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Still an ethnic enterprise after a generational change? Indian-owned SMEs in Malaysia

  • Jesrina Ann Xavier and Edmund Terence Gomez


This study grapples with two key puzzles: first, what happens when companies established as ethnic-based enterprises, including by migrants, are passed on to the next generation? Second, do these migrant businesses remain as ethnic enterprises after generational transitions? The empirical focus of this study is Malaysia, a country with one of the largest ethnic Indian populations outside India. To provide insights into these questions, this article pays particular attention to how an ethnic enterprise functions, in terms of types of goods and services produced and its targeted market, after the emergence of a new generation of owners with more class resources. The evidence from this study will provide insights into the validity of the concept of ethnic enterprise following a generational transition.


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The authors would like to thank the entrepreneurs from the eleven Indian-owned SMEs for their time and their feedback. They would also like to acknowledge the financial support for this research from the Population Studies Unit (PSU), Faculty of Economics & Administration, University of Malaya.



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1 This was in 2016, an appreciable fall since its peak in the late 1930s, when Indians comprised 15 per cent of the population. Arasaratnam, Sinappah, Indians in Malaysia and Singapore (Kuala Lumpur: Oxford University Press, 1970).

2 See Rising India and Indian communities in East Asia, ed. Mani, A., Kesavapany, K. and Ramasamy, P. (Singapore: Institute of Southeast Asian Studies, 2008).

3 Logan, J.R., Alba, R.D. and McNulty, T.L., ‘Ethnic economies in metropolitan regions: Miami and beyond’, Social Forces 72, 3 (1994): 693.

4 Light, Ivan H. and Gold, Steven J., Ethnic economies (San Diego: Academic, 2000).

5 Waldinger, Roger, Aldrich, Howard and Ward, Robin, Ethnic entrepreneurs: Immigrant business in industrial societies (Newbury Park, CA: Sage, 1990), p. 33.

6 Zhou, Min, ‘Revisiting ethnic entrepreneurship: Convergencies, controversies and conceptual advancements’, International Migration Review 38, 3 (2004): 1040.

7 Kotkin, Joel, Tribes: How race, religion and identity determine success in the new global economy (New York: Random House, 1993), p. 4.

8 The one exception is Singapore, though even here this policy change is a recent occurrence. Citizenships are offered to foreigners who the government feels can make a major contribution to the development of the Singaporean economy. Liu, Hong, ‘Beyond co-ethnicity: The politics of differentiating and integrating new immigrants in Singapore’, Ethnic & Racial Studies 37, 7 (2014): 1225–38.

9 See, for example, Gabriel, Sharmini Patricia, ‘“It ain't where you are from, it's where you're born”: Re-theorizing diaspora and homeland in postcolonial Malaysia’, Inter-Asia Cultural Studies 12, 3 (2011): 341–57; Liu, Hong, ‘Beyond co-ethnicity’; Belonging to the nation: Generational change, identity and the Chinese diaspora, ed. Gomez, Edmund T. and Benton, Gregor (London: Routledge, 2015).

10 See, for example, Redding, S. Gordon, The spirit of Chinese capitalism (Berlin: de Gruyter, 1990); and Asian business networks, ed. Hamilton, Gary G. (Berlin: de Gruyter, 1996).

11 Liu, Hong, ‘Beyond a revisionist turn: Networks, state and the changing dynamics of diasporic Chinese entrepreneurship’, China: An International Journal 10, 3 (2012): 2041.

12 For a recent study on Indian businesses in a number of countries, Indian and Chinese immigrant communities: Comparative perspectives, ed. see Bhattacharya, Jayati and Kripalani, Coonoor (London: Anthem, 2015).

13 The United States has the largest ethnic Indian population outside of India.

14 Nasution, Khoo Salma, The Chulia in Penang: Patronage and place-making around the Kapitan Kling Mosque 1786–1957 (Penang: Areca, 2014).

15 Under this system, the migrants signed a contract under which they would be ‘indentured’ to their employer for five years; they did not have the right to change employers or employment and their wages were fixed for the entire period (Arasaratnam, Indians in Malaysia and Singapore).

16 The Chettiars were major moneylenders, catering to all segments of society — European businessmen, Chinese traders, Malay peasants and members of the Malay royal houses. Chettiars emerged as major landowners when they called in their loans to Malay rulers and peasants following the onset of the economic depression from the late 1920s. Legislation such as the Malay Reservation Act 1933 had to be introduced to curb the volume of land that was coming under the ownership of the Chettiars. However, many Chettiars lost their assets when they fled to India during the Japanese Occupation of Malaya. Ummadevi Suppiah and Sivachandralingam Raja, Sundara, ‘Kedudukan ekonomi Chettiar di Tanah Melayu, 1945–1957’, Sejarah: Jurnal Jabatan Sejarah Universiti Malaya 20 (2012): 143–65.

17 This study does not include the informal sector. Indians continue to play a dominant role in certain areas of this sector, such as food vending and street hawking of goods requiring little capital investment.

18 Economic Planning Unit, Prime Minister's Department, Tenth Malaysia Plan, 2011–2015 (Putrajaya: Government Printers, 2010).

19 The New Economic Policy in Malaysia: Affirmative action, horizontal inequalities and social justice, ed. Gomez, Edmund T. and Saravanamuttu, Johan (Singapore: NUS Press; ISEAS, 2013).

20 Marimuthu, Maran, ‘Ethnic diversity on boards of directors and its implications on firm financial performance’, Journal of International Social Research 1, 4 (2008): 431–45.

21 Gomez, Edmund T., Political business: Corporate involvement of Malaysian political parties (Townsville: Centre for Southeast Asian Studies, James Cook University of North Queensland, 1994), pp. 240–86.

22 The Ministry of Entrepreneur and Co-operative Development's VDP main aim is to develop the domestic and international competitiveness of Malaysian SMEs.

23 Sivalingam, A., ‘Economic problems and challenges facing the Indian community in Malaysia’, in Indian communities in Southeast Asia, ed. Sandhu, K.S. and Mani, A. (Singapore: Times Academic, 1994), pp. 388404.

24 Kumararajah, A.T., ‘SEED and the Indian community: The government's role in economic empowerment initiatives’, in Contemporary Malaysian Indians: History, issues, challenges & prospects, ed. Jayasooria, Denison and Nathan, K.S. (Bangi: Institute of Ethnic Studies [KITA], UKM, 2016), pp. 5770.

25 Thurasamy, Ramayah, Mohamad, Osman, Omar, Azizah and Marimuthu, Malliga, ‘Technology adoption among small and medium enterprises (SME's): A research agenda’, Proceedings of World Academy of Science, Engineering and Technology 41 (May 2009): 943–6.

26 Harian Metro, 26 July 2012.

27 Light, Ivan H., Ethnic enterprise in America: Business and welfare among Chinese, Japanese and Blacks (Berkeley: University of California Press, 1972).

28 Light, Ivan H. and Bonacich, Edna, Immigrant entrepreneurs: Koreans in Los Angeles 1965–82 (Berkeley: University of California Press, 1988).

29 Arasaratnam, Indians in Malaysia and Singapore; Sojourners and settlers: Histories of Southeast Asia and the Chinese, ed. Reid, Anthony (Sydney: Allen & Unwin, 1996).

30 Bonacich, Edna and Modell, John, The economic basis of ethnic solidarity: Small business in the Japanese-American community (Berkeley: University of California Press, 1980).

31 Bonacich and Modell, The economic basis of ethnic solidarity; Ward, Robin and Jenkins, Richard, Ethnic communities in business: Strategies for economic survival (Cambridge: Cambridge University Press, 1984).

32 Light and Bonacich, Immigrant entrepreneurs.

33 Light, Ivan H. and Rosenstein, Carolyn N., Race, ethnicity, and entrepreneurship in urban America (New York: de Gruyter, 1995).

34 In-Jin, Yoon, ‘The changing significance of ethnic and class resources in immigrant businesses: The case of Korean immigrant businesses in Chicago’, International Migration Review 25 (1991): 303–31.

35 Virdee, Satnam, ‘“Race”, employment and social change: A critique of current orthodoxies’, Ethnic and Racial Studies 29, 4 (2006): 605–28; Deakins, David, Ishaq, Mohammed, Smallbone, David, Whittam, Geoff and Wyper, Janette, ‘Ethnic minority businesses in Scotland and the role of social capital’, International Small Businesses Journal 25, 3 (2007): 307–26.

36 Kloosterman, Robert and Rath, Jan, ‘Immigrant entrepreneurs in advanced economies: Mixed embeddedness further explored’, Journal of Ethnic and Migration Studies 27, 2 (2001): 189201; Granovetter, Mark, ‘Economic action and social structure: The problem of embeddedness’, American Journal of Sociology 91, 3 (1985): 481510.

37 Ram, Monder and Jones, Trevor, Ethnic minorities in business (Milton Keynes: Small Business Research Trust, 2008).

38 Bonacich and Modell, The economic basis of ethnic solidarity.

39 Portes, Alejandro and Rumbaut, Ruben, Immigrant America: A portrait (Berkeley: University of California Press, 1990).

40 Koning, Juliette and Verver, Michiel, ‘Historicizing the “ethnic” in ethnic entrepreneurship: The case of the ethnic Chinese in Bangkok’, Entrepreneurship & Regional Development: An International Journal 25, 5–6 (2012): 325–48.

41 Sequeira, J.M., Mueller, S.L. and McGee, J.E., ‘The influence of social ties and self-efficacy in forming entrepreneurial intentions and motivating nascent behaviour’, Journal of Developmental Entrepreneurship 12, 3 (2007): 275–93.

42 See for example: Bonacich and Modell, The economic basis of ethnic solidarity; Light and Bonacich, Immigrant entrepreneurs; Waldinger et al., Ethnic entrepreneurs; Logan et al., ‘Ethnic economies in metropolitan regions; Light and Gold, Ethnic economies; and Min Zhou, ‘Revisiting ethnic entrepreneurship’.

43 Dhaliwal, Spinder, ‘Entrepreneurship — a learning process: The experiences of Asian women entrepreneurs and women in business’, Journal of Education and Training 42, 8–9 (2000): 445–52.

44 Bailey, Thomas and Waldinger, Roger, ‘Primary, secondary and enclave labor markets: A training systems approach’, American Sociological Review 56, 4 (1991): 432–45.

45 Ram and Jones, Ethnic minorities in business.

46 Light and Bonacich, Immigrant entrepreneurs.

47 Borjas, George J., ‘The self-employment experience of immigrants’ (Cambridge, MA: National Bureau of Economic Research Working Paper, 1986); Camarota, Steven A., Reconsidering immigrant entrepreneurship: An examination of self-employment among natives and the foreign-born (Washington, DC: Center for Immigration Studies, 2000).

48 Basu, Anuradha, ‘From “break out” to “breakthrough”: Successful market strategies of immigrant entrepreneurs in the UK’, International Journal of Entrepreneurship 15 (2011): 5970.

49 Clark, Ken and Drinkwater, Stephen, ‘Recent trends in minority ethnic entrepreneurship in Britain’, International Small Business Journal 28, 2 (2010): 136–46.

50 Jones, Trevor, Barrett, Giles and McEvoy, David, ‘Market potential as a decisive influence on the performance of ethnic minority business’, in Immigrant businesses: The economic, political and social environment, ed. Rath, Jan (Basingstoke: Macmillan, 2000), pp. 3753.

51 Koning and Verver, ‘Historicizing the “ethnic” in ethnic entrepreneurship’.

52 Similar findings were noted in the study of minorities in Malaysia and Singapore by Gabriel, ‘It ain't where you are from’; Hong Liu, ‘Beyond co-ethnicity’. See also the results of the study of the Chinese diaspora by Gomez and Benton, Belonging to the nation.

53 This conforms to the arguments by Yoon In-Jin, ‘The changing significance of ethnic and class resources’; Virdee, ‘“Race”, employment and social change’; and Deakins et al., ‘Ethnic minority businesses in Scotland’, though their studies focus on the migrant cohort.

54 This is not the case with the larger, prominent jewellers in major malls targeting a multi-ethnic middle and upper-middle class. The owners of these businesses did not wish to be interviewed for this study.

55 Westhead, Paul, ‘Company performance and objectives reported by first and multi-generation family companies: A research note, Journal of Small Business and Enterprise Development 10, 1 (2003): 93105.

The authors would like to thank the entrepreneurs from the eleven Indian-owned SMEs for their time and their feedback. They would also like to acknowledge the financial support for this research from the Population Studies Unit (PSU), Faculty of Economics & Administration, University of Malaya.

Still an ethnic enterprise after a generational change? Indian-owned SMEs in Malaysia

  • Jesrina Ann Xavier and Edmund Terence Gomez


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