contribute to creating a better economic and social landscape for entrepreneurship. To achieve this goal, the book includes a number of chapters that have different theoretical and methodological approaches.
The remainder of this chapter is organised as follows. The meaning of diversity in entrepreneurship is discussed with an overview of how this has changed in recent years. Next, the rationale for specifically focusing on diversity from a holistic perspective is stated. This leads to a summary of the chapters included in this book and an agenda for future research. Finally, managerial and policy implications are stated.
Role of entrepreneurship in society
An entrepreneur is defined as āsomeone who perceives an opportunity and creates an organization to pursue itā (Bygrave and Hofer, 1991:14). Culture involves learned behaviour that is communicated in a societal setting. Most forms of culture involve a language or way of acting that is common to all members (Anggadwita et al., 2017). Culture is normally passed down generations, but can be also learnt. There are different ways of looking at culture both from an entrepreneurship perspective and from a societal stance. Depending on the context, culture can be learnt via example or involve a set of behaviours to adhere to. Individuals behave in a certain way based on the values endemic in their culture. Some cultures have specific ideas that shape society. One of the most famous scholars on culture is Hofstede, who refers to culture as āthe collective programming of the mind which distinguishes the members of one human group from anotherā (Hofstede, 1980:25). The culture in a society influences how individuals define and react to diversity in entrepreneurship.
Entrepreneurs are often considered to be young, and this stereotype has restricted entrepreneurship research. Entrepreneurship education is often focused on young people and neglects other sectors of society. White (2018:2) states, āminority entrepreneurship scholars have long studied the relationship between age and entrepreneurship practiceā. However, a large proportion of society is now considered mature age or seniors. This is evident in some developed countries, such as Japan having a large proportion of people over sixty years of age. Whilst the average life span of individuals has increased, there has been a reluctance in entrepreneurship studies to understand these entrepreneurs who have been referred to as mature age, older, seniors, grey and baby boomers. There is also a debate in the entrepreneurship field about whether age matters in the proclivity to start a business. This issue about whether entrepreneurs are born or made keeps popping up in the entrepreneurship scholarship with no appropriate answer being found.
Entrepreneurs are not considered as members of mainstream society, as they have had to overcome obstacles in their personal life that help them deal with adverse conditions. Thus, in order to search for better economic opportunities or have greater independence, individuals become entrepreneurs. Altinay and Altinay (2008:24) state, āsociety today is a mosaic of people from different backgrounds in terms of their histories, cultures, origins, religions and languagesā. The diversity in terms of personality or behaviour helps contribute to entrepreneurial endeavours as gaps in the market are filled.
Minority entrepreneurship can be understood from a cultural or structural perspective. The cultural approach suggests that certain types of businesses are favoured by minorities. This may be related to food or lifestyle preferences that are different to what is currently in the marketplace. The structural approach focuses on the disadvantages minorities face due to different resources. This may include language or geographic differences that limit business opportunities. Another theory used to understand minority entrepreneurship is the mixed embeddedness approach, which focuses on regulations, sectoral and spatial differences in the environment (Kloosterman, Van der Leun and Rath, 1999). The food sector is a good example of an industry that has been impacted by minority entrepreneurs. For example, Patakās curry products when first introduced in the United Kingdom market were considered exotic, but now are common food items in many customersā cupboards. Greek yoghurt is another example of a specific ethnic product gaining mainstream market appeal. The spatial environment focuses more on geography in terms of how close individuals are to business locations. For agricultural products such as dairy and meat, the spatial environment can be used as a branding tool. This applies to milk and fruit where location is used as a way to distinguish the reputation of a product. The regulatory environment involves aspects such as taxes and tariffs that are influenced by the government.
In the entrepreneurship literature, diversity is seen as an asset because it brings in a new mindset. Although most of the literature on entrepreneurship has tended to use the same sample demographic that is easy to access and acquire, it has limited the number of studies that have diverse samples and takes into account modern living styles that are not typical of past research. Diversity is a complex subject and each person has their own entrepreneurial style. This book takes a holistic approach to diversity by confirming its important role in entrepreneurship research. Diversity, whilst considered a positive factor in entrepreneurship, can also have negative factors depending on the context. In the early stage of entrepreneurial development, diversity may make it hard for others to understand the business idea. In addition, it can act as a constraint in later entrepreneurial development when the entrepreneur wants to sell or divest the business. To counteract these positive and negative factors, a bridging approach that focuses more on the profitability and future income of the business is needed.
Social network theory is a commonly referred to theory in entrepreneurship research in order to understand diversity management. By engaging in a social forum, networks enable both formal and informal interaction. This helps to create a knowledge community and enable collaborative learning. Within these networks, there is a sense of trust, with members expected to behave in a reciprocal manner. Social networks enable entrepreneurs to access information and resources to make business decisions.
The block mobility theory suggests that certain individuals are stopped from entering certain professions due to their characteristics such as ethnicity, age or gender. Piperopoulos (2010:142) states that some ethnic groups āare disadvantaged in the labour market due to racial discrimination, negative events, low education and qualifications, redundancy, under-paid salaried work, or language difficultyā. Thus, to understand minority entrepreneurship in the global economy, it can be examined through migration, settlement, identity and business. Migration is a topic often addressed in the media due to its impact on economic policy. There are regions migrants tend to settle in due to the cultural community that exists (Ratten, 2006). Moreover, some regions have a historical association with certain ethnic groups and have existing infrastructure. Other regions such as the Silicon Valley have migrants wanting to work in the technology industry. Thus, the personal connection a migrant has to a location can be based on occupation, language, religious or some other kind of connection. Government policy also contributes to migration, as some regions encourage it as a way to build their pool of human capital (Ratten, 2014). This is evident in more favoured locations based on migration traditions. Settlement involves looking into where diverse communities are located and the type of business in these areas. For older people, they might move to locations that have more health services. Other groups of people such as working professionals might prefer locations closer to cities. Identity means how individuals associate with their cultural and social background. Some minority groups might consider themselves part of communities because of their business skills, whilst others might prefer to be identified based on behaviour or culture. Business means the kind of economic activity an individual engages in.
Expectancy or valence, instrumentality, expectancy theory has been used to understand minority entrepreneurship (Edelman et al., 2010). This theory suggests that when individuals believe their effort will result in an outcome, they are likely to behave in a certain way. The theory has been used to explain the reasons why individuals are motivated to become entrepreneurs.
The extant research explaining the impact of minorities on entrepreneurship has expanded over the past years. Culture has a strong influence on entrepreneurial ambitions, and research on this topic is informing our understanding about general entrepreneurship behaviour. Indeed, it is noted that there is a shifting research agenda to exploring what a minority is and how it is defined by society. The increased social acceptance and tolerance of different individuals has changed the research discour...
