Is accessing global markets easier than ever in the 21st. century ?

A sociological study of Transnational Indian

entrepreneurs in the U.S. and India

By Manashi Ray, PhDResearch Presentation at West Virginia State

UniversityJune 28, 2011

1

Objective of the Presentation

Research Question: How do entrepreneurs of Indian origin acquire and sustain their business across transnational space in the present century ?

2

Three Categories of Transnational Entrepreneurs & Findings

3

Immigrants Indian

entrepreneurs in the U.S.

ReturneesIndian

entrepreneurs in India

Non-migrants Indian

entrepreneurs in India

A) Material Goods Sectors

Ethnic & Religious

networks

A) Material Goods Sectors

Inclusive networks

& organizations

B) Technology Sectors

Professional networks, organizations & reputation

B) Technology Sector

Exclusive networks & organizations

Transnational Practices and Actions

‘Transnationalism’ defines migration to be a “multi-level process (demographic, political, economic, cultural, familial) that involves various links between two or more settings rather than a discrete event constituted by a permanent move from one nation to another (Gold 2001: 57).”

4

Literature Review 1) In the U.S. context conceptions of transnational practices

based on experiences of resource poor immigrants: a) Latin American b) Caribbean c) East Asian countries Perceived as a ‘resistance’ to global capitalism.

2) Transnational entrepreneurship portrayed as

‘deterritoralized’ or as ‘boundless’ and for that reason as a ‘liberatory’ process, challenging the authority of (i) nation-state, (ii) class, (iii) ethnicity (iv) race etc.

5

Significance of the Research

Why Study the Indian case ?

1)Gives a voice to a group of new migrants.

2)Significance of Indian state policies in enhancing transnational flows.

6

Organization of the Presentation

Profile of Indian immigrants in the United States & Indian policies

Theoretical Framework

Methodology

Description of the data

Key Findings

Conclusion and Ideas for Future Research7

Admission as Workers with Specialty Occupation and International Students,1998 – 2008

Source: “Opendoors”: Report on International Student Exchange 1989-2009. Institute of International Education; New York; USA and Year Book of Immigration Statistics 1992–2008.

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1989 1991 1993 1995 1997 1999 2001 2003 2005 20070

20000

40000

60000

80000

100000

120000

140000

160000

180000

Speciality Workers (H1-B)

Indian Int'l Students

Profile of Indian Immigrants in the United States

•1.5 million foreign born from India resided in the United States in 2006.

•More than 1/3rd of all Indian foreign born, arrived in the United States in year 2000 or later.

•74% Indian born adults age 25 and older had a bachelor’s or higher degree in 2006.

•The median income of Asian Indian families is $ 72, 865 in 2009.

Source: Migration Policy Institute 2008 & U.S. Census Bureau & 2009 American Community Survey.

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Changes in India’s Policies since 1990s

At the Macro level:

• Since 1990, India has been advancing neo-liberal, pro- business policies.

• Proactive stance of the Indian Government and implementation of market friendly policies. Examples are

removal of licenses on import of industrial equipments,

removal of barriers for foreign investment tax exemption for 5 years in designated zones for export- oriented firms,

easy availability of bank credit etc.

• By 2002, for the first time return migration started.

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Theoretical Framework

Transnational Network PerspectiveNetwork perspective shows how resources, capital, knowledge, information, goods, and ideas flow through patterns of ties or bonds.

Shortcomings:Neo-Classical: Micro – level analysisWorld System Theory: Macro – level analysis

Advantage of Network Perspective:Makes provision for explaining thereverse migration of highly skilledimmigrants from developed countriesof the West to their home countries. 11

Theoretical Framework

• Portes (1998:6) definition of social capital as “the ability of actors to secure benefits by virtue of membership in social networks or other social structures”.

• Social capital needs to be understood: how social capital is generated? who possesses social capital? how societal shifts affect the social capital of whom?

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Theoretical Framework

Three Forms of Capital: - Cultural - Social - Human - Bourdieu’s Theory of Capital and

Practice for analyzing the transnational business actions and practices.

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Methodology: Multi-sited urban ethnography

United States of America India

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Gaining Access to the Transnational Entrepreneurs

Creation of Initial Roster of 100 – 150 tentative transnational entrepreneurs between 2003-07 primarily from

the following sources

Transnational

Organization

Public Social

Gatherings

Personal family and extended

kin connections in both countries

Friends and Acquaintanc

es

Public Data Sources in

both countries

The Indus Entrepreneurs (TiE)

National Association of Software and Service Companies (NASSCOM)

Indian Institute of Technology alumni Association (PAN IIT)

Indian festivals like Holi at the local Hindu Temples at Michigan

Hindu Temple, Lemont, Illinois

Vivekananda Vedanta Society, Chicago

Michigan State University India Council

Ethnic associations, e.g. Bichitra ,Troy

North American Bengali Conferences 2006- 07.

School, college and universities attended in India and in the United States.

Respondent referrals

Web Portals, e.g. LinkedIn, Government sources

Leading News- papers in both countries

Opinion Journals

News and Trade Magazines

Transnational Entrepreneurs

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Study Sample

Stratified purposive sampling of 42 Transnational Entrepreneurs

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Respondents from Technology Sector

Respondents in Material goods

sector

Transnational Entrepreneurs in the High-Tech

sector

Transnational Entrepreneurs in

the Material Goods sector

USA INDIA

12

9

15

6

No. of Respondents

Distribution of Respondents by Age and Country

18

UNITED STATES OF AMERICA INDIA

10

7

11

14Older Generation Younger Generation

Study Respondents

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Analyses of data from in-depth interviews with the respondents

1. Owners/partners for a minimum of 5 years or more

2. Travelled extensively all over the world and at least 5-6 times a year to the U.S. or India in a year for business.

3. Maintained a high intensity of exchange and contact with people associated with their business, class mates, family members, and professional colleagues in both countries.

Key Findings – Immigrant Entrepreneurs

1. Entrepreneur in the Material goods sector: Connections to the Indian diaspora mattered. Diasporic community controlled their personal behavior, e.g. concern for potential loss of reputation, ties, source of income

Access to social and financial capital.

2. Entrepreneur in the Technology domain: Individual professional reputation Ties to professional colleagues & college peers Employed ‘economics of synergy’ for achieving their entrepreneurial goals.

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Immigrant Technology Entrepreneur in the U.S.

Sudhir: “When I started the company my existing customers from my previous employment said that they would come with me after I started something of my own. They were true to their word.

Then as I was building the company I tried to put the right board members and management team together so that the company could scale beyond me. I was cognizant of their potential and they had a good idea of my work. So, the point is when you have this powerful team, the team brings with it their social network. Then you can leverage from these networks.

You can start with your reference customers: build your brand, that’s how each one feeds on the other positively. We also got some introduction from my board member friend, who was our financial investor. We get our clients now because of the reputation we started with and arduously built over the years. We are known all over the world now, so customers come to us (sic).”

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Key Findings – Returnee Entrepreneurs

1. Longitudinal expansion of college alumni networks assisted in return migration like the Pan IIT (Indian Institute of Technology)

2. Emergence of meso-level global intermediary networking forums.

TiE (The Indus Entrepreneurs)SIPA (Silicon Valley Indian Professional Association) NASSCOM (National Association of Software and Services Companies).

3. Team Entrepreneurship based on trust based ties between technology entrepreneurs, who had an on going relationship or shared the same social context.

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Arun: “The networking that happens in Pan IIT meetings is helpful. These are actually old friends (old boys network) who look out for you all the time. We give each other information about industry trends, and enormous ‘trust’ exists right off the bat. When people give references they are very clear. If someone has violated this ‘trust’ it goes around quickly in the network. The best kind of ‘trust’ is established while you are going to school.

And you retain the connection and continue behaving with people the way you did with them in school with no vested interest. You interact with such peers and friends because either you need something from them and you are upfront about it or help someone without any expectations. So that continues to operate . . . among IITians, that is why the whole transnational business among us is booming (sic).”

Returnee Technology Entrepreneur in India

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Use of Networks by a Returnee Entrepreneur

TRANSNATIONAL RETURNEE ENTREPRENEUR LOCATED AT MUMBAI, INDA

Meets a peer from IIT, Delhi

at PAN IIT Conference

in Washington, D.C.

USA.

Few Years later the entrepreneur sold a company to his IIT Delhi

peer at SINGAPORE

Friend from IIT sets up a venture fund

in California,

USAPart owner of a

company in France which was looking for a subsidy in BANGALORE

1st DEAL

Graduate School buddy at Duke

University

Buddy’s neighbor was

looking to buy a

company at BOSTON

24“Either the Buyer or Seller is from IIT (Indian Institute of Technology)”

3rd DEAL

2nd DEAL

Key Findings – Non Migrant Transnational Entrepreneurs

1. Transnational business in the material goods sector dealing with luxury and consumer goods.

like - hand crafted textiles & crafts tea and pre-packaged food home décor custom made jewelry etc.

2. Lower levels of human capital and devoid of migratory experience.

3. Extensive use of cultural capital.

4. Participation in multiple trade or interest-based all inclusive global networks

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Rani : “I manage to sell almost 95% of my stuff at the conferences and get long term contracts from museum

stores.” Non-migrant entrepreneurs’ membership in multiple

global and all inclusive networks

654321SurfaceDesign

Association

of UnitedStates

Association

of United States Museum Stores

CraftCouncil

ofIndia

SurfaceDesign

of KansasCity

International

Folk Art Market atNew Mexico

WorldCraft

Council

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Conclusions

The use of capital and networks varied depending on

• Individual resources endowment of the entrepreneur,

• Existing migratory and transnational business channels,

• Domain of enterprise.

Important to differentiate social contexts and instances that lead to diverse patterns in transnational entrepreneurship, and thereby to a variety of network configurations.

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Contribution of the Research

Contributes to the Sociology of Asian/South Asians, ethnic economies and migration studies.

Policies for international migration and business.

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Ideas for Future Research and Action

•Research on women transnational entrepreneurs.

•Collaborative study of comparing and understanding the process of return migration of different highly skilled migrants from the U.S. to their home countries, like Nigerians, Germans etc.

•Involvement of students in field work for data collection and analysis.

Thank You

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