The role of institutional support in Asian entrepreneurial expansion in Britain

Abstract

This paper examines the role of formal and informal institutional support in the expansion of Asian‐owned businesses in Britain, based on a large survey of Asian entrepreneurs based in Britain. More specifically, it investigates the significance of formal (bank) sources of finance relative to that of informal (family or personal) sources of finance at start‐up and the implications of that reliance on subsequent business expansion. The paper also examines the wider role of informal family and community networks in providing access to information and labour, in addition to capital, and the impact of these support networks on business expansion. The methodology used is that of quantitative, statistical analysis supplemented by qualitative survey data. The evidence suggests that both formal and informal institutional support have played a limited role in fostering Asian entrepreneurial expansion in Britain. Although bank finance was valuable in preventing undercapitalised ventures, rapidly growing Asian businesses did not rely on bank finance either at start‐up or for expansion. This may be attributed to the short‐term perspective of banks. Rapidly growing Asian businesses did not rely on formal sources of advice. Nor did they rely on family or community networks for finance or labour. The Asian entrepreneurs who rapidly expanded their businesses invested their personal savings at start‐up, relied on their family and friends for advice, employed non‐Asian labour and invested in employee training. These results imply that Asian entrepreneurs aspiring to grow need to advance beyond the traditional reliance on informal support networks for finance and labour. Formal institutions could offer long‐term debt or equity finance, encourage investment in employee training, and provide appropriate training schemes.

Citation

Basu, A. (1998), "The role of institutional support in Asian entrepreneurial expansion in Britain", Journal of Small Business and Enterprise Development, Vol. 5 No. 4, pp. 317-326. https://doi.org/10.1108/EUM0000000006796