Does Networking Promote Immigrant Business Performance?—The Case of Chinese and Korean Immigrants in California

Scholars have pointed out both positive and negative effects ethnical networks could have on immigrant business performance. By statistically ana-lyzing the difference in income among Chinese and Korean entrepreneurs, this study focuses on the impact of a strong network on immigrant business performance. The results indicate that higher network quality and quantity have negative impacts on business owners’ incomes, yet these negative effects could be offset by stronger overall networks.

and 58,282 jobs in 1998. Moreover, due to the centrality of self-employment with regards to upward economic mobility, these businesses play an important role in bridging the wage-gap between natives and immigrants, promoting economic assimilation for immigrants. They unquestionably have the ability to influence the U.S. economy in terms of both growth and allocation.
Every profit-seeking firm relies on its business performance to survive and make economic contributions possible. In order to better understand the economic contribution of immigrant businesses, examining the driving force of their business performance becomes crucial. The United States welcomes immigrant entrepreneurs by giving special preferences for admission to immigrants who invest $1 million in businesses and provide or preserve at least 10 full-time jobs for U.S workers. Identifying the factors that affect immigrant business performance can help the U.S. government when it comes to screening these immigrant entrepreneurs and granting entry to the most "beneficial" individuals.
Scholars have found certain factors contributing to above-average business performances for some immigrant-owned firms. It is argued that Asian-owned businesses outperform non-Hispanic white owned businesses due to higher levels of owner education and startup capital [4]. Besides capital and education, another often unobservable, and less discussed factor that might also affect im- search also contributes to the broader investigation of benefits and costs of immigrant networks, which further provides insight into whether it is more advantageous for immigrant entrepreneurs to branch out from their communities, or stay within them.

Background
Some immigrant-run businesses are more successful than others in terms of generating profits, and this is not simply due to individual characteristics or coincidence. On average, immigrant firms have lower sales than non-immigrant firms. On the other hand, studies also find high levels of business earnings among Asian immigrant groups. Using data from the Characteristics of Business Owners, it was found that "Asian-owned businesses, which are 80 percent immigrant owned, have higher sales and profits, and they are more likely to survive and hire employees than non-Hispanic white owned businesses". Also, startup capital explains at least 50 percent, and high levels of education explain "8 -26 percent of why Asian-owned businesses perform better on average" [4].
Capital and the education level of owners represent only part of the ultimate equation for running a successful business as an immigrant. Networking is another indispensable factor. The overall effect of networks on immigrant entrepreneurship and business performance is double-sided, yet networks undoubtedly play an important role in increasing earning opportunities for immigrants. Some scholars believe that networks represent entrepreneurial resources that expand economic opportunities immigrants encounter in destination economics [5]. These networks support co-ethnic entrepreneurship in three principal ways discussed below.
First, these networks feed low cost co-ethnic labor to immigrant entrepreneurs, reducing costs for employers [6]. Immigrant entrepreneurs often employ co-ethnic individuals, including relatives, at a significantly high rate. For example, it was reported that 30.8% of the Korean immigrants in Los Angeles were employees of Korean-owned firms, while Koreans only made up 1 percent of the total population in Los Angeles County at that time [7]. It was also shown that ethnic networks helped Mexican migrants find jobs in low-wage, labor-intensive sectors [8]. This low-cost labor brought by immigrant networks usually possessed the same language and cultural values as the business owner, which further aided smooth operation of these firms, reduced overall production costs, and led to greater business performance.
Second, migration networks feed economic information to immigrant entrepreneurs and aspiring immigrant entrepreneurs, providing a protected market for certain goods. By studying the garment industry in New York, Bailey and Waldinger pointed out that immigrant networks and enclaves served as an "external, informal training system that shape[d] the employment relationship and increase [d] the availability and quality of information for workers and employers" [9]. As mentioned previously, newcomers tend to work in immigrant firms, train and become familiarized within the market of the host country. Workers who have gained skills and information by working for their co-ethnic owners often set up new businesses of their own, which creates an informal training system for both immigrant entrepreneurs and employees. This is valuable in terms of generating sales for an immigrant-owned business as it forms a rather exclusive information system and product markets.
Third, studies have confirmed immigrant networks' usefulness in dealing with business problems. Migration networks provide access to various kinds of mutual assistance including information, as well as starting capital and business support. Small businesses are the main avenue for economic mobility for minority groups. Self-employment is a mobility ladder, but sometimes, it is also an economic lifeboat for those who are unable to find jobs in a formal sector. Immigrant networks encourage these people by providing access to microfinance or informal lending markets through programs such as rotating credit associations [10]. the quality of these networks is often unobservable. The fact that the geographical boundaries for most ethnical enclaves are rather ambiguous adds further difficulties to the study. "Quantity" of a social network is measured as "the number of people the minority individual interacts with through this language", and "quality" of the social network is measured by "counting the number of people in this language group who use welfare" [2] [11]. This paper will adapt this measurement, which will be introduced and discussed in the following section.

Methods
In order to understand the importance of networks, ideally, we want to examine States, while the estimated number of Chinese Christian churches is 1200 [12]. A wide variety of studies have indicated that common religious preference serves as a strong social bond. For example, using the national Survey of Parents and Youth (1998-199) data, it was found that "participation in religious congregations increases network closure between the parents of youth and their children's friends" [13]. Studies also indicate that Korean immigrants maintain higher levels of ethnic attachment than other Asian immigrant groups. "The affiliation of the majority of Korean immigrants with Korean churches, their cultural homogeneity, and their concentration in small businesses contribute to their high ethnic attachment." Korean immigrants in Los Angeles preserve an even higher level of ethnicity than those in other parts of the U.S. partly because of the existence of Korea Town as a "territorial base" and partly because of a large concentration of Koreans in the city" [14].
Ethnic network is defined as the interaction between the size of the network and the quality of the network [2] [11]. Below is a mathematical representation: where E jk is the "ethnic enclave" of a person from a country of origin group k living in area j, defined as follows: jk Number of people from group k in area j Total population in area j E = Number of people from group k Total population in country Q k stands for the quality of the network, or the "knowledge" and "attitude" of others from the country origin group k (China or Korean) has towards entrepreneurship. This is measured by the logarithm of the self-employment rate of the group in certain metropolitan areas, divided by the national self-employment rate for the specific group, which is 12% and 24% for Chinese and Koreans, respectively.

Results and Conclusion
According to the regression results (see Appendix 3), 1 β the Korean dummy variable is negative and significant for both regression models.

Conflicts of Interest
The authors declare no conflicts of interest regarding the publication of this paper.